Highway funds from feds about to run out

WASHINGTON — The fiscal cliff is gone, but a highway cliff has appeared on the horizon.

The federal highway trust fund — paid for with a federal gasoline tax of 18.4 cents per gallon — is on track to dry up in August, says the Congressional Budget Office, meaning the government would run out of money to pay for maintaining and building highways.

“The balance of the highway trust fund is lower than it’s ever been, and the moneys there are going out faster than what they’re coming in,” said Chris Runyan, president of the Ohio Contractors Association. “The trust fund can never deficitspend. It can never become insolvent. ... When it hits zero, things come to a screeching halt.”

For decades, the federal gas

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tax adequately covered a large part of the nation’s highway and transit needs, providing about 45 percent of states’ highway costs. But that has changed in recent years, in part thanks to a spike in construction costs and an increase in autos’ fuel efficiency.

Congress’ most-recent increase in the gas tax was 21 years ago, during President Bill Clinton’s first term. There’s little appetite to increase the gas tax months before the midterm elections.

Congress has compounded the problem. It traditionally has approved five- or six-year highway bills, but the most-recent one became mired in partisan politics. The battle resulted in the 2005 highway bill’s being extended nine times after it expired in 2009. When Congress finally reached an agreement, it was for an 18-month federal program — far short of the six years that many transportation experts say is needed to properly plan for long-term highway projects. That law expires on Sept. 30.

The trust fund takes in about $38 billion each year and spends about $50 billion, said Jim Tymon, director of management and program finance for the American Association of State Highway and Transportation Officials. He said that U.S. Department of Transportation officials have indicated that once the trust fund drops to below $4 billion, it will have to begin delaying payments to states.

The collision has been coming for some time.

“Everyone has known for the last 10 years that something structurally needs to happen to the highway trust fund, or else we’ll go hand-to-mouth in the future and not have a sustainable federal highway system,” said former U.S. Rep. Steve LaTourette, a Republican from Geauga County, in northeastern Ohio.

The Senate Finance Committee has begun holding hearings on how to address the problem. On the House side, Ways and Means Committee Chairman Dave Camp, R-Mich., suggested a taxreform package this year that would use corporate tax reform to raise revenue for highways, but his proposal was met with lukewarm support from fellow Republicans. President Barack Obama also has pushed corporate tax reform as a long-term solution.

But such reform takes time, and, “Very few things can get the money into the trust fund quick enough to fix the August problem,” Tymon said. “The general fund is probably the only option out there.”

Many people, including Sen. Rob Portman, ROhio, say it’s likely that, in the short term, Congress will borrow from the general fund to avoid a bruising battle before November. Tymon said the federal government has transferred about $50 billion from the general fund to highway spending since 2008.

But that likelihood doesn’t thrill people. “We really need to do something,” said Portman. Continuing to transfer money out of the general fund is not a long-term viable solution, he said.

Sen. Sherrod Brown, D-Ohio, said the cost of failing to act would be high: harming productivity and putting public safety at risk.

Brian Burgett, president and CEO of Columbusbased Kokosing Construction Co., said Congress has little choice but to act.

“If the checks stop, we’ve got 1,200 families, 1,200 homes that wouldn’t have income coming in, because we can’t afford to pay them,” he said.

To hear Burgett describe it, no one wins if Congress allows the trust fund to dry up. His employees and his company would be hurt, he said, but so would other businesses that rely on the nation’s highways to transport goods. Also feeling effects would be anyone who drives on the highways. Not only would long-term projects dry up, but routine maintenance — such as filling all those potholes left behind by a bruising winter — also would suffer.

According to a 2013 report by the American Society of Civil Engineers, 2,462 bridges in Ohio — 9.1 percent — are considered structurally deficient. That report found that 42 percent of the state’s roads are in poor or mediocre condition.

Another group, Transportation for America, found that Ohio receives more than $1.4 billion from the federal gas tax — 59 percent of what it spends on highways. That group also found that federal dollars account for half or more of the capital transportation budget in all but 15 states.

Steve Faulkner, a spokesman for the Ohio Department of Transportation, said the state works hard to make sure it has money in hand before spending it. “We typically have the money upfront before we put shovels in the ground,” he said, “so the money is there.”

The larger concern, he said, would be a long delay in resolving the issue. He said the state’s priority is maintaining the existing highway system. After that, the state considers other priorities, such as new projects.

“Certainly, if the trust fund is ignored and solutions aren’t found, it could have an effect long term on how we maintain roadways and what to do about constructing new ones,” he said.