It may take all possible solutions to keep the federal transportation program afloat, to maintain and improve the nation’s transportation network. That’s our takeaway from the latest non-partisan, objective report on federal transportation funding from the Congressional Research Service (CRS). “<b reviews ”the problems associated with the [highway] trust fund financing system” and the “possible options for financing surface transportation infrastructure.”
Two of the key points: Increasing federal fuel taxes probably is unlikely to solve the long term challenges with funding transportation needs. Second, reducing the program size “might not provide immediate relief from the demands on the HTF.”
Why won’t reducing the federal transportation program solve the problem? This is a critical issue that is not widely know outside of insiders and transportation finance experts. CRS explains:
“Because of the multiyear nature of the highway and public transportation programs and the multiyear availability of the contract authority that supports them, both programs have ongoing existing commitments. For FY2013, unspent contract authority for highway programs is expected to total roughly $67 billion in unpaid obligated balances and $30 billion in unobligated contract authority. For the public transportation programs these figures are roughly $13 billion in unpaid obligations and $8 billion in unobligated contract authority. These obligations have been incurred by the federal government (under binding agreements such as highway project agreements) and must be paid.”
We’ll have more stories from the the report (33-page pdf) but for now here are the main points:
- Raising motor fuel taxes could provide the highway trust fund with sufficient revenue to fully fund the program in the near term, but it may not be a viable long-term solution due to expected future declines in fuel consumption.
- Replacing current motor fuel taxes with a fuel sales tax or a fee based on vehicle miles traveled (VMT) raise a variety of financial and administrative concerns.
- The political difficulty of adequately financing the highway trust fund could lead Congress to consider the desirability of changes to maintain the trust fund system or eliminating it altogether. Such changes might involve a reallocation of responsibilities and obligations among federal, state, and local governments.
- Interest in improving transportation infrastructure with private and non-grant funding sources, such as tolls, public-private partnerships (PPPs), and federal loan programs is increasing, but many projects may not be well suited to alternative financing.