DAYTON, Ohio – On the road in a tour bus this week, the U.S. transportation secretary is spreading some bad news: the government’s Highway Trust Fund is nearly broke. If allowed to run dry, that could set back or shut down projects across the country, force widespread layoffs of construction workers and delay needed repairs and improvements.
Anthony Foxx kicked off an eight-state bus trip in Ohio to whip up public support for congressional approval of legislation to keep federal transportation aid flowing to states for another four years, and possibly longer. But Congress will have to act fast. The Highway Trust Fund — the source of much of the aid — is forecast to essentially run dry sometime before the end of the federal fiscal year Sept. 30, and possibly as early as late August.
If that happens, the government will have to slow down or even halt payments to states, which rely on federal aid for most major highway projects. Uncertainty over whether there will be enough funds in the coming months is already causing officials in states like Arkansas, California and Colorado to consider delaying planned projects.
Foxx’s warnings this week echo ones by President Barack Obama, who cautioned in February that unless Congress finished a bill by summer’s end then “we could see construction projects stop in their tracks.” But there is little interest among politicians in an election year to consider raising gasoline taxes.
Many transportation insiders, including Foxx’s predecessor, Ray LaHood, predict Congress will wind up doing what it has done repeatedly over the past five years — dip into the general treasury for enough money for to keep programs going a few weeks or a few months, at which point the exercise will have to be repeated all over again.
But keeping highway and transit aid constantly teetering on the edge of insolvency discourages state and local officials from moving ahead with bigger and more important projects that take many years to build. In 2012, Congress finally pieced together a series of one-time tax changes and spending cuts to programs unrelated to transportation in order to keep the trust fund solvent for about two years. Now, the money is nearly gone.
“Tell Congress we can’t slap a Band-Aid on our transportation system any longer,” Foxx urged state and local officials at a stop Monday to view one of Ohio’s biggest construction projects. Other states on the tour are Kentucky, Georgia, Tennessee, Alabama, Louisiana, Mississippi and Texas.
Foxx is promoting Obama’s four-year, $302 billion plan to shore up the trust fund with savings from proposed changes to corporate tax laws. The White House has said as much as $150 billion could come from its proposal to close corporate loopholes, such as ones that encourage U.S. companies to invest overseas.
“I feel it’s clearly a crisis,” Fox said in an interview, “but we have a responsibility to put a proposal out there that casts a longer-term vision, that helps Congress and the country quite frankly think past our noses, and that’s what we’re doing.”
It would also be a one-time fix, but it would generate enough money to ratchet up transportation for several years. Rep. David Camp, R-Mich., chairman of the House’s tax-writing committee, has also proposed a one-time, $126.5 billion infusion into the trust fund over a period of eight years. But his plan is part of a much broader rewrite of corporate laws, which would require heavy-lifting from Congress at any time, but especially in the hyper-partisan atmosphere of an election year.
“There doesn’t seem to be much of an appetite to go after corporate tax reform this year, which is the only long term funding source that has been proposed by both the administration and Congress,” said Joshua Schank, president of the Eno Center for Transportation, a Washington transportation think-tank .
But Sen. Barbara Boxer, D-Calif., chairman of the Senate Environment and Public Works Committee, told reporters last week that “what seems to be coming forward as a consensus is a piece of tax reform” rather than shifting money from the general treasury or fuel taxes.
Foxx cited the modernization of Interstate 75, which rumbles through the heart of this middle-sized Ohio city, as an example of the kind of much needed improvements communities want but may have to forgo. The $381 million project is intended to expand the highway’s capacity, reduce traffic congestion, and eliminate dangerous and confusing left-hand exits. More than a third of the project’s cost is being paid with trust fund dollars.
The interstate highway program, launched in 1956, has been funded primarily through federal gas and diesel taxes under the principle that users of the system should pay for its construction and maintenance. But it’s been clear for nearly a decade that fuel taxes haven’t been keeping pace with transportation needs as the nation’s population grows and its infrastructure ages.
The 18.4 cents a gallon federal gas tax was last increased in 1993 as part of a deal between President Bill Clinton and Congress to raise money to help reduce the federal deficit and pay for transportation programs. Clinton was fiercely criticized by Republicans as a tax-raiser, and the issue was one of several reasons Democrats lost control of the House and Senate the following year.
It was a lesson lawmakers in both parties took to heart.
“People don’t want to vote to increase the gas tax,” LaHood, a former Republican congressman, said in an interview.
With encouragement from Congress, some states are stepping up their use of tolls to help pay for projects. But tolls aren’t practical for all projects.
“Congress is stymied,” said John Horsley, former executive director of the American Association of State Highway and Transportation Officials. “We’re all scratching our heads.”
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