Government must fund, chart future of highways

The country is careening toward a grisly wreck as the federal surface transportation bill races toward expiration on May 31, with a successor nowhere in sight. Congressional action for a long-term replacement seems unlikely until after the 2016 presidential race, as well as any meaningful tax reform addressing the defunct Highway Trust Fund, leaving an already fragile economic recovery open to more bruising setbacks.

Shoddy roads cost U.S. motorists $94 billion a year in added vehicle repairs and operating costs, or $444 per driver, reports the American Society of Civil Engineers. And yet every dollar of federal transportation investment can up to double the amount of return benefits in Gross Domestic Product, reports analyst firm IHS Inc., with two-thirds of the economic aid and jobs occurring in nonconstruction sectors.

The last long-term federal transportation bill expired in 2009 before being extended 10 times until the current lackluster Band-Aid called MAP-21 took hold in 2013. Meanwhile, the Highway Trust Fund — the pot from which states draw most of their transportation monies — is insolvent due to the gas tax’s diminished value amid greater fuel efficiency, reduced travel mileage and increased transit ridership. The 18.3-cent gas tax — the main fund contributor — was last increased in 1993, leaving the highway trust inert and incapable of keeping pace with inflation.

Congress in July approved a $10.8 billion stopgap measure to keep the highway fund afloat through a budgeting maneuver called “pension smoothing,” which allows companies to delay employee retirement plan contributions. Businesses will report higher profits, paying more in corporate taxes that, in turn, temporarily creates added revenue for the highway fund. The Highway Trust Fund has needed $70 billion in total cash infusions from other sources since 2008 in order to stay afloat.

It’s myopic, but unlikely to change anytime soon. Sadly, the political will is lacking for a more permanent funding fix such as indexing the gas tax to inflation or implementing a vehicle-miles-traveled fee. And pension smoothing doesn’t generate any real money, since in later years, companies will increase pension contributions to make up for what it’s being deferred today; business tax payments will eventually dip as a result.

States, in response, are adopting a do-it-yourself approach. Public-private partnerships, for instance, enable states to buy new infrastructure on layaway, preserving cash reserves and bonding capacity while still receiving much needed roads and bridges without the risk of project cost overruns, delays and lawsuits. Thirty-three states, including Nevada, have adopted laws authorizing public-private partnerships for highways and bridge projects as of January 2014, says the Eno Center for Transportation.

Voters, meanwhile, approved two-thirds of the 655 state, county and local transportation funding initiatives proposed during the last decade, reports the American Road and Transportation Builders Association, despite nearly 80 percent of them involving tax increases. Georgia, Iowa, Kentucky, North Carolina and South Dakota all enacted transportation funding legislation this year, Transportation for America reported, joining dozens of others that enacted similar measures between 2012 and 2014, including Clark County, which approved using a dime a day from fuel revenue to help build nearly 200 transportation projects throughout Southern Nevada. The measure will generate $700 million for road, transit and bridge construction between 2014 and 2016, while also creating 9,000 new jobs.

Proactive measures are needed after recessionary cost-cutting efforts and reduced tax revenue saw shelved construction programs, resulting in pent-up demand that will only grow pricier. Understandably, there is a reluctance to spend money or commit to multiyear projects amid an uncertain federal financial future. But our transportation future is at stake. It requires vision, grit and leadership in order to chart our own future before it’s too late to act.

Tony Illia is the public information officer for the Nevada Department of Transportation in Las Vegas.