Transportation spending will likely return to the agenda on Capitol Hill in the months ahead. The highway authorization bill expired in 2009 and an extension expires at the end of September. The Congressional Budget Office estimates that the U.S. spends about $160 billion annually on highways, including $40 billion from the federal government.
Federal spending is funded primarily through fuel taxes that are deposited into a federal trust fund. The gas tax has not been increased since 1993, and trust fund revenues have not kept pace with highway spending in recent years. From 2008 to 2010, Congress supplemented the fund with about $35 billion in revenues from the Treasury.
A new report by Smart Growth America and Taxpayers for Common Sense highlights some of the funding challenges facing policymakers. The report concludes that poor road conditions have become “a large and growing financial liability for the states.” The states would need to spend $43 billion per year for 20 years to bring roads currently in poor condition up to good condition and maintain them, according to the report.
The increasing gap between revenues and spending will be one of the key obstacles facing policymakers considering a new highway bill. An honest discussion of the trade-offs needed to fund transportation priorities is long overdue and should be on the agenda. Proposals for new spending should be paid for with credible offsets that are explained in detail.
CBO Testimony: The Highway Trust Fund and Paying for Highways
CBO Economic and Budget Issue Brief: Spending and Funding for Highways
CBO: Alternative Approaches to Funding Highways
Smart Growth America/ Taxpayers for Common Sense Report