News and Press
03
08
2016

Where Will Future Funding Come from for the Highway Trust Fund?

by LPS Insights, on August 3, 2016

“In a world filled with uncertainties, there are at least two certainties in the world of freight transportation, supply chain management, and logistics as it relates to federal policy: the federal gasoline tax will never see an increase and national transportation infrastructure that is badly needed will never receive the requisite amounts needed.”

 

Jeff Berman, group news editor for Logistics Management magazine, lays out a bleak future for the habitually underfunded Highway Trust Fund (HTF) in an editorial he authored July 22, 2016. In it he reminds readers of the constant call for an increase in the gas tax, which hasn’t been touched since Bill Clinton was president—more than 20 years ago.

 

What’s at Stake

 

In the meantime, the countries highway and bridges continue to decline rapidly. By some estimates, there are more than 60,000 bridges in the U.S. that are considered structurally deficient. Moreover, a staggering 32 percent of U.S. roads are in poor condition. A properly funded HTF is critical for funding construction because given a typical project, about 20 percent of the funding is paid by states with the remaining 80 percent provided by the HTF.

 

One of the more poignant reminders of what’s at stake here is the collapse of the I-35W bridge in Minneapolis in 2007, which killed 13 people and injured 145. The bridge had a design flaw, which led to the catastrophic failure, but “an investigation led by the Minnesota legislature revealed that the state’s Department of Transportation, which inspected the bridge, was underfunded and overworked,” this according to a report originally published by the PBS News Hour.

 

Traditionally, much of the funding for the HTF has come from a national gas tax: 18.4 cents a gallon for gasoline and 24.4 cents for diesel fuel. The tax generates about $34 billion in revenue annually, but it’s not enough to fund the government’s budget of $50 billion annually for infrastructure improvements. That’s a $16 billion shortfall, every year. As far as raising a national gas tax, it’s become politically unpopular, to state it mildly.

 

Fortunately, last fall the HTF received a shot in the arm when it received $70 billion through an instrument called the 2015 surface transportation reauthorization, which will, however, disappear in 2020.

 

Berman says, Earlier this month, the Transportation Construction Coalition (TCC), a concern made up of associations and unions penned a letter to Rep. Kevin Brady (R-Texas), Chairman of the House Ways & Means Committee, which called for a permanent solution for the Highway Trust Fund’s structural revenue deficit.”

 

For more on the divisive future of the Highway Trust Fund, read Berman’s article in the latest issue of Logistics Management magazine.

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