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Solutions to Highway Fund Shortfall in the Slow Lane

Congress is once more setting itself up for a last-minute funding crisis, set to hit right before lawmakers take off for their August recess.

Sometime in late July, the Highway Trust Fund, which is expected to pay for $45 billion in road projects this year, will drop below a sustainable level, preventing federal officials from sending money out to states. That could produce huge problems in states that depend on federal money for contracts they’ve already signed. In principle, the trust fund should be entirely funded by federal gas tax receipts. But rising fuel efficiency in new vehicles, coupled with a slowdown in Americans’ driving habits is leaving revenues stalled, even as states face costly repairs to aging infrastructure.

So far, there is little sense of panic among lawmakers about the looming deadline. This is not the first time the trust fund has run low, after all. In 2008, for instance, Congress agreed to bail out the fund with $8 billion in general fund money. Subsequent years have brought more bailouts of the fund to keep it solvent.

What’s different now is the fiscal 2014 House resolution (H J Res 59) that stipulated that any transfer to the Highway Trust Fund must be offset. The two-year budget agreement crafted by Washington Democrat Patty Murray and Wisconsin Republican Paul D. Ryan, the chairs of the Senate and House budget committees, did not overwrite that provision, leaving it in effect for House members.

And once this funding crisis is resolved, another one looms in the fall. The legislation authorizing transportation programs expires at the end of the fiscal year, in September. That may mean lawmakers would have to interrupt their re-election campaigns to extend transport programs that touch virtually every corner of the country.

In all likelihood, however, legislation to finance the trust fund would also include an authorizing extension. The last two surface transportation authorizations survived on serial extensions before full bills covering the six-year authorization cycle were enacted.

At this point, only House Republicans have put forward a suggestion to keep the trust fund solvent. Their plan would cut most postal deliveries down from six days a week to five and use the savings to maintain the Highway Trust Fund for another year. That would give the 114th Congress until May 2015 to come up with a long-term transportation funding solution.

Their idea has been roundly panned by Democrats, labor unions and conservatives at Heritage Action. Senate Democrats say they’re working on their own ideas to keep highway programs afloat but have been mum on the details.

One big area of contention is around timing. Senate Democrats — and Environment and Public Works Chairwoman Barbara Boxer in particular — insist they want to move on a multi-year reauthorization of transportation programs that would include a funding solution as soon as possible.

“A short-term patch is not sufficient,” she said last month. “We must work together to find the sweet spot for a dependable, bipartisan source of funding for the Highway Trust Fund.”

Boxer’s committee, one of four with jurisdiction over transportation issues, has already marked up a bill to maintain highway programs for six years. Her task was relatively easy, however, compared with the job that awaits Sen. Ron Wyden, D-Ore. Wyden chairs the Finance Committee, which is trying to come up with a way to pay for the transportation programs that Boxer’s committee authorized.

Wyden held a meeting with most of the committee last week, in which he asked members to send him their recommendations for keeping the Highway Trust Fund solvent by early this week. Like Boxer, Wyden said he wanted to see the problem fixed for the long term but did not rule out a shorter fix.

“We’re going to do everything we can to try to bring the predictability and certainty that you need to create jobs,” he said. “I’m committed to doing everything I can to have a markup in the Finance Committee before the end of this work period.”

Senate Republicans, however, are more cautious.

“We want to do what’s feasible and under the circumstances I think there’s a leaning towards a short term [fix],” said Sen. Pat Roberts, R-Kan., a member of the Finance Committee. “Not a short-short term [fix] but at least get it past this session of Congress. If I could do a six-year bill I’d love to do it.”

Finance ranking member Orrin G. Hatch of Utah also envisions a plan to keep the money flowing well into next year.

“If it’s a short-term fix, fine. My preference is at least 15 months, which would get us through the election and into November of next year,” he said. “If we can do that it would give us enough time to see if there’s some way we can get everybody together and solve it once and for all.”

It’s hard to see how a deeply divided Congress will find a way to agree to billions of dollars in new spending over the next two months. That leaves a short-term funding patch to the Highway Trust Fund as the most likely scenario.

“Sen. Boxer certainly wants a long-term bill done before the end of August. She continues to push for that. The later in the year that we get without the House acting and without the other two or three Senate committees acting, the odds of that decrease,” said Jim Tymon, finance director at the American Association of State Highway and Transportation Officials. “But Sen. Boxer has defied the odds in the past”

But a short-term solution, while it would prevent a catastrophic collapse in highway funding, does little to reassure state officials. Governors of both parties have routinely urged Congress to agree on a long-term funding solution that would give them some measure of confidence before they sign off on ambitious transportation projects.

“This situation is creating great uncertainty about the viability of our long-term transportation improvement plans,” the governors of 17 states wrote in a letter to Capitol Hill leaders in January. “And if remedial action is not taken in a timely manner, the consequences would harm the economy of every state.”

Lawmakers of both parties are sympathetic. For now, though, they have few long-term solutions to offer.

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