The document discusses the Federal Highway Trust Fund (HTF), which provides funding for public roadwork projects. It notes that the HTF is projected to have a $168 billion cumulative deficit by 2025 if nothing is done. Congress has taken $62 billion from the general treasury fund to provide short-term financing, but a long-term solution is needed to fix the HTF. Potential solutions discussed include increasing the gas tax, implementing a vehicle miles traveled tax, and establishing more toll roads, but no agreement has been reached. The HTF faces insolvency by July 31, 2015, which could delay important highway and transit projects around the country if not addressed.

1.
1
POLICY
ANALYSIS
Federal
Highway
Trust
Fund
Analysis
Overview
of
the
Current
Federal
Highway
Trust
Fund
The
59
year
old
Federal
Highway
Trust
Fund
(HTF)
was
established
in
1956
under
the
Highway
Revenue
Act
of
1956.
It
is
a
federal-­‐aid
highway
program,
which
provides
states
with
a
certain
percentage
of
funding
for
public
roadwork.
The
HTF
is
broken
down
into
two
different
accounts,
the
highway
account
making
up
85%
of
the
funding
and
the
mass
transit
account
making
up
15%
of
the
funding.1
As
it
currently
stands,
the
HTF
is
mainly
funded
by
fuel
taxes,
representing
85%-­‐
90%
of
the
funding.2
Since
1993,
fuel
taxes
have
been
18.4
cents
per
gallon
of
gasoline
and
24.4
cents
per
gallon
of
diesel.
The
Federal
Highway
Administration
estimates
that
in
FY2015,
the
HTF
will
spend
$52B
and
only
take
in
$39B
leaving
the
fund
with
a
$13B
deficit.3
The
HTF
is
projected
to
have
a
cumulative
deficit
of
$168B
by
2025
if
nothing
is
done.
Over
the
past
six
years,
Congress
has
taken
$62B
from
the
U.S.
Treasury
Department’s
General
Fund
to
provide
short-­‐term
financing
for
the
HTF.
This
type
of
financing
serves
as
a
short-­‐term
fix
to
a
long-­‐term
problem.
Most
recently,
H.R.
2353,
the
Highway
and
Transportation
Funding
Act
of
2015
become
law
on
May
29th
,
2015.4
This
law
extends
general
fund
spending
to
the
HTF
through
July
31st
,
2015.
We
again
are
seeing
short-­‐term
fixes
by
Congress
as
both
sides
of
the
aisle
cannot
come
to
an
agreement.
Proposed
long-­‐term
solutions
on
how
to
fix
the
HTF
consist
of
a
fuel
tax
increase,
switch
to
a
vehicle
miles
traveled
tax,
establishment
of
additional
state
toll
roads,
and
repatriation
of
foreign
earnings,
but
no
meaningful
progress
has
been
made.
Despite
all
of
this,
one
thing
is
clear,
there
certainly
is
a
need
for
the
HTF.
Without
the
HTF,
highways
and
mass
transit
routes
around
the
U.S.
could
suffer
even
longer
project
delays.
States
such
as
Montana,
Tennessee
and
Arkansas
have
already
delayed
some
of
their
projects
due
to
federal
funding
1
http://www.heritage.org/research/reports/2015/05/highway-­‐trust-­‐fund-­‐basics-­‐a-­‐primer-­‐on-­‐federal-­‐surface-­‐
transportation-­‐spending
2
http://www.pewtrusts.org/en/research-­‐and-­‐analysis/analysis/2015/02/24/funding-­‐challenges-­‐in-­‐highway-­‐and-­‐
transit-­‐a-­‐federal-­‐state-­‐local-­‐analysis
3
http://www.heritage.org/research/reports/2015/05/highway-­‐trust-­‐fund-­‐basics-­‐a-­‐primer-­‐on-­‐federal-­‐surface-­‐
transportation-­‐spending
4
http://policy.house.gov/sites/republicanpolicy.house.gov/files/Legislative%20Digest%20-­‐
%20%20H.R.%202353,%20the%20Highway%20and%20Transportation%20Funding%20Act%20of%202015.pdf
Quick
Takes
-­‐ 59
years
old
-­‐ $62B
taken
from
Treasury
General
Fund
-­‐ $168B
cumulative
deficit
over
next
10
years
-­‐ 1.4%
of
federal
budget
-­‐ Projected
insolvency
on
July
31
st
,
2015

2.
