Tuesday, June 02, 2009

Administration: Highway Fund To Go Broke In August

The Obama administration announced to lawmakers that the highway fund for ongoing projects will be empty by August, and an additional $5 to $7 billion will be needed to continue. You can find a snippet of an Associated Press article discussing the issue below, or find the full story here.

Sen. Barbara Boxer, chairman of the Senate Environment and Public Works Committee, said at a hearing the administration has told senators the Federal Highway Trust Fund will need an estimated $5 billion to $7 billion to keep current construction projects going.

The California Democrat said another $8 billion to $10 billion will be needed to keep the fund solvent through the year ending Sept. 30, 2010.

Transportation Department spokeswoman Jill Zuckman confirmed those figures.

"The administration is working closely with Congress to solve this difficult problem and ensure that states have the resources they need to maintain our roads and highways," Zuckman said.

A decline in driving that began in late 2007 has reduced federal gas tax revenue, the primary source of trust fund dollars.

The trust fund is separate from the $48 billion in transportation projects included in the economic recovery law enacted by Congress and signed by President Barack Obama earlier this year.

Congress approved an emergency transfer of $8 billion in general treasury dollars last fall to make up a projected shortfall — the first time in the history of the program that had happened. The fund dates back to creation of the federal interstate highway program in 1956.

Sen. George Voinovich, R-Ohio, said it's clear that Congress must raise the federal gas tax, which is now 18.4 cents per gallon.

"I know that doesn't go down so well with some folks," but it's "the reality of the situation," Voinovich said at the hearing, which was on Obama's nomination of former Arizona highways director Victor Mendez to head the Federal Highway Administration.

"That will be one of my highest priorities, to get on that very quickly," Mendez said of the trust fund.

The law that authorizes federal highway programs is due to expire at the end of September, but the issue hasn't been on Congress' frontburner. There is a consensus among transportation experts and lawmakers that there will have to be some form of a tax increase — always unpopular, but especially so in a recession — to make up for the lower gas tax revenues and to address a backlog of crumbling and congested highways, bridges and public transit systems.

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