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Fixing the Shortfall in Highway Infrastructure Funding

Fixing the Shortfall in Highway Infrastructure Funding

The Regulatory Review
Aug 21, 2019
Jared Kadich

A recent report highlights funding gaps for infrastructure and potential fixes.

Every time you fuel up at the gas pump, you help the federal government fill its coffers. But the 18 cents per gallon tax premium you pay today is the same as 25 years ago, leading to a “revenue dilemma” for transportation agencies.

Taxes on gasoline and diesel fuel fund the majority of the Highway Trust Fund, which supports federal infrastructure spending on roads and bridges. But as a recent Congressional Research Service (CRS) report makes clear, this funding formula is broken, and Highway Trust Fund revenue is falling behind spending needs. In its report, the CRS identifies numerous options for addressing the long-term financial stability of the Highway Trust Fund, including raising the gas tax, expanding the use of tolling, and making general Treasury funds a permanent revenue source.

Today, the vast majority of revenue paid into the Highway Trust Fund comes from federal taxes on gas and diesel. When the Fund was created in 1956, the U.S. Congress imposed a 3 cent per gallon tax on gasoline. Critically, however, Congress did not peg the tax to inflation, so Congress must vote each time it wants to raise the tax. Congress raised the gas tax only four times over the following 40 years, with the last increase in 1993, raising the tax to 18.4 cents per gallon. The gas tax today would be 31.7 cents per gallon if indexed to historical inflation... FULL ARTICLE

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