Wed July 2, 2014
LaHood: Inaction On Highway Trust Fund Could Be Disastrous
Originally published on Tuesday, updated on Wednesday, July 2 with "St. Louis on the Air" interview
Former Secretary of Transportation Ray LaHood is sounding the alarm bells about the federal government’s dwindling Highway Trust Fund.
LaHood — a former Republican member of Congress from Illinois — wants Congress to raise the federal gas tax to prevent the fund from going belly up.
The Highway Trust Fund provides billions of dollars each year to the states for road construction. But the fund is quickly drifting toward to insolvency. Bloomberg News reported last month the fund could run out of money by August, primarily because the federal 18.4-cent a gallon gasoline tax has remained the same since 1993.
LaHood is in St. Louis this week to promote “Building America’s Future,” a group that’s raising awareness about the Highway Trust Fund’s financial woes. He spoke to the St. Louis Regional Chamber on Tuesday morning to warn about the dire consequences of congressional inaction.
“I think that people need to understand that the Highway Trust Fund will be broke at the end of the summer,” LaHood told reporters after his speech. “That means that the pot of money that funds projects all over America, if it’s not replenished, won’t be there. And a lot of projects are going to stop. And a lot of people are going to be unemployed. And a lot of people are going to be out of work. And a lot of contractors are going to be wondering how they’re going to fund their projects.”
LaHood said he would support raising the federal gas by 10 cents a gallon and then indexing that tax to inflation. But he added he wasn’t optimistic that Congress would follow through on that suggestion.
“If it had been indexed in 1993, we wouldn’t be having this debate because the trust fund would be solvent. The trust fund is broke and will be broke here in another 30 days. And the way to replenish the trust fund is to raise the gas tax and index it [to inflation],” he said. “I think that gets you at least back to some semblance of opportunity to do what needs to be done. It doesn’t give you the kind of surpluses you need. But I think it does send a signal that our country is serious about infrastructure.”
During an interview with St. Louis Public Radio last month, Missouri Department of Transportation director Dave Nichols said a bankrupt Highway Trust Fund would mean that the federal government would “not have enough money … to pay the states their reimbursement for the federal aid projects that we’ve been building that are currently being built.”
“We can make it for a couple of months, but we can’t make it much longer than that,” Nichols said. “So the federal funding problem is going to have to be solved.”
But even if the federal situation resolves itself, Nichols said the state still needs to figure out a way to bring more revenue in for transportation projects.
“Most of our federal projects are funded at 80 percent federal dollars and 20 percent state dollars,” Nichols said. “And if we are not able to get our state funding problem solved, we will not be able to match hundreds of millions of dollars of federal funds that are coming to Missouri. What happens to those federal funds is they go back into a redistribution pool that other states get to capitalize on those dollars.”
LaHood backs Amendment 7
One avenue to deal with the “state funding problem” Nichols referred to is Amendment 7. This voter referendum calls for a 0.75 sales tax increase to fund transportation projects. If it passes, it could raise billions of dollars over a 10-year period for roads, bridges, highways and mass transit programs.
LaHood said he was encouraging Missourians to “work very hard for this referendum to put Missouri really ahead of everybody else in terms of their ability to send a message to Washington.”
“Without infrastructure, you cannot attract any jobs or any businesses,” LaHood said.
Near the end of Tuesday’s event, Chamber President Joe Reagan strongly backed Amendment 7. The proposal also received support from all four members of a panel on the topic, including state Rep. Dave Hinson.
“With Missouri getting 44 percent of our funding from the federal government, we have to look at what they’re doing in Washington, D.C., very closely,” said Hinson, a St. Clair Republican who sponsored the transportation tax in the General Assembly. “And the news is not good coming out of Washington, D.C. I hope Secretary LaHood’s prognosis is going to come true with some infusion of funding to get us through the end of the year. If not, you’ll start seeing a lot of projects come to a screeching halt across the state.”
“Ultimately, we have to get out and do our part to educate the people in the next 35 days of how important this is,” he added, referring to the transportation tax.
While speakers at Tuesday’s event were bullish about the transportation tax, it has attracted opposition from across the political spectrum. Some conservatives have bristled at the size of the tax increase, while others on the left contend that a sales tax increase would disproportionately fall on the poor and elderly. And while proponents of the tax have raised nearly $1.7 million in donations of more than $5,000 — primarily from contracting companies who could benefit from heightened road construction — Missourians overwhelmingly rejected tax increases for transportation in 2002.
(Click here to read an overview of the transportation tax -- including who's supporting and opposing the proposal.)
Asked about the criticism of the tax, LaHood said Missouri exempts its sales tax for medicine and groceries. Those type of exemptions, he said, could help proponents.
“I think that’s a selling point for the people to think about the use of it for infrastructure where they know that a pothole in front of their house is going to get filled or they know that a road is going to be built or they know that infrastructure is going to be built to attract new businesses to come to the state,” LaHood said.
St. Louis on the Air provides discussion about issues and concerns facing the St. Louis area. The show is produced by Mary Edwards and Alex Heuer with assistance from Kyle Jacoby. It is hosted by veteran journalist Don Marsh.
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