President-elect Donald Trump plans to fix America’s aging infrastructure in his first 100 days. Recently, his team laid the loose groundwork for a plan that “leverages public-private partnerships, and private investments through tax incentives,” and hopes to “spur $1 trillion in infrastructure investment over 10 years.”
Yet there has been no discussion on how to pay for the plan, and unless Congress identifies problems of past infrastructure investments, prosperity of future generations could be at stake.
In recent decades, the Interstate Highway System has fallen into disrepair due to reduced revenue and lack of prioritization. Once considered a crown jewel of the Unites States, the American Society of Civil Engineers recently gave our roads a D rating.
So what happened?
Well, as the late astronomer Carl Sagan eloquently said, “You have to know the past to understand the present.”
Originally created as a user-supported fund, the revenues of the Highway Trust Fund were intended to support highways and the interstate system. Currently, the trust fund is supported through a federal fuel tax of 18.4 cents per gallon on gasoline and 24.4 cents per gallon on diesel fuel and other truck-related taxes. These taxes bring in about $34 billion in revenue annually. However, the federal government spends about $50 billion annually on infrastructure, thus running roughly a $16 billion deficit every year.
The problem is two-fold.
First, people are driving less, and the rise of fuel-efficient vehicles has kept people away from the pumps. Coupled with these facts, there has been no change in the gas tax level, which continues to leave trust funds revenues stagnant.
Many have called for a raise in the federal gas tax to provide a boost in Highway Trust Fund revenues. In fact, we haven’t raised the gas tax since 1993, under then-President Bill Clinton.
According to PBS, “if the gas tax had kept up with inflation, it would be 30 cents a gallon today and pull in nearly twice the amount of revenue,” which would account for the trust fund deficit. While this may seem like an easy fix, the situation is much more complicated.
According to the Congressional Budget Office, raising the gas tax would increase revenues, “but they also can impose a larger burden relative to income on people who live in low-income or rural households because those people tend to spend a larger share of their income on transportation.”
The second problem with infrastructure investment is Congress’s lack of prioritization. While the federal gas tax shares part of the blame in the infrastructure equation, the drastic expansion of projects eligible for funding under the Highway Trust Fund is equally guilty.
In the beginning, the Federal Highway Administration only funded interstate transportation projects, but its scope is much broader now and includes funding for beautification projects like transportation museums, bike paths and projects that are entirely local in nature. Mismanagement and the overextension of the Highway Trust Fund in particular has left America’s roads and infrastructure significantly weakened.
There is no doubt Congress has had a significant impact on the depletion of the Highway Trust Fund by picking winners and losers in the infrastructure process. In fact, the fund had an excess of almost $11 billion in 2005. Since 2008, however, Congress has bailed it out six times for more than $63 billion, and the Congressional Budget Office estimates $157 billion in additional revenues would be required to maintain current spending levels between 2015 and 2024.
According to the Government Accountability Office, during fiscal 2004 through 2008, four agencies within the Department of Transportation obligated about $78 billion in Highway Trust Fund monies for “purposes other than construction and maintenance of highways and bridges.” These projects included bike paths, pedestrian walkways, scenic beautification, and landscaping projects. Few would argue that a sculpture park or a bike trail is more important than a critical bridge that transports hundreds of thousands of people daily, but those have been the priorities of Congress.
As Congress and the president consider how to fund transportation, critical national priorities that ensure the safety and operability of crucial interstate infrastructure should be the top priority. Congress can also no longer afford to spend billions of federal transportation dollars on non-transportation priorities such as scenic beautification, bike paths and pedestrian walkway projects.
Congress and the incoming administration need to agree on a long-term plan for funding surface transportation. Continuing to supplement the Highway Trust Fund with general revenues is not sustainable, especially given the federal government’s fiscal challenges.
When Congress shortchanges critical infrastructure, we see the impact in the form of potholes, deficient bridges and crumbling roads; that’s why this conversation is so relevant to every American. However, if a new infrastructure deal fails to learn from past mistakes, Congress will shortchange economic opportunity for young Americans, and while we won’t physically see the damage, the impact will be just as severe.