The Highway Trust Fund keeps bridges from falling down, but will Congress reauthorize it?
On Aug. 1, 2007, the I-35W bridge in Minneapolis collapsed, pitching cement slabs, twisted metal and cars 10 stories down into the Mississippi river. Thirteen people died in the disaster; 145 were injured.
For 17 consecutive years, the bridge had been rated in poor condition by inspectors from the Minnesota Department of Transportation. In 2006, the agency also classified the bridge as “structurally deficient.” But it was never shut down for repairs. When it did collapse, it fell across a rail yard, severed utility lines, blocked the waterway and disrupted traffic to Saint Paul and the nearby airport. The estimated economic impact was about $17 million in 2007 and $43 million in 2008.
The catastrophe placed a national spotlight on our crumbling infrastructure. The bridge had a design flaw: a metal plate that was critical to its structure was “undersized” — instead of being an inch thick, it was half an inch thick. When it broke, the entire bridge came down. Compounding that, an investigation by the Minnesota legislature revealed that the state’s Department of Transportation, which inspected the bridge, was underfunded and overworked. Tom Johnson, author of the report, told the New York Times in a Retro Report documentary, “We came away from our investigation that these are professionals trying to do their job, but they had some very severe restrictions about what they could do, largely because of lack of money.”
Consequently, in 2008, Minnesota voted to raise its gas tax for the first time in 20 years, overcoming a veto from the governor, and embarked on an ambitious plan to renovate bridges across the state.
Keeping bridges and roads safe across the United States, however, requires funding on a much larger scale. For a typical highway project, roughly 20 percent of funding comes from state coffers, according to the Government Accountability Office. The other 80 percent is covered by the federal government — from a transportation fund known as the Highway Trust Fund.
What is the Highway Trust Fund?
The Highway Trust Fund is a major source of funding for our public roads, highways, bridges, tunnels and public transit. It is levied mostly through the federal gas tax. At 18.4 cents a gallon of gasoline and 24.4 cents a gallon of diesel, the gas tax brings approximately $34 billion into the fund annually. But that’s not enough to meet the country’s overwhelming infrastructure demands.
Today, more than 60,000 bridges in the United States are considered structurally deficient, according to the U.S. Department of Transportation, and 32 percent of U.S. major roads are in poor or mediocre condition, according to the American Society of Civil Engineers. In Pennsylvania, one in five bridges are deficient. And that’s troubling, because a whole lot of people use those bridges and drive those roads. According to U.S. Census data, 86 percent of U.S. workers commuted to work by automobile in 2013. Like the I-35W Bridge, which was built in 1967, about half of the U.S. interstate highway system infrastructure was built in the 1950s and 1960s, and while it was built to last, it was not built to last forever.
To be clear, structurally deficient does not necessarily mean the bridge is unsafe — if a bridge is open then it is considered safe — but it means that the bridge “has major deterioration, cracks, or other flaws that reduce its ability to support vehicles,” according to the Federal Highway Administration.
Why are we falling short?
That $34 billion the federal gas tax brings in annually isn’t enough to fund all of our infrastructure needs. The federal government currently spends about $50 billion on transportation infrastructure and thus runs roughly a $16 billion annual deficit. Because the Fund cannot borrow money, it has needed regular general fund transfers in order to stay solvent.
But even that $50 billion is seen as insufficient by transportation experts, including current Transportation Secretary Anthony Foxx, who has said that “we need a transportation reset.” The Congressional Budget Office reports that to simply keep up with the current performance of the highway system, an additional $14 billion a year would have to be spent on transportation infrastructure.
Experts say we are falling behind in part because the federal gas tax is not bringing in enough money. “Beginning about the time of the [Great] Recession, we no longer collect sufficient taxes,” said James Burnley, former Secretary of Transportation, who served from 1987 to 1989 under Ronald Reagan.
