House approves bill to restore federal highway infrastructure funding

Jeff Berman, Group News Editor -- Logistics Management, 7/28/2008

Editor’s note: this article first appeared on July 24

WASHINGTON—The United States House of Representatives yesterday overwhelmingly approved legislation by a 387-37 vote that would go a long way towards ensuring there is sufficient capital allocated towards United States highway and transportation infrastructure projects.

The bill, entitled H.R. 6532, the Highway Trust Fund Restoration Act, was introduced by Representative Charles Rangel (D-NY) on July 17. It pledges to restore $8.017 billion to the Highway Trust Fund balance from the United States Treasury General Fund. The Highway Trust Fund is currently projected to be facing a deficit of $3.2 billion or more by next year, according to the White House. An updated projected deficit is expected to be released later this month. A report from The Wall Street Journal, though, said the Bush administration is expected to release this week that estimates a deficit of $5 billion or more in the Highway Trust Fund for next year.

Under the terms of SAFETEA-LU (Safe, Accountable, Flexible, Efficient Transportation Act: A Legacy for Users) when it was drafted in 2005, there was $41.2 billion available for Federal-aid highways and $10.34 billion in fiscal year 2009, according to the House Committee on Transportation and Infrastructure.

But this projected deficit has the potential to lead to a $14 billion reduction in Federal highway investment in Fiscal Year 2009, according to Representative Peter A. DeFazio (D-Oregon), Chairman of the House Transportation and Infrastructure Committee’s Subcommittee on Highways and Transit.  “This would have a disastrous impact on transportation projects across the country and cost as many at 380,000 jobs,” said DeFazio in a statement. “Both the Congressional Budget Office and the Joint Committee on Taxation have determined that this bill does not add to the national debt.”

A major reason for the fiscal shortfall is the current gasoline situation, with the Highway Trust Fund receiving the motor fuel federal tax of 18.4 cents per gallon for gasoline and 24.4 cents for diesel, which goes toward road construction, repairs, and maintenance. This tax has not been raised since 1993. With gasoline prices continuing to rise, Americans are driving less frequently and subsequently spending less on gasoline. This, in turn, is leading to fewer dollars going towards the Highway Trust Fund and contributing to the projected shortfall.

What’s more, the Department of Transportation issued a report on Monday, July 28, indicating that the fewer number of miles Americans are driving is additional proof that the country needs new means—other than the gas tax—to finance the nation’s transportation infrastructure, said DOT Secretary Mary E. Peters. Pierce also said that the U.S. needs to embrace more sustainable funding sources for highways and bridges through more sustainable and effective ways like congestion pricing and private activity bonds. The DOT said that Federal Highway Administration data reported that Americans drove 9.6 million fewer vehicle-miles traveled in May 2008 compared to May 2007. This represents the third largest monthly drop in the 66 years since the data was collected, with three of the largest single-month declines occurring since last December.

"With what the President calls a 'weakening economy' there is no better immediate and sustainable economic incentive than investing in transportation infrastructure,” said Jeffrey L. Solsby, director of public affairs and Equipment Manufacturers Division Manager, American Road & Transportation Builders Association. “Every billion dollars invested produces 34,779 jobs and helps modernize an infrastructure we will need to compete in a global economy."

Solsby added that the overwhelming bipartisan support for the Highway Trust Fund solvency solution speaks volumes about the value leaders in both parties see in

transportation infrastructure investment. He added that ARTBA is hopeful the Senate will follow suit and address this critical issue."

With the specter of transportation infrastructure projects being tabled is there is a federal funding shortfall, it would be a major problem from a management standpoint and in also keeping congestion and traffic bottlenecks worse than they currently are, said Leslie Blakey, executive director, Coalition for America’s Gateways and Trade Corridors, in an interview.

“The stakes are pretty high, because the shortfall in the HTF is turning out to be larger than expected,” said Blakey. “The potential financial gap [prior to the House vote] really had the potential to cause some disruption for trying to maintain the current highway system. But the big problem we have is that we need to build much bigger and more efficient and effective transportation systems and that requires a lot of money. Ultimately, it is up to the public to provide that money by paying taxes through the diesel tax or in another form. If we don’t come up with the money, it will cost the country in terms of being competitive in the global economy, and that will cost us.”

Mortimer L. Downey, chairman of PB Consult and former Deputy Secretary of Transportation, told LM that the overwhelming vote in favor of filling the projected hole in the Highway Trust Fund reflects the importance of resolving the issue. 

“Various ‘fixes’ were proposed and each have benefits and problems, but it’s clear that a wide majority of House members agree that something needs to be done,” said Downey.  “Absent action by Congress to restore the balances, there are two likely outcomes, neither of which is acceptable.”

Downey said these actions include Congress possibly imposing severe cuts in project approvals to contain spending to expected revenues, or the Administration allowing projects to move forward with States and contractors waiting on reimbursement until revenues flow in.  But neither is an appropriate policy, he noted. 

“Now that we are on the way to averting disaster, however, we need to focus on the necessary debate about how long-term investment needs will be met.  The clear lesson of the current situation is that we are not generating the revenues we need to meet minimal investment requirements.”

H.R. 6532 is now headed to the Senate.