Highway Trust Fund needs $8B fast, Peters says

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U.S. Transportation Secretary Mary Peters Friday, Sept. 5, directed the Federal Highway Administration to take immediate steps to protect the solvency of the highway account of the Highway Trust Fund and called on Congress to act quickly to address the problem.

Peters called on Congress to provide immediate short-term relief by passing pending legislation, already approved by the House of Representatives, that would make an additional $8 billion available for the Highway Trust Fund. She urged Congress to get the bill done by the end of next week.

Peters said the legislation was needed now because Congress had failed to heed over three years of warnings from President Bush and DOT about the Highway Trust Fund shortfall. She added that the recent and sudden decline in American driving and the resulting decline in gas tax revenue during the summer had accelerated the shortfall.

Peters said that in order to allow for continued highway payments to states while Congress acts, the federal government would begin making reimbursements to states on a weekly basis starting next week. In addition, she said the agency would make funds available on a pro-rated basis; for example, if there are only enough funds to cover 80 percent of requests, the highway agency will pay only 80 percent of each.

Peters said that states would receive the balance of the funds in the following week, and then any new requests also would be dealt with on a pro-rated basis. She said DOT also will review its personnel and purchasing policies and consult with other federal agencies receiving highway funds to find ways to free up additional funding for reimbursing state partners.

“This unprecedented action by the FHWA is going to have grave repercussions for the states, for hundreds of thousands of workers in the construction industry, and the driving public,” said John Horsley, executive director of the American Association of State Highway and Transportation Officials. “It will worsen the financial crises many states are already facing, and it will delay or halt needed transportation projects and leave contractors and suppliers with IOUs instead of cash to pay their workers.”

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Horsley said the situation reinforces the urgency for Congress to restore $8 billion to the Highway Trust Fund as an immediate short-term solution. The Senate Finance Committee and other Senate leaders must continue to push for rapid enactment to restore the viability of the federal highway program, he said, adding that AASHTO would be working closely with Congress to make it happen.

The American Trucking Associations also urged quick action by Congress. “The stark reality facing our nation is that we have neglected our infrastructure for far too long, and the bill is coming due,” said Bill Graves, ATA president and chief executive officer. “Current revenue streams are failing to keep pace with infrastructure need.”

Peters argued that the problem would have been avoided had Congress acted on President Bush’s proposal from last February to transfer funds from the Highway Trust Fund’s mass transit account, which has a surplus. That measure would not have affected current transit investments, Peters said.

To avoid future shortfalls, Peters said it was time to embrace new funding mechanisms that respond to today’s transportation challenges and are in keeping with national energy policies. “The current approach may have made sense 50 years ago, but it is ineffective and unsustainable when we are trying to reduce congestion and encouraging Americans to embrace more fuel-efficient cars,” she said.