Thursday, May 21, 2015

Another Fudge as the US Puts Off Proper Political Action to Fund Transport Infrastructure

Lack of Will to Resolve a Most Serious Situation as Highway Trust Fund Continues to Fail
Shipping News Feature

US – With the Highway Trust Fund, the gasoline tax, part of which funds roads infrastructure upkeep and development, about to expire at the end of the month, the US House of Representatives has passed yet another short term funding patch in an effort to avoid any interruptions in the country’s numerous infrastructure development projects. Whilst it appears that the government are actually trying to solve the issue, this 33rd patch in six years only sees Congress delay proper investment decisions for all of two months as politicians of every hue simply continue to drip feed the failing fund.

Now on its way to the Senate, the extension, which passed the House in a 387 to 35 vote, adds another needed boost to the near depleted fund which has been ‘running on fumes’ for some time. Federal motor-fuel tax rates have not increased since 1993, when President Clinton upped the tax by 4.3 cents, bringing the total tax to 18.4 cents per gallon in an effort to reduce the Federal budget deficit, but the revenue was then redirected to the Highway Trust Fund in 1997. Many first world countries look on in astonishment at the level of road fuel taxation and, adjusted for inflation, the tax is now worth a little over 10 cents for a gallon.

This trend toward revenues falling in real terms is expected to continue as demand for gasoline decreases with the introduction and adoption of more fuel-efficient and alternative fuel vehicles in the years ahead. In August 2014, the Congressional Budget Office estimated that to maintain current spending levels plus inflation between 2014 and 2024, the Highway Trust Fund will require about $157 billion more than it is expected to take in over that period. To maintain current spending levels and cover revenue shortfalls, between 2008 and 2014 Congress has transferred over $50 billion in general revenues to the Highway Trust Fund. In August 2014, an extension of federal-aid highway programmes through May 31, 2015, was enacted providing $10.8 billion in funding to the Highway Trust Fund, of which $9.8 billion was transferred from the General Fund of the US Treasury.

According to estimates by the Joint Committee on Taxation, a one-cent increase in the taxes on motor fuels, effective October 1, 2014, would have raised about $1.5 billion annually for the Fund over the next 10 years, assuming that the taxes are extended beyond 2016. If lawmakers chose to meet obligations projected for the trust fund solely by raising revenues, they would have to increase the taxes on motor fuels by between 10 and 15 cents per gallon, starting in 2015. A rise of 15 cents would still leave the country comfortably under worldwide average price per gallon as evidenced by an average $2.91 per gallon as of May 18, compared to a worldwide $4.27. The average price per gallon in the UK, as of May 18 was $6.93.

The Highway Trust Fund has its modern roots in the Yom Kippur war when, in 1973, OPEC cut off America’s fuel for supporting Israel. If the latest round of support isn’t forthcoming all work on infrastructure across the US would basically cease overnight. For anyone with 20 minutes and a sense of humour to spare who wants to see the current condition of some of America’s transport and utility infrastructure, and hear a comedian's personal view of the parlous condition of the Fund whilst citizens’ rail against any increase in the tax, Birmingham born John Oliver gives an alternative video view here.