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ATM Fact / Fiction about the Highway Trust Fund

FICTION: There’s no Highway Trust Fund (HTF) or transportation infrastructure crisis on the horizon; it’s ok for Congress to continue kicking the can down the road by passing short-term legislation that re-authorizes the HTF one or two years at a time.

FACT: America can’t afford NOT to fix the Highway Trust Fund (HTF) or the transportation infrastructure it funds for two overriding reasons: the federal highway and transit programs are integral to the nation’s economic growth and the longer Congress takes to fix the problem, the more consumers and businesses pay to fix vehicles that experience damage because of deteriorating infrastructure. The savings Americans are enjoying because of low gas prices are being wiped away because of repairs needed from potholes and accidents from poor road conditions. The average person is currently paying $8 a month in federal fuel user fee. For this amount they have access to the nation’s Interstates, urban and rural highways, — literally hundreds of thousands of miles – and improved mass transit services. Meanwhile, per household, the cost of deficient surface transportation is $1,060 per year, according to the American Society of Civil Engineers. A 10 to 15 cent per gallon increase would mean an additional $4 to $6 dollars a month. This is a reasonable amount for users of the federal highway network to pay to maintain and progress this network so it is more efficient, reliable and safe.

FICTION: Mass transit is not essential to the federal transportation program; the federal government is forcing transit programs onto states.

FACT: Transit began receiving highway funding in 1982 under Ronald Reagan, when it became clear that congestion could not be addressed solely though roads—members of Congress from both parties determined transit was an essential piece of the solution; it is obviously a necessary form of transportation to help ease road congestion. The bi-partisan MAP-21 gave a significant amount of discretion to state and local governments to decide into which modes of transportation and specific projects they would like to invest money they receive through the HTF. If state and local governments decided to invest funds provided into mass transit, they did so because they determined those were the projects that would improve the economy, livability, efficiency or safety in their communities.

FICTION: Transportation infrastructure projects are too expensive and the HTF won’t really go broke if spending habits are changed.

FACT: The costs of highway and transit projects have escalated over the past two decades because everything is more expensive: the real purchasing power of 18.4 cents has slipped because of inflation and increases in wages and materials since 1993. Since the federal fuel user fee was last raised 20 years ago, the purchasing power of the dollar has declined substantially. The inflationary bite means that the current 18.4 cents per-gallon user fee is effectively worth about 11.5 cents today compared to when it was last increased in 1993. A September 2012 WSJ article noted, “the tax buys about half the concrete, steel and other materials it did 20 years ago.

FICTION: The HTF won’t really go broke.

FACT: It’s well established that the HTF will become insolvent in the summer of 2015 if legislation re-authorizing MAP-21 is not passed and signed into law, meaning if Congress does not act, the federal government will slow or stop sending checks to state DOTs this summer. The economic consequences of not being able to pay contractors and employees will send shockwaves throughout our economy. Several states have already announced they are suspending numerous road projects (and the jobs that go along with them) due to the uncertainty of the federal role in building and maintaining our nation’s infrastructure. Hundreds of projects slated to begin around the country will not move forward if MAP-21 is not re-authorized. The economic benefits of building infrastructure projects are clear:  for every $1 of federal highway investment approximately $1.80 to $2.00 in additional growth in goods and services follows. It is irresponsible for Congress – just because of the threats of extremists that seats will roll – not to act to prevent the negative economic impact – on communities across America and the economy as a whole – of inaction.

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About the Federal Transportation Funding Crisis
Where does the money come from for federal spending on transportation?

  • Drivers pay 18.4 cents on every gallon of gasoline and 24.4 cents on every gallon of diesel fuel—if you use the roads, you pay to build and maintain them.
  • These proceeds are deposited into the federal Highway Trust Fund, which is the main source of money for federal road, bridge, and transit spending.

 

Where does the money go and who decides where it goes?

