Sept. 5, 2008 -- The Department of Transportation said Friday that the fund that pays for road and bridge projects nationwide is essentially broke.
With Americans driving less, revenues have plummeted for the Highway Trust Fund because the fund is made up of gas tax money.
Today the Transportation Department said that this month it is expecting to bring in $2.7 billion in gas tax revenues but anticipates needing $4.4 billion to reimburse states for their highway and road projects. The department said it will start the upcoming fiscal year that begins Oct. 1 with no money in the trust funds if patterns continue as is.
On Friday, the Transportation Department said that starting next week it will begin delaying payments to states unless Congress acts quickly. Transportation Secretary Mary E. Peters said in a statement, "Americans cannot afford to have Congress play 'kick the can' with highway funding for another year, another month, or frankly, another week."
"Every family understands that constantly spending more than you earn is a recipe for insolvency," Peters said. "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."
In turn, the department called for an immediate infusion of $8 billion in tax revenues into the fund. That's precisely what some Democrats in Congress have been trying to do -- and a move that the administration, just six weeks ago, opposed.
"It's too bad that it has taken an emergency to force the administration to pull its head out of the sand and appreciate how serious this problem is," said Sen. Patty Murray, D-Wash., who leads the committee in charge of appropriating transportation funds, in a Friday statement.
In this highly charged political season, Transportation Secretary Peters blamed the financial crisis on earmarks included in the last transportation bill, which she said amounted to $24 billion in pet projects.
Funds Shrink as Driving Trends Shift
Every day, states ask the Transportation Department for millions of dollars in reimbursements for road projects.
But as Americans drive less and spend less money at the gas station, that means there are fewer dollars being pumped into fixing the nation's roads and bridges.
On Friday, the Transportation Department said it receives an average of $185 million in bills from states each day. That amount rose to $250 million in the summer. The seasonal increase is expected because most construction projects are done during the summer when the weather is warmer.
At the same time, in late July, the Department of Transportation announced a plunge in the amount of miles people were driving and warned that the nation's infrastructure could take a hit as a result.
With high gas prices taking a big bite out of family budgets, Americans drove almost 10 billion fewer miles in May 2008 than in May 2007, according to Federal Highway Administration numbers released in July by the Transportation Department.
That shift has had some unintended consequences. With less money coming in, it's possible critical traffic and transit improvements could be scaled back or delayed.
In late July, Peters said that was "yet another example of how the gas tax is an antiquated mechanism." At that time, she said the money in the fund is needed for a backlog of highway maintenance projects that haven't yet been funded but need to be.
"This crisis could lead to millions of construction layoffs across this country at a time when the unemployment rate is already the highest it has been in nearly five years," Murray said.
On the other side of the aisle and the other side of Capitol Hill, Rep. John L. Mica, R-Fla., also said Congress should take action.
"We are in an economic slowdown, and we cannot afford to start shutting down critical infrastructure projects," said Mica, the Republican leader of the House transportation panel, in a Friday statement. "These projects are vital to transportation safety and the economy, and provide thousands of well-paying jobs."