2
uncertainty.
More
broadly
speaking,
inadequate
roads
cause
congestion.
This
is
a
major
concern
for
businesses
and
people
as
they
may
view
respective
infrastructure
as
a
deciding
factor
on
whether
or
not
to
relocate.
There
is
strong
support
for
the
HTF
from
both
sides
of
the
aisle
on
both
state
and
federal
levels.
States
have
even
dipped
into
their
own
funds
to
cover
federal
reimbursements
to
speed
up
projects.
If
this
fund
is
not
fixed,
this
country
could
face
some
major
economic
repercussions.
Fund
Flows
Current
Funding
Levels
From
2008
to
2012,
the
federal
government
provided
25%
of
the
funding
for
all
state
highway
and
transit
projects.5
The
majority
of
the
spending
from
federal
state
and
local
governments
is
on
highways.
The
main
source
of
funding
for
the
HTF
is
revenue
from
the
fuel
tax.
There
is
an
18.4
cent
tax
on
gasoline
and
a
24.4
cent
tax
on
diesel.
Although
this
revenue
stream
provided
ample
coverage
in
the
past,
in
most
recent
years
we
have
begun
to
see
large
deficits.
The
HTF
falls
under
the
Department
of
Transportation
(DOT)
and
represents
1.4%
of
the
federal
budget
and
about
56%
of
the
DOT
budget.6
The
total
portion
of
the
federal
budget
that
was
allocated
to
transportation
in
2014
was
about
2.5%.
Major
entitlements
such
as
Medicare
and
health,
Social
Security,
unemployment/labor
make
up
87%
of
federal
mandatory
spending.
Distribution
of
Funds
Of
the
$58B
the
HTF
was
appropriated
in
2012,
$45B
was
distributed
directly
to
the
state
and
then
the
states
distributed
about
$11B
to
the
local
governments.
On
top
of
federal
funding,
states
also
fund
their
own
projects.
States
spent
$89B
in
2012
having
total
funding
of
$109B
for
transportation.7
States
that
are
most
reliant
on
federal
funding
are
Vermont,
Rhode
Island,
West
Virginia,
Mississippi,
Georgia
along
with
some
western
central
states.8
These
states
received
37%
plus
on
transportation
funding
from
the
federal
government.
On
a
per
capita
basis,
Vermont,
Rhode
Island,
West
Virginia
and
5
http://www.pewtrusts.org/en/research-­‐and-­‐analysis/analysis/2015/02/24/funding-­‐challenges-­‐in-­‐highway-­‐and-­‐
transit-­‐a-­‐federal-­‐state-­‐local-­‐analysis
6
http://www.transportation.gov/sites/dot.gov/files/docs/FY2016-­‐DOT-­‐BudgetHighlights-­‐508.pdf
7
http://www.pewtrusts.org/en/research-­‐and-­‐analysis/analysis/2015/02/24/funding-­‐challenges-­‐in-­‐highway-­‐and-­‐
transit-­‐a-­‐federal-­‐state-­‐local-­‐analysis
8
http://www.pewtrusts.org/en/research-­‐and-­‐analysis/analysis/2015/02/24/funding-­‐challenges-­‐in-­‐highway-­‐and-­‐
transit-­‐a-­‐federal-­‐state-­‐local-­‐analysis
HTF
makes
up
56%
of
DOT
budget
and
99%
of
FHWA
budget.

3.
3
some
western
central
states
received
$250
plus
per
capita
on
transportation,
way
above
the
$167
national
average.
The
problem
with
the
spending
is
that
it
has
been
expanded
from
highways
to
all
roadways.9
It
has
been
projected
that
about
25%
of
all
projects
are
non-­‐highway
projects.
Some
of
these
non-­‐highway
projects
include
urban
transit,
bike
paths,
sidewalks
and
trail
upkeep.
