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Highway Fund to Drain Before Your Eyes

Wednesday, January 22, 2014

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The federal Highway Trust Fund will start bouncing checks in August, and taxpayers will have a front-row seat to watch the agency go broke.

The Department of Transportation has started posting exactly how much money the Highway Trust Fund has left and will update that number every month until the fund either runs out or sustains itself, Secretary of Transportation Anthony Foxx has announced.

Foxx spoke Jan. 15 at the Transportation Research Board's 93rd Annual Meeting in Washington, D.C. (The meeting lasted from Jan. 12-16.)

Anthony Foxx
National-Academies.org

"As many as 100,000 bridges are old enough for Medicare," DOT Secretary Anthony Foxx said at the TRB's 93rd Annual Meeting.

One of six major divisions of the National Research Council, the TRB facilitates the sharing of information on transportation practice and policy and provides expertise on transportation policy and programs.

Funding Set to Expire

At the heart of the funding shortfall is the $105 billion, 27-month MAP-21 transportation bill, which is set to expire Oct. 1.

President Obama signed the bill in July 2012. The bill reauthorized taxes that support the Highway Trust Fund through Sept. 30, 2016, and authorizes spending from that fund through Sept. 30, 2014.

The source of funding for most programs in MAP-21, the Highway Trust Fund is comprised of the Highway Account (funding for highway and intermodal programs) and the Mass Transit Account.

The Highway Account started FY 2014 with about $1.6 billion in cash and, shortly after the fiscal year started, received a $9.7 billion transfer from the General Fund. (The amount, under MAP-21, was supposed to be $10.4 billion but was reduced by sequestration.) As of the end of December 2013, the account's cash balance was $8.5 billion.

The Mass Transit Account began FY 2014 with about $2.5 billion, and received a $2 billion transfer from the General Fund (down from $2.2 billion authorized in MAP-21). As of the last week of December 2013, that account had a balance of $3.8 billion.

Budget vs. Infrastructure: 'Time is Money'

As the budget dwindles, Foxx also has another kind of deficit on his mind—the infrastructure deficit.

"A third of all major U.S. roads are in 'poor or mediocre condition,'" Foxx noted. "We face more than $86 billion in backlogged transit maintenance. As many as 100,000 bridges are old enough for Medicare."

Citing a decade of information from the World Economic Forum, Foxx said the country's quality of infrastructure has fallen 20 spots, putting the U.S. behind Barbados—"a country with one airport," Foxx noted.

Part of the problem is that funding has been addressed only in short-term increments, which is too unpredictable for state and local governments to want to make long-term investments and plans, Foxx said.

Highway Trust Fund
fhwa.dot.gov

DOT will post each month exactly how much money the Highway Trust Fund has left, Foxx said. The fund could start bouncing checks as soon as August.

"So they've waited," said Foxx. And as they've waited to repair roads, and bridges, and transit projects, the price tag on those projects has gotten bigger. Because what's true in business is true for infrastructure: Time is money."

Foxx said he planned to work with Congress, to show that it would be fiscally responsible to fund infrastructure now, including passing a surface reauthorization bill and a bill to fund rail.

"[W]hen we talk about our long-term infrastructure deficit, let's understand that every day we fail to tackle it, we're actually creating more expensive projects," he said.

1 + 1 = 4

"Now, while funding is important, just being practical, we are not going to be able to spend our way out of this infrastructure deficit. Even if we replenish the Highway Trust Fund—and maybe add a little more to it—we would still have an infrastructure deficit."

Infrastructure costs money, and generally, a set amount of funding equals a set amount of projects: "One plus one equals two," Foxx says.

"But what if we could make one plus one equal three—or four?"

Foxx says that's the kind of math the DOT is employing with its Every Day Counts program, an initiative designed to identify and deploy innovation aimed at reducing the time it takes to deliver highway projects, enhance safety, and protect the environment.

Asphalt on the Brain

The secretary also has another solution up his sleeve: warm mix asphalt.

warm mix asphalt
Brad Neitzke, Western Federal Lands Highway Division via fhwa.dot.gov

Using warm-mix asphalt could save the U.S. $3.6 billion by 2020, Foxx says. The DOT has touted its benefits in its Every Day Counts initiative.

