Reconstructing the Highway Trust Fund

Farm Forum

Our state has more than 80,000 miles of highways, roads, and streets. Maintaining them is an expensive and colossal project to undertake every year that requires funding from the federal, state, county, and city governments.

Much of the federal funding comes through the Highway Trust Fund, which is an account that was set up in the 1950s to support a number of the country’s transportation projects. Over the last decade, the Trust Fund has slowly run out of money and experts believe it could drop below a key threshold in August. The good news is that Congress and the White House are working together on a solution.

More specifically, the House passed legislation on July 15 to maintain the Trust Fund through May 2015. While the Senate hasn’t taken the bill up yet, the President has already said he supports the House proposal, meaning there’s a pretty good chance our bill – or something very close to it – will become law in the next few weeks and South Dakota road repairs can continue uninterrupted.

While this legislation solves the short-term problem, it still doesn’t make the Highway Trust Fund self-sustaining over the long-run.

It’s important to know that the Highway Trust Fund is currently funded through an 18.4 cent-per-gallon tax on gas and a 24.4 cent-per-gallon tax on diesel. Over the last few years, cars have become much more fuel efficient, people are buying smaller vehicles, and Americans have begun to drive less because of increased gas prices. This has decreased the number of gallons sold by about 4 percent since 2007. With a new mandate in place that requires 54.5 miles-per-gallon cars and light-duty trucks by 2025, demand will likely continue to fall.

As a result, the Highway Trust Fund has lost a portion of its revenue stream, forcing Congress to find different ways to fund hundreds of construction projects that support about 700,000 jobs.

For more than a half-century, the U.S. has believed we should prioritize infrastructure investments. After all, farmers and manufacturers use our transit system to bring products to market while workers, tourists, and families use it to get to work, the grocery store, or Mount Rushmore. I too would agree that making these projects a priority is important.

Band-Aid fixes aren’t the most effective or efficient way forward, but I supported the recent agreement because we need to start somewhere. We need to give states and the construction industry the certainty to know that if a contract is signed, payments will be made. And everyone else deserves to know that our bridges and roads will be safe.

If legislation is enacted that keeps the Highway Trust Fund viable through May, I believe Congress has a responsibility to use this time to confront the problem and find a way forward. For now, I’m confident South Dakota will finish this road-construction season strong before the snow flies a few months from now.