Transportation has its own version of a fiscal cliff

By David Tanner, Land Line associate editor | Monday, November 26, 2012

Father Time and transportation are not best friends. Our vehicles wear out, as do our roadways and bridges. Even the bank account that funds transportation serves a ticking clock as its master as costs rise and inflation erodes its purchasing power. Even with the Highway Trust Fund shored up through 2014, the system desperately needs a long-term funding solution.

Earlier this year, Congress passed a two-year, $109 billion highway law known as MAP-21. Despite a feeling that the pressure was off, at least for a while, transportation stakeholders, lawmakers and think tanks are already crunching hard in their quest for a longer-term funding solution to avoid transportation’s version of the fiscal cliff.

“MAP-21 was basically a bandage on the funding perspective,” says Ryan Bowley, director of legislative affairs for the Owner-Operator Independent Drivers Association.

“It transferred just enough money to the Trust Fund to remain solvent through the duration of the bill. So the Trust Fund is going to face fiscal challenges on the very day that MAP-21 expires.”

The difference between this deadline – Sept. 30, 2014 – and other deadlines transportation has faced since the economy sent the Highway Trust Fund dangerously close to red figures in 2008 is the advance warning signs, Bowley says.

“In this case, we know this is coming,” he said. “There’s no other way to say it. We know that the bad situation is coming down the pipe and there are no more bandages in the bandage box.”

Congress has transferred $35 billion in general funds to the Highway Trust Fund since 2008. That’s when fuel-tax receipts and other user fees that keep the trust stocked with cash fell noticeably behind expenditures.

High fuel prices, strengthening fuel economy standards and other factors have meant less money from fuel taxes going into the fund.

MAP-21 included some reforms, but did not address the long-term issue of solvency for the fund.

Two federally appointed commissions have come up with ways for increasing revenue, including fuel-tax increases, a possible tax on vehicle miles traveled, and other increases in highway user fees. But the downed economy in recent years has kept Congress and the White House from taking any large steps to correct the problem.

Adding everything together, the Congressional Budget Office projects a $105 billion shortfall by 2022 in the highway and mass transit accounts that make up the Highway Trust Fund.

Transportation cannot afford the risk of going over the cliff, Bowley says.

“The situation that the Trust Fund is facing basically leaves Washington with a few difficult options,” he said. “They can stabilize the Trust Fund with some form of new revenue, more general fund transfers – which increases the deficit – or they can significantly scale back the program and devolve more responsibility to the states – which is largely going to lead to tolling and expanded use of public private partnerships.”

In the coming days, Land Line will examine more issues surrounding the transportation shortfall and the tough choices ahead for stakeholders and lawmakers.

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