Highway Trust Fund in Trouble
This ought to be fun. The House Transportation Highways and Transit Subcommittee's hearing Tuesday on the status of the highway trust fund shines a spotlight directly on the biggest and ugliest problem looming before the committee. The trust fund is dwindling so fast that it will not be able to meet its current obligations by the fall of 2014, the Congressional Budget Office said in April. Even a simple one-year extension of the current surface transportation program, a time-honored punting tradition when lawmakers get stuck on legislation, becomes problematic because a stop-gap would cost $14 billion, according to CBO. The other options to keep the trust fund from going into the red are politically impossible--raising the gas tax by 10 cents per gallon or virtually eliminating the government's ability to promise money for new projects.
Rep. Pete DeFazio, D-Ore., sees a silver lining in this dire scenario--it might just put the fire into Congress to do something. Without action, he told me recently, "There would be a year of near zero spending on federal investment in infrastructure. That means a loss of hundreds of thousands of jobs. It means acceleration of the deteriorating highways. I have no idea how transit gets through that at all. I just think that the reality of that will drive something, will drive a bill. That's something that hasn't happened before."
It's hard to know how it happens. The Republicans on the committee are hoping to squeeze savings out of government streamlining along the lines of last year's highway and transit bill. But that only takes you so far. There also may be a way to facilitate public-private partnerships that would reduce the public cost of some projects. The administration seems amenable to some of these ideas, given that the most recent White House budget proposes to lift the caps on private activity bonds, a move designed to give the private sector more leeway in negotiating deals with the government.
Still, the betting person should place long odds on anything but a short-term highway bill coming out of Congress next year. The dwindling highway trust fund is simply a prop to illustrate the broader point—the money isn't there anymore.
Does the poor state of the highway trust fund help the cause for a gas tax increase or a move toward a vehicle miles traveled user fee? How bad does it have to get before these kinds of options become politically palatable? Are CBO's projections missing part of the picture? Where else might funding be found to keep up with highway and transit projects? If the current trajectory of the highway trust fund is unsustainable, as CBO says, who needs to be convinced that this is a problem before something happens to change it?