We haven’t seen an increase in the gas tax in more than 20 years. The last time it was raised was in 1993 under Bill Clinton. In 1990, George H.W. Bush had raised the gas tax in part to raise money for highways and in part to reduce the deficit. The last time before that was in 1983 under Ronald Reagan.
Moreover, the gas tax is not pegged to inflation. With inflation, the value of a dollar declines over time. A dollar in 1993 is worth only 60 cents today. If the gas tax had kept up with inflation, it would be 30 cents a gallon today and pull in nearly twice the amount of revenue.
On July 1, stepping in where Congress has not tread, state legislatures in Idaho, Georgia, Maryland, Rhode Island, Nebraska and Vermont raised their state gas taxes to repair their roads and bridges.
Others have turned to the ballot. In 2014, for example, Texans voted on Proposition 1, which invests money raised from taxes on fracking into the highways and bridges. It passed with 81 percent of the vote. In Phoenix this August, a proposition to raise the city’s sales tax in order to pay for the roads and public transit passed with 55 percent of the vote. In 2013, 73 percent of transportation ballot measures passed, according to the Center for Transportation Excellence.
But this state-by-state, proposition-inclined model isn’t sustainable, said Dan McNichol, transit expert and author of the book, “The Roads that Built America.” “It’s the equivalent of a bake sale…It’s piecemeal.”
But even federal funding through the Highway Trust Fund isn’t certain. And if Congress doesn’t act, the Highway Trust Fund is set to expire…and soon.
When will the Highway Trust fund expire?
As a result of a stopgap bill passed in July, the Highway Trust Fund will not run out of money until late spring 2016. While the amount of money available is not a problem right now, the issue is whether Congress allows those funds to be used. Lawmakers must technically “authorize” highway fund spending — and the latest authorization runs out Oct. 29. Thus, a divided Congress has only two days left to reauthorize the Fund, or it stops operating.
Since 2005, Congress has passed 34 short-term extensions, and it has not reauthorized the fund for more than two years at a time. To keep the fund solvent, Congress has relied on a number of stopgap measures — most notably, in 2014, using “pension smoothing,” which allowed businesses to defer putting money into employees pensions in order to report bigger profits and therefore pay higher taxes. This revenue was then funneled into the Highway Trust Fund.
What happens if the Highway Trust Fund shuts down?
If federal funding is disrupted, over $1.1 billion in projects is at risk, according to state transportation officials. States rely heavily on federal funding, and when the funds stop coming in, they’re often forced to stop construction, which usually violates the terms of their contracts, costing the states more.
What do these disruptions mean? For one thing, they delay the repairs and replacement of more than 80,000 “functionally obsolete” and 60,000 “structurally deficient” bridges.
Dan McNichol points out an additional safety issue. Work zones are dangerous for drivers and workers, and uncertain funding means that unsafe conditions meant to be temporary — confusing signs, uneven pavement, barriers and no breakdown lanes — last longer.
Jobs are also at risk. In 2014, the White House estimated that some 700,000 jobs were on the line if the Highway Trust Fund was allowed to expire in October of that year. (Yes, we faced this same debacle last year.)
Finally, it almost goes without saying: You’ll be sitting in traffic longer.
So what is Congress doing about this situation?
While it’s highly unlikely that Congress will allow the Highway Trust Fund authorization to expire, an agreement on how to fund it in the future is anything but certain.
In July, a bipartisan trio made up of Senate Majority Leader Mitch McConnell (R- Ky.), Senator Barbara Boxer (D-Calif.) and Senator Jim Inhofe (R- Okla.) authored a bill called the Developing a Reliable and Innovative Vision for the Economy (DRIVE) Act to solve the Highway Trust Fund’s long-term funding problem. At the time, the fund was set to expire at the end of the month. (Yes, this also happened in July.) It passed in the Senate with a 65-34 vote, but faced opposition in the House.
Those opposed to the bill were skeptical of the DRIVE Act’s funding sources. “This idea of a Senate bill coming together in a last minute that’s not long term, that’s not paid for, I think brings real doubt to a lot of people,” House Majority Leader Kevin McCarthy (R-Calif.) had told reporters in July.
