The Highway Trust Fund Is Almost Insolvent
May 14, 2015
Transportation funding could hit a dead-end at the end of the month. On May 31, the Highway Trust Fund's authorization to pay for the nation's highway and mass transit projects will expire. Even worse, the fund is running a $13 billion cash flow deficit this year and is expected to exhaust all its money sometime in July unless lawmakers take action.
- The fund is financed mostly by the gas tax—an 18.3 cent tax on gasoline and a 24.3 cent tax on diesel fuels. It spends over $50 billion every year on roads and mass transit, which includes rail, buses, streetcars and other forms of public transportation.
- Like most federal programs, the Highway Trust Fund consistently spends more than it receives in revenues. Congress has constantly had to bailout the fund with money from the Treasury in order to keep its balance in the black, and has spent $62 billion covering the fund's shortfalls since 2008.
This year, the Congressional Budget Office projected the Highway Trust Fund's spending will top its revenues by $13 billion.
Congress needs to examine the inherent flaws in the way the nation invests in transportation infrastructure. The current system of taxing drivers and then redistributing their money through the federal government to projects unrelated to highways no longer makes sense.
Instead, Congress should end the top-down approach that breeds inefficiency and special interest handouts at the expense of prudent infrastructure investment.
The right approach would be to let states and localities—, which are more in touch with the needs of their citizens—make their own decisions on transportation. Allowing them to tax and spend on infrastructure as they see fit without the interference of Washington would inject a much-needed degree of accountability and reliability into transportation investment.
Source: Michael Sargent, "Washington Is Mismanaging Your Gas Tax Dollars. Here's Why States Should Have Control," Daily Signal, May 12, 2015.
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