On July 29, the House passed a bill transferring $12 billion to the perpetually underfunded Highway Trust Fund. On July 30, the Senate followed suit. On July 31, without the bailout, the U.S. Department of Transportation would have started cutting payments to state transportation agencies.
The House and Senate’s last-minute rescue isn’t just an example of 11th-hour governing. It also is an example of Congress’ tendency to always leave the true problem-solving for another day.
This $12 billion transfer from the general fund to the highway fund marks the 34th such transfer since 2008. Those transfers have totaled more than $75 billion, according to the Congressional Budget Office.
The next deadline for Congress either to bail out or restructure the Highway Trust Fund so it’s sustainable is Oct. 29.
The Highway Trust Fund isn’t supposed to work this way. Congress created it nearly 60 years ago to fund the nation’s developing interstate highway system, and lawmakers gave it a dedicated revenue source so it could be self-sustaining: a tax on motor fuel.
But the federal government’s gasoline tax of 18.4 cents per gallon and 24.4 cents for diesel hasn’t risen since 1993, and the erosion of the gas tax’s value is becoming increasingly evident. This year, the Highway Trust Fund is expected to pay out $44 billion for road work but the gas tax is expected to generate only $34 billion in revenue — 77 percent of what’s needed — to cover it, according to the Congressional Budget Office.
Congress passed the $12 billion transfer last month with the idea that members would work on a long-term solution in the interim. The Republican-led Congress is resistant to a gas tax increase, but that doesn’t change the reality that a gas tax hike is long overdue and is the most logical way to put the Highway Trust Fund on solid footing.
While Congress has gone 22 years without changing the gas tax, states have taken a number of different directions with their own gasoline taxes in an effort to maintain sufficient revenues for road work.
Between 2003 and 2011, Maine indexed its gas tax to inflation, so it rose incrementally each year. And according to a newly released analysis by the Federal Reserve Bank of Boston, Maine fared better than any other New England state over the past two decades when it came to keeping the gas tax’s ability to pay for road work intact.
Adjusted for inflation, Maine in 2012 took in just 4.9 percent less revenue from its gas tax — for every 10,000 miles driven — than it did in 1993. By comparison, Massachusetts, which kept its gas tax constant for most of that time, collected 37.9 percent less revenue in 2012 than it did in 1993.
In those two decades, inflation ate away at the value of gas tax collections, average fuel economy rose 12 percent and driving habits began to change as the near-constant growth in car travel that dominated the 20th century began to wane.
In addition, the cost of road construction materials rose significantly faster than inflation. Between 2003 and 2014, they jumped 44 percent — compared with general inflation of 29 percent — according to the Congressional Budget Office, meaning governments could afford less with the same amounts of money. Meanwhile, many of the nation’s bridges, which were designed to last about 50 years before overhaul or replacement, are approaching their 50-year mark.
The Fed analysis examined a variety of gas tax structures: a tax indexed to inflation, a tax indexed to road construction material costs, a tax that rises with average fuel efficiency and a tax that’s a percentage of the price of gasoline.
Over the past 20 years, the analysis determined all those alternatives to the straight gas tax — including alternatives that blend two — would have helped New England states’ gas tax revenues lose less ground to inflation.
Congress shouldn’t let the Highway Trust Fund continue to lose ground to inflation and the climbing costs of road construction. It clearly has gas tax-related options if it’s serious about making sure the slide doesn’t continue.