Eno Center for Transportation calls for novel ways to federal surface transportation long-term

By Jeff Berman, Group News Editor
March 02, 2015

The ongoing financial travails of the Highway Trust Fund was made clear in a position paper recently issued by Jeff Davis, senior fellow at the Eno Center for Transportation.

In the paper–entitled “Why Not A Ten-Year Surface Transportation Bill?”-Davis points to past federal transportation bills, as well as the White House’s GROW AMERICA proposal as having one fatal flaw in common: they each leave the HTF on worst financial shape after the bill expires than it was prior to the bill being enacted.

That is hardly a good thing, even more so when looking at the projected future HTF deficits, which are based on the Congressional Budget Office’s new current-law-plus-inflation baseline.

Putting those numbers into perspective, the CBO has the HTF deficits are for FY 16 through FY 18 at -$14 billion, -$14 billion and -$15 billion, respectively, with the GROW AMERICA act expected to run even steeper deficits, ranging from -$37 billion alone in FY 2022, $-32 billion in FY 2023, and $-30 billion and -$29 billion in FY 2024 and FY 2025, respectively.

So, what does Eno’s Davis propose? His main thesis for Congress is to essentially replicate what President Dwight D. Eisenhower’s 84th Congress did, which is this: “enact legislation providing ten or more years of contract authority for core federal surface transportation interests while also providing additional funding on a shorter timeline for other transportation programs.”

Davis made it clear that this proposal legs, too, based on historical precedent, as Eisenhower’s 1956 law provided 13 years of stability with guaranteed contract authority drawn on the new HTF which in turn was used to construct the Interstate system in the U.S.

To get back to that period of sustained HTF stability again for the next decade, Davis said two actions are required
-reducing new HTF contract authority to whatever the actual user tax receipt levels will be; and
-paying down the “legacy debt” of unsustainable outlays from obligations incurred prior to FY 2016 that are estimated to be $20-$25 billion

This scenario, according to Davis, could require $50 billion in business tax reform or a non highway-user asset to pay for a ten-year transportation bill that would provide $422 billion along with ten years of contract authority for core federal programs at roughly $40 billion per year to be supplemented by $12-$13 billion per year in additional general fund budget authority in the first two years to keep total spending at baseline levels. He also explained that additional proceeds from tax reform could support higher levels of general budget fund authority for a longer period of time, with any increase in highway user taxes automatically increasing the size of annual HTF contract authority appointments.

“People need to start thinking outside the box…in terms of coming up with ways of making money go farther,” Davis said on an Eno-hosted conference call last week. “We are the only country left that has a major revenue source for users paying for surface transportation, but if you are going to keep a trust fund, it should be solvent and self-supporting and should not depend on bailouts.”

Davis presents a novel approach to something that has been overlooked for too long and periodically swept under the rug with Congress essentially applying band aids to a transportation funding issue that at least needs stitches at this point. Congress has been steadfast in stressing the raising the federal gasoline tax is not going to happen, and most people have come to accept this as a reality, which is too bad, considering that many supply chain stakeholders have called for this for several years.