Understanding the Highway Trust Fund
Breaking Down the Highway Trust Fund
What is the Highway Trust Fund?
The Highway Trust Fund was established in 1956 to provide a dedicated source of federal funding for highways. It is the primary way that federal highway and transit programs are funded for state, local, and national projects across the country.
Importance of the Highway Trust Fund for the 5th Congressional District of Georgia
Issue number one for our community is transportation. Commuters sit in traffic for a record total 60 hours a year. Earlier this year, Forbes magazine declared the Atlanta Metropolitan Area as the worst city for commuters in the country. On July 23, 2008, the House passed H.R.6532, a bill that restores the Highway Trust Fund balance by making an amendment to the IRS code. This legislation will help bring more construction jobs, connecting communities, cleaner air, and encouraging businesses to invest and grow in Atlanta and across the country.
Few people realize that 97 percent of the nation’s roads and highways are owned by state and local governments, and most transit systems are owned and operated by public state and local agencies. Federal support for many, many major state and local highway and transit projects are funded through the Highway Trust Fund.
Over the years, Congressman Lewis has worked to secure millions of federal dollars to help Metro Atlanta initiatives like MARTA’s Smart-Card Fare Collection system and Clean Fuel Bus acquisition project, improvements to I-285, I-85, I-20, the Lovejoy to Griffin Commuter Rail Line, the BeltLine, the Atlanta Inter-Modal Passenger Facility, and a variety of other Metro Atlanta transportation initiatives. This fiscal year, there is $1.3 billion in federal highway and transit funds reserved for the State of Georgia.
Where does the Highway Trust Fund money come from?
The Highway Trust Fund has two main sources of revenue. The first is through federal excise taxes on motor fuels also known as the gas tax. Americans – primarily through businesses -- pay a tax for the amount, not price, of motor fuels that they purchase. The second tax is based on truck-related (trucks, trailers, and other heavy-use vehicles) taxes. Again, truck manufacturers and tire retailers primarily pay these taxes. These revenues comprise about 84 percent of the funding dedicated to the Highway Trust Fund.
Why do we need to act now?
As gas prices increase, less is being purchased. This means less money is sent to the Highway Trust Fund. Simultaneously, the cost of transportation and construction -- like that of food and energy -- continue to increase. Consequently, the estimate cost of a project planned in 2005 is significantly higher today than it was three years ago.
In January, before the steep increase in gas prices, the administration predicted a $3.3 billion Highway Trust Fund shortfall. Unfortunately, many believe the situation will continue to deteriorate. For example, the American Association of state Highway and Transportation Officials (AASHTO) estimated that the shortfall could lead to a devastating $14 billion, or 34 percent, reduction in federal highway investment in fiscal year 2009.
What has Congress done and what is ahead?
Federal financial assistance for federal, state, and local surface transportation and transit initiatives were most recently authorized in the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) law in 2005. This legislation will need to be updated in the next Congress. This year, Congress adopted a budget resolution that permits for full funding of this bill.
Most recently, Congressman Lewis managed Floor consideration of H.R. 6532 , which permits for an additional $8.02 billion to be transferred to the Highway Trust Fund to prevent an emergency shortfall. This legislation passed the House on July 23, 2008 by a bipartisan vote of 387-37. Passing H.R. 6532 will help the federal government meet their financial commitments to state and local highway and transit initiatives. The fiscal year 2009 impact of the President not signing this bill is a loss of nearly 14,000 jobs and $400 million in the State of Georgia.