Kicking the can down the road hurts Minnesota

Kicking the can down the road hurts Minnesota

This article was originally written by Margaret Donahoe for Finance & Commerce, a business and finance journal published out of Minneapolis, and can be found on their website here.


Congress has a handful of days to agree on a new transportation authorization act before June 30, the deadline for when the authority to collect the federal fuel tax — and the ability of states to receive federal transportation dollars — comes to a halt.

If this sounds familiar it’s because we’ve been here before — eight other times. The current surface transportation authorization act, known as SAFETEA-LU, officially expired in September 2009. Since that time, Congress has passed a series of extensions to prevent a complete shutdown of the highway and transit programs.

Given that 2012 is a major election year, many pundits don’t view the current impasse over transportation as a big surprise. It’s easy to defer work on an issue when Congress simply can maintain the status quo with continuing extensions.

But here’s the catch: Each time SAFETEA-LU is extended, the Highway Trust Fund loses more money than it’s taking in with the federal fuel tax. The situation is analogous to draining your savings account. At some point the money runs out and, in the case of the Highway Trust Fund, we will all face a painful day of reckoning.

According to the Congressional Budget Office (CBO), the highway account in the Highway Trust Fund will hit a negative balance sometime in federal fiscal year 2013, which begins Oct. 1, 2012. How quickly that happens depends on the degree to which spending outpaces revenue. So, inaction by Congress means the problem grows continually worse and could have a disastrous impact on Minnesota’s construction industry and economy.

As automobiles become more fuel-efficient and a lagging economy depresses travel, the revenue from the fuel tax is reduced. At the same time, inflation is adding to the cost of needed highway and transit improvements. In fact, we don’t have the resources to even maintain the existing transportation system built through the investments of previous generations.

Relying largely on the revenue from the current level of fuel tax means every state would face a cut in transportation funding of about one-third. Cuts in federal funding of that magnitude would mean cancelations or delays of projects and the loss of thousands of jobs in the construction industry while our infrastructure deteriorates.

The majority of members in Congress don’t want to see states suffer a cut of one-third of their federal transportation dollars. An amendment to limit spending in the next authorization act to the level of funding anticipated in the Highway Trust Fund was soundly rejected by the Republican-led House of Representatives.

A two-year fix to prevent more draining of the Highway Trust Fund has been proposed by the Senate and was passed on a strong bipartisan basis. A conference committee of Senate and House members is working on a two-year transportation bill, but time is running short.

We need Congress to take action to provide jobs in the construction industry by passing a new transportation authorization act that will sustain the infrastructure that all businesses rely on to move products and people every day.

The Minnesota Transportation Alliance has more than 250 member organizations representing local governments, the transportation industry, labor, and advocates for all transportation modes.