The federal government”™s latest stalemate has the country headed for what”™s being called the “highway cliff.”
The federal Highway Trust Fund, which invests in transportation projects like highway repairs and bridge construction, is drying up and on the road to ultimate evaporation by August.
More than 112,000 projects and 700,000 jobs hang in the balance, according to the U.S. Department of Transportation. The number of jobs that could be lost is greater than the combined populations of Tampa, Fla., and St. Louis.
President Barack Obama has proposed a four-year, $302 billion transportation infrastructure bill to replenish the trust fund. He was in Westchester County on May 14, touting the bill and speaking on the Hudson River waterfront by the Tappan Zee Bridge, which is on the Interstate 287 corridor that begins in Byram.
Obama stood at a lectern at Sunset Cove restaurant at the Washington Irving Boat Club, noting the bridge was the longest in the state and calling it “one of the busiest bridges around.”
“As any commuter will tell you, it”™s crowded,” he said. “It carries a lot more traffic than when it was built in 1955. At times, you can see the river through the cracks in the pavement: I”™m not an engineer but I figure that”™s not good.”
The president used the new bridge as an example of the types of projects the U.S. needed, saying premier roadways and transportation infrastructure were key to the economy of the country.
“The alternative is to do nothing and watch businesses go to places that have outstanding infrastructure,” he said.
The federal government committed a $1.6 billion loan for construction of the Tappan Zee replacement, though questions linger about how expensive the bridge toll will need to be to pay for the construction.
Obama said the country”™s highway and transportation system is what set it apart as a world leader and location for thriving businesses in the middle part of the 20th century. He said it was time to recommit.
“The bottom line, Tarrytown, is America doesn”™t stand still,” he said.
Avoiding the highway cliff is more complex than being committed to replenishing the Highway Trust. How to provide money for the trust and other complexities could delay any revolutionary changes, particularly in an election year in which Republicans are aiming to take control of the U.S. Senate.
Running out of gas
The Highway Trust was established in 1956 as part of the Federal Aid Highway Act. President Dwight D. Eisenhower, an Army veteran, understood the correlation between a strong and easily navigable roadway system and military and economic might. He pushed through the act, which led to the largest and most comprehensive nationwide infrastructure project in the nation”™s history.
More than 41,000 miles of roadway saw construction.
The trust was funded through a tax on gas, initially 3 cents to the gallon. To keep the fund solvent, the tax has increased several times but it has remained steady at just above 18 cents on the gallon since 1993.
The consumption of gas has decreased in recent decades, with the advent of more fuel-efficient cars as well as hybrids. That has led to less tax money collected for the fund, and improving technology means the amount of fuel consumed will likely fall further in coming years.
Also, ballooning project costs have led to the amount going out of the fund outpacing the amount of taxes collected by nearly $20 billion annually. Increasing the taxes is unlikely, with talks stalled for several years. The depleting of the fund could start to affect federal disbursements to states before it has completely run dry, experts say.
Alternatives to a gas-tax increase
Obama”™s bill calls for tightening corporate tax loopholes and increasing taxes on overseas earnings. Those initiatives are likely to see resistance in Congress, particularly in the House. A much-debated measure of the bill would allow increased authority to states to expand tolls on interstate highways and give improved authority to levy those tolls to the states themselves.
American Trucking Associations, a national trade group, criticized the president”™s plan for what it said were “quick fixes.” Bill Graves, president and CEO of ATA, took issue with the toll provision and a lack of details in the corporate tax reform proposal.
“Any proposal that moves away from a user fee-funded transportation system is not going to be acceptable to the American trucking industry, period,” he said. “The focus must be on real, long-term funding answers rather than repeatedly looking for the proverbial ”˜nickels in the couch cushions.”™”
The fund has only remained solvent for the last five years due to temporary solutions. Dating back to 2008, Congress has had to make up the shortfall in the trust by dipping into the general fund to the tune of $54 billion. A recent NPR piece said another $15 billion would be needed from the general fund to extend the trust this year. That option may be the most likely with elections looming and any major policy changes bogged down. Tapping the general fund may mean a deal between the House and the Senate.
Another long shot, at least to be approved in the immediate future, is to change entirely the way the trust is funded. One suggestion is to eliminate changes to the gas tax and instead tax drivers based on how many miles they drive. Drivers who use the roadways more would pay more taxes to support those roads. There has not been tangible support of an initiative such as this on the legislative level.
Senate unveils counter proposal
The day after Obama”™s visit to the Tappan Zee Bridge, May 15, the Senate”™s Environment and Public Works committee released a counterproposal to the president”™s transportation bill. The Senate plan called for $260 billion in spending spread out over six years ”” $40 billion less than the president”™s bill and stretched two years longer.
The committee bill did not lift the restrictions on tolls on interstate highways, which drew kudos from the Owner-Operator Independent Drivers Association.
The group”™s executive vice president, Todd Spencer, said, “We look forward to working with both the Senate and House transportation committees in addressing the challenges faced by the highway trust fund and ensuring that the priorities of professional and small-business truckers are included in the final bill.”
According to a recent article in The Hill, the Senate is expected to amend its bill significantly before a full vote while the House hasn”™t chimed in on whether it will amend the existing bill or come up with an alternative plan. The Senate committee plan, notably, does not offer a suggestion on how to pay for replenishing the trust fund.
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