Highway Trust Fund Almost Broke

June 10, 2009
Blaming a decline in driving because of fuel prices resulting in lower revenues from federal gas taxes, the Obama administration says that the Fund will run out of money in August.

While Congress approved an emergency transfer of $8 billion in 2008 to meet a shortfall then, as drivers continued to drive less, lowering federal gas tax revenues, again the Highway Trust Fund is facing insolvency. Additionally, automakers are producing more fuel-efficient cars. In 2008, funding came from the government’s general fund.

Primary income for the Fund is from the tax revenues. For its part, the Obama administration is not in favor of an increase in that tax. It has been proposed that motorists be taxed on the number of miles that they drive rather than how much gasoline they buy. While Secretary of Transportation Ray LaHood has indicated he is willing to examine that alternative. There are problems with that proposition, as well, not only in terms of how to monitor motorist but politically with this idea angering many in the driving public.

One Senator, George Voinovich (R-Ohio), who has said he will not be running for re-election, has proposed raising the federal gas tax that presently stands at 18.4 cents per gallon. In responding to the proposal, Secretary LaHood said this is not the time, during an economic downturn, to be raising gas taxes.

Questions and solutions may be forthcoming in the reauthorization of SAFETEA-LU (Safe, Accountable, Flexible, Efficient Transportation Equity Act ...A Legacy for Users) due to expire in September. At this point Congress is preoccupied with other matters. It will, however, have to come up with funding from somewhere. This year’s shortfall is estimated between $8 and $10 billion.

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