A hearing held by the House of Representatives Transportation and Infrastructure Committee on April 29 delved into what might be required to ensure the Highway Trust Fund or HTF is fiscally sustainable for the long term.
[Above photo by House T&I committee]
Established in 1956 to provide a more dependable source of funding from the federal government for the construction of the interstate highway system, the HTF is split into two separate “accounts” – the Highway Account, largely devoted to construction and maintenance of highways and bridges; and the Mass Transit Account, which funds capital expenditures on buses, railways, subways, ferries, and other modes of public mass transit.
In general, state and local governments fund most transportation investment in the United States; responsible for four-fifths or roughly $180 billion of total spending for highways in 2022. The federal government contributed the remaining fifth or $52 billion in highway investment in 2022; 96 percent of which went toward specific capital projects, such as bridges or projects on the Interstate Highway System.
The hearing featured testimony from Carlos Braceras, executive director of the Utah Department of Transportation and former president of the American Association of State Highway and Transportation Officials; Ty Johnson, president of the Fred Smith Company and testifying on behalf of the National Asphalt Pavement Association; Jeff Davis, senior fellow at the Eno Center for Transportation; Brian Burkhard, vice president and global principal for advanced mobility systems at Jacobs; and Adie Tomer, senior fellow for the Brookings Institution.
During his opening statement at the hearing, Rep. Sam Graves (R-MO), the chair of the House T&I Committee, noted that the HTF has faced an insolvency crisis dating back to at least 2008, as current user fees are no longer sufficient to sustain necessary investment in the nation’s surface infrastructure needs.
“The Infrastructure Investment and Jobs Act (IIJA) failed to address this issue and only made matters worse by increasing spending from the HTF by $102 billion and relying on an [HTF] bailout with a $118 billion General Fund transfer,” he said. “Our highway funding system is founded upon the principle that roadway users must pay for their use of the system. Failing to restructure our surface transportation funding sources will have severe consequences for our nation’s transportation system and the American people.”
In addressing the overall funding issue for transportation infrastructure going forward, Utah DOT’s Braceras focused on the need to prioritize formula funding over monies set aside for discretionary grants.
“Formula funding offers administrative efficiency and the predictability essential for effective infrastructure planning; enabling [states] to allocate resources according to our local needs and priorities,” he said in his testimony. “I view discretionary funding as a windfall; beneficial but unreliable. Discretionary grant programs are most effective in targeted circumstances and should be used for projects that align with established goals, which have been identified through collaborative long-range planning with local governments.”
The efficacy of formula funding ties directly into HTF revenues, which states use to support multiyear capital investments in surface transportation; what Braceras called the “ideal means” for supporting state DOTs, local governments, and transit agencies in their infrastructure objectives nationwide.
[Editor’s note: AASHTO’s board of directors recently affirmed that position on formula funding as part of its vision statement and three core policy principles on reauthorization adopted unanimously in late April.]
Furthermore, resources from the HTF are provided in the form of contract authority on a five-year timeline; a “unique federal budgeting mechanism,” he stressed, that allows for the obligation of funds without the need for an annual appropriation – thus deploying those funds at a far faster pace compared to the discretionary grant process.
Yet the stability of that five-year timeline is now uncertain as the HTF is now relying on General Fund transfers to stay solvent.
“With the transfer of $118 billion into the HTF to pay for the IIJA, the total amount transferred now stands at over $275 billion,” Braceras said. “This is not a viable long-term solution. Upon expiration of the IIJA, states will be left uncertain about how to plan for projects in the future.”
The main issue is that the HTF is supported by fuel taxes; yet the revenue yield from fuel taxes has decreased significantly in recent years.
Braceras pointed to one suggestion to help shore up the future viability of the HTF; a “user-pay” approach that charges people based on how many miles they drive rather than how much fuel they buy – especially in the case of alternative fueled and all- electric vehicles, which do not use diesel or gasoline.
Though there are privacy concerns regarding the data collected for such user-pay systems, he said some fiscal mechanism is needed to reverse the downward trajectory of the HTF.
“Achieving a future world-class transportation system – essential for our nation’s security and economic vitality – requires predictable revenue sources that keep up with inflation,” Braceras stressed. “The current funding trajectory of the HTF – the backbone of the federal transportation surface transportation program – is declining and remains unsustainable. Given its foundational role in funding highway and transit investments in every corner of the country, [we] need to find and implement a viable set of revenue options for the HTF to ensure continued investment in transportation.”
