Last year, we celebrated the 50th anniversary of the Dwight D. Eisenhower National System of Interstate and Defense Highways and the creation of the Highway Trust Fund.
The Highway Revenue Act established the Highway Trust Fund as a mechanism to finance an accelerated federal highway program, including the construction of the interstate highway system. This act provided that federal motor fuel and motor vehicle taxes be
deposited in the Highway Trust Fund.
By ensuring that these revenues were deposited into the Highway Trust Fund, a direct link was established between highway user fees (motor fuel and motor vehicle taxes) and a federal program for the construction of an interconnected system of roads.
In 1956 the Highway Trust Fund supported a federal highway program of $175 million annually. Today that same trust fund supports a federal highway program of nearly $40 billion a year, a federal transit program of more than $9 billion (80 percent of which comes from the Highway Trust Fund and 20 percent of which is funded through the general fund) and highway and truck safety programs totaling nearly $1 billion a year.
However, projections show that the current sources of revenue credited to the Highway Trust Fund will not be able to fully support the federal highway, transit and highway safety programs as it has in the past.
When the president’s fiscal 2008 mid- session budget review was released on July 11, it projected a more serious shortfall in the highway account of the Highway Trust Fund than was anticipated in the president’s fiscal 2008 budget proposed this past February.
In February, the president’s budget projected that the highway account of the fund would run a deficit of $238 million at the end of fiscal 2009. The new projections released this month show the highway account will experience staggering shortfalls of $3.8 billion in fiscal 2009, $9 billion in fiscal 2010 and $15 billion in fiscal 2011.
To address this problem, Congress created the National Surface Transportation Policy and Revenue Study Commission. To date, the commission has held nearly 20 meetings and field hearings across the country, including meetings and hearings in California, Minnesota, Illinois, Georgia, New York, Oregon, Texas and in my home state of Tennessee, as well as Washington, D.C.
The commission is tasked with conducting a comprehensive study of short-term revenue sources to supplement the Highway Trust Fund and long-term alternatives to replace or supplement the fuel taxes as the principal revenue source to support the Highway Trust Fund.
The commission is due to submit its report to Congress in December of this year, and it should be an important resource for Congress to draw from when it addresses the revenue crisis facing the Highway Trust Fund.
In addition to making sure we have enough revenue to properly fund a federal highway program, we need to make sure we are getting the most out of the revenue that we currently are collecting. Two issues that we must continue to address are improvements in the project delivery process and reducing fraud in the collection of federal motor fuel and motor vehicle taxes.
In both the Transportation Equity Act for the 21st Century and the Safe, Accountable, Efficient, Transportation Equity Act: A Legacy for Users, we made efforts to streamline the project delivery process for highway and transit projects.
On average, it can take seven years to obtain the proper approvals and permits from the various state and federal regulatory agencies for a highway construction project. That is seven years before you can even break ground and begin construction.
While the provisions in TEA 21 and SAFETEA-LU have made improvements to these processes, more must be done. Every day a project is unable to proceed because of repetitive law suits and uncoordinated permitting processes is a day when the cost of construction is increasing.
From May 2003 to May 2007, the cost of asphalt paving increased an average of approximately 11 percent a year, the cost of cement increased an average of approximately 13 percent a year, and the cost of iron and scrap steel increased an average of approximately 25 percent a year.
The longer it takes to build a project, the more expensive it is to build that project. We need to make further improvements to streamline these processes, especially environmental red tape, so we can maximize our current level of highway funding.
We also need to continue to make strides in reducing fraud in the collection of federal motor fuel taxes and other Highway Trust Fund revenue. It is estimated that the Highway Trust Fund loses more than $1 billion a year because of unpaid federal taxes on fuel and vehicles.
SAFETEA-LU closed several of the loopholes being used to circumvent the tax collection system and created a Motor Fuel Tax Enforcement Advisory Commission. As we work on the next highway reauthorization bill, we must continue our vigilance on this issue to ensure that the revenue designated for the Highway Trust Fund is actually collected and deposited into the that fund.
A strong federal highway program is integral to our nation’s economic success, but it also is integral to ensuring the safety of our driving public. More than 43,000 people die each year on our nation’s highways, and bad roads and roadside hazards are a contributing factor in nearly one-third of all fatal crashes.
If we are not able to adequately fund the federal highway program, road conditions certainly will decline and the number of highway fatalities will increase.
While the challenge of ensuring the solvency of the Highway Trust Fund and providing a sustainable revenue source for a federal highway program that can meet this nation’s needs is a daunting one, it is a challenge we must take on. If we fail to address these changes, the consequences will be severe and wide-ranging.
Rep. John Duncan (R-Tenn.) is ranking member of the Transportation and Infrastructure Subcommittee on Highways and Transit.