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March 6, 2019
Reauthorizing Highway and Transit Funding Programs
Surface transportation reauthorization acts fund federal
HTF, mainly from the Treasury general fund. This includes
highway and public transportation programs, along with
$70 billion of transfers authorized in the FAST Act.
transportation research, intercity passenger rail, and other
Short-term issues. The Congressional Budget Office
programs. The Fixing America’s Surface Transportation
(CBO) estimates that the HTF has sufficient balances to
Act (FAST Act; P.L. 114-94), authorized federal spending
cover expected outlays through September 2021. However,
on highways and public transportation for FY2016-
unless Congress authorizes additional funds by then, the
FY2020. The funding expires on September 30, 2020.
balance in the HTF could fall so low that the Department of
The Federal-Aid Highway Program
Transportation may have to delay reimbursement to states
and transit agencies for completed projects.
The FAST Act provides on average $45 billion annually for
the 1,027,849-mile system of Federal-Aid highways. Of
Long-term issues. More money will likely be needed if
these funds, 92.5% are distributed to the states via formula.
Congress wishes to continue the highway and public
The states have nearly complete control over the use of
transportation programs at or above their current levels,
these funds, within the limits of federal planning, eligibility,
adjusted for inflation, in a future multiyear reauthorization.
and oversight rules. Money is not provided up front. A state
CBO projects the annual difference between revenues and
is reimbursed after work is started, costs are incurred, and
outlays to rise from $16 billion in FY2021 to $22 billion in
the state submits a voucher to the Federal Highway
FY2026 (see Figure 1).
Administration (FHWA). The highway program focuses on
highway construction and planning, and does not support
Figure 1. HTF Revenue and Outlays ($ Billions)
operations or routine maintenance. The federal share of
project costs is generally 80%, but 90% for Interstate
System projects. In general, projects are limited to a
designated system that includes roughly 25% of all U.S.
public road mileage.
The Federal Public Transportation Program
The FAST Act authorized an average of $12.2 billion
annually for the federal public transportation program. Most
of this funding is distributed by formula to local transit
agencies. The largest discretionary program is the New
Starts Program, which supports construction of new local
rail, bus rapid transit, and ferry systems, and the expansion
of existing systems.
Source: CBO, Highway Trust Fund Accounts––January 2019
Funding Issues
Baseline.
Highway Trust Fund. Historically, all of the federal
highway program and 80% of the public transportation
Based on current law, a future five-year reauthorization bill
program have been funded with revenues from the Highway
would need to cover a projected $68 billion shortfall, and a
Trust Fund (HTF). Revenues supporting the HTF come
six-year bill would need to cover $89 billion.
from a combination of fuel, truck, and tire taxes, but the
fuel taxes provide about 85%-90% of the money.
What Are Some Options?
The excise taxes on gasoline and diesel are fixed in terms of
Continue reliance on general funds. Congress could
cents per gallon (18.3 cents for gasoline and 24.3 cents for
choose to transfer money from the general fund to the HTF
diesel), and do not adjust for inflation or change with fuel
to accommodate as large a surface transportation program
prices. The rates were last raised in 1993. Increases in fuel
as desired. When the FAST Act expires at the end of
consumption kept revenues growing until the recession that
FY2020, general fund transfers will have occurred for 12
began in 2007. Since that time, improving fuel efficiency
years. Alternatively, Congress could eliminate the HTF
and slower growth in vehicle mileage have led revenue to
altogether and pay for highways and transit through annual
level off, and spending from the HTF has consistently
appropriations from the general fund.
outrun highway user revenues. Unable to agree on revenue
Cut spending. Congress could reduce federal highway and
increases or program reductions, Congress began providing
public transportation spending to match the currently
transfers to the HTF to prevent its insolvency. Since
projected revenues. This would require spending cuts of
September 2008, Congress has provided $144 billion to the
roughly 25%.
https://crsreports.congress.gov
Reauthorizing Highway and Transit Funding Programs
Devolve highway programs. Congress could give
of population and highway travel growth, which might be
responsibility for highways to the states and reduce federal
relevant in assessing the need for new highway capacity.
motor fuel and truck taxes accordingly. States could raise
their own highway revenues or reduce spending as they see
Recent reauthorizations have increased the states’ discretion
fit. The challenge of making these adjustments would vary
in the use of federal highway funds. State discretion may
greatly from state to state. Devolution would have
conflict with the desire of Congress to set priorities. For
significant federal front-end costs, as the federal
example, despite much progress, there were still about
government would remain obligated to reimburse the states
55,000 structurally deficient bridges nationwide at the start
for highway projects committed to in previous years.
of 2018. It would be difficult for Congress to make bridge
repair a priority without reducing states’ discretion.
