Congress faces urgent funding issues

Prior to leaving for August recess, Congress passed and the president signed a three-month funding patch to prevent the federal Highway Trust Fund from reaching insolvency.

The Highway Trust Fund was scheduled to run out of money on July 31, and the short-term fix came in the waning hours of that day.

The Highway Trust Fund receives revenue generated by the 18.4-cent federal gas tax, and it funds highway construction and maintenance. The gas tax has not generated enough revenue in recent years to meet transportation funding needs, however, and the shortfall means Congress must appropriate funds from other sources.

The July 31 patch is the 34th time in the past decade that Congress has passed a short-term transportation funding plan rather than enacting new long-term surface transportation policy. The last multi-year surface transportation bill was MAP-21, enacted in 2012.

When Congress returns from its recess, it will have about six weeks to pass another extension or a long-term plan. Each time a patch is passed, state and local governments face funding uncertainty that hinders long-term infrastructure planning.

Prior to July 31, the Senate had passed a six-year, $275 billion highway bill called the DRIVE Act (Developing a Reliable and Innovative Vision for the Economy), but only included enough funding for the first three years. The House has not passed a long-term transportation bill.

In addition to transportation funding, Congress must immediately contend with the new federal fiscal year, which begins on Oct. 1. If new funding bills are not enacted by Sept. 30, the nation will face another government shutdown. The last shutdown, which lasted for 16 days in October 2013, cost the nation an estimated $24 billion, according to Standard & Poor’s.

The nation’s debt ceiling, set at $18.113 trillion in March, will also be reached this fall. In order to avoid defaulting on the nation’s debt obligations, Congress will need to raise the debt ceiling or suspend it. If no action is taken and the nation defaults, the country’s bond rating could be downgraded.