The
federal
government
does
not
have
a
responsibility
to
fund
these
types
of
projects,
but
has
a
responsibility
to
fund
any
projects
involving
interstate
highways.
If
stricter
rules
were
put
in
place
limiting
the
use
of
funds,
it
could
dramatically
reduce
the
HTF
deficit.
Future
Projections
As
it
currently
stands,
the
HTF
will
run
out
of
money
on
July
31st
,
2015.
By
2025,
it
is
projected
that
HTF
spending
will
exceed
revenue
by
$22B,
spending
$60B
while
only
taking
in
$38B.10
As
we
continue
to
ask
why
this
deficit
will
continue
to
grow,
it
is
important
to
keep
in
mind
two
trends.
The
first
trend
is
that
there
has
and
will
continue
to
be
an
increase
in
fuel
efficiency
as
the
country
is
becoming
more
environmentally
conscious.11
We
have
seen
the
most
dramatic
increase
from
1975
to
1981
with
fuel
economy
increasing
by
56%
(13.1
MPG-­‐20.5
MPG)
as
well
as
another
increase
from
2005
to
2014
with
fuel
economy
increasing
by
20%
(19.9
MPG-­‐24.2
MPG).
The
second
trend
that
we
see
emerging
is
the
decrease
in
fuel
consumption.
This
trend
piggybacks
off
of
the
fuel
economy
trend
because
as
vehicles
become
more
fuel
efficient,
they
use
less
fuel.
This
could
send
fuel
tax
revenue
in
a
downward
spiral.
Many
people
are
concerned
about
the
long
term
implications
of
these
trends.
The
Congressional
Research
Service
has
proposed
four
alternatives
to
financing
the
HTF.12
The
first
is
a
shift
to
a
variable
fuel
tax
rate
on
the
price
of
fuel
from
the
fixed
price
that
has
not
moved
in
years.
The
second
is
reforming
the
current
fuel
tax
structure
by
either
adjusting
it
for
inflation
or
creating
a
highway
tax
instead
of
a
fuel
tax.
Third,
some
believe
that
drivers
should
be
charged
based
on
vehicle
miles
traveled
(VMT)
instead
of
fuel
consumption
and
lastly,
the
simple
solution
is
to
cut
HTF
spending
to
match
revenues.
Any
one
of
these
fixes
could
have
a
substantial
impact
on
the
future
of
the
HTF,
but
9
http://reason.com/archives/2010/03/05/road-­‐to-­‐ruin
10
http://www.heritage.org/research/reports/2015/05/highway-­‐trust-­‐fund-­‐basics-­‐a-­‐primer-­‐on-­‐federal-­‐surface-­‐
transportation-­‐spending
11
http://www.epa.gov/fueleconomy/fetrends/1975-­‐2014/420r14023a.pdf
12
https://www.asphaltpavement.org/michele/CRS%20report.pdf

4.
4
unfortunately
political
motives
hinder
long-­‐term
fixes
to
this
major
problem
and
it
seems
as
if
another
Treasury
General
Fund
transfer
is
inevitable.
Legislation
and
Hearings
Legislation
If
the
past
is
any
indication
of
the
future,
the
HTF
will
have
another
6-­‐month
Treasury
General
Fund
transfer.
Congress
has
tried
many
times
to
come
to
an
agreement
on
what
to
do
about
the
funds
deficit
and
both
sides
continue
to
be
at
odds
with
each
other.
The
most
recent
development
on
the
HTF
is
H.R
2353
also
known
as
the
Highway
and
Transportation
Funding
Act
of
2015.
As
we
have
seen
in
the
past,
Congress
has
a
knack
for
providing
short-­‐term
fixes
to
long-­‐term
problems
and
that
is
exactly
what
this
bill
is.
This
bill
became
public
law
on
May
29th
,
2015
and
provides
funding
for
the
HTF
to
remain
solvent
through
July
31st
,
2015.
