U.S. highway trust fund veers toward crisis

WASHINGTON — Soaring gasoline prices are hurting Uncle Sam in the wallet too.

As motorists cut back on their driving and buy more fuel-efficient cars, the government is taking in less money from the federal gasoline tax.

The result: The principal source of funding for highway projects will soon hit a big financial pothole. The federal highway trust fund could be in the red by $3.2 billion or more next year.

The fund, set to finance about $40 billion in transportation projects next year, is increasingly strained. And the problem has taken on greater urgency as lawmakers face a backlog of projects to maintain the nation's aging interstate highway system and ease traffic congestion.

"The situation has only been exacerbated by rising fuel prices, which are causing motorists to drive less and resulting in less revenue for transportation improvements," said David Bauer, senior vice president for government relations at the American Road and Transportation Builders Assn.

California risks losing $930 million, or about a third of its federal highway allotment, Caltrans Director Will Kempton said in a letter to the state's congressional delegation. Kempton warned that unless Washington acted to address the shortfall, projects could be delayed, reduced or canceled.

In the short run, lawmakers are scrambling to figure out how to close the gap. Federal highway spending nationwide could be cut by a third beginning Oct. 1, according to the American Road and Transportation Builders Assn.

"The condition of the highway trust fund has been deteriorating for years, but skyrocketing gas prices have made an already dire situation worse," said Sen. Patty Murray (D-Wash.), head of the Senate transportation appropriations subcommittee. "We are now less than a year away from a bankrupt trust fund, which would leave critical construction projects in peril."

In the long run, lawmakers must figure out whether the 18.4-cent-a-gallon federal gasoline tax, which helped bring in money when fuel-hungry SUVs were hot, is still a viable way to fund transportation projects amid heightened concern about gasoline prices, U.S. dependence on foreign oil and global warming.

The federal gasoline tax is tied to every gallon sold, not every dollar spent, so federal gas tax revenue goes up only if consumption increases. This year, consumption is projected to drop for the first time since 1991.