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Table of Contents
SAFETEA-LU and the Highway Trust Fund
What is SAFETEA-LU and why is it important?
On August 10, 2005, President Bush signed the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU). SAFETEA-LU authorizes the federal surface transportation programs for highways, highway safety, and transit for a 5-year period. SAFETEA-LU expired on September 30, 2009, and has been extended until December 31, 2010.
Our leaders in Washington must seize this critical opportunity to improve existing programs and increase investment in the nation’s roads, bridges and transit systems. It is important for Congress and the Obama Administration to think beyond the short term by providing comprehensive investments in our transportation system that will support our businesses and supply chains, create jobs and help the ailing economy recover.
We must call on Congress to make strategic and sometimes difficult investment decisions to support a transportation system that will cater to a growing, robust global economy while protecting our environment.
What is the Highway Trust Fund?
The Highway Trust Fund (HTF) is the main source of funding for programs authorized by the SAFETEA-LU legislation. The HTF is composed of the Highway Account, which funds highway and intermodal programs, and the Mass Transit Account, which funds public transit. The HTF is funded by a federal gasoline tax of 18.4 cents per gallon and a federal diesel tax of 24.4 cents per gallon, as well as other fees.
Current funding levels cannot sustain, let alone rebuild, our nation’s infrastructure. Without changes, highway funding will drop to $21.5 billion in 2012, and transit funding will plummet to a meager $7.5 billion. Further compounding the problem is the fact that ARRA funding will be all but spent out.
What is the Condition of the Nation’s Transportation System?
By any measure, the nation’s transportation system is failing. For example, nearly one-third of roads are in poor or mediocre condition and one quarter of the nation’s bridges were either structurally deficient or functionally obsolete, according to the American Society of Civil Engineers (ASCE). U.S. transit systems earned a D rating in the ASCE’s annual Infrastructure Report Card.
Transit funding is declining while public transportation ridership is at its highest level in 50 years, with more than 10 billion yearly trips. Ridership continues to grow at record levels with a 5.2 percent increase in the second quarter of 2008.
How did our national transportation system fall into such disrepair?
Currently there is an annual gap of more than $50 billion in funding to maintain the nation’s highways and transit systems and an average annual gap of $100 billion to improve these systems. Chronic underinvestment in all modes of transportation by all levels of government is to blame. The 2005 federal highways and public transportation bill provided $90 billion less than the $375 billion that experts said was needed to repair, rebuild and replace America’s transportation infrastructure. The user fees that paid for much of the nation’s postwar freeway system have failed to keep pace with inflation and the soaring costs of construction and materials. The federal gasoline tax of 18.4 cents a gallon, which makes up the majority of the Highway Trust Fund, has not been raised since 1993 and has fallen far behind the rate of inflation.
As the nation’s population and economy continue to grow and transportation infrastructure continues to deteriorate, the only real solution is a significant increase in investment. The National Surface Transportation Policy and Revenue Study Commission’s report, "Transportation for Tomorrow," recommended investing at least $225 billion annually from all sources for the next 50 years to finance a surface transportation system capable of sustaining strong economic growth.
What is the effect of a deteriorating, national transportation system?
The impact is enormous. The condition of the nation’s transportation system threatens safety and quality of life, the creation of jobs, as well as the economy and the environment. Approximately 42,000 people are killed annually on the nation’s highways, with 15,000 of those traffic fatalities in crashes where substandard road conditions, obsolete designs, or roadside hazards were a factor.
Traffic congestion costs American motorists $87.2 billion a year in wasted time and fuel costs and we spend 4.2 billion hours a year stuck in traffic.
If we fail to act, we will pollute our air and destroy the free, mobile way of life we cherish. The average driver spends 40 hours per year in gridlock. If highway capacity does not grow faster than it has in the past 25 years, Americans can expect to spend 160 hours each year in congestion by 2035.
Economic Benefits
Are there economic benefits to investing in surface transportation networks?
Absolutely. Each dollar invested in highway construction generates $1.80 of GDP. According to the Department of Transportation, each $1 billion in federal highway investment supports 28,000 jobs. In order for the U.S. to remain a leader in a global economy the country’s policy-makers must make this national challenge a national priority.
What is at Risk
How does the state of our transportation system affect American businesses and the economy?
Businesses depend on a transportation network that is reliable, fast, safe and cost-effective. Unfortunately, increasing congestion due to crumbling transportation infrastructure disrupts these important connections and imposes additional costs on workers and employers alike. As congestion increases system-wide, supply chains and cargo shipments are frequently disrupted and the cost of doing business increases.
