NCPA - National Center for Policy Analysis

Myths about Transportation Spending Dispelled

June 29, 2011

The United States spends about $160 billion annually on highways, with about one-fourth of that total coming from the federal government.  Federal highway spending is funded mainly through gas and other fuel taxes that are paid into the Highway Trust Fund.  In recent years, however, the amount of money Congress has spent out of the general fund has exceeded the dedicated trust funds set aside for highway spending, says Veronique de Rugy, a senior research fellow at the Mercatus Center at George Mason University.

De Rugy sets straight some myths about transportation spending.

Myth One: Highways and roads pay for themselves thanks to gasoline taxes and other charges to motorists.

  • In 1957 about 67 percent of highway funds came from user fees.
  • Forty years later the revenue from user fees had shrunk to just 50 percent of total highway funds.
  • Indeed, user fee revenue as a share of total highway-related funds is now at its lowest point since the Interstate Highway System was created.

Myth Two: Proceeds from the federal gas tax are used to build and maintain the interstate highway system.

  • Today, at least 25 percent of federal gas tax funds are diverted to non-highway uses including maintaining sidewalks, funding bike paths and creating scenic trails.
  • Fuel tax revenues are now insufficient to maintain the current level of highway spending.

Myth Three: Increased spending on public transit will boost ridership.  Therefore we need to transfer highway dollars to transit programs and increase state and local taxes to fund transit agencies.

  • Although transit funding in 1995 was eight times more than it was in 1978 (17.4 billion and 2.2 billion respectively), the total increase in ridership was only about 2 percent.
  • Total ridership in 1978 (7.8 billion trips) was actually more than ridership in 1995 (7.7 billion trips) -- the only difference was in the amount of funding.
  • Between 1989 and 1996 ridership fell by 11 percent; again, this was while funding increased by 42 percent.

Source: Veronique de Rugy, "The Facts about Transportation Spending," Reason Magazine, June 17, 2011.

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