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Updated February 13, 2020
Reauthorizing Highway and Transit Funding Programs
Surface transportation reauthorization acts fund federal
$144 billion to the HTF, mainly from the Treasury general
highway and public transportation programs, along with
fund. This includes $70 billion of transfers authorized in the
transportation research, intercity passenger rail, and other
FAST Act.
programs. The Fixing America’s Surface Transportation
Short-term issues. The Congressional Budget Office
Act (FAST Act; P.L. 114-94), authorized federal spending
(CBO) estimates that the HTF has sufficient balances to
on highways and public transportation for FY2016-
cover expected outlays through September 2021. However,
FY2020. The funding expires on September 30, 2020.
unless Congress authorizes additional revenues or transfers
The Federal-Aid Highway Program
by then, the balance in the HTF could fall so low that the
Department of Transportation may have to delay
The FAST Act provides an average of $45 billion annually
reimbursement to states and transit agencies for completed
for the 1,027,849-mile system of federal-aid highways.
projects.
Although there are exceptions, federally funded projects are
generally limited to this system that includes roughly 25%
Long-term issues. More money will likely be needed if
of all U.S. public road mileage. Of these funds, 92.5% are
Congress wishes to continue the highway and public
distributed to the states via formula. The states have nearly
transportation programs at or above their current levels,
complete control over the use of these funds, within the
adjusted for inflation, in a future multiyear reauthorization.
limits of federal planning, eligibility, and oversight rules.
CBO projects the annual difference between revenues and
Money is not provided up front. A state is reimbursed after
outlays to rise from $14 billion in FY2021 to $22 billion in
work is started, costs are incurred, and the state submits a
FY2026 (see Figure 1).
voucher to the Federal Highway Administration (FHWA).
The highway program focuses on highway construction and
Figure 1. HTF Revenue and Outlays ($ Billions)
planning, and does not support operations or routine
maintenance. The federal share of project costs is generally
80%, but 90% for Interstate System projects.
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 Capital
Investment Grants Program, more widely known as “New
Starts,” which supports construction of new local rail, bus
rapid transit, and ferry systems, and the expansion of
existing systems.
Funding Issues
Source: CBO, Highway Trust Fund Baseline—January 2020.
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 $67.3 billion shortfall, and
Trust Fund (HTF). Revenues supporting the HTF come
a six-year bill would need to cover $89.3 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 supported outlays
began in 2007. Since that time, improving fuel efficiency
for 12 years. Alternatively, Congress could eliminate the
and slower growth in vehicle mileage have led revenue to
HTF altogether and pay for highways and transit through
level off in most years, and spending from the HTF has
annual appropriations from the general fund.
consistently outrun highway user revenues. Unable to agree
Cut spending. Congress could reduce federal highway and
on revenue increases or program reductions, Congress
public transportation spending to match the currently
began providing transfers to the HTF to prevent its
projected revenues. This would require spending cuts of
insolvency. Since September 2008, Congress has provided
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
47,000 bridges in poor condition nationwide at the end of
for highway projects committed to in previous years.
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 $3.3 billion to $9.7 billion less than
comparatively small. For example, while the FAST Act
annual expenditures under a possible six-year
created a freight-focused discretionary program, the
reauthorization bill.
program does not have the resources to fund extensive
Revenue Options
widening or bridge construction on highways anticipated to
have high growth in truck traffic. Historically, discretionary
A wide variety of revenue sources have been suggested to
funding has often been broken into many relatively small
help address the HTF shortfall, including the 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 10 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, adjusted for
mechanism. A FAST Act-required study recommended that
anticipated inflation.
Congress create an Interstate Highway System Renewal and
Modernization Program, but distribute the federal aid for
Tax electric vehicles (EVs). Charging EV drivers for road
each state’s segments based on the estimated cost of
use could provide some revenue. Vehicles that do not
rebuilding and expanding the Interstate system in the state
consume motor fuel do not contribute to the HTF. Finding
rather than by formula.
an equitable and efficient way for the federal government to
tax EVs presents a challenge.
Given both falling public transportation ridership and
Impose a vehicle miles traveled (VMT) charge. Charging
substantial preservation needs, Congress might consider
vehicle owners for each mile of travel has been discussed
both the size and direction of the federal public
for many years as an alternative to the motor fuel tax.
transportation program. One question is whether
Congress could set the per-mile rate and raise it as
discretionary funding for major capital projects, provided
necessary. However, this revenue source has privacy,
through the Capital Investment Grants Program, is being
implementation, and collection cost issues.
spent effectively to build rail and bus rapid transit in
relatively low-density urban areas.
Tolling. Tolls could be used to pay for highway projects,
reducing demands on the HTF. Toll systems can be
Disaster response and the resiliency of highway and public
expensive to administer and enforce, and are subject to
transportation infrastructure are likely to be important
evasion. Many roads may not have enough traffic to make
issues in reauthorization. Concerns that climate change and
tolling worthwhile.
more frequent natural disasters are damaging roads and
Private investment. Increased use of public-private
transit lines could lead to consideration of requirements that
partnerships and privatization of roads and bridges may
states and transit agencies devote more attention to
reduce federal costs in some cases. However, relatively few
resilience in infrastructure design. Highway safety may also
transportation projects are suitable for large-scale private
receive major attention in the reauthorization debate, given
investment, and investors are sometimes unwilling to accept
that highway fatalities and the highway fatality rate, which
the risk that traffic volumes will be below expectations.
had fallen for many years, have been rising again recently.
Issues in Reauthorization
More Information
The distribution of highway funding among states has
CRS Report R45350, Funding and Financing Highways
historically been a difficult issue for Congress to resolve.
and Public Transportation.
States have been concerned about the funding they receive
relative both to other states and to the contribution their
Robert S. Kirk, Specialist in Transportation Policy
drivers make to the HTF. The formula used to distribute
William J. Mallett, Specialist in Transportation Policy
most highway funds is based on FY2015 apportionments,
and does not directly consider factors such as states’ rates
IF11125
https://crsreports.congress.gov
Reauthorizing Highway and Transit Funding Programs
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https://crsreports.congress.gov | IF11125 · VERSION 4 · UPDATED