As many of you know, my day job with PolicyBEST involves a lot of information about transportation related problems, issues, and facts. Of those many things that we’ve been watching the last few months is the Federal Highway Trust Fund. This is the funding mechanism for maintaining the interstate system in the US. It’s also about to run out. Previous projections were October, but August is now looking much more likely.
Today on Vox, the new project of Ezra Klein formerly of the Washington Post, there was a great piece that explains the looming problems with shortfall. And while I’ve never been a big fan of Ezra Klein, Vox does seem to be putting out a good bit of content based on sound numbers and data.
Why does any of this matter? Well Georgia is one of the states that will be disproportionately affected by any shortfall of the HTF. The reason being that of the $2ish billion budget that GDOT has, $1.1 billion comes directly from the Federal government via the HTF.
If the HTF were to default then Georgia, as well as many other states, would no longer be able to start new transportation projects because the funding is not there. Already, many state Transportation Departments are looking at which projects to delay and if new projects should be bid.
Why is the HTF no longer solvent? Three main reasons. First is the introduction of higher CAFE standards. These are the Corporate Average Fuel Economy standards that direct how many miles per gallon each automobile manufacture must achieve. These have been going up and vehicles are traveling further on less gas. Consequently less motor fuels tax is being collected.
Second is that people are driving less. (Figure 2) If we aren’t driving as much, then less fuel is being consumed, and consequently less fuels tax being collected.
Third, is that the motor fuels tax is set per gallon and not pegged to inflation or price. At the federal level it has been 18.4 cents per gallon of gasoline since the early 90’s. Obviously there have been some changes since then and the revenue has not remained constant.
All three of these factors together have resulted in the looming transportation funding crisis that will happen if things stay the status quo. Something will need to change, or there will be stop gap measures taken every couple of years to continue funding the HTF. If not there will be an additional $12 billion shortfall added each year.
The first step in fixing this problem begins with changing the perception of the gas tax itself. We need to see the gas tax for the user fee that it is. As such, it is as a tax paid per mile driven, not a tax paid (as it currently collected) per gallon of fuel. That doesn’t mean that we need to shift to a VMT based tax, only that we need to reframe our perspective. This perspective allows us to more easily see the diminishing return of the user fee. Once we understand this, a discussion about long term funding solutions becomes a bit easier.