With No Transport Funding Fix, USDOT to Cut Payments to States Next Month

Click to enlarge. Next month, the Highway Trust Fund -- the funding mechanism for the nation's transportation system -- will become insolvent next month without Congressional action. Chart: FHWA
Click to enlarge. Next month, the Highway Trust Fund — the funding mechanism for the nation’s transportation system — will become insolvent unless Congress acts. Chart: FHWA

State transportation departments could see the federal funding they receive pared back as early as a few weeks from now if Congress doesn’t come up with a transportation funding solution.

A “cash management plan” to deal with the impending shortfall in the Highway Trust Fund — which actually pays for transit, biking, and walking projects in addition to roads — was outlined in a letter from U.S. DOT to state transportation officials yesterday [PDF]. U.S. Transportation Secretary Anthony Foxx wrote that “as we approach insolvency, the Department will be forced to limit payments to manage the reduced levels of cash.”

Federal transportation revenues have been faltering for a long time, primarily because inflation has eaten away at the gas tax, which hasn’t increased in more than 20 years. Congress and the White House have floated many possible solutions of varying merit — a gas tax increase, an excise tax on oil, “business tax reform,” even canceling Saturday mail service. Lacking an agreed-upon revenue source, the Highway Trust Fund has been propped up with general revenues over the last few years. It is unclear whether Congress will extend that stopgap before funding starts to run dry in the next few months.

In his letter, Foxx indicated that if the issue isn’t resolved by August 1, around the time when revenues are expected to dip below current spending levels, U.S. DOT will dole out the available money based on existing funding formulas. In other words, the funding cuts will be shared among all the states, based on population and other factors.

In a speech yesterday in Washington, President Obama urged Congressional action to ward off funding problems, saying inaction would put 700,000 jobs at risk — or about as many people as live in Denver or Boston. He blamed Congressional Republicans for failing to act to resolve the issue.

  • Kyriacos Stavrinides

    Let it fail. Maybe the states and people will understand how much they actually depend on the federal government for their roads.

  • Mcass777

    Perhaps the president can do one more executive order. What the hell, just send congres home and let Bo do everything. I think that is what he is aiming for and no one give sh.. This all sucks.

  • Adam Herstein

    Instead of trying to solve the problem, Obama just points the finger. How about actually trying to come up with solutions instead of just blaming?

  • This is good to know, thanks!

    Is there a full resolution version of your chart available? The embedded image is blurry and very difficult to try and read.

    -danny

  • Instead of trying to solve the problem, Adam Herstein just points the finger …

    Angie points out various proposed solutions above, but Congress is broken. Obama is one branch of government and he is not empowered to manage the government’s budget: that’s Congress. Blaming the President for what is not his responsibility is weak sauce.

  • oooBooo

    Decades of discouraging driving and policies designed to impoverish americans are working as designed.

  • oooBooo

    The federal government is funded through taxing the people, borrowing from the people and foreigners, and creating new money which devalues the money the people hold as savings.

    The problem the states have is that they don’t have the problem to indirectly steal from the people the way the federal government does via the federal reserve. It is through this monetary power that the federal government can create dependency.

  • omaryak

    No, it’s not what he was aiming for. It’s what the GOP was aiming for when they decided their top political priority was to make Obama look bad instead of working to make the country a better place.

    He waited a good five years before resorting to executive orders, and the GOP swung hard to the right instead of operating in a spirit of compromise. It’s been sad to watch.

  • omaryak

    It’s not a matter of blame, Adam. The House controls the purse strings. President-worship won’t solve anything, even if Congress does do its job right.

  • omaryak

    The GOP House has opposed infrastructure bill after infrastructure bill. Of course they’re going to let this happen too and blame Obama for the impasse. But the minute Obama supports anything (individual mandate, cap and trade) the GOP inches further to the right.

    The political goal of the GOP is to make government look dysfunctional so that their ideology becomes a self-fulfilling prophecy. When they are in office they run up budgets and leave Democrats with the mess and blame. It has been this way ever since Reagan, at least.

  • Nathanael

    I’d put it differently, because I don’t have the rigid ideological views you have.

    It’s good to print/coin money (through the Federal Reserve or the US Mint or whatever). It’s important for money to become worth less every year, so that there’s some incentive for rich people to spend the stuff, keeping people employed and keeping factories running, rather than hoarding it out of circulation. So it’s important to print the stuff.

    But unfortunately, the problem the states have is that they can’t print money while the federal government can, which leaves them dependent on the federal government. (So you see, we agree on the facts here.)

    California, in practice, could print money, and nobody would dare to stop it. (It’s proved this in the past with various circulating notes such as “vouchers” which were not officially called “money”.) But no other state has the raw power and influence to get away with it. And California’s legislature and governor don’t seem to have the political will to do it — yet.

