It took another episode of crisis-driven governing, but it appears as if Congress is on track to avert the would-be disaster of an insolvent Highway Trust Fund.
While Congress seemingly has found consensus on a short-term fix, the House and Senate once again have put off the real work of governing — finding a solution that keeps the highway fund solvent long-term.
The Highway Trust Fund last year paid out about $43 billion for improvements to the country’s highway system. State and local governments shelled out about another $110 billion for roads, often to match the federal spending.
Since the fund was destined for insolvency by the end of August, the U.S. Department of Transportation has been planning to wind down payments to the states starting Aug. 1. The Maine Department of Transportation has estimated Maine would lose out on $28 million in funds in August. That would amount to 17 percent of Maine’s share of federal highway funds, potentially forcing a delay in some of the state’s planned improvements.
The $11 billion transfer, wich will hold over the fund until next May, is just the latest multibillion-dollar transfer to the Highway Trust Fund. Since 2008, the fund has needed more than $50 billion in one-time patches.
The culprit is Congress itself and the inability of its members to muster the courage needed to raise the federal gasoline tax and index it to inflation. The tax has remained at 18.4 cents per gallon of gas (and 24.4 cents per gallon of diesel) since 1993.
Even if revenue from the gas tax remained constant, its buying power to pay for asphalt, labor and other construction costs has been eroded. When you factor in the realities that Americans are driving less and driving more fuel-efficient cars, the buying power of the gas tax has dropped 28 percent since 1997, according to the Institute on Taxation and Economic Policy.
In 2012, Americans drove 2 percent fewer miles than they did in 2007 — when the number of miles driven peaked — according to the Federal Highway Administration. Meanwhile, average fuel efficiency on light-duty cars grew nearly 2 percent in that period. Though the decrease in driving is largely related to a sluggish economy, the decline could be long-term: Younger Americans today are less likely than their parents were to get driver’s licenses and drive.
The message to Congress should be clear that the Highway Trust Fund is in desperate need of a structural fix rather than repeated short-term patches. At the very least, Congress should tie the gas tax to inflation just as it indexes income tax brackets, tax deductions and credits, and Social Security payments. The impact on the average consumer’s wallet wouldn’t be significant considering the rate of inflation would dictate small, one-time increases, and the expanded ability to pay for road improvements could mean less time spent in traffic and less money spent on auto repairs necessitated by poor road conditions.
Plus, if Congress is concerned about ensuring a progressive tax code, it could raise income tax rates on high earners or increase the Earned Income Tax Credit as a way to negate the impact of a higher gas tax on those with low incomes.
As Congress — at least in theory — deliberates a longer-term fix between now and May, it might also explore a gradual shift away from dependence on the fuel tax.
Fuel efficiency will only rise over time — and fewer vehicles will depend on gasoline and diesel — meaning the fuel tax will become less and less effective as a way to collect the revenue needed to maintain and improve the nation’s roads. Those maintenance and improvement costs, after all, correlate most closely with the number of miles driven, not the number of gallons of gas consumed.
Oregon is piloting a per-mile tax on vehicles, perhaps establishing a model for the federal government and other states. And the number of highway miles in the U.S. that are subject to tolls has increased.
Congress has its work cut out for it when it comes to improving the nation’s highways — if only it viewed success as doing the work rather than putting it off.