By Ben Husch and Taylor Bates

That sound you hear isn’t your car backfiring, but rather the gavels of Chairman Paul Ryan (R-Wis) of the House Ways and Means Committee and Chairman Orrin Hatch (R-Utah) of the Senate Finance Committee, both of whom held hearings this week to discuss the challenges facing the future of the Highway Trust Fund (HTF). 

The HTF is used to help fund federal transportation projects, usually in the form of reimbursements to states and local governments. The primary reason for the hearings is the current unsustainable spending level of the HTF, which runs an annual deficit of about $15 billion.

The deficit is mainly the result of a stagnant federal gasoline tax—18.4 cents per gallon—that has not been raised in more than two decades and lost much of its value to inflation. More recently, revenues have started to feel the negative impact of both the implementation of federal Corporate Average Fuel Economy (CAFÉ) standards for automobiles, which raise the requirement for how far a car can go on a gallon of gas, as well as a leveling off in the number of miles people drive.

The HTF’s annual deficit has made it very difficult for Congress to approve a long-term transportation bill. The Congressional Budget Office reports that a six-year bill, at current spending levels, would require an infusion of $92 billion. Lacking the revenue to pass a long-term bill has unfortunately led to a series of short-term extensions, which usually include transfers from the general fund to cover the smaller deficit.

In fact, the last long-term transportation funding bill expired in 2009 and has resulted in more than 10 short-term extensions. This uncertainty has made it extremely challenging for states to adequately plan and achieve their performance targets, especially because many transportation infrastructure projects require a multi-year commitment. The uncertainty already has caused some states to defer projects this year.

Unfortunately, neither hearing saw agreement on a single way forward. Suggestions from six witnesses included a gas tax increase, using tax revenues from U.S. corporation overseas earnings, continuing transfers to the HTF from the General Fund, increasing the amount of private capital and reducing the HTF’s current spending levels. Although Ryan noted in his opening statement that he would not agree to an increase in the federal gas tax, Hatch did not rule one out. 

The co-chairs of NCSL's Natural Resources and Infrastructure Committee—Maryland Delegate Sally Jameson (D) and Alabama Senator Cam Ward (R)—submitted comments for the record on behalf of NCSL. They outlined our position on the issue of federal transportation funding. While you can find their full comments here, highlights included:

• Ensuring the continued solvency of the Highway Trust Fund (HTF), while committing to adopt a long-term agreement on surface transportation funding as part of a multi-year reauthorization of the Moving Ahead for Progress in the 21st Century Act (MAP-21).
• Supporting state-level pilot programs that explore transportation funding alternatives to fuel taxes.
• Making all funding and financing options available to state legislatures for state and federal-aid surface transportation programs.
• Preserving the federal government’s role in a national surface transportation system that facilitates interstate commerce, addresses fairly and equally the mobility needs of all Americans, and meets our national defense needs by directing spending to national priorities while providing flexibility for states to address regional variations.

With both authorization and funding for federal transportation programs set to expire at the end of July, time is winding down before Congress reaches yet another fiscal cliff. The Senate has scheduled a markup on a long-term bill for June 24, while no such plans from the House have been made public. Although it remains to be seen if Congress will be able to complete a long-term bill before the current authorization expires, you can be sure that staying tuned to NCSL will always keep you updated with the latest information, even as this issue heads towards the edge.

Ben Husch is committee director for Natural Resources and Infrastructure Committee in the NCSL Washington, D.C. office. Taylor Bates is an intern in NCSL's D.C. office.

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