The stakes are high. Reliable and cost-effective transportation systems that can efficiently move an ever-increasing volume of goods and people are essential to creating economic growth, increasing productivity, and improving the competitiveness of American businesses across all economic sectors. Investments in transportation drive economic growth by creating much-needed jobs across the construction, engineering, and manufacturing sectors.
Congress and the Obama Administration recognized the economic impact of transportation investment and provided needed funding for vital projects in the recovery legislation that was signed into law in February. The American Reinvestment and Recovery Act was an important first step to shore up our ailing economy, but the job of planning and investing in our transportation system isn’t done yet.
Congress must turn its attention to long-term planning by putting together a responsible reauthorization package which focuses national resources on national needs and ensures that dollars are spent wisely. For too long, transportation programs have lacked a national focus and precious resources have been squandered.
How will the global economic competitiveness of American businesses be affected if needed investments in transportation are not made?
It’s simple; if we fail to address our transportation infrastructure challenges, we will continue to lose jobs and industries to other nations. Our competitors around the world are building and rebuilding at a staggering pace while American infrastructure development stands still. China spends 9 percent of its GDP on infrastructure investment, which includes transportation, telecommunications and power networks, India spends 5 percent and that number is rising, while the United States budgets only $112 billion or 0.93 percent of its GDP, even with a $1.6 billion deficit looming to make the necessary upgrades through 2011. Developing nations will be moving goods and services quickly and efficiently while American businesses are mired in congestion and rising costs. We cannot expect to remain competitive with such a low level of investment.
How do we Pay?
How do we pay for all of the needed transportation investment in this environment?
There is no question that, as a nation, we are going to have to find and invest more public and private dollars in our infrastructure. There is no single answer, but all options must be on the table. The U.S. can either invest now or pay later.
We must do more to ensure that money is spent wisely. That means ending waste and targeting the highest priority projects. It means focusing on a sensible mix of projects based on actual need and not on politics or ideology—for example, more road construction in some areas, more investment in mass transit in others.
It also means that politicians must stop diverting money intended for infrastructure to other programs. There should be a price to pay when money is skimmed from dedicated transportation funds to pay for other, unrelated projects. It hurts businesses that rely on these projects, and breaks trust with the taxpayers, who expect their money to go toward its intended purposes.
In addition to cutting waste and ensuring that infrastructure dollars are spent as promised, we can also stretch public dollars by tapping the growing interest in public-private partnerships and other innovative financing arrangements. Public-private partnerships have the potential to not only drive important projects forward but also improve the economy by supporting businesses and communities.
Earmarks
Some say the amount of money available is not the problem—the problem is that the money is wasted on earmarks. What is ATM’s position on earmarks?
Not all earmarks are wasteful. Earmarks can undermine the integrity of federal transportation programs particularly if they are not related to transportation infrastructure, do not address the goals of federal transportation policy, and have limited or no regional or national benefit. However, the vast majority of earmarks included in SAFETEA-LU have been dedicated to projects that were already on state transportation improvement agendas. Going forward, Congress should prioritize spending and eliminate any earmarks that do not support transportation infrastructure or have limited or no regional or national benefit.
Safety & Security
If we are using the bulk of the money to repair and rebuild, where does that leave safety and security precautions?
If we fail to increase investment, we will see more senseless deaths on our bridges and roads. Americans need to know that 32 percent of our major roads are in poor or mediocre condition. Driving on roads in need of repair costs U.S. motorists $67 billion a year in extra vehicle repairs and operating costs – that’s $324 per motorist. More importantly, poorly maintained roads contribute to a third of all highway fatalities, more than 14,000 deaths every year.
The American Road & Transportation Builders Association’s study Federal Highway Program and Highway Safety: An Economic Analysis found that every $1 billion invested by the public in government-financed road improvements since 1950 has helped prevent 1,400 premature deaths and nearly 50,000 injuries, and helped save Americans over $2 billion in health care, insurance, lost wages and productivity costs.
SAFETEA-LU also includes programs designed to increase safety on all modes of transportation. The legislation established the Highway Safety Improvement Program, a core Federal-aid program that seeks to reduce the number of traffic fatalities and serious injuries on all public roads through infrastructure improvement. SAFETEA-LU also requires states to submit a Strategic Highway Safety Plan (SHSP) before receiving federal safety funds.
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