Although Texas voters approved Proposition 1 on Nov. 4—a constitutional amendment which could provide $1.7 billion to state transportation projects in the next year—Texas and the rest of the country have an even more significant long-term transportation funding problem on the horizon: the Highway Trust Fund.
The federal government's funding source for transportation projects across the country, the HTF could run out of money if Congress does not pass new legislation this session. In addition, decreasing revenue from the motor vehicle fuel tax and a growing need for transportation projects means the HTF is facing an average $17 billion annual deficit from 2015–23 unless Congress finds a new funding source.
"The Highway Trust Fund is a very key component [in our ability] to maintain and improve our transportation systems," said Jeff Collins, co-chair for the Cy-Fair Houston Chamber's transportation committee. "Our growth strains our highways so we need to build improvements to avoid worsening congestion."
Funding problem
The majority of HTF revenue is generated by 18.4 cents for every gallon of gas pumped throughout the country as well as 24.4 cents per gallon of diesel gas. The gasoline tax has not increased since 1993, said Janet Kavinoky, executive director of transportation and infrastructure for the U.S. Chamber of Commerce.
With less gasoline tax revenue being generated, the federal government has had to borrow from the rest of the budget to make up the difference. Since 2008, $64.1 billion has been borrowed to make up the shortfall, she said.
The national recession in 2008 exacerbated the gas tax revenue decline, Kavinoky said.
"When [people] drove less, they also bought less gas, so there were fewer fuel taxes going into the [HTF]," she said. "We didn't anticipate that, so we had to start making up the difference. People didn't jump back into driving the way they did before, so we [have been] making up the difference ever since."
While Congress deals with a long-term problem of fixing federal transportation funding, there is perhaps a more pressing issue of what to do about funding transportation in the next fiscal year.
Kavinoky said Congress passed a bill in July to extend MAP 21—the federal transportation act that has provided states transportation funding since 2013—until May 2015. However, unless Congress acts before then and approves a new bill to fund transportation, the HTF could run out of money.
"I don't think we're hearing any great panic about this," said Alan Clark, director of the Houston-Galveston Area Council's Metropolitan Planning Organization. "Most people feel like it's a matter of when [a bill is passed], not if. But I think there's a bigger issue of transportation funding overall."
Local effect
Roughly one-third of all of the Texas Department of Transportation's budget comes from federal funding, TxDOT Public Information Officer David Glessner said. The department's federal obligation authority, or the authority provided by federal law to make funds available for use, has hovered around $3 billion a year since 2009.
Clark said federal funding has been integral to projects throughout the Greater Houston area, including various improvements to Hwy. 290 and Hwy. 59. In Cy-Fair, TxDOT officials were able to move forward with several sections of Hwy. 290 construction from Telge Road to Mason Road because of the federal funding. Clark also said most state transportation projects, aside from toll roads, will likely have some federal funding contributions.
However, federal funding for state and local transportation projects is not necessarily provided prior to a project's construction, Clark said. Rather, states are reimbursed for costs spent on transportation projects.
"It's up to each state to decide how much risk it wants to incur based on the funds that have or have not been appropriated," Clark said. "The states can go ahead and make the investment knowing that at some point they will receive the reimbursement. They just don't know when."
Glessner said transportation projects take years to develop, and planners need some idea of the long-term funding outlook. The short-term extensions provided by Congress have made it difficult for TxDOT to depend on federal funding.
"In recent years, Congress has let the authorization get close to expiring before extending or reauthorizing the program," Glessner said. "Also, [revenue] to the trust fund [does] not keep up with obligations."
State agencies are preparing for a potential slowdown in transportation projects. Glessner said TxDOT can borrow funds on a short-term basis to cover the operations of the department for several months.
Congress has let the program expire for a few days in the past, but it has not been lengthy enough to interrupt construction projects, Glessner said.
Federal funding does not just affect TxDOT projects or highway projects, Clark said. The dollars from the HTF can be used for transit services for local government agencies, such as the Metropolitan Transit Authority of Harris County, for capital purchases, maintenance costs and to offset operating expenses.
Funds from the HTF also go toward improvement and transportation plans, park and pathway projects and environmental programs, such as the reduction of vehicle emissions on roadways, Clark said.
H-GAC officials estimate about $1.7 billion of H-GAC's $3.5 billion 2018 Transportation Improvement Program—a four-year plan of transportation projects approved to receive federal funding—will receive federal money between 2015 and 2018.
Short-term, long-term solutions
With MAP 21 set to expire in May, Congress will be faced with passing a new transportation funding bill this next session.
"Congress has delayed passing a new multiyear bill, and this really impacts highway programs with states already curtailing portions of their highway construction because the Highway Trust Fund is not properly funded," Collins said. "We need reliable and sustainable transportation funding levels, and we need to ask our elected officials to get this done."
Kavinoky said any long-term solution should meet three criteria: the funding solution must be able to be collected today, it must raise enough sustainable funding and it has to be transportation-related.
"We should increase the federal gas and diesel taxes and index them to inflation," Harless said. "Then we need to [look] at what we're going to do as cars become more fuel efficient."
State Rep. Patricia Harless, R-Spring, said the state receives about 70 cents in transportation funding per dollar of the gas revenue sent to Washington. Despite an estimated $5 billion transportation funding shortfall at the state level, Harless said she believes the state should address the shortfall itself.
"The money we get from the federal government is important, but we're losing 20–30 cents on the dollar," Harless said. "I don't want to send any more money to the federal government than I have to."
The state of Texas needs another $5 billion annually to maintain current congestion levels on the highways, Collins said.
"We haven't seen an increase in our road user fees in over 20 years, and we have to find additional funding this legislative session," he said. "The challenge is getting the public educated on this subject so they then will speak to their elected leaders to get this done."
The American Association of State Highway and Transportation Officials released a list of 38 possible funding sources in November, including various transportation taxes, registration fees and user fees.
AASHTO estimates a 10-cent increase in the gas tax would yield $13.21 billion more revenue in 2014 and $78.12 billion more from 2015–20.
