Highway Trust Fund is Fine, Until It isn’t
By ATM Staff
Joy and happiness spread like wildfire amongst transportation funding opponents recently when news outlets picked up U.S. Department of Transportation comments on their month-old ticker.
The tally released monthly on transportation.gov showed that the transfer of general funds into the Highway Trust Fund from the end-of-July short-term extension agreed to by the House and Senate may last longer than initially projected. Media further projected that this latest intelligence could lead to delays for transportation reauthorization legislation.
Transportation funding experts like Joung Lee, Policy Director with the American Association of State Highway Transportation Officials (AASHTO) say there’s no reason to celebrate. “When you look at the mechanics of the Trust Fund – how the money comes in and goes out, the money coming in is fairly flat but there’s going to be variability in activity.
“It’s sort of on a bell curve when you look at it on the calendar year – lower on the front and back ends and higher during the peak summer construction season. But the ticker looks only at the cash balance and doesn’t take the underlying dynamics into account.”
The ticker also doesn’t consider the impact the current lack of investment is having on transportation funding nationwide – e.g., the fact that DOT officials in at least 19 states have publicly stated their programs would be impacted by a shutdown of federal surface transportation funds. Seven states have already canceled or delayed projects in 2015, totaling over $1.6 billion (source: ARTBA HTF Uncertainty Report).
“As a nation, we’re skirting so close to the edge here,” said Lee. “We’ve been spending $15 billion more on transportation needs each year than the Trust Fund has been bringing in in fuel taxes and truck fees.”
Lee said if you’re talking about Trust Fund solvency, the number that sets off alarm bells is $4 billion left in the Highway Account of the Trust Fund, and the DOT has said it will dip down to that threshold in November.
“Last summer, when we got close to that number, DOT was talking about putting in place a ’cash management process’ through which states would only be able to get reimbursements based on what’s in the Trust Fund, meaning they could only get cents on the dollar on expenditures they already made,” said Lee.
He said DOT didn’t have to implement this emergency process when Congress added $10.8 billion in August 2014.
“People can get distracted by the vagaries of the Highway Trust Fund cash flow, but at the end of the day, you shouldn’t take eyes off the need for a six-year bill.”
With already 19 states with projects halted or delayed and counting, all eyes need to be on a long-term solution.