Administration: Highway fund to go broke in August - KFDA - NewsChannel 10 / Amarillo News, Weather, Sports

Administration: Highway fund to go broke in August

By JOAN LOWY, Associated Press

WASHINGTON - The Obama administration is warning lawmakers that the trust fund that pays for highway construction will go broke in August unless Congress approves an infusion of as much as $7 billion.

Sen. Barbara Boxer, chairman of the Senate Environment and Public Works Committee, said at a hearing Tuesday that the administration has told senators the Federal Highway Trust Fund will need an estimated $5 billion to $7 billion to keep current construction projects going.

The California Democrat said another $8 billion to $10 billion will be needed to keep the fund solvent through the year ending Sept. 30, 2010.

Transportation Department spokeswoman Jill Zuckman confirmed those figures.

"The administration is working closely with Congress to solve this difficult problem and ensure that states have the resources they need to maintain our roads and highways," Zuckman said.

A decline in driving that began in late 2007 has reduced federal gas tax revenue, the primary source of trust fund dollars.

The trust fund is separate from the $48 billion in transportation projects included in the economic recovery law enacted by Congress and signed by President Barack Obama earlier this year.

Congress approved an emergency transfer of $8 billion in general treasury dollars last fall to make up a projected shortfall - the first time in the program's history that had happened. The fund dates back to creation of the federal interstate highway program in 1956.

Sen. George Voinovich, R-Ohio, said it's clear that Congress must raise the federal gas tax, which is now 18.4 cents per gallon.

"I know that doesn't go down so well with some folks," but it's "the reality of the situation," Voinovich said at the hearing, which was on Obama's nomination of former Arizona highways director Victor Mendez to head the Federal Highway Administration.

"That will be one of my highest priorities, to get on that very quickly," Mendez said of the trust fund.

The law that authorizes federal highway programs is due to expire at the end of September, but the issue hasn't been on Congress' front burner. There is a consensus among transportation experts and lawmakers that there will have to be some form of a tax increase - always unpopular, but especially so in a recession - to make up for the lower gas tax revenues and to address a backlog of crumbling and congested highways, bridges and public transit systems.

Two congressionally mandated commissions have called for an immediate increase in the gas tax. The first commission, which issued its report in early 2008, recommended a 40-cent per gallon hike. The second panel, which issued its report earlier this year, recommended the tax be increased 10 cents per gallon for gas and 15 cents per gallon for diesel, and that both be indexed to inflation.

The two panels also said fuel taxes are not a sustainable source of revenue over the long term as drivers shift to more fuel efficient vehicles. Both panels recommended Congress find a new revenue source to pay for highway and transit programs.

Their top recommendation was to tax motorists based on how many miles they drive. That would require equipping cars and trucks with devices that use GPS technology to record not only how many miles the vehicle was driven, but whether the driving occurred on interstate highways or secondary roads and whether it was during peak travel periods. The device would calculate the amount of tax owed and the bill could be downloaded.

A mileage-based tax system would take about 10 years to implement.

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