The five-year Infrastructure Investment and Jobs Act still has more than three years to run, but a House subcommittee is focusing attention on a big post-IIJA worry: the Highway Trust Fund’s projected poor financial health.
At an Oct. 18 House highways and transit subcommittee hearing, there was general agreement from witnesses and lawmakers that a long-range fix for the Trust Fund is needed. Several alternatives or supplements to the trust fund were discussed: including mileage-based user fees and federal levies on electric vehicles, which contribute nothing to the fund.
Increases in the federal motor fuels taxes are another option, but politically a seeming nonstarter, given that those taxes haven't been raised since 1993.
"A long-term sustainable solution is necessary to provide state, local and private sector partners that certainty they need to plan and build their projects,” Subcommittee Chairman Rick Crawford (R-Ark.) said.
Del. Eleanor Holmes Norton (D.C.) the panel's top Democrat, said, "Congress needs to find a solution for the long-term solvency of the Highway Trust Fund."
That would mean boosting user fees or indexing them to inflation, Norton added, which "would mean increasing user taxes, user fees, rather, or indexing them to inflation.
She said, "It also might mean transitioning to a new system based on vehicle miles traveled."
The problem isn’t new. Crawford said that since 2001, spending from the trust fund on highways and transit has outrun revenue flowing into the trust fund from gasoline and diesel fuel and other sources.
To prop up the trust fund, Congress since 2008 has shifted to the trust fund a total of $275 billion, mostly from the Treasury's general fund. That includes a 2021 infusion of $118 billion in the IIJA, which essentially bought the trust fund five years in the black.
But subcommittee members and witnesses see danger after that.
Chad Shirley, principal analyst for the Congressional Budget Office's microeconomics studies division, told the panel the current balances in the trust fund's highway and transit accounts would vanish in 2028 if no new revenue is added to them and trust fund spending on highways and transit increases to match the inflation rate.
Moreover, Shirley said that under that scenario, the trust fund's accumulated shortfall from 2024 to 2033 would total $241 billion.
Construction, engineering, state transportation officials and other infrastructure advocates are weighing in on the looming trust fund warning signs, too.
Industry and Transportation Groups Weigh In
A coalition of two-dozen groups wrote to the leaders of the full Transportation and Infrastructure Committee on Oct. 18, calling for a long-term remedy for the Trust Fund that would retain the user-based finance principle.
The coalition also said that a VMT or other mileage-based replacement for the present fuel tax system “can certainly be a potential solution.”
CBO Estimates of Revenue Raising Options
Shirley of the CBO outlined how much revenue various options would raise. He said increasing the gasoline and diesel taxes by 15¢ per gallon would bring in about $25 billion annually, enough to keep the trust fund out of the red.
A VMT fee would raise about $3 billion a year per penny in fees; and a new federal fee on electric vehicles would bring in $2 billion per year, on average, over 10 years, according to Shirley.
Jeff Davis, a senior fellow with the Eno Center for Transportation, told the subcommittee, "States are taking the lead and and testing new user-pay options." They include ways to charge vehicles by miles traveled. "These are promising," Davis said.
For example, in Washington, the state transportation commission "has concluded that we must end our reliance and transition to a road usage charge, or RUC, where drivers pay by the mile rather than by the gallon of gas," Reema Griffith, the commission's executive director, told the subcommittee.
Griffith said the state has been undertaking assessments, research and testing of an RUC for more than 10 years.
She said officials want to ensure the transition to a new fee "is informed and deliberate ... like the slow turn of a dial rather than the sudden flip of a switch."