U.S. highway fund needs a lasting fix

  • Article by: EDITORIAL BOARD , Star Tribune
  • Updated: July 23, 2014 - 9:02 PM

Congress should apply a patch, then get busy on reform.

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Construction was underway at the intersection of Interstate Hwy. 494 and 34th Avenue. S. in Bloomington last year.

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Any member of the U.S. House expecting applause for the vote last week to temporarily rescue the Highway Trust Fund from insolvency must be stung by the bad reviews the move received. The New York Times called the bipartisan measure a “sad excuse for a highway funding bill.” The Boston Globe described it as a “rash scheme.” The Spokane Spokesman-Review said it was “incredibly irresponsible, even for this Congress.”

We regret that the House bill doesn’t take a longer-term view of the nation’s transportation funding needs, but we urge the Senate to pass it before leaving for August recess. If, as it appears, the House bill is the best a divided Congress can do, it had better become law.

Inaction would allow the fund to be depleted to the point of inoperability. An immediate 28 percent reduction in federal outlays to state and local highway projects would ensue next month, followed by an eventual slowdown or stoppage of an estimated 100,000 projects, and the loss of 700,000 jobs.

In Minnesota, the impact on state projects would likely not be felt until next year, said Department of Transportation (MnDOT) spokesman Kevin Gutknecht. Federal funds are paid as reimbursement for state outlays, lagging the state’s spending by several months. MnDOT’s cash position today is strong enough to finish this construction season, though some local projects likely would feel an earlier squeeze, Gutknecht said.

But the potential for havoc with highway and transit projects in 2015 and beyond is real. That risk must be what inspired a rare show of unity on a funding bill by the Minnesota delegation on July 15. All three Republicans and five Democrats voted with the House’s 367-55 majority to employ $10.8 billion in budget maneuvers to keep the fund functional through the end of May.

Action to pull the fund back from the brink was necessary. But this rescue isn’t one to brag about. It’s far from the long-term plan the nation needs to modernize its aging transportation infrastructure. The Highway Trust Fund is filled largely by the 18.4-cents-per-gallon federal gas tax, which has not been increased since 1993. Inflation has cost the tax 39 percent of its buying power since it was enacted.

A minimally responsible quick fix would boost that tax back to its 1993 strength. A better one would combine a short-term gas-tax hike with a phased transition to a new funding formula that moves away from per-gallon taxation. With driving declining and vehicle fuel efficiency climbing, the traditional gas tax can’t keep up with the nation’s needs to move goods as well as people. Better would be a formula based on miles driven, vehicle weights and/or carbon emissions, thereby accounting for the toll driving takes on roads and the environment.

The House bill does neither of those things. Instead, it would extend the period in which companies can use a higher interest rate calculation on pension plans, thus reducing their minimum payments and increasing their profits. By the House’s bookkeeping, 10 years of increased corporate taxes would be applied to 10 months of additional funding for transportation.

Unlike other critics of the House bill, we see merit in relieving companies of the pension strain many are facing in this era of low interest rates. Our regret is that the fix does not provide a longer-term solution.

The Senate’s plan, which appears less likely to prevail, also avoids a gas-tax increase, relying instead on stepped-up tax enforcement measures for a similar short-term patch on the leaky Highway Trust Fund.

That’s like vacuuming the nation’s sofas to cover a major household expense. And the cost of managing a transportation network on the cheap can be very high. A report by the National Economic Council and the President’s Council of Economic Advisers says that unsafe road conditions contributed to as many as a third of last year’s 33,000 U.S. traffic deaths. That’s not to mention the economic toll caused by potholes, traffic congestion and carbon emissions.

Democrats must share blame with tax-averse Republicans for allowing a basic government function to fall into this sorry state. Even when Democrats last controlled both houses of Congress, in 2009-10, then-House transportation chairman James Oberstar of Minnesota seethed in frustration about his own party’s unwillingness to raise and reform transportation funding. Oberstar lost his seat in 2010 and died earlier this year. If we could have spoken with him this week about the latest House bill, we suspect he would have said much the same thing he said to us in 2009: Delay in investing in infrastructure is “madness. Just madness. It’s shortsightedness of the worst kind. … We can’t afford time. The public can’t afford time.”

The Senate should pass the House bill. Then voters should give all of them an earful about infrastructure in coming months, so that in May — when the trust fund’s fuel gauge again approaches E — chances improve for a more lasting fix.

  • Federal share

    About 60 percent of Minnesota’s 2014 highway construction budget of $770 million is paid by the federal government, primarily via the Highway Trust Fund. Those funds arrive as reimbursement for state funds already spent. About 30 percent of MnDOT’s total $3.1 billion 2014 budget comes from federal sources.

    Source: Minnesota Department of Transportation

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