The U.S. federal deficit is projected to average its highest levels over the next decade at $1.2 trillion per year, and the Highway Trust Fund (HTF) is one of the deficit-spending programs that will be most in need of a major funding overhaul or risk going bankrupt.
According to the latest estimates from the Congressional Budget Office (CBO), since 2008 the fund’s spending has exceeded its revenues by a total of $115 billion, up 12 percent from the $103 billion CBO calculated in April 2018, and a 55 percent increase from the $74 billion calculated in April 2016.
Because money paid into the trust fund is used to reimburse state and local governments for road and highway projects that commercial trucking relies on, lawmakers over the years have authorized a series of transfers to the fund to avoid delaying those payments, so far totaling an estimated $144 billion, according to the CBO.
Absent another funding reauthorization, the highway and mass transit account, which stands at $32 billion in 2019, is expected to be depleted by 2022.
As a result of deficit spending under the HTF and other programs, the federal debt, which will stand at roughly $17 trillion by the end of this year, is estimated to increase to $28 trillion by 2029, according to the CBO report.
Testifying on the report today on Capitol Hill, CBO director Keith Hall told the House Budget Committee that the debt trajectory is on an unsustainable course. “To put it on a sustainable one, lawmakers will have to make significant changes to tax and spending policies,” he said.
As the new Congress begins filling its legislative calendar, several committees, including the House Transportation and Infrastructure Committee, plan to debate infrastructure programs and float ideas on new ways to pay for them, as raising the gas tax – the simplest way – has yet to gain political traction. Instead, lawmakers plan to begin seriously considering user fees and taxes based on vehicle mileage (VMT).
According to the Tax Policy Center, a tax on vehicle miles driven would provide a more direct link to the cost of highway use “but, unlike an increase in the tax on motor fuels, would be difficult to implement, requiring new tolls or electronic motoring of vehicles.”
It noted that an advantage of a VMT is that it could make up the additional costs of congestion by increasing tolls or the tax rate in certain locations and at certain times of the day. “A vehicle mileage tax would not, however, provide an incentive for driving more fuel-efficient vehicles,” it asserted.