Laura Bliss is CityLab’s west coast bureau chief. She also authors MapLab, a biweekly newsletter about maps (subscribe here). Her work has appeared in the New York Times, The Atlantic, Los Angeles magazine, and beyond.
The gas tax hasn’t budged since 1992, and highway trust fund is running on fumes. Could a Green New Deal pushed by Congress be a fix?
With the federal government back in operation for three weeks after a historic shutdown, U.S. transportation agencies are breathing short sighs of relief. As President Trump fought with Congress over a border wall for 35 painful days, the Federal Transit Administration’s activities hung at a standstill, leaving rail and bus systems around the U.S. without billions in expected reimbursements and grants. By last week, some rural operators were starting to mull service cuts.
But the reprieve will be short, and not only because the country faces a good chance of another prolonged shutdown. The highway trust fund, the federal account that collects gas-tax receipts and supplies the vast majority of transportation funding to states and cities, is set to dry up in 2022, a new report by the Congressional Budget Office finds. The cash that’s allocated to public transit specifically will run out even sooner, in 2021.
Below, a chart from the report projects year-by-year declines in the trust fund’s balance, from $41 billion in 2018, to $32 billion this year, to $19 billion in 2020 and—assuming Congress doesn’t step in to reverse the spiral—$4 billion in 2021 before hitting bottom in 2022.
Lawmakers have long seen this day coming. Though a number of states have recently raised fuel levies for themselves, the federal gas tax hasn’t budged since 1993—pump-handlers have sent 18.4 cents per unleaded gallon to Washington, D.C., for more than 25 years. That’s left the highway trust fund increasingly strapped, for a few reasons. First, inflation has weakened the purchasing power of those tax dollars. Second, the cost of labor and materials to build and maintain roads and rails has spiked. And third, Americans have been driving relatively more fuel-efficient vehicles (though those climate benefits are being wiped out by the rising number of cars on the road). That translates to fewer tax dollars relative to the number of miles (and amount of wear) drivers are putting on the roads.
The highway trust fund was set up in the 1950s to bankroll the interstate system, and it has been due for a tune-up for more than a decade. The U.S. DOT made the dire announcement that the fund was running on empty back in 2008, and that it couldn’t guarantee states much for long. That crisis inspired an $8 billion bailout by Congress from the government’s general fund—yes, banks and carmakers weren’t the only ones who got a handout in the darkest depths of the recession. Ever since, withdrawals from the highway trust fund have exceeded revenues by a total of $115 billion.
Congress has continued to keep it on life support with periodic infusions from the general fund, most recently seen in the FAST Act, the last big transportation authorization bill, which expires in 2020. But the CBO report finds that without more and larger infusions, the fund’s balance will bottom out in a few short years.
To give a sense of how bad that would be for transportation systems around the country, in 2018, the federal government spent just under $60 billion on roads and transit systems, according to the CBO. If the trust fund hits bottom in 2021, that would limit the government to spending no more than the revenue flowing in that year, which is estimated to be $41 billion. A nearly 30 percent budget cut would likely force the Federal Highway Administration and the Federal Transit Administration to slow down its obligated payments to already-completed road and transit projects. That would keep commuters waiting on better service, and stunt the ability of state and local agencies to make plans for the future.
The exceptionally obvious solution to the problem of a dying highway trust fund remains boosting the federal gas tax, which is the fix that has been recommended by the U.S. Chamber of Commerce, the American Trucking Association, Nancy Pelosi, and most recently, President Donald Trump. But a tax hike is likely to remain elusive as long as read-my-lips Republicans control the Senate. The other option—devolve federal transportation programs and slash spending, as Utah Senator Mike Lee has long crusaded to do—is not likely to win over Democrats, who now have a majority in the House.
What to do? Congress is due to take up the matter of a new transportation spending bill this year. Some policy-shapers believe that a zeroed-out highway trust fund offers a ripe opportunity to rethink how America pays for transportation in the first place. The feds could switch to a sales tax model, where revenues fluctuate with the retail price of gas rather than be fixed per gallon. Representatives Peter DeFazio and Earl Blumenauer* of Oregon are pushing a pay-as-you-go driving tax, like the one their state is piloting with promising results. Climate advocates (and a few lonely congresspeople) have called for a carbon tax on driving, levied at the pump.
But no matter how the money comes in, said Adie Tomer, a fellow at the Brookings Institution Metropolitan Policy Program, the moment is right to reshuffle the government’s priorities for the kinds of projects that receive money. “There is a real reckoning conversation that we have to have because of what we’ve built,” he said.
The highway trust fund, after all, was established to create the infrastructure that allowed transportation to become the number-one contributor to the U.S. greenhouse gas emissions. Now, with freshman Democrats in Congress pushing for a still-undefined Green New Deal, leaders should start talking about how to push Americans who depend on internal combustion into more-sustainable modes, including electric vehicles, public transportation, walking, and biking. That could mean a role for the federal government in stewarding how communities develop so that those modes are within reach. “If people are stuck driving cars, there is no amount of transit we can build in time to hit our climate change goals,” Tomer said.
In all likelihood, even a marginally more transit-oriented U.S. DOT will have to wait for a president who believes climate change is happening. For now, it seems, states and cities will scrape by with fewer top-down resources by upping their own gas taxes, testing out per-mile fees and tolls, and other such measures to pay for public transit. Until further notice, the big fight for cleaner transportation—and the planet’s future—will remain all too local.
*CORRECTION: An earlier version of this story misstated Rep. Blumenauer’s title and last name.