The U.S. Department of Transportation has announced plans to cut road and transit payments due to dwindling dollars in the Highway Trust Fund. According to DOT Secretary Anthony Foxx, an estimated $4 billion will remain in the trust by the time the cuts begin next month. This reduction of federal dollars could not come at a worse time, as the peak of the summer driving season steadily approaches.
Foxx said a cash management plan will be implemented by the first week of August, leaving states struggling to cover the funding gap. “States will not be paid as they [send] their bills in, but every two weeks as money from the gas tax comes in,” Foxx said, adding that there is no good option when the trust fund runs short.
The Highway Trust Fund, supported by the 18.4 cents-per-gallon gas tax, reimburses states for expenses; however, under this new plan, reimbursements will be limited to available cash. With August just around the corner, states will face some challenges as they try to cover their expenses.
As the condition of U.S. roads continues to decline, business groups are supporting an increase of the gas tax to fund the work that is needed.
The Business Council of Alabama in its 2014 federal legislative agenda supports efforts to pass a long-term, multi-year transportation reauthorization bill that provides for an increase in federal investment to meet the nation’s transportation needs.
Foxx and President Obama have pushed Congress to approve a $302 billion proposal to address transportation funding. Their proposal relies on the use of an estimated $150 billion in corporate tax increases.
According to The Hill, Congress has shown little interest in increasing the tax and seems to have come to a halt in approving new funding for highways and bridges. Many House and Senate members, both Republican and Democrat, do not want to raise the amount that our nation’s drivers have to pay.
The DOT estimates that by the Sept. 30 end of this fiscal year, the Mass Transit Account of the Highway Trust Fund that began with a balance of $2.5 billion in cash will have a balance of roughly $1 billion. The Highway Account of the trust fund will also face a shortage by the end of the fiscal year, suffering a $3.8 billion drop in its cash balance.
“At that time we predicted that the Highway Trust Fund could run dry in August of this year … as we predicted back in January, the time’s almost up,” Foxx said.
Foxx says that he is open-minded to alternative solutions for solving the Highway Trust Fund’s insolvency. “If Congress comes up with a different combination, another formulation to get there, we’ve said that we’ll listen to what they have to say, but they have to speak with one voice.”