Who Should Pay for Highways?

January 9, 2012

When Congress established the Highway Trust Fund in 1956 to finance the Interstate Highway System, it insisted that only monies paid into the fund by road users could be appropriated to meet its objectives.  Now, Congress is considering a new guiding principle: spend what you want and if the usual funding sources are insufficient (in this case, the fuel taxes that replenish the trust fund), dip into general revenues to make up the difference.  This move from "user pays" to "taxpayer pays" has distinct and substantial disadvantages, says Gabriel Roth, a research fellow at the Independent Institute.

  • The new principle encourages a lack of discipline in controlling spending, because members of Congress will be able to increase transportation spending without increasing the corresponding revenue sources.
  • It would further politicize highway spending, making decisions more dependent on political preferences than consumer choice.

This first point is evident even in the most recent appropriations for transportation.  The latest House Transportation Committee's bill would authorize some $230 billion to $285 billion over the next six years, while the Senate Environment and Public Works Committee has approved a new bill authorizing some $109 billion in spending in fiscal years 2013 and 2014.  Both of these proposed allocations far exceed revenues provided by the fuel tax.

Congress could get out of transportation financing altogether, wind down the Highway Trust Fund, and leave highway financing and decision-making to states, local authorities and private entities.

  • This would encourage the more efficient use of transportation dollars, as state financing must gain approval from local voters -- this would likely eliminate high-cost, low-yield projects.
  • It would also reduce Washington's financial burden, as highways and city transit systems can be financed out of fares, fees, tolls and dedicated state fuel taxes that users pay.
  • Finally, it would improve upon the principle that the consumers of public services pay for them by ensuring that users only pay for transportation within their own area.

Source: Gabriel Roth, "Who Should Pay for Highways?" Independent Institute, December 28, 2011.

For text:

http://www.independent.org/newsroom/article.asp?id=3217

 

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