Study suggests solutions to highway trust fund problems

December 9, 2014

A new report released by the Eno Center for Transportation suggests that not only is our country’s Highway Trust Fund broke, but the way Congress has been repeatedly infusing it with life-saving cash may also be illegal. The study, The Life and Death of the Highway Trust Fund, takes a look at what led the U.S. system to bankruptcy, and how other nations, including Japan, Canada, Australia, Germany and the United Kingdom, use “sustainable mechanisms for ensuring adequate national level investment in surface transportation systems” — pointing to ways that the U.S. system might be reformed.

The Eno Center for Transportation suggests that restoring legal infrastructure funding may not be easy, but isn’t rocket science, either. From Petteri Sulonen.

We’ve reported on the Highway Trust Fund’s bankruptcy woes before. The Trust Fund is supplied with cash via the gas tax, which is currently 18.4 cents per gallon and not enough to cover highway infrastructure projects and repairs. Of the five countries studied, the U.S. system is the only one which “still pretends to rely on a ‘user-pay’ system,'” explains Streetsblog; the other countries’ drivers and truck companies pay a great deal more than their U.S. counterparts. The five foreign countries studied also charge much greater national gas tax rates.

Between 2008 and 2014, the fund was pumped with $52 billion in transfers from the general treasury. As CityLab blogs, this translates into 83% of the funds money coming from the federal gas tax, which, it turns out, may be illegal: “[A] Congressional budget act from 1974 requires all federal funds that work on contract authority, such as the Highway Trust Fund, to pull at least 90% of receipts from user expenses.”

Yet breaking that Act is just one of the Fund’s current problems — developing a sustainable solution for funding or abandoning the Fund is the true focus of the Eno report. Analyzing national-level surface transportation programs in those five foreign countries, Eno looked at how “adequate, sustained transportation” investment as well as how countries’ funding approaches impact their investment decisions.

The takeaway? Three conceivable solutions for the U.S.’s transportation funding dilemma: 1) “Adjust spending to match revenues,” by either reducing spending or increasing revenues to cover costs. 2) “Adopt a hybrid funding approach that relies on both general funds and gas tax revenues,” which would involve codifying the existing “hybrid” system, to make the existing, patchwork system legal. Or, lastly, 3) “Eliminate the Highway Trust Fund,” which would be a permanent alternative that’s more reflective of what other developed countries do: funding surface transportation via an appropriations process.

One critical voice of the report hails from Streetsblog, which urges Eno to “stop obsessing” over the “tired” gas tax debate and agrees, at least in part, with the report’s third solution: “[D]o away with the Highway Trust Fund, let gas taxes flow into the treasury, and fund transportation at whatever level it deems appropriate. The pressure to raise revenues government-wide would still exist, but the paralysis over raising gas taxes would likely ease,” writes editor Tanya Snyder.

General funding, argues Snyder, is the preferable option for salvaging the U.S.’ ailing transportation system — and one that’s been adopted by other countries. Consider Australia, which has a “National Priority List” of projects needing funding; Germany, the UK and Canada also have priority-driven programs. “The common thread here is that these countries, through general-funded transportation programs, have been able to place a far greater priority on projects of national significance — and projects with a sound financial rationale — than the United States.”

Learn more about the Eno Center for Transportation at their site.