According to Foxx, warm-mix asphalt can save the country $3.6 billion by 2020 because the material doesn't need to be heated as hot to pave roads. The DOT says that warm-mix asphalt can reduce paving costs; extend the paving season; improve asphalt compaction; allow asphalt mix to be hauled longer distances; and reduce exposure to fuel emissions, fumes and odors.

When $17.65B Isn't Enough

On Friday (Jan. 17), President Obama signed the Consolidated Appropriations Act of 2014, an omnibus spending bill that packages several appropriations bills together.

The bill gives $17.65 billion in discretionary funding to the DOT, and $53.5 billion in obligation limitation (contract authority provided through transportation authorization bills).

Several Democrats from the Ways and Means Committee have called on the committee's Chairman, Rep. Dave Camp, to start exploring new funding options for the Federal Highway.

In a Jan. 16 letter to Camp, the Democratic members wrote, "Our transportation programs will begin to notice a drop in funding this summer, when the Highway Trust Fund's available cash on hand is likely to fall below $4 billion, which is the minimum amount necessary to maintain a sufficient balance to meet week-to-week obligations.

"Below this amount, reimbursements to states will be delayed, construction projects will be curtailed, and jobs will be lost throughout the economy.

"We have fewer than nine months to find a funding solutions for our infrastructure system. Thus, time is of the essence."

   

Tagged categories: Bridges; Department of Transportation (DOT); Federal Highway Administration (FHWA); Funding; Government; Roads/Highways; Transportation

Comment from Billy Russell, (1/22/2014, 5:12 AM)

Hope & Change Working out for you ?????


Comment from Tom Schwerdt, (1/22/2014, 2:10 PM)

Billy, I don’t think we can exactly blame the current crop of Democrats for failing to raise taxes to fund highways. There are a few other fellows vehemently opposing any funding increases, even something to keep up with inflation. The fed gas tax hasn't had a meaningful increase since Clinton - and that money was initially directed to "deficit reduction" (not the highways) - GHW Bush was the increase before that, and again - a big chunk was directed into "deficit reduction." Reagan was the biggest increase - from 4 cents to 9 cents per gallon (over 100%) - and the money actually went to highways.


Comment from Billy Russell, (1/23/2014, 5:32 AM)

Tom, The Complete mismanagement of this Economy can be blamed on NO ONE else but these Democrats in office, They have spent more money on Free programs for people that do not work, will not get a job, "Federal gas Tax" is not the answer to funding 100,000 dilapidated Bridges under the same system that let them get in a dilapidated state of repair, Throwing more money into a Bad system not the answer, We have to change the way we are doing the Job, The way we are Inspecting the Job, we need Uniform but much Tighter oversight of the 80% federally funded projects, Some state specifications are a complete disaster, factor in the Totally inexperienced inspectors these firms are putting with the Cut corner Contractors more money got us in this position, we didn't do the Job right call a Time out, and lets regroup before Throwing more money into a Bad system.


Comment from Andrew Piedl, (1/24/2014, 1:02 PM)

Yes - and look what has happened to our education system.


Comment from Keith Holdsworth, (1/24/2014, 1:12 PM)

The problem is mismanagement of the Gas Tax in the General Fund. It wasn't meant for Deficit Reduction it was meant specifically for infrastructure maintenance. This is Democrat and Republican problem as it has to do with the Federal Governments mismanagement practices of the fuel taxes collected and how they're used. This here is a political pitch to get the tax payers prepared for another excuse at a tax increase for infrastructure. If the government wanted to get real serious about cost savings in performing this work they would be looking at doing something like repealing the Davis Bacon Act which would save tax payers billions of dollars a year in opening competitiveness and not basing wages and benefits on a predetermined scale.


