Will the Government Cut Funds for Our Nation’s Highways?

Federal funding for highways is forecast to reach an all-time low if Congress doesn't act soon. Here's what you need to know.


UPDATE: Congress has passed a short-term bill to fund the federal highway program, successfully avoiding a Friday shutdown of transportation projects nationwide. The 3-month patch extends the government’s authority to make payments to states through October 29, and provides 8 billion to pad the Highway Trust Fund. When talks for a long-term solution begin again in the fall, they will likely center around a $350 billion six-year highway bill that was approved 65-34 by the Senate, but dismissed by the House.

With four million miles of road interlaced throughout America, connecting coast to coast and any willing motorist to a multitude of destinations, the possibilities of shining asphalt seems a simple pleasure. But as the US’s infrastructure ages and funds for repairs shrink, the future of the interstate highway system is at a turning point.

The Highway Trust Fund (HFT) is a federal program that was set up in 1956 to build and service a nationwide network of highway. Almost six decades have passed since its creation and now the fund, which reimburses states for maintenance on roads, bridges and transit projects, is set to expire on July 31. This deadline is the result of a five-week funding “patch” passed by Congress, to give lawmakers more time to negotiate funding for a reauthorization of the program.

Federal funding for roads, bridges & transit is running out.

If lawmakers can’t agree on a solution, the US Department of Transportation projects the HFT will reach insolvency the first week of September. Without the HFT, states will face insufficient funds to complete projects and much-needed repairs. The American Society of Civil Engineer’s latest infrastructure report assigned a grade of D to America’s roads, citing a forty-two percent congestion rate across America’s major urban highways with the resulting cost to the economy an estimated $101 billion in wasted time and fuel annually. America’s bridges fared slightly better, receiving a grade of C, but there is little to rejoice in as the ASCE reports that one in nine of the nation’s bridges are rated as structurally deficient.
infrastructure report
What does all this mean for drivers getting geared up for the summer driving season? For motorists with plan to visit family a few states over or embark on a cross country journey akin to Steinbeck’s 10,000 miles? If underfunding continues, you can expect an increase in congestion, deteriorating bridges, road closures and dangerous conditions, like the collapse of a section of Interstate 10 that occurred just a few weeks ago.

A Crumbling Infrastructure

The congressional gridlock stems not from deciding whether America’s roads are in need of repairs — that is one thing everyone can agree on — but from deciding how to pay for them. Currently, the HTF is financed by the federal gas tax, which conforms to the benefit principle on which the highway trust fund is based: Those who benefit from the spending are the ones that pay. The federal gas tax, set at 18.4 cents per gallon, has not gone up in more than 20 years. As the ASCE-developed website fixthetrustfund.org explains, “While the price of every other household good—like bread, milk, or a new car—has nearly doubled in price, as a nation we are trying to pay for 2015 transportation using 1993 dollars.”

At first glance, raising the federal gas tax is a clear solution, though it has not proven to be a popular option. Last year, in a bipartisan appeal, U.S. Senators Bob Corker (R-Tenn.) and Chris Murphy (D-Conn.) proposed a federal gasoline and diesel tax increase that would reach a total of 12 cents over two years. “We’re currently facing a transportation crisis that will only get worse if we don’t take bold action to fund the Highway Trust Fund,” said Senator Murphy in a joint statement. “By modestly raising the federal gas tax, we can address a crippling economic liability for this country—the inability to finance long-term improvements to our crumbling national infrastructure. I know raising the gas tax isn’t an easy choice, but we’re not elected to make easy decisions – we’re elected to make the hard ones.”

The bill never came up for a vote.

What Comes Next?

Still on the table is the Grow America Act, a six-year, $478 billion plan proposed by the Obama administration that would pay for infrastructure by imposing a 14 percent tax on the untaxed foreign earnings being held overseas by U.S. companies. Another alternative approach that involves taxing corporations’ overseas profits, known as repatriation, comes from House Ways and Means Committee Chairman Paul Ryan (R., Wis.) and is backed by House Republican leaders. Chairman Ryan calls for a one-time tax on corporate profits overseas as part of an international tax reform.

The Bottom Line

Friday at midnight, the authority for federal highway aid payments will expire. And for all Americans that have never questioned the freedom of the highway, the shared hope is for smooth roads ahead.