Highway Trust Fund Made Official

From Logistics Management:

WASHINGTON-Days after Federal highway funding received a much-needed boost, when the US House of Representatives last week voted by a 376-29 margin to sign off on H.R. 6532, the Highway Trust fund Restoration Act, the bill was officially signed into law by President George W. Bush.

This bill calls for a transfer of more than $8 billion from the United States Treasury General Fund to the Highway Trust Fund.

This vote paves the way for a transfer of more than $8 billion from the United States Treasury General Fund to the Highway Trust Fund. The legislation will now be sent to President Bush to be signed.

This news comes at a time when the future of the Highway Trust Fund was dire, as it was facing the prospect of running out of money entirely. At the end of July, the US House of Representatives approved H.R. 6532 to restore more than $8 billion to the Highway Trust Fund balance, which the White House said was soon to be facing a deficit of more than $4.3 billion. And earlier this week the US Senate approved the transfer of funds, too.

Last week, Department of Transportation Secretary Mary E. Peters called out Congress for the Highway Trust Fund’s financial situation, saying that President Bush has warned Congress of the pending shortfall and submitted budgets with fiscally prudent steps to close the gap. And she has called on Congress to go forward with passing “a fiscally responsible and effective transportation spending bill for the coming fiscal year—one that is free of waste and free of earmarks…and promotes solutions to our most pressing transportation challenges instead of ignoring them.

She added that that the situation has been exacerbated due to the oil and gas price spikes that have occurred this year and have resulted in vehicle miles traveled dropping by more than 50 billion miles in the last eight months. This is especially relevant, considering that the Highway Trust Fund is largely financed by the motor fuel federal tax, which is 18.4 cents per gallon for gasoline and 24.4 cents for diesel, and it has not been raised since 1993.

In 1993 a gallon of gas cost $1.04, so a 18.4 cent tax was equivalent to a 17.7% tax. If this tax would have been a percentage of a gallon instead of a flat rate, it would be 68 cents at today's prices.

Considering this, it is not hard to see how and why our nations highways and infrastructure is seriously under-funded.