September 2, 2014

Warning Sign: Delays Ahead on Highway Funding

  • Discretionary spending is the portion of the federal budget determined through the Congressional appropriations process. Approximately one-third of...

Due to a long-predicted financial crunch, the Department of Transportation has announced that it will begin delaying payments next month from the Highway Trust Fund to the states.

Lawmakers must quickly find a solution to avoid postponement or cancellation of transportation projects across the country. In addition to the immediate shortfall, the Congressional Budget Office estimates that over the next decade dedicated revenues in the trust fund -- from motor fuels taxes -- will fall short of planned spending by $167 billion.

Meanwhile, lawmakers also soon need to renew authorizations for highway and transit programs.

Congress has struggled to find a consensus on how to stave off trust fund insolvency and find a dedicated long-term funding source that can fully finance transportation spending.

Several lawmakers have suggested raising revenue from sources unrelated to transportation, including the postal service -- which has its own financial problems.

Motor fuels taxes have not been raised since 1993 and so have failed to keep up with inflation and transportation needs. Proposals to raise these taxes, however, have failed to gain much congressional support.

A promising proposal by Rep. Earl Blumenauer (D-Ore.) would raise motor fuels taxes by 15 cents over three years and then index them to inflation.