The Highway Trust Fund will be bankrupt in 2008, one year before the spending program enacted this year expires, according to a transportation financing study by the National Chamber Foundation, an affiliate of the U.S. Chamber of Commerce.
The report, the Future of Highway and Public Transportation Financing, predicts a cumulative funding shortfall if the government doesn’t come up with new revenue sources. An extra half trillion dollars would be needed to maintain the current condition of the country’s transportation system through 2030 and $1.1 trillion to improve current conditions over the same time period, according to the report.
One of the main reasons the report cites for the funding gap is that the federal gas tax is not indexed to inflation and revenue from the tax has lost one-third of its purchasing power since the last adjustment in 1993. Of the approximate 60 cents per mile that automobile drivers now pay to operate their vehicles, only 1 cent in federal fuel taxes is paid to the Highway Trust Fund. An additional half-cent per mile would be enough to maintain the nation’s highway and transit systems, according to the report.
Stephen Sandherr, chief executive of the Associated General Contractors of America, has called for short-term solutions such as indexing the gas tax to inflation to guard against future erosion of the fund’s purchasing power and long-term methods to supplement the gas tax.
“Without a significant influx of new revenues, not only will the Highway Trust Fund be unable to support the federal commitment made under SAFETEA-LU [the $286-billion highway funding bill President Bush signed in August], but our nation’s transportation network will also continue to deteriorate, impacting mobility and economic well-being,” Sandherr said.
Recommendations in the report include closing exemptions, re-crediting interest to the trust fund, expanding the use of tolling and encouraging use of innovative financing tools.
In 2003, while Congress debated the last highway bill, congestion caused 3.7 billion hours of travel delay and 2.3 billion gallons of wasted fuel, according to AGC. Sandherr said the current political environment doesn’t accommodate a rational discussion of a gas tax adjustment to meet growing transportation needs. “Unfortunately, the gas tax has become another political third rail,” he said.