The nation’s economic vitality rests, in part, on Congress coming up with a long-term fix to the Highway Trust Fund, seven state and local groups argue in a Monday letter to House and Senate leaders. The letter echoes the urgency voiced by President Obama and his administration last week, both of which warned that states could begin feeling the effects of inaction as soon early August.
“Jobs, infrastructure projects and the safe and timely movement of freight are now at risk because of the impending insolvency of the HTF,” the seven groups write in their letter to House Speaker John A. Boehner (R-Ohio), Minority Leader Nancy Pelosi (D-Calif.), and Senate Majority Leader Harry Reid (D-Nev.) and Minority Leader Mitch McConnell (R-Ky.).
Most states get about half of their transportation money from the federal government, but the Transportation Department recently predicted the Highway Trust Fund that provides much of that money will begin drying up as early as Aug. 1.
The fund helps to pay for highway, bridge and transit projects, but has been suffering due to growing and fundamental problems with one of its main funding sources, the federal gas tax. That tax, which Congress hasn’t tied to inflation, hasn’t risen since 1993. (The prospect of raising a tax on a product all Americans are highly sensitive to is, of course, politically unpalatable.)
To make matters worse, American driving habits are changing, too. Despite a growing population, the number of total miles driven has stagnated in the last few years, as the former top economist to Vice President Biden, Jacob Bernstein, pointed out recently with the chart below.
Although some economists disagree, many believe infrastructure spending provides a strong return on investment. In a May 2013 survey, for example, leading economists overwhelmingly agreed that infrastructure spending represents an opportunity to boost average incomes, even though many also said they believed that most projects would yield low or negative returns. After looking at two decades of data, a pair of Federal Reserve economists concluded that each federal highway grant dollar increases a state’s economic output by at least two dollars, a high return on investment.
In their letter to Congress, the seven state and local groups alluded to the role that such spending — or lack thereof — plays.
“Federal inaction and short-term extensions create uncertainty at the state and local levels, which hinders transformative transportation investments and prevents our nation’s economy from moving forward,” the groups argued. “Our national organizations stand together to collectively urge Congress to find a long-term fix for the HTF and pass a multi-year surface transportation authorization bill. Let’s get it done together.”
The Monday letter was signed by the “Big 7,” a group of nonpartisan organizations that advocate for state and local governments. They are: National Conference of State Legislatures, National Governors Association, Council of State Governments, National Association of Counties, National League of Cities, U.S. Conference of Mayors and the International City/County Management Association.