Separate public transportation from the HTF. Under this
scenario, federal support for public transportation would be
Most federal surface transportation funding is distributed by
provided from the general fund as Congress sees fit. If the
formula. This can make it difficult for Congress and the
HTF were to be dedicated solely to highway spending at the
states to fund large projects of regional impact.
current level, adjusted only for inflation, annual receipts are
Discretionary funding intended to fill this gap is
projected to remain $4 billion to $9 billion less than annual
comparatively small. For example, while the FAST Act
expenditures under a possible six-year reauthorization bill.
created a freight-focused discretionary program, the
Revenue Options
program does not have the resources to fund extensive
widening or bridge construction on highways anticipated to
A wide variety of revenue sources have been suggested to
have high growth in truck traffic. Historically, discretionary
help address the HTF shortfall. Among them are the
funding has often been broken into many relatively small
following:
grants. This was especially true prior to a 2010 ban on
Increase the fuel tax. The motor fuel tax could be raised
earmarks, when virtually all discretionary program funding
enough to make up for its loss of purchasing power and
was distributed by earmarking: the average earmark in the
then be adjusted annually for inflation and fuel efficiency.
last earmarked authorization bill was less than $4 million.
Based upon the current level of fuel consumption, an
increase of fuel taxes in the range of 13 cents to 15 cents
A new Interstate Highway construction or reconstruction
per gallon would be required to fund highway and public
program might not fit the traditional formula funding
transportation programs at their current levels.
mechanism. A FAST Act-required study recommended that
Congress create an Interstate Highway System Renewal and
Tax electric vehicles (EVs). Charging EV drivers for road
Modernization Program, but distribute the federal aid for
use could provide some revenue. Vehicles that do not
each state’s segments based on the estimated cost of
consume motor fuel do not contribute to the HTF. Finding
rebuilding and expanding the Interstate system in the state
an equitable and efficient way to charge EVs is a challenge.
rather than by formula.
Impose a vehicle miles traveled (VMT) charge. Charging
vehicle owners for each mile of travel has been discussed
Given both falling public transportation ridership and
for many years as an alternative to the motor fuel tax.
substantial preservation needs, Congress might consider
Congress could set the per-mile rate and raise it as
both the size and direction of the federal public
necessary. However, this revenue source has privacy,
transportation program. One question is whether
implementation, and collection cost issues.
discretionary funding for major capital projects, provided
through the Capital Investment Grant Program, is being
Tolling. Tolls could be used to pay for highway projects,
spent effectively to build rail and bus rapid transit in
reducing demands on the HTF. Toll systems can be
relatively low-density urban areas.
expensive to administer and enforce, and are subject to
evasion. Many roads may not have enough traffic to make
Disaster response and the resiliency of highway and public
tolling worthwhile.
transportation infrastructure are likely to be important
Private investment. Increased use of public-private
issues in reauthorization. Concerns that climate change and
partnerships and privatization of roads and bridges may
more frequent natural disasters are damaging roads and
reduce federal costs in some cases. However, relatively few
transit lines could lead to consideration of requirements that
transportation projects are suitable for large-scale private
states and transit agencies devote more attention to
investment, and investors are sometimes unwilling to accept
resilience in infrastructure design. Highway safety may also
the risk that traffic volumes will be below expectations.
receive major attention in the reauthorization debate, given
that highway fatalities and the highway fatality rate, which
Issues in Reauthorization
had fallen for many years, have been rising again recently.
The distribution of highway funding among states has
historically been a difficult issue for Congress to resolve.
More Information
States have been concerned about the funding they receive
CRS Report R45350, Funding and Financing Highways
relative both to other states and to the contribution their
and Public Transportation.
drivers make to the HTF. The formula used to distribute
most highway funds is based on FY2015 apportionments,
Robert S. Kirk, Specialist in Transportation Policy
and does not directly consider factors such as states’ rates
William J. Mallett, Specialist in Transportation Policy
IF11125
https://crsreports.congress.gov
Reauthorizing Highway and Transit Funding Programs
Disclaimer
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https://crsreports.congress.gov | IF11125 · VERSION 1 · NEW