Highway Trust Fund Bankruptcy: Look Beyond the Cries of “Wolf!”

If you follow transportation issues in the news – heck, even if you don’t – you’ve probably seen the headlines:

Federal Highway Trust Fund Going Bankrupt!

Transportation Projects Coming to a Halt!

It seems often we hear dire warnings, then nothing bad seems to happen, so after a while we ignore them, likening them to the boy who cried “wolf.”

Will Congress do something to shore up the trust fund before it goes bankrupt later this summer? I honestly don’t know.  

My concern is that if Congress does act, they will create a short-term “fix” – enough to avoid an immediate crisis, and once again make it appear we cried “wolf!” for no reason, but not enough to truly solve the problem.

What is the problem? How did we get here? The underlying issue is simple – the Highway Trust Fund was designed to be an user-pay fund, but while costs have increased, revenues have not.

Think of the trust fund as your salary. When you got your first job, your expenses were small – rent, a car payment, food, and miscellaneous expenses. As you matured, your expenses grew – you got married and had children, leading to the need for a bigger car, larger house (with all the maintenance that goes with it), increased trips to the grocery store, and more. Even your routine expenses cost more due to inflation.

But – here’s the kicker – your employer prides himself on being fiscally conservative, so he has chosen to not give raises; good work earns you a nice pat on the back instead.

Your employer boasts about his fiscal conservativeness, but you are in a quandary: more expenses + same salary = you can’t afford to pay your bills and eventually become a burden on society.

The Highway Trust Fund is in the same boat. Inflation has increased the costs of everything from labor to supplies, but the federal fuel tax hasn’t increase since 1993. What cost $100 in 1993 costs $158.85 today! In addition, people are driving less and they are driving more fuel efficient vehicles, which means less gas purchased, and less money into the trust fund.

By underfunding our transportation system, it too becomes a burden on society.  Freight haulers must go out of their way to avoid bridges with weight restrictions, leading to extra costs in fuel and time. Deliveries are late due to detours and roads in poor repair, leading to less efficient commerce. Workers are stuck in traffic or can’t catch a bus, due to lack of ability to keep up with demand.

Most proposals I have seen to shore up the Highway Trust Fund are short-term “fixes,” but do not address the underlying problem. We need a long-term solution by returning to a true “user pay” system:

1. Raise the fuel tax.

2. Index the fuel tax to inflation, so we aren’t having this argument in the future – Congress won’t have the unpleasant task of raising taxes; the taxes will raise themselves.

3. Implement a tax on electric, hybrid, and other vehicles that are less reliant on gas so that they pay an amount equivalent to their use of the roads.

We need to stop boasting about being fiscally conservative and instead boast about being fiscally sound. Our future depends on it.