    North Dakota figured out how to do something very close to printing money by establishing the state-owned “Bank of North Dakota” which has direct access to the Federal Reserve’s 0% loans. But no other state has done that since ND did about 100 years ago, probably due to lobbying by commercial bankers.

  • oooBooo

    Monetary inflation benefits the wealthy and destroys the middle class.
    Which is exactly what has been happening dramatically since 2009.

    The primary reason is the wealthy get the new money first and use it to buy things before the price inflates. Then there is leverage, carry trades, etc and so forth.

    http://www.oftwominds.com/photos2014/income-inequality4-14a.png

    The middle class benefits from their savings increasing in purchasing power over time. But you’ll say what if home prices go down on their debt? Well, maybe we shouldn’t be debt slaves in the first place. But most people just stick the banks with the properties that way and get out from under.

  • Nathanael

    No, it really doesn’t. You simply haven’t done your research. It’s true that new money is being preferentially distributed to the wealthy (bad), but the rest of what you’ve written is just wrong — backwards, actually.

    The wealthy consistently advocate for “hard money” or “sound money”, a.k.a. deflation. The ultimate version of this is the gold standard, which is extremely deflationary unless there are big gold mine discoveries. (The gold mines, of course, are always strictly controlled by the wealthy.)

    DEFLATION benefits the wealthy by making them richer relative to everyone else. INFLATION hurts the position of the wealthy.

    We haven’t got outright deflation at the moment, but we’re at near-zero inflation. The wealthy love this, but they’re trying to push the country into deflation so that they’ll benefit even more.

  • Nathanael

    A lot of people misunderstand this. (There’s been a lot of anti-inflation, pro-deflation propaganda published by the rich in the last 40 years.)

    Here’s the key thing to remember: if there’s actually inflation, your wages are going up. If your wages aren’t going up, then there is no inflation. If your wages are dropping, you’re looking at deflation.

  • oooBooo

    The wealthy created the federal reserve. It was a bait and switch job that you apparently still haven’t received the memo on. The wealthy have always believed in something they control, something they can manipulate to transfer wealth to themselves. At some points in history they have been able to control hard money, gold, but that hasn’t been the case for well over a century. It’s also difficult for them to do so which is why they always want a central bank. Hence the Federal reserve.

    Because the wealthy -own- the central bank (yes, the fed is privately owned), they always get the new money first. They have access to the fed’s money tap. We don’t. The fed also serves to bail them out when their bets go bad. Privatize the gains, socialize the loses.

    The middle class has savings in the nation’s currency. The wealthy have financial equities, assets, etc. Deflation brings down equity and asset prices and increases the value of savings. Inflation always largely destroys a nation’s middle class. We are observing the effects right now as the wealthy 0.01% have escape velocity on their wealth increase while the middle class is faltering. Inflation is concentrating wealth in fewer and fewer hands as it is designed to do.

    Near zero inflation? Where do you shop? I’d like to shop there. How does it benefit the middle class when food and energy are increasing in price? How does it benefit the middle class when the goods they can afford are being cheapened to hold price point? Prices are increasing but wages are not.

    Simply put, your ideas are 100% against observed reality.

  • oooBooo

    Someone has savings and is not wealthy. Works for a living. How does inflation benefit? Explain how such a person benefits when his savings and salary buys less. Wages don’t even keep up with tax increases.

    You are telling me to believe you and not observed reality.

  • Jack Jackson

    Back in 2009, the HTF did this, only then Democrats controlled both houses of Congress and the White House, and still did nothing. so why is it now only the Houses fault?

    Hussein the Community Organizer is a walking talking lame duck fraud.

ALSO ON STREETSBLOG

Democrats Learning to Love the I-Word — But Will Words Bring Action?

|
The White House is re-centering its message around economic and fiscal concerns ahead of tomorrow’s State of the Union address, with a new package of job-creation measures expected to vault to the top of the agenda and a three-year "spending freeze" pitched to deficit-wary conservative Democrats. Infrastructure: Democrats love it. But how will they fund […]

Flashback: Does the Government Owe Transportation $21 Billion?

|
Welcome to Flashback, a regular feature at Streetsblog Capitol Hill looking back at past transportation policy debates that have the potential to impact the next congressional re-authorization — no matter when it occurs. For today’s installment, let’s start with an interesting comment that Rep. Jim Oberstar (D-MN), chairman of the House transportation committee, made earlier […]

Why the Federal Funding Emergency Matters for Transportation Reform

|
Why does it matter if state departments of transportation get less money? In light of last week’s news that the U.S. DOT might have to ration its payments to states in the absence of new revenue for the federal transportation program, we posed that question to David Goldberg, communications director at Transportation for America. After all, a […]