In
addition,
Representative
Paul
Ryan
(R-­‐WI),
Chairman
of
the
House
Ways
&
Means
Committee
has
clearly
stated
that
a
gas
tax
increase
is
not
something
that
the
Republican
Party
is
willing
to
do.
13
Representative
Ryan
says
that
the
economy
is
currently
having
trouble
growing
and
it
is
imperative
that
congress
do
everything
in
their
power
to
help
it
grow
and
low
gas
prices
is
one
of
them.
Representative
James
Renacci
(R-­‐OH)
introduced
H.R.
1846
also
known
as
Bridge
to
Sustainable
Infrastructure
Act
on
4/16/2015
to
provide
both
a
short-­‐term
and
long-­‐term
solution
to
this
problem.
The
short-­‐term
fix
this
bill
proposes
is
to
adjust
the
gas
tax
for
inflation.
This
simple
move
would
provide
$27.5B
in
revenue
over
10
years
for
the
fund.
In
addition
to
this,
the
long-­‐term
solution
is
to
create
a
bi-­‐cameral
commission
for
16
months
to
put
a
long-­‐term
plan
together.
This
bill
has
been
introduced
in
both
the
House
Ways
&
Means
Committee
as
well
as
the
Transportation
and
Infrastructure
Committee,
but
has
not
received
any
action
since
4/17/2015.
Most
recently,
Senator
Chuck
Schumer
(D-­‐NY)
and
Senator
Rob
Portman
(R-­‐OH)
presented
a
international
tax
reform
framework
to
partially
fund
the
HTF.
Although
this
framework
is
far
from
becoming
legislation,
it
seeks
to
reduce
the
U.S.
taxes
on
corporations,
but
charge
a
one-­‐time
transition
tax
on
profits
from
overseas
companies.
Hearings
On
July
17th
,
2015,
the
Ways
&
Means
Committee
on
request
by
the
Select
Revenue
Subcommittee
held
a
hearing
on
long-­‐term
financing
options
for
the
highway
trust
fund.
The
witnesses
participating
in
this
hearing
were
Chad
Shirley
from
the
Congressional
Budget
Office
(CBO),
Robert
Poole
from
Reason.com
and
Bill
Graves
from
the
American
Truckers
Association.
Throughout
this
discussion,
there
were
many
interesting
ideas
raised
on
how
to
fix
the
HTF.
Mr.
Shirley
started
off
by
saying
that
there
were
three
options
on
the
table:
reduce
spending,
increase
revenue,
or
transfer
funds.
Mr.
Poole
raised
four
important
thoughts:
continue
using
the
user
use,
user
pay
method,
determine
what
the
real
priorities
of
13
http://www.bondbuyer.com/news/washington-­‐infrastructure/ryan-­‐takes-­‐gas-­‐tax-­‐hike-­‐off-­‐table-­‐says-­‐short-­‐term-­‐
htf-­‐fix-­‐inevitable-­‐1076692-­‐1.html

5.
5
the
HTF
are
making
sure
there
is
no
overlap
between
state
and
federal
governments,
transition
to
a
per
mile
traveled
using
electronic
tolling
fees,
and
increase
private/public
partnership
(P3)
investment.
Lastly,
Hon.
Graves
said
that
this
conversation
has
been
going
on
for
22
years
and
if
no
long
term
solution
is
met
here,
we
will
lose
mobility
in
this
country
causing
a
much
bigger
problem.
Every
committee
member
expressed
their
opinions
on
the
HTF
as
well
as
what
their
constituents
feel.
Some
of
the
common
themes
that
were
expressed
by
congressmen
were
the
need
for
increased
P3
investment,
continuation
of
user
use
and
user
pay
policies,
move
to
another
source
of
revenue
for
the
long-­‐term
and
narrowing
the
scope
of
the
HTF.
On
the
flip
side
though,
Congressman
Pascrell
(D-­‐NJ)
illustrated
that
having
these
hearings
and
talks
are
great,
but
there
is
no
sense
of
urgency
from
this
congress.
He
urged
all
of
the
Congressmen
to
consider
H.R.
1846,
which
is
a
combination
of
a
short-­‐term
and
long-­‐term
solution
to
keep
the
fund
solvent
and
running
for
future
generations.
