No More Money Under the Couch Cushions: House Subcommittee Looks at Funding Solutions

An integrated, long-term fix for the ailing Highway Trust Fund (HTF) was the focus of a hearing last week before the House Subcommittee on Highways and Transit. While the five witnesses all brought different prescriptions for stabilizing the funding behind America’s surface transportation system, presenters and committee members all acknowledged the depth of the problem—and agreed that now is the time to solve it, once and for all.

House Transportation & Infrastructure Chair Bill Shuster (R-PA) called for a bipartisan approach to clearing the repeat shortfalls in the HTF. “We need to be forward-looking, and fundamentally address this issue in a sustainable manner,” he said in his opening remarks. Subcommittee Chair Sam Graves (R-MO) noted that freight is expected to increase by 40% and passenger by nearly 20% over the next 30 years, while technology fundamentally changes the way goods and people move along the country’s roads.

“Our surface transportation system needs to keep pace with these changes,” he said. “Unfortunately, our current method of providing the funding necessary to maintain and improve the system is no longer sustainable,” with another HTF cliff on track to curtail surface transportation projects as early as spring, 2020.

“There are many reasons for this—motor fuel taxes have not been raised in 25 years, fuel economy standards have increased, not all users pay into the Trust Fund,” Graves said. “But the fact remains, the Highway Trust fund is going broke and Congress must act to fix it. However, continuing to rely on bailouts from the General Fund is not the answer. There simply isn’t any money left under the couch cushions.”

A Toolbox of Options

IBTTA members know that tolling is one important tool in a wider toolbox of transportation funding and financing options. Much of that toolbox was on display in the testimony to the House subcommittee.

The American Association of State Highway and Transportation Officials (AASHTO) suggested three broad categories of financial relief for the HTF: higher taxes and fees, diverting current revenues from other federal sources, and a menu of new federal revenue sources, including mileage-based usage fees, container fees, driver’s license surcharges, vehicle registration fees, imported oil fees, sales taxes on fuel, carbon taxes, vehicle sales taxes, sales taxes on auto-related components, and a tire tax on light-duty vehicles.

The Colorado Department of Transportation traced the impact of uncertain funding at the state level and described its own efforts to evaluate a mileage-based fee system as an alternative funding mechanism.

The Economic Policy Institute endorsed the gas tax as a “perfectly sound strategy” for funding the HTF, along with strategies like a vehicle miles traveled tax that “approximate user fees”.

The U.S. Chamber of Commerce cited its January, 2018 Roadmap to Modernizing America’s Infrastructure, which lays out a four-point plan for Congressional action on the White House infrastructure proposal: a 5¢-per-year increase in the gas tax (or, as the Chamber calls it, the “federal fuel user fee”) over the next five years, with indexing for inflation and for increases in fuel economy; a “multi-faceted approach” to leveraging public and private financial resources; streamlined permitting processes at all levels of government; and work-based learning and immigration reform to expand the American work force.

The American Trucking Associations asked for a 20¢ gas tax hike.

But the common message was clear, and perfectly sensible: It’s time to get this done.

A Moment for the White House to Lead

Which is why it was heartening to see Sunday’s Washington Post editorial, calling on the White House to add its considerable heft to the growing call for a significant increase in the federal gas tax, the first the country has seen since 1993.

“Agreement on whether the nation needs better infrastructure has never been elusive,” the Post editors wrote. “How to pay for it has. On that tough question, it is time for Mr. Trump to step up.”

The editorial recaps arguments from the subcommittee hearings—the same familiar, urgent arguments we’ve been hearing for many years. It notes that the tax has been eroding for 25 years, has lost 40% of its purchasing power, but typically “hits a wall of resistance” with lawmakers from both parties when discussion turns to a possible increase.

“That is why Mr. Trump’s intervention is crucial,” the editors state. His advocacy “could give cover to Republicans who understand the virtues of raising the gas tax but fear the political repercussions.” That kind of advocacy would bring in the needed cash to fund the $200-billion federal contribution to the infrastructure plan, and as the Post notes, “the country could certainly use it.”

Mark your calendar for IBTTA’s Summit on Finance & Policy, July 22-24, 2018 in Portland, Oregon.