Highway Trust Fund Needs Long-Term Solvency

 

November 22, 2016

 

About half of the funding for Texas' State Highway Fund -- almost $21 billion for the state's 2016-2017 biennium -- comes from the federal government.

 

The chief executives of state departments of transportation make the point that even after last year's Fixing America's Surface Transportation, the Highway Trust Fund (HTF) will soon be back in crisis mode unless Congress and the new President provide a long-term funding stream for it.

 

Officials of the American Association of State Highway and Transportation Officials are focused on the potential for President-elect Trump to follow up on his campaign promise to send Congress a major infrastructure investment plan.  In a recently passed resolution they underscored the need to move beyond temporary infusions into the trust fund and dedicate more revenue to put it on solid footing for years to come.

 

"Any responsible new infrastructure funding proposal needs to take into consideration and address the long-term solvency of the Highway Trust Fund," said a resolution adopted by AASHTO directors.
The state transportation executives said the Highway Trust Fund, which supports almost all federal highway and transit funding, will be in bad fiscal shape at the end of the current five-year federal surface transportation bill without new revenue to support the dedicated fuel tax collections.

 

The HTF's annual revenue will have $20 billion per year less than expected expenditures when the Fixing America's Surface Transportation Act expires at the beginning of fiscal 2021. The funding law, which was enacted in late 2015, required general fund transfers totaling $70 billion to support federal transportation funding over five years.

 

Bond Buyer's Jim Watts reports that Trump's $1 trillion proposal relies on $137 billion of tax credits that Congress would be asked to authorize, possibly as part of a larger tax reform plan. Investors would get an 82% tax credit on investments in revenue-producing transit, highway, and bridge projects that could be financed as public-private partnerships.

 

The Trump proposal might free up some public funding for other projects, but would do nothing to enhance the long-term stability of federal surface transportation funding, according to the AASHTO board.

 

"In the first term of the next president, the HTF will once again be facing significant revenue shortfalls that will create uncertainty and lead to disruptions in states delivering their transportation programs," the directors said.

 

The resolution urges the Trump administration and Congress to support the HTF "by providing real, reliable, dedicated and sustainable revenue sources derived from the users and beneficiaries of the system."

 

AASHTO's board has offered the policy and technical expertise of AASHTO and member DOTs to President-Elect Trump and Vice President-Elect Mike Pence to help develop infrastructure improvement initiatives.