Highway Trust Fund: Secretary's Remarks
U.S. Department of Transportation
Office of Public Affairs
Washington, D.C.
www.dot.gov/affairs/briefing.htm
Speech
REMARKS FOR
THE HONORABLE MARY PETERS
SECRETARY OF TRANSPORTATION
TRUST FUND SOLVENCY MEDIA BRIEFING
WASHINGTON, D.C.
SEPTEMBER 5, 2008
1 PM
Thank you for making the time to dial in this afternoon. I am joined by Phyllis Scheinberg, our Assistant Secretary for Budget and Programs and Chief Financial Officer, and Federal Highway Administrator Tom Madison.
Since becoming Secretary, I have been advocating for fundamental reform of our approach to transportation in America. Today, we have another reminder of why reform is so imperative.
Those of you who have covered this Department will clearly recall that for several years we have been warning of the dangers of transportation bills loaded with wasteful spending and unnecessary and unsupported earmarks – over 6,000 totaling $24 billion in the last transportation bill alone. And we have long cautioned that unfocused spending and non-essential, special-interest programs would put the Highway Account of the Highway Trust Fund at serious risk.
Every family understands that constantly spending more than you earn is a recipe for insolvency. Yet many in Congress have refused to apply that same common-sense thinking to the federal program that currently accounts for close to half of all highway and transit investments.
For over three years, we have been warning that our current levels of spending were not sustainable and that the Highway Account would likely go into the red before the current surface transportation legislation expires in 2009.
Time and again, President Bush warned Congress of the pending shortfall and submitted budgets with fiscally prudent steps to close the gap. Many in this Department, myself included, repeated this message through countless speeches, Congressional hearings, and media interviews.
But when it came time to address the rapidly growing Trust Fund solvency issue, Congress chose to do nothing. Instead, members continued to earmark, continued to divert transportation dollars to lighthouses and museums, and continued to spend like there was no tomorrow.
In fact, while the Administration was sounding the alarm and warning that a shortfall was imminent, Congress actually added billions more to the spending authorized by the last surface transportation bill.
The urgency of the situation was heightened earlier this summer when we began to see significant and sustained declines in vehicle miles traveled. For the first time in history, VMT dropped more than 50 billion miles over eight months.
The less Americans drive, the less gas tax revenue is collected. And with Americans seeking greater fuel economy and taking steps towards conservation, this trend is likely to continue even if highway travel begins growing again.
As a result, in recent days it has become increasingly clear that the tab has come due. Put plainly, the Highway Account of the Highway Trust Fund will not have cash available to reimburse State highway expenditures – not at some point in the distant future, but as soon as this month.
Outlays are now expected to exceed receipts by more than $8 billion for fiscal year 2008. In September alone, we expect the Highway Account will take in $2.7 billion but have reimbursement requests totaling $4.4 billion.
At current spending rates, we will start the new fiscal year on October 1 with a zero balance in the Trust Fund, and will continue to spend more than we take in.
The lesson is quite clear. We can no longer afford to allow political whims to dictate transportation priorities or to rely almost exclusively on federal fuel taxes to fund our highway and transit programs. 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.
That is why, as part of this Administration’s proposal to fundamentally reform our nation’s current scattered approach to transportation, we have called for the promotion of new funding mechanisms and a new investment strategy that actually responds to today’s transportation challenges.
With real reform, federal resources would go to priority areas of national interest to improve safety, to maintain and improve the condition and performance of the Interstate highway system, and to get stalled traffic moving in our nation’s largest cities. And it ensures that we have sound financial management laws in place so that political indifference does not jeopardize funding stability ever again. Frankly, if Congress just produces another “TEA” bill, with business as usual, they will have failed.
More immediately, in order to continue to meet our obligations to State transportation agencies, we must confront the pressing challenge. So today, I am asking Congress to approve pending legislation that will provide $8 billion to be used exclusively to cover the funding shortfall – and have it on the President’s desk before the end of next week.
Make no mistake. This is far from an ideal solution. Taking money from other pressing national priorities to plug a hole caused by poor fiscal discipline sets a dangerous and disturbing precedent. But the state of the Highway Trust Fund has now moved from a theoretical to a practical problem, and States should not have to suffer the consequences.
This is no time to play political games or try to sneak pet projects or other unrelated provisions on must-pass legislation. The cash-flow problem we face is serious. Americans cannot afford to have Congress play “kick the can” with highway funding for another year, another month, or frankly, even another week. And our State partners who are working so hard to keep our bridges and roads in good repair deserve better than IOUs from Congress.
So while Congress acts on legislation, the Federal Highway Administration is instituting a series of immediate steps designed to stretch out revenues and allow us to continue making highway payments to States on a fair and equitable basis.
Effective next week, the Highway Administration will begin making reimbursements to States on a weekly basis, instead of the twice daily cash reimbursements we make today. The Department will make those weekly reimbursements on a pro-rated basis. If, for example, the Highway Administration only has funds available in the Highway Account to cover 80 percent of the requests we receive, they will pay only 80 percent of each.
The following week, the Federal Highway Administration will pay the balance of the money owed. And only then will they provide similar, pro-rated reimbursements for the new requests received that week.
To further slow the rate of depletion, I am taking actions with respect to Department of Transportation personnel and purchasing policies and am consulting with other federal agencies funded by the Trust Fund to see if we can free up additional funding for our State partners.
As a former State DOT Administrator, I understand that the measures I have outlined will be tough on States programs and State budgets. That is why it is absolutely imperative that Congress not waste time. We have got to get States out of the box they have been put in by Washington’s addiction to wasteful special-interest spending and pork barrel projects.
But a short-term fix is not enough. We must come to terms with the fundamental problem facing the Trust Fund, while honoring the funding commitments of SAFETEA-LU.
So I am asking Congress to get to work on a fiscally responsible and effective transportation spending bill for the coming fiscal year – one that is free of waste and free of earmarks, and one that actually promotes solutions to our most pressing transportation challenges instead of ignoring them.
I am asking Congress to work with me resolve this shortfall as quickly, and as responsibly, as possible. We must not fail all those Americans who depend on a safe and reliable transportation system every day.
Thank you, and now we would be happy to answer any questions you have.
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Last updated: 9/5/2008