Last week was a busy one in the world of surface transportation. The Omnibus Appropriations bill signed by President Obama on January 17 increases Transportation Investment Generating Economic Recovery (TIGER) grant funding from $500 million to $600 million, funds requested transit New Starts (to create or upgrade guideway transit systems, such as commuter rail, bus rapid transit, and ferries), and enables authorized funds to be spent from the Mass Transit and Highway accounts of the Highway Trust Fund. House and Senate committees held hearings to consider the next surface transportation authorization bill and review progress on the current authorization law, Moving Ahead for Progress in the 21st Century (MAP-21). Passing Appropriations bills begins to move the nation away from crisis management, but careful observers noticed that at least one urgent action item remains to be addressed to avert looming economic damage and a transportation crisis.

The Mass Transit and Highway accounts of the Highway Trust Fund hit 28- and 42-year lows respectively at fiscal year-end 2013. Eighty percent of federal transit investment comes from the Highway Trust Fund. Transit agencies, and State Departments of Transportation, depend on timely reimbursements from these accounts to pay private construction firms for the transit and highway construction work they perform, as well as to repair and operate surface transportation networks. Over the last 20 years, the average fiscal year-end balance for these accounts has been $7.4 billion for the Mass Transit Account and $13.3 billion for the Highway Account. Generally, when Fund balances fall below $1 billion for the Mass Transit account and $5 billion for the Highway account, the federal government needs to begin delaying or prorating reimbursements. Balances at the end of FY13 were $2.5 billion and $3.8 billion for the Mass Transit and Highway accounts respectively. The FY14 infusion of General Funds, planned under the July 2012 authorization law, was executed in October 2013, averting for now impacts on federal reimbursements.

While the average bus boarding fare has increased about 80 percent since 1993, the federal gas tax that feeds the Highway Trust Fund has not been increased at all - so since last October's infusion of funds, fund balances resumed their inexorable decline. Current shrinking balance projections indicate that, this summer, the Department of Transportation will need to begin delaying or prorating reimbursements to transit agencies and states. If transit agencies are forced to reduce or eliminate service, people with no alternative will lose access to current or potential employment opportunities. Those with choices will take to the roads, increasing the potential for congestion.

Of more immediate concern, transit agencies and states planning for the year will start recognizing that federal reimbursements may be delayed or prorated, and so delay or cancel transit and highway construction to avoid committing funds they are not certain they'll receive. If Congress acts to increase Highway Trust Fund account balances in the next few months, it can avoid inflicting this damage to the nation's economy.

See EESI's issue brief, Federal Funding for U.S. Transit and Roadway Infrastructure , for more details on surface transportation funding and the Highway Trust Fund.

Author: Paul Haven