Highway Trust Fund Nearing the End of the Road | Citizens Against Government Waste

Highway Trust Fund Nearing the End of the Road

The WasteWatcher

The Highway Trust Fund is a transportation fund financed by an 18.4 cents per gallon gas tax extracted from drivers every time they fill their tank.  The tax proceeds are then used to fund work on the country’s rails, bridges, and roadways.   Unfortunately, according to a June 2014 CBO report, during the last decade “outlays from the Highway Trust Fund have exceeded revenues by more than $52 billion, and outlays will exceed revenues by an estimated $167 billion over the 2015–2024 period if obligations from the fund continue at the 2014 rate.”  The fund’s decline, brought about by inflation and increased fuel efficiency in new vehicle models, has placed the federal government in the all-too-familiar position of spending more money than it generates.

The solution preferred by many members of Congress would be to shovel more money into the fund.  However, given Congress’ poor track record with transportation spending, it is difficult to believe that additional funds would be allocated to their highest and best use.

Transportation appropriations bills have long been rife with waste.  Since FY 1991, members of Congress have added 18,174 earmarks costing taxpayers $32.5 billion to the transportation appropriations bills.  These include numerous museums, opera houses, and beautification projects such as streetscaping and bike paths over the years.  Before pumping more money into the fund, Congress should first ensure the bill is free of special interest handouts.

Perhaps the most efficient way to address the current dilemma is not to increase federal taxation, but rather to hand over both revenue generation and decision making power to the states.

An interesting idea has been proposed by Rep. Tom Graves (R-Ga.), who believes the best road forward is to “reduce the tax over five years to 3.7 cents/gallon, which could produce around $7 billion, and that money would be sent to states through block grants.”  After that, states would be free to raise their own gas taxes to pay for infrastructure as they see fit.  The contraction of federal taxation would allow for states to decide what is best for their residents and would eliminate the moral dilemma of having the residents of one state pay for residents of another.

A 2011 study by The Heritage Foundation found that in 2009 there were 28 donor states.  Worse yet, “Texas received only an 83.5 percent payback, costing it $672 million in underpayments that year.  Also in 2009, Florida received just 86 percent back, Arizona received 92 percent, and South Carolina received 85 percent.”  Regrettably, this version of robbing Peter to pay Paul has swindled Texans and others for quite some time, the tabulation of “return ratios over the past 53 years reveals that, among some of the 24 long-term losers, Texas received just 80.5 percent, Oklahoma received 86.3 percent, and Georgia received 85 percent.”

The task before legislators is to maintain the country’s infrastructure while foregoing increased funding for pet projects.  Time will tell if they are successful.