Federal Highway Trust Fund facing another shortfall
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People are driving less because of rising prices at the pump, even though those prices are not near the $4 per gallon average of last summer. Driving fewer miles means fewer gas purchases. Because the trust fund depends on gas purchase volumes, and not dollars spent, increases in prices at the pump don't affect the fund. The state collects the same amount per gallon, regardless of the price per gallon.
U.S. Transportation Secretary Ray LaHood traveled to Capitol Hill this week to propose an immediate 18-month highway reauthorization that would replenish the fund.
In 1956, the Highway Revenue Act authorized revenues from certain highway-user taxes that could be allocated to the HTF as part of the Federal-Aid Highway Act. Since then, legislation has been passed to extend the transfer of highway-user taxes to the fund.
The HTF focused solely on highways originally, but Congress later approved a portion of revenues from highway-user taxes could be used to fund transit projects, which resulted in a 5-cent gas tax increase.
As a result of last year's financial impasse, the Federal Highway Administration (FHWA) moved from daily reimbursements to states to weekly or biweekly payments.
"During that time, TxDOT used short-term borrowing to cover its obligations so that no project went unfunded," Saenz said.
LaHood, in his speech on Capitol Hill, proposed critical reforms "to help us make better investment decisions with cost-benefit analysis," he said. He said he wants an added focus on more investments in metropolitan areas.
"I recognize that there will be concerns raised about this approach," LaHood said in his statement. "However, with the reality of our fiscal environment and the critical demand to address our infrastructure investments in a smarter, more focused approach, we should not rush legislation.
"We should work together on a full reauthorization that best meets the demands of the country. The first step is making sure that the Highway Trust Fund is solvent."
Beyond an immediate budgetary shortfall, the HTF also faces structural considerations. The fund has supported approximately $40 billion a year in nationwide highway projects over the past five years. By 2010, that figure will plummet to $8.7 billion unless Congress acts to provide a substantial subsidy from general funds.
Saenz said TxDOT plans to work with officials from the FHWA over the coming weeks to determine a "prudent course of action to handle this shortfall."