Among the concerns is the DRIVE Act’s proposal to sell off a portion of the federal oil reserve.
In 1973, Arab OPEC nations cut off the sale of oil to the United States. In 1979, Iran curtailed its exports, which pushed the price of oil higher. In response, the U.S. created a stockpile of oil to prevent a financial meltdown. The DRIVE bill proposes the sale of a portion of that stockpiled oil and claims that sale would raise $9 billion for the Highway Trust Fund.
But at today’s prices, selling that stockpiled oil would raise only half that desired revenue, former Transportation Secretary Burnley said — about $4.3 billion. Opponents to this proposition add that it’s shortsighted and will make the reserve less effective when it’s truly needed.
The House has put together its own long-term funding bill, the Surface Transportation Reauthorization and Reform (STRR) Act. It gained approval from the chamber’s transportation committee on Oct. 22, but the odds that Congress will pass a multi-year authorization by Oct. 29, especially without a House Speaker, said Burnley, are low.
More likely, Congress will pass a simple straightforward extension and deal with the funding issue later. On Friday, Oct. 23, the House Republicans released a three-week extension measure to allow the House to finish work on the STRR Act and iron out the differences between the two transportation bills in conference with the Senate. On Oct. 27, the House passed the three-week measure by a voice vote.
Wait, what’s wrong with raising the gas tax? Why isn’t that an option on the table?
“The simplest, fastest way [to fund the Highway Trust Fund] is to raise the gas tax,” McNichol said.
“Congress needs to raise the gas tax,” says Robert Puentes, a senior fellow at the Brookings Institution.
But it’s not politically popular. “There is literally nobody who wants to do this,” Burnley said. President Obama is among those against it, and raising any tax is against current GOP creed.
Could it be a lack of political will? McNichol thinks so. “Congress is following and not leading.”
Others, like Richard Geddes, an associate professor in the department of policy analysis and management at Cornell University and scholar at the conservative American Enterprise Institute, say it’s not a fair or effective tax.
Back in the 1950s, when Eisenhower signed the gas tax law, every car had roughly the same gas mileage. Today, that’s no longer the case. Low-income motorists disproportionately use older, less fuel-efficient vehicles, Geddes explains. As a result, the tax hits the poor disproportionately.
He lists several more reasons why the gas tax is no longer as effective: it’s not indexed to inflation, cars are more fuel-efficient due to regulations, many drivers own hybrid or electric cars, which use little or no gas, and people are driving less.
So what are the alternatives?
Another option would be to tax miles traveled.
Vehicular Miles Traveled taxes, known as VMTs, are thought to be more equitable and efficient and are probably the “most reliable solution,” Burnley said. Instead of charging per gallon, VMTs charge per mile.
But determining how many miles a person drives is tricky. Also, how would the government collect the money?
And while a number of states like Oregon and California have begun testing this method, the federal government likely won’t follow suit until they see it successfully implemented elsewhere.
Other proposals, including Republican presidential candidate John Kasich’s suggestion to wipe out the federal highway program altogether, have gained little support.
Burnley, McNichol and Geddes all suggest more public-private partnerships, such as the high occupancy vehicle express lanes on the 495 Capital Beltway. They deliver results quickly, which ultimately saves money. After all, every deferred dollar of spending on maintenance costs four to five dollars down the road, says Geddes, referencing a study by Cornell’s Local Roads Program.
So what’s the verdict? Are we heading towards a crisis?
Depends on who you talk to.
Burnley says the rhetoric is worse than the reality. “I don’t think the crisis today is quite appropriate. But I think we are rapidly approaching a set of crises [if we don’t pass something].”
But McNichol says we’re already there.
“Our system is cracking,” he said. “The civil engineering projects are crumbling because of governmental breakdown. And it’s showing in the cracks in bridges.”