The federal government will need to make difficult and politically divisive choices to maintain highway funding in coming years, transportation experts told members of the House Budget Committee Wednesday.
The hearing, requested by Rep. Earl Blumenauer, D-Ore., focused on how to keep the federal highway trust fund solvent over the long run. The Congressional Budget Office currently projects that the trust fund will reach insolvency sometime in fiscal year 2015 as needs increase and federal gas tax revenue continues to stagnate or decline.
The trust fund is used for both highways and transit and backs grant anticipation revenue vehicles, known as Garvee bonds, which have been downgraded in recent months due to the uncertainty of future federal policy.
“The highway trust fund is once again going broke,” said Rep. Paul Ryan, R-Wis., chairman of the committee.
Ryan, who left the hearing after his opening remarks to attend to business at the House Committee on Ways and Means, said allowing the trust fund to spend more than it takes in is a mistake that will likely lead to drastic spending reductions without action. Blumenauer warned the committee that reducing the federal government’s role in transportation funding would be a mistake, but acknowledged that the gas tax, stuck at 18.4 cents-per-gallon for the past 20 years, is no longer a realistic way to make federal resources available to the states.
“In the next 10 years, we’ve got to go to a different system,” Blumenauer said.
Robert Poole, director of transportation policy at the Reason Foundation, told the committee that the government faces a dilemma: increasing the available resources while decreasing the scope of federal services.
Poole said raising the gas tax is such a political third rail that he no longer considers it a serious approach to highway funding. Instead, he said the federal government should restrict highway trust fund spending to highways and let transit funding be administered by to the Federal Transit Administration.
“I propose eliminating the middleman,” he said.
As an alternative, Poole continued, policymakers could initiate a fundamental reordering of the system by spending federal tax dollars only on interstate routes and allowing appropriate lower levels of government to handle other roads.
“Sorting out what is truly federal, what is properly state,” Poole explained.
He added that Congress should lift restrictions on tolling interstates, while examining various options for fees based on vehicle miles traveled. Oregon has led the way with a VMT pilot program, but other states are also investigating this idea.
“The states are already very active on this,” Poole said.
Janet Kavinoky, executive director of transportation and infrastructure at the U.S. Chamber of Commerce said Congress should consider the problem in a three-phase approach: keeping the trust fund solvent through the next fiscal year, addressing the period up until 2025 when new federal emissions standards are likely to weaken gas tax revenues further, and finding a suitable revenue stream for beyond 2025. Kavinoky said businesses would not favor separating transit and highways, and would really prefer a gas-tax increase to serve as a near-term solution.
Rep. Scott Garrett, R-N.J., who chaired the hearing in Ryan’s absence, questioned whether devolving some federal role back to the states was really a matter of “passing the buck,” as some Democrats have suggested.
“Isn’t it the states who are passing the buck to us?” he asked the witnesses.
Kavinoky admitted that while she does hear some grumbling from state officials who want to know why they have to come hat-in-hand to Washington asking for money they originally collected from their own residents, most are happy to take the federal disbursements.
“They realize that since 2008 they’ve been getting back more than they put in,” she said.
While the Chamber of Commerce has not yet prepared a detailed projection, the 2010 Bowles-Simpson plan for deficit reduction suggested a gas tax increase of about 30 cents per gallon would have been sufficient to solve the immediate problem. Kavinoky said it remains by far the simplest path to solvency.
“Not a real popular discussion,” I understand,” she told lawmakers. “But they don’t pay me to have popular discussions.”