2014 is looming ever larger in the transportation community. The federal transportation Trust Fund will run out of money in 2014 absent significant action by Congress – and these days waiting on action from Congress doesn’t evoke much confidence. That being said what are the potential solutions for stabilizing the Trust Fund? The first and most simple answer is an increase in the gas tax. The gas tax has remained at 18.3 cents per gallon since 1993. Factor in inflation, demographic trends which indicate a long-term decline in driving, increased construction costs, and more fuel-efficient vehicles and the Trust Fund may very well go broke sooner than later. A simple gas-tax increase, while welcome, would be just a short-term solution given these trends.
In the long term, we’ll need to look at many solutions including the following: indexing the gas tax to inflation, a per barrel fee on oil, an increase of 17 cents per gallon on gas, a sales tax on each gallon, or some combination of these. This is a menu of solutions that is widely accepted by many stakeholders across the spectrum. There’s also a continuing stream of transfers from the General Fund to plug the funding gap as a possibility but given the current budget discussions in DC that looks politically risky and unstable. The very grim alternative would be cutting funding to meet what the gas-tax brings in. These cuts would be very deep and would seriously impact the ability of regions like ours to meet our long-term economic goals. The sooner Congress gets past its current deadlock the sooner this discussion can begin.