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New Funding is Needed as the Highway Trust Fund Nears Empty

As the Highway Trust Fund goes bankrupt, the editors of <em>Bloomberg</em> suggest new ways to finance transportation infrastructure that integrates new technology, increasing public-private associations and loosening the funding framework itself.
March 3, 2012, 1pm PST | Alesia Hsiao
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The central weakness exposed by the conflicting proposals from the White House, the Senate, and the House to finance transportation infrastructure is identified by the Editors as each plan's reliance on unsustainable short-term funding sources. This weakness is, of course, caused by the imminent demise of the Highway Trust Fund.

According to the editors, "The reason everyone is resorting to such sophistry is that the Highway Trust Fund, which gets the bulk of its revenue from a federal excise tax on gasoline of 18.4 cents per gallon, is nearly bankrupt. Because the tax isn't adjusted for inflation, and has been pegged at the same rate since 1993, it has covered less and less of U.S. transportation spending."

As a response to the politically untenable proposition of raising the gas tax, the editors propose new funding approaches to take the place of the Highway Trust Fund. "One promising future replacement for the gas tax is a 'vehicle miles-traveled fee,' which would use satellite tracking or a variety of other methods to charge drivers by mileage, regardless of the fuel they use."

Another avenue identified is, "more and better public-private partnerships for construction projects," based on the success of the much lauded Transportation Infrastructure Finance and Innovation Act (or TIFIA).

Lastly, the editors suggest that the structure of transportation funding could use an update to reduce bureaucracy and allow states more control over federal funding use.

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Published on Sunday, February 26, 2012 in Bloomberg
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