Conclusion
The
HTF
has
been
around
for
59
years
and
plays
a
fundamental
part
in
the
growth
of
infrastructure
in
the
United
States.
Infrastructure
has
always
been
something
that
both
sides
of
the
aisle
could
come
together
on,
but
that
is
not
the
situation
today.
The
Republican
Party
is
not
in
favor
of
a
fuel
tax
increase
and
believes
that
a
long-­‐term
solution
cannot
be
implemented
in
the
short
deadline
that
they
have
while
the
Democratic
Party
is
in
favor
of
a
fuel
tax
increase
and
a
long-­‐term
solution
as
soon
as
possible.
Given
the
way
these
hearings
have
been
going,
another
6-­‐month
Treasury
General
Fund
transfer
is
more
than
likely
going
to
happen.
The
fact
of
the
matter
is
that
the
short-­‐term
solutions
for
the
HTF
need
to
stop.
Congress
needs
to
begin
thinking
about
the
long-­‐term
and
what
future
generations
are
going
to
have
to
deal
with
in
coming
years.
If
the
HTF
continues
to
run
a
deficit
and
potentially
default
on
their
reimbursements,
highways
and
mass
transit
routes
will
be
in
for
a
wakeup
call.
Highways
and
mass
transit
routes
across
the
country
are
already
in
horrible
condition
and
this
presents
a
problem
for
people
traveling
as
well
as
business
relocation.
A
study
done
by
Robert
Poole
from
reason.com
said,
“Congestion
gridlocks
our
urban
expressways,
costing
Americans
$76
billion
per
year
in
wasted
time
and
fuel”.
This
country
would
be
far
more
efficient
than
it
currently
is
if
expressways
and
roadways
were
in
better
condition
and
less
congested.
With
the
HTF’s
projected
insolvency
due
on
July,
31st
,
2015,
this
is
Congress’s
number
one
priority
within
the
next
coming
weeks.
A
number
of
reasonable
proposals
have
already
been
presented
and
it
is
time
for
Congress
to
act
instead
of
talk.
Strap
your
seatbelts.
This
is
going
to
be
a
bumpy
road.

6.
6
Sources:
http://www.fhwa.dot.gov/ipd/finance/tools_programs/federal_debt_financing/garvees/
http://www.cato.org/blog/reforming-­‐highway-­‐trust-­‐fund
http://www.brookings.edu/blogs/the-­‐avenue/posts/2015/04/06-­‐tolls-­‐highway-­‐funding-­‐kane-­‐sabol-­‐puentes
http://www.brookings.edu/blogs/the-­‐avenue/posts/2015/05/13-­‐federalist-­‐agenda-­‐for-­‐transportation-­‐puentes
http://www.washingtonpost.com/blogs/wonkblog/wp/2015/06/25/why-­‐driving-­‐on-­‐americas-­‐roads-­‐can-­‐be-­‐more-­‐
expensive-­‐than-­‐you-­‐think/
http://www.fhwa.dot.gov/reports/fifahiwy/fifahi05.htm
https://www.fhwa.dot.gov/publications/publicroads/96summer/p96su10c.cfm
http://www.cbo.gov/sites/default/files/45416-­‐TransportationScoring.pdf
http://www.cbo.gov/publication/43198
http://www.transportation.gov/sites/dot.gov/files/docs/FY2016-­‐DOT-­‐BudgetHighlights-­‐508.pdf
http://www.transportation.gov/sites/dot.gov/files/docs/FY2016-­‐BudgetEstimate-­‐FHWA.pdf
http://thf_media.s3.amazonaws.com/2014/pdf/SR162.pdf
https://www.whitehouse.gov/omb/budget/Historicals
https://www.nationalpriorities.org/budget-­‐basics/federal-­‐budget-­‐101/spending/
http://reason.com/archives/2010/03/05/road-­‐to-­‐ruin
http://www.ustream.tv/recorded/64033572
https://www.congress.gov/bill/114th-­‐congress/house-­‐bill/1846/cosponsors
http://www.ustream.tv/recorded/64752412