Everyone Blames Everyone Else For Highway Trust Fund Shortfall

Sep 5: U.S. Secretary of Transportation Mary Peters directed the Federal Highway Administration to take immediate steps to protect the solvency of the highway account of the Highway Trust Fund (HTF) and called on Congress to act quickly to finally address this long-predicted problem. The Administration said that the HTF "fix" was needed because "Congress ignored three years' worth of warnings." Secretary Peters said, “Time and again, the President has warned Congress of the pending shortfall and submitted fiscally prudent budgets to close the gap. Americans cannot afford to have Congress play ‘kick the can’ with highway funding for another year, another month, or frankly, another week.”

Peters called on Congress to provide immediate short-term relief by passing pending legislation, already approved by the House of Representatives, that would make an additional $8 billion available for the highway trust fund. She urged Congress, however, to avoid adding pet projects, new earmarks or unrelated provisions on the “must pass” legislation and to get the bill done by the end of next week (week of September 8). She added that the recent and sudden decline in American driving and the resulting decline in gas tax revenue during the summer had accelerated the predicted shortfall.

The Secretary said that, in order to allow for continued highway payments to states while Congress acts, the Federal government would begin making reimbursements to states on a weekly basis starting this week. In addition, she said the agency would make funds available on a pro-rated basis. For example, if there are only enough funds to cover 80 percent of requests, the highway agency will pay only 80 percent of each.

In July, the Administration opposed the House Trust Fund legislation, in part because the $8 billion would come from the government’s general fund. However, the recent decline in Federal gas tax revenue requires immediate action on legislation that has already passed the House to ensure states are not adversely affected. Peters said, “Taking money from other pressing national priorities to plug a hole caused by poor fiscal discipline sets a dangerous and disturbing precedent." She added, though, that “states are working hard to keep the nation’s bridges and roads in good repair and deserve better than IOUs from Congress.”

The Secretary said it was time to fundamentally reform the nation’s "scattered approach to transportation." She said, "Congress should do away with billions in annual earmarks and consolidate the over 100 special niche programs that require states to slice and dice federal transportation funds to do things like build museums and restore lighthouses." She noted that the Administration issued a comprehensive transportation reform proposal along those lines several weeks ago. To avoid future shortfalls, the Secretary said it was time to "embrace new funding mechanisms that respond to today’s transportation challenges and are in keeping with national energy policies." She said, "The current approach may have made sense 50 years ago, but it is ineffective and unsustainable when we are trying to reduce congestion and encouraging Americans to embrace more fuel-efficient cars.”

U.S. Senator Barbara Boxer (D-CA), Chairman of the Senate Committee on Environment and Public Works, issued a brief statement regarding the Bush Administration's announcement that the Highway Trust Fund could begin to run out of money as early as this week. Senator Boxer said, "Today the Bush Administration has finally stopped denying there is a dangerous shortfall in the federal fund that helps states pay for critical highway construction. Three times the Senate has brought up legislation to restore money to the Highway Trust Fund and protect millions of construction jobs, but Republicans have put up roadblocks and filibusters over and over again. It's time that Republican opponents to action move out of the way so we can solve this transportation crisis now."

During the week of September 2, Senator Boxer held a series of field hearing to discuss the next authorization of the Federal highway, transit, and highway safety programs. This legislation will impact all Americans because it sets the policy and provides funding for surface transportation nationwide. She said the current authorization bill will expire on September 30, 2009, and she is leading the effort to develop the new transportation bill. The Committee has already begun the authorization process by holding several hearings in Washington, DC and will continue to hold hearings, meetings, and listening sessions to make sure all points of view are considered.

She said she has been working to develop a set of principles for the next bill including: Maintaining the National character of the interstate and federal highway system; Efficient movement of people and goods (including intermodal); Safety (including condition and design of infrastructure); Reducing congestion and its impacts; Sustainable funding (Trust Fund Including Alternatives); Consolidating programs substantially to refocus the program; and Establishing funding and performance criteria. She said the principals are reflected in the title for the bill, "MAP 21" (Moving Ahead for Progress in the 21st Century). She said, "One of my primary goals for this bill is to improve air quality." Another challenge, she indicated that must be addressed in the next bill is that the Highway Trust Fund, which funds the legislation primarily through gas tax receipts, and which is expected to run out of funding before the end of the 2009.

Senator James Inhofe (R-OK), Ranking Member of the Environment and Public Works Committee, also commented on the announcement by the Department of Transportation that the Highway Trust Fund (HTF) is not going to be able to fully meet its obligations to the states. Previously, DOT had estimated it would remain solvent until next summer. Tax receipts have been dropping precipitously in recent months due largely to high gas prices. Senator Inhofe said, "Gas receipts have been declining because the Democratic opposition to drilling for more oil has caused prices to rise." The Administration indicated their support for quick passage of legislation to restore $8 billion to the Highway Trust Fund.

Senator Inhofe indicated, "Today the Department of Transportation announced that the HTF will be unable to fully meet its obligations beginning this month. While this announcement came well before anyone expected, we have been working on a solution to this problem for the quite some time. The solution I have been advocating for, an immediate restoration of $8 billion transfer that had been taken from the Highway Trust Fund in 1998, will ensure the states receive the money promised to them. This short term fix enjoys overwhelming support in the Senate, has already passed the House, and now has the support of the White House. With just three weeks left until Congress adjourns, we need to make this fix happen next week (week of September 8). I will continue to lead the effort in the Senate to make that happen.”

House Transportation & Infrastructure Committee, Chaired by Representative James Oberstar (D-MN) issued a statement saying, "In July, the House of Representatives passed H.R. 6532, the Highway Trust Fund Restoration Act, to address the impending shortfall in the Highway Trust Fund, by a bipartisan vote of 387-37. The bill restores $8.017 billion in motor vehicle user-fee revenues to the Trust Fund. Despite the overwhelming House vote in support of this legislation, the Administration threatened to veto it. Today [September 5], the Secretary of Transportation recognized the dire circumstances of the Highway Trust Fund, and reversed the Administration’s irresponsible opposition to restoring these user fee revenues. The Trust Fund is approaching a zero balance and, beginning next week, the Federal Government will be unable to pay all of the bills submitted by the States for reimbursement under the Federal-aid highway program. The Federal Government will be required to begin paying interest on unpaid bills."

Access a lengthy release from DOT that outlines immediate steps to address the shortfall (click here). Access two releases from Senator Boxer (click here); and (click here). Access the statement from Senator Inhofe (click here). Access the statement from Representative Oberstar (click here). Access Chairman Oberstar's Floor Statement on passage of H.R. 6532 (click here). Access the Dear Colleague letter on H.R. 6532 from Oberstar, et al (click here). Access legislative details for H.R. 6532 (click here). [*Transport]