End of the Highway Trust Fund?

Abstract

More than at any other time, the status of the Highway Trust Fund is in doubt. Modern federal surface transportation policy began in 1956, and its survival is threatened by a lack of political will to increase the main source of revenue for the program: the federal excise tax on gasoline. In the short term, the federal highway and transit programs can survive with more borrowed money or with an increase in federal gas tax. However, even if the political will to do either of these things is found, both sources of revenue are unsustainable in the long term. As Congress faces this transportation funding crisis, it must consider how to avoid a similar problem in the future by transitioning to a reliable source of revenue immediately. Failing to do so would put the national transportation system and national competitiveness at risk. This paper explores the following three policy options for long-term federal transportation funding by presenting the advantages and disadvantages of each one: (a) continued current funding, (b) improved user fees, and (c) dedicated general revenue. These options offer general guidance for funding policy rather than detailed proposals; each option has possible variations. However, each option sets a specific direction for future federal transportation policy, and each provides policy trade-offs. The purpose of this paper is to describe the trade-offs regarding strategies for transitioning to a sustainable federal surface transportation program.