  • All of the gas and diesel taxes are distributed to state departments of transportation and local transit authorities.
  • State DOTs and local agencies determine their priorities and spend the money to:  improve the condition and performance of roads, bridges and transit systems; reduce deaths on our roads—especially in rural areas; relieve traffic congestion; make the transportation system more reliable; spur economic development; and move freight more efficiently.

 

How critical is federal funding to transportation investment?

  • Federal funds provided, on average, 52% of the funding for annual state DOT highway and bridge construction and maintenance projects from 2001-2011.  (ARTBA)
  • Federal funds provided 44% of transit capital spending (bus purchases and rail construction) in 2014.  (APTA)

 

What’s the problem today?

  • The Highway Trust Fund is projected to go bankrupt in the summer of 2015; Congress continues to “patch” the Trust Fund through short-term extensions that provide just enough funding to barely upkeep America’s transportation systems.
  • There is not enough revenue from gas and diesel taxes for the Highway Trust Fund to pay states and local agencies for ongoing and planned construction projects.
  • This would stop thousands of construction projects across the nation endangering hundreds of thousands of jobs in construction, manufacturing, and supporting industries.
  • Because of this looming bankruptcy, many states are holding off on the largest and most important projects.

 

What needs to be done?

  • Congress must ensure that the Highway Trust Fund does not face bankruptcy ever again by dedicating additional revenue to the Highway Trust Fund.

 

What is the best immediate option to pay for what is needed?

  • One option is to increase the gas tax, which has not increased since 1993, when gas cost $1.05 a gallon.
  • Users should continue to pay for the benefits they receive.
  • Today, we’re still paying 18.4 cents per gallon, but it doesn’t go as far.  Inflation reduced the purchasing power, vehicles are more fuel efficient and construction costs have skyrocketed.
  • The Interstate Highway System is nearly 70 years old—and roads are typically built to last 30 years!  It needs to be rebuilt for future generations.

 

What can you do to help solve the problem?

  • Tell your Senator and your Member of Congress to make transportation a top priority and ensure that the Highway Trust Fund does not face looming bankruptcy ever again.  Visit FasterBetterSafer.org!

 

About The Importance of Transportation Infrastructure
Transportation infrastructure is important…

  • To the nation:  A first rate national transportation system is necessary in order to maintain a first rate economy in the United States.  Failure to address transportation problems undermines U.S. economic growth.
  • To you:  Time spent in traffic is time stolen from your family and your business. Congestion slows the movement of food and merchandise. It raises prices and erodes the bottom line.
  • To everyone:  The safety concerns are obvious. Potholes aren’t just unsightly; they damage cars and cause accidents, sometimes fatal ones. Even worse is the high number of structurally compromised bridges in the United States—63,000, according to the American Road and Transportation Builders Association.

 

There’s a history of federal leadership in transportation.

  • Back in the 1700s, America joined the ranks of nations as an upstart, unconstrained by the expectations and traditions of other countries. We had to be scrappy.
  • We were building a country from scratch, and in a wilderness no less.
  • Americans slowly migrated westward, with horses and wagons first, then later canals, railroads, and eventually the automobile. Each advance in transportation brought growth, opportunity, and prosperity.
  • The interstate highway system begun in the 1950s made it cheaper to move goods and people across America, which opened new markets and encouraged development.

 

The Federal government should continue to play an important role in building and maintaining providing roads, bridges, and public transportation infrastructure.

  • Unfortunately, much of the United States’ transportation infrastructure—especially that which supports interstate commerce and international trade—is becoming less competitive with the rest of the world, and our closest competitors.
  • The greatest country in the world needs the greatest roads and bridges. And these are our roads and bridges. They belong to all of us, together. They’re our responsibility. Together.
  • If we care about the Americans who built the system, we won’t tarnish their legacy through neglect. And if we care about our kids, we won’t make THEM pay the bill tomorrow for the roads we’re using today.
  • We’ll make sure we’re leaving our great nation even better than we found it. We’ll build on the investments made for us. It’s the right thing to do.

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