How to Increase Transportation Revenue
Investing in transportation is unlike any other federal government spending. Transportation dollars are converted to physical assets that will last 50 to 100 years to provide future generations with a modern, globally competitive system. At the same time, such investments create and maintain well-paying “Made-in-America” jobs.
There are compelling reasons to increase transportation investment right now. In the short-term, enactment of an economic recovery bill can use transportation infrastructure investment to create and sustain thousands of family-wage jobs, in every part of the country, building “Made-in-America” infrastructure. According to FHWA, every $1 billion of federal investment in highways supports 35,000 jobs. For the long-term, increased transportation investment can help sustain economic recovery, keep the U.S. globally competitive, reduce congestion, and save lives.
What Is Needed
To meet America’s 21st Century mobility needs and remain competitive in the world economy, surface transportation infrastructure investment must be substantially increased. According to the National Surface Transportation Policy and Revenue Study Commission 2008 Report Transportation for Tomorrow, today the country is investing at less than 40 percent of what is needed. That bipartisan panel chartered by Congress estimates that an investment of at least $225 billion per year is required through 2055 in highways, transit, freight, and passenger rail to meet our national needs.
The Commission concluded that the only way investment could be increased to the levels needed is for all levels of government—federal, state and local—to continue to fund their historic shares. Over the past 20 years, the federal share of highway and transit capital investment has averaged 45 percent.
Three Steps to Investment
- Congress recognized the critical nature of this investment and took the first step by transferring $8 billion to the Highway Trust Fund to ensure its solvency. It will need to ensure that this funding is sufficient to carry us through fiscal year 2009 and take further action if funding again falls short.
- The next major step is to increase federal transportation revenues enough to restore the purchasing power of current highway and transit programs, which has steadily eroded in the 16 years since the last revenue adjustment.
- In the longer term, we must prepare to transition revenue collection methods to alternatives capable of sustaining funding for the transportation system for years to come.
The Immediate Federal Funding Crisis
Today federal transportation funding faces two crises:
1. Highway Trust Fund Insolvency
Spending from the Highway Trust Fund has exceeded the levels of revenue flowing into it. In September 2008, Congress transferred $8 billion back into the Trust Fund from the General Fund to enable U.S. DOT to honor the commitments made to states under the current highway and transit authorization (SAFETEA-LU) through October 2009.
By October 1, 2009, or just before, Congress will again have to provide interim funding to simply sustain current investment levels. Otherwise, based on current revenue projections, the highway program will face a cutback of $20 billion or more for FY 2010. The transit program will face similar drastic reductions one year later in FY 2011, unless additional revenue is provided.
