There will be a great deal of squabbling among our politicians over the next several months as they prepare to deal with the Highway Trust Fund, fuel taxes and other related transportation needs.
These issues can get quite complicated and this series of blog posts will in no way attempt to dissect these issues. Nevertheless, the Highway Trust Fund has two components – a portion of revenues is for highways and the other portion is for mass transit. The highway portion takes up the bulk of the trust fund.
Spending on projects is not automatically triggered by revenues credited to the trust fund. Funds have to be “obligated” and “appropriated” and there are limits on these obligations, appropriations and ultimate disbursements.
The fact is current federal taxes on fuel are not enough to fund current needs. As mentioned in an earlier post, gas demand has fallen and this results in fewer dollars going into the trust fund. Better fuel efficiencies also mean decreasing the amounts going to the government.
There has not been an increase in fuel taxes since October of 1993 and this may provide some incentive to enact another increase to help cover funding needs.
But there may not be a lot of support to raise taxes in an election year (unless the proponent is not up for re-election).
Certain segments within the trucking industry are clamoring for more funding for the near bankrupt highway trust fund. Yet, they themselves will bear a large brunt of higher fuel taxes.
It’s a tricky scenario for everyone. It’s “I’ll be hanged if I do and I’ll be hanged if I don’t”.
Some of the opposition to higher fuel taxes is the fact that some of the current funding is diverted from roads and bridges. For example, some monies are spent on bike paths and other non-related and non-essential projects.
In Part VI, I will give some opinions on where I think this is all going.
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