Infrastructure Magazine Spotlights Fragile State of National Highway Trust Fund

The poor condition of existing roads and bridges across United States is thoroughly examined in the Fall 2014 issue of Transportation & Infrastructure Magazine. In an important editorial, “Road Trusts Almost Busts,” a leader of one of America’s top municipal finance and infrastructure firms examines the fragile state of the federal Highway Trust Fund.

Sean Werdlow, Managing Director and Chief Operating Officer of Siebert Brandford Shank & Co. (SBSCO), discusses the infrastructure project gridlock that can occur should the national Highway Trust become insolvent.  SBSCO is the largest minority owned municipal finance firm in the United States.

“If the Highway Trust Fund were to become insolvent or have its funding greatly reduced, states that issued Grant Anticipation Revenue Vehicles bonds (GARVEES) may not receive federal grants in the amounts they originally anticipated. GARVEES are debt instruments that states use to raise money for approved highway projects when funding is anticipated from federal grants. This will require these states to come up with money from other sources to meet debt service obligations and repay borrowers,” Mr. Werdlow says.

The Highway Trust Fund has had solvency issues in the very recent past.  Gasoline tax revenues that support it have fallen drastically and since fiscal year 2008 Congress has needed to transfer $54 billion into the Trust to prevent insolvency. Congress last increased the gas tax in 1993, raising it from 14.1 cents to 18.4 cents per gallon. Gas taxes are on a per gallon basis, not a percentage basis. Since cars are mandated to achieve better EPA gas mileage, the flow of dedicated gas tax revenues has dropped. 

Mr. Werdlow highlights that the Trust is responsible for:

·       Supporting as many of 800,000 jobs to build and maintain roadways and without prompt authorization many of those jobs may be in jeopardy. 

·       American Society of Civil Engineers (ASCE) gave 2 million miles of roadways in the United States a grade of “D” – “Poor at Risk.”  Just to maintain that D-Rating for our aging national road infrastructure cost $101 billion per year.  If we actually wish to make upgrades and improvements, the cost rises to $170 billion annually.

·       Congested highways and long traffic tie-ups cost consumers and our economy an estimated $101 billion each year in lost time, efficiency and fuel costs, without taking into consideration pollution. 

·       Roadway conditions are a significant factor in 1/3 of all U.S. traffic facilities, costing our national economy $230 billion a year.

According to the Bond Buyer, the gas tax would need to be raised to 31 cents per gallon in 2015 and increased thereafter to keep up with the national infrastructure road and bridge funding needs. 

The $3.79 billion Highway Trust Fund has avoided insolvency for now.   The House of Representatives approved a $10.8 billion plan to keep the Fund afloat until May 2015, but that is but a short-term fix.  Mr. Werdlow explains that there are serious concerns about the future of the Fund.

According to a Fitch Credit Ratings, Congress is not likely to agree upon a long-term funding solution for transportation. 

Mr. Werdlow encourages national leaders to prioritize the Highway Trust to ensure it will have sufficient funding to “carry out the mission they were created for.”

Read the important Transportation & Infrastructure spotlight editorial:  

http://ti-magazine.com/features/columnists/93-road-building

For an interview with Sean Werdlow, contact Tom Butler /Victoria Carman…..212-685-4600

The poor condition of existing roads and bridges across United States is thoroughly examined in the Fall 2014 issue of Transportation & Infrastructure Magazine. In an important editorial, “Road Trusts Almost Busts,” a leader of one of America’s top municipal finance and infrastructure firms examines the fragile state of the federal Highway Trust Fund.

Sean Werdlow, Managing Director and Chief Operating Officer of Siebert Brandford Shank & Co. (SBSCO), discusses the infrastructure project gridlock that can occur should the national Highway Trust become insolvent.  SBSCO is the largest minority owned municipal finance firm in the United States.

“If the Highway Trust Fund were to become insolvent or have its funding greatly reduced, states that issued Grant Anticipation Revenue Vehicles bonds (GARVEES) may not receive federal grants in the amounts they originally anticipated. GARVEES are debt instruments that states use to raise money for approved highway projects when funding is anticipated from federal grants. This will require these states to come up with money from other sources to meet debt service obligations and repay borrowers,” Mr. Werdlow says.

The Highway Trust Fund has had solvency issues in the very recent past.  Gasoline tax revenues that support it have fallen drastically and since fiscal year 2008 Congress has needed to transfer $54 billion into the Trust to prevent insolvency. Congress last increased the gas tax in 1993, raising it from 14.1 cents to 18.4 cents per gallon. Gas taxes are on a per gallon basis, not a percentage basis. Since cars are mandated to achieve better EPA gas mileage, the flow of dedicated gas tax revenues has dropped. 

Mr. Werdlow highlights that the Trust is responsible for:

·       Supporting as many of 800,000 jobs to build and maintain roadways and without prompt authorization many of those jobs may be in jeopardy. 

·       American Society of Civil Engineers (ASCE) gave 2 million miles of roadways in the United States a grade of “D” – “Poor at Risk.”  Just to maintain that D-Rating for our aging national road infrastructure cost $101 billion per year.  If we actually wish to make upgrades and improvements, the cost rises to $170 billion annually.

·       Congested highways and long traffic tie-ups cost consumers and our economy an estimated $101 billion each year in lost time, efficiency and fuel costs, without taking into consideration pollution. 

·       Roadway conditions are a significant factor in 1/3 of all U.S. traffic facilities, costing our national economy $230 billion a year.

 

According to the Bond Buyer, the gas tax would need to be raised to 31 cents per gallon in 2015 and increased thereafter to keep up with the national infrastructure road and bridge funding needs. 

The $3.79 billion Highway Trust Fund has avoided insolvency for now.   The House of Representatives approved a $10.8 billion plan to keep the Fund afloat until May 2015, but that is but a short-term fix.  Mr. Werdlow explains that there are serious concerns about the future of the Fund.

According to a Fitch Credit Ratings, Congress is not likely to agree upon a long-term funding solution for transportation. 

Mr. Werdlow encourages national leaders to prioritize the Highway Trust to ensure it will have sufficient funding to “carry out the mission they were created for.”

Read the important Transportation & Infrastructure spotlight editorial:  

http://ti-magazine.com/features/columnists/93-road-building

For an interview with Sean Werdlow, contact Tom Butler /Victoria Carman…..212-685-4600

 
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