Comment from Noel Stampfli, (1/24/2014, 5:43 PM)

On January 10 the editor posted a very neutral article regarding the debacle at the GW Bridge which in retrospect appears to be an act of pure hubris and a gross betrayal of public trust regardless of ones political leanings.Several in this forum opined that such subject matter is not germane to the coatings industry. Although I disagree I can go along with that in the interest of civility. So, why is it that when reading a very germane article about infrastructure funding I am confronted with a reader comment like "Hope & Change Working out for you ????? " followed by a rant attempting to justify a comment that many may find not only irrelevant but offensive. Lets do a better job of policing ourselves. It is getting old.


Comment from Chuck Pease, (1/24/2014, 6:12 PM)

Oh here we go another Davis Bacon basher. I would be curious what the annual salary is of opponents of prevailing wage laws. Bet for the most part they dont worry about getting the mortage paid or keeping the lights on.


Comment from Jim Johnson, (1/25/2014, 12:13 AM)

I have not been offended by anything written here. There are things I am offended about though. There are 545 members of Congress and 80% of them are liars, cheat on their taxes and their wives, adore the lobbyists that dump loads of cash in their coffers and they could care less what the desires of their constituents are - They offend me. The government collects those gas tax dollars, then spends a huge amount of our tax money hiring thousands of people, pays for thousands of desks, computers, etc. Then doles out what is left to the states, but only if they agree to their terms for spending and reporting, a kind of legal blackmail system to say the least. That offends me. The government screws up everything they touch. Look at the Post Office being broke, the fiasco at the DOJ, the State Department, the IRS and obamacare...These all offend me as a citizen and a tax payer that has to support their felonious actions. We have nine people sitting on the Supreme Court that tend to rewrite our Constitution and ignore what it says or interprets it to say things it was never intended to say. They call a fine a tax, when no where does it say it is a tax and we were assured by the President it was not a tax. So much for Honesty on the Supreme Court. Yes, I am grossly offended by this too. Someone mentioned the Tea Party. I am not a member of any Tea Party, but I have stopped at several of their functions to see what they were about. I saw young and old people, people of every race and color, yet I never heard a racist remark. What I have gathered by speaking with them is that they are for reduced spending, a smaller government that is less intrusive, and want our government to abide by the Constitution. To be honest, every person I know desires those same things and would consider anyone not wanting those things to be a radical or extremist. The GAO last year announced they found 350 Billion dollars being wasted in duplicative programs. Did Congress do something to stop that waste? They totally ignored the report and have not cut one dollar of that wasteful spending. You want money for bridges? Tell your Congressmen to give you that wasteful spending instead. Taxing is not the problem, it is wasteful spending, excessive permitting, excessive government red tape and requirements and few wanting to do anything to fix the problem. Instead of simply wanting more money how about working to stop the excess spending? The Dept of Energy was established to figure out how to make this country energy independent. Instead they have turned into the local free money machine for people who donate large political contributions. How about making the DOE an advisory agency only, no grant capabilities and giving those hundreds of billions to the states for infrastructure? Should we talk politics here? You bet....we should talk politics everywhere until we get this country back on the right track by changing its erroneous ways. Congress on its own is never going to cut the waste as too much goes into their own pockets. The Administration is no better. They spent 700 million dollars in Mexico City advertising all they had to do was come to the US and they would get free food stamps, rent assistance and several other benefit packages, including Social Security. We citizens need to pressure them into cutting the waste, no matter which party, and when we press them hard enough you will have money for infrastructure, but not until then.


Comment from Billy Russell, (1/27/2014, 5:29 AM)

Put on your Big Boy Panties on, and stop being so sensitive, I was not Trying to Justify anything, Factually speaking the Bridge Rehabilitation program specifications are seriously lacking from state to state There is NO federal oversight/input regarding specifying how best to do the specific Project Those are MY tax Dollars that I see being wasted, I am an independent Conservative, Lean towards Republican on a lot of issues, Hope & Change is what a lot of my Union friends were sold we were all tricked this article is yet another example of Democrats incapable of Managing a Budget. Hope & Change working for you now ?????? just curious


Comment from Noel Stampfli, (1/27/2014, 1:47 PM)

I rest my case.


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