Dwindling federal gas tax could make funding Minnesota road repairs difficult

Road construction and pothole filling season is here. But Minnesota could be short the cash to pay for it if Congress doesn't act on the gas tax, which funds about a third of the nearly $1.7 billion the state spends on roads.

The news likely will frustrate people have grown tired of the many down to the wire battles over federal spending in the nation's capital.

Given the dire condition of many roads and bridges, the handwringing could soon be back.

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"We've chugged along from crisis to crisis and fiscal cliff to fiscal cliff and now we have the highway cliff, if you will," said U.S. Rep. Tim Walz, a Democrat who represents Minnesota's 1st District.

At issue is the federal highway trust fund, which collects 18.4 cents for every gallon of gasoline sold in the country and distributes it to the states to build roads and bridges.

That piggy bank is about to go broke, in large part because the fund's share of the gasoline tax hasn't gone up in more than 20 years. The U.S. Department of Transportation estimates that the fund will run out of money by August.

"The reality is we're not bringing in enough revenue from gas tax receipts, " said Adie Tomer, an associate fellow at the Brookings Institution.

Tomer said inflation has eaten away at that 18 cent per gallon tax and raising it has become politically toxic for many members of Congress. Americans are also driving less and driving more fuel-efficient cars.

Meanwhile, Congress has been reluctant to curb transportation spending while the nation's roads and bridges repeatedly receive low marks for its poor state of repair. But there's been little movement to address the trust fund's looming insolvency.

A Senate committee will hold its first hearing on the matter next week. Nothing has happened in the Republican-controlled House, said Walz, a member of the House Transportation Committee. He notes that Congress just finished a two week recess.

"The reality is we're not bringing in enough revenue from gas tax receipts."

"I come back here and nothing on the plate, nothing scheduled, nothing moving -- and that's business as usual," he said. It's very frustrating."

The Republican staff on the House Transportation Committee didn't respond to a request for information on possible legislation to address the issue.

Walz said many Republicans want to stay away from a potentially controversial bill that could require additional deficit spending while primary election season is underway.

"We know that we're in a situation where a lot of these folks are back home campaigning against attacks from their right flanks because they built roads," he said.

But even if Congress doesn't resolve the transportation funding problem in coming months, Minnesota still has adequate resources to devote to its roads and bridges, at least in the short term.

"Minnesota is in a pretty good cash flow position and a pretty good fund balance position on the state side," said Tracy Hatch, deputy commissioner of the Minnesota Department of Transportation and its CFO.

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Also, the federal money would not disappear. However, it likely would be cut to match what is coming into the highway trust fund.

Hatch said if there's no resolution or Congress does decide to make major spending cuts, the state will have to scale back its portfolio of new projects.

Tomer agreed.

"Those orange cones you see on the sides of roads, proverbially, they might be lasting quite a bit longer at least until we solve the problem here in Washington," he said.

As a result of the funding crisis, Tomer said states and cities increasingly are taking matters into their own hands and coming up with the money to fund projects -- even through new taxes -- rather than wait for the federal government to provide it.

"The state and especially the local level, leaders from all across the political spectrum have no problem doing it," he said.

In part, Tomer said, that because it's easier to sell voters on a project they know will have an effect on their lives.

"If folks know what they're getting, if they can say, 'it's a new transit line here, it's a new bike path there and it's a new highway lane over there,' they're a little more receptive to support it," he said.

It's not clear if Congress would do about highway funding before its August recess.

For Hatch, the MNDOT official, that means bracing for a long, suspenseful summer.

"We are hoping for the best, planning for the worst," she said.