The Associated General Contractors of America’s (AGC) CEO Stephen E. Sandherr declared the Highway Trust Fund (HTF) on the verge of bankruptcy, and called for short-term solutions such as indexing the gas tax to inflation to guard against future erosion of the fund’s purchasing power and long-term methods to supplement the gas tax.

Sandherr spoke at an event hosted by the U.S. Chamber of Commerce and discussed the recommendations outlined in The Future of Highway and Public Transportation Financing, the final phase of a transportation financing study released by the National Chamber Foundation.

“The release of [this] report is the first step in the long process of reauthorizing the surface transportation program,” said Sandherr. “It includes thoughtful and bold recommendations, and it is now our job to convince leaders to lead.”

The report estimates a cumulative funding shortfall at all levels of government ranging from a half trillion dollars to maintain the current condition of the transportation system through 2030 to $1.1 trillion to improve the current condition of the system over the same time period. The report also predicts that the HTF will be fully spent in 2008, one year shy of the SAFETEA-LU authorization period.

“Without a significant influx of new revenues, not only will the HTF be unable to support the federal commitment made under SAFETEA-LU, but our nation’s transportation network will also continue to deteriorate, impacting mobility and economic well-being,” added Sandherr.

This report includes many of the recommendations made by AGC in advance of the last reauthorization cycle such as boosting highway funding, including indexing the gas tax to inflation, closing exemptions and re-crediting interest to the HTF, expanding the use of tolling, and encouraging use of innovative financing tools.

Increasing the federal gas tax through indexing would have an immediate impact on the solvency of the HTF in the short term; however, as this report lays out, it is critical to augment the future funding of transportation infrastructure in this country.

Since 1993, the last year the federal gas tax was increased, it has lost one-third of its purchasing power. Sandherr pointed out that the current political environment does not accommodate a rational discussion of a gas tax adjustment to meet growing transportation needs.

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