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Highway Trust Fund Bankruptcy Would Hurt Local Governments

by eCivis on July 10, 2014
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Trucks headed up rural highway, Highway Transportation Fund insolvency risk

The Highway Trust Fund, a major revenue source for infrastructure projects throughout the United States, is due to go bankrupt by September if Congress doesn't take action to shore up the fund, according to the U.S. Department of Transportation (DOT).

It's not the flashiest topic, but it has major implications for state and local governments and labor. The White House has warned that an insolvent fund could result in the delay of 112,000 roadway projects and 5,600 transit projects and puts up to 700,000 construction jobs at risk.

Over the decades, the fund has been sustained by an 18.4-cent-per-gallon gasoline tax. But the tax has not been increased (to account for inflation and increased fuel-efficiency, for example) for more than two decades. Revenue for the fund has shrunk over time, and lo, here we are at the edge of another fiscal cliff.

Proposals from Both Sides of the Aisle

So how is Congress addressing the fund's near-insolvency? There's the bipartisan proposal of a gas tax hike of 12 cents (the most uphill battle), and even an alternative Democrat bill to create a separate freight trust fund. On Tuesday, House Republican leaders proposed a $11 billion bill that would keep the fund solvent until next May. The House Ways and Means Committee begins work on the bill on Thursday. (Update: The short-term House bill passed on July 15.)

In the meantime, let's take a step back and consider other legislation that could address the transportation fund and expand DOT grant programs.

How Do Grants Figure into This?

Fair question. This is a blog about grants, after all. One of the solutions to shoring up the Highway Trust Fund has been the GROW AMERICA Act, the Obama administration’s four-year, $302 billion transportation proposal that the DOT has underscored as critical to stabilizing and providing future solvency to the fund.

The robust proposal, intended to replace MAP-21 (set to expire the end of September), would also infuse significant capital into new and existing programs, notably stabilizing the TIGER Discretionary Grant program ($5 billion for four years) so it is not subject to the yearly appropriations bill. In addition, the bill proposes two new grant programs:

  • Fixing and Accelerating Surface Transportation (FAST) grant program: to encourage state, local, and tribal governments to adopt innovative strategies to coordinate transportation and economic development policies.
  • Rapid Growth Area Transit Program: to fund fast-growing communities for bus rapid transit and other multimodal solutions to get ahead of the challenges caused by rapid growth.

The bill also substantively focuses on infrastructure for rural communities. Rural priorities of the bill include:

  • Safety on Rural Roads
  • Fix-It First
  • Broadband Expansion
  • Workforce Development
  • Federal Lands and Tribal Transportation Investments
  • Freight Network Investment
  • TIGER Grant Program Stabilization

So, back to the Highway Trust Fund: My fingers are crossed that Congress can come to real solutions with long-term vision - and it's this long-term vision that brings stability to our infrastructure projects. I'll leave my opinion at that.

Your Take

What's your take on the Highway Trust Fund issue, the GROW AMERICA Act, and the infrastructure needs of America? Leave a comment below and join the discussion!

About eCivis

eCivis is the nation's leading grants management software solution and the ideal platform for improving local governments' and community-based organizations' grants performance. For more information about eCivis, visit www.ecivis.com. For a free article to help you consider grants management software to track funding, click the button below:


Grants management software allows for complete grant award management that spreadsheets like Excel cannot provide

Topics: Funding News

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