NCPA - National Center for Policy Analysis

Is There a Highway Funding Crisis? Not Really

January 16, 2015

Lawmakers on both sides of the aisle are considering raising the federal gas tax (currently at 18.4 cents per gallon), now that gas prices have fallen dramatically. But the Wall Street Journal has another idea: abolish the gas tax.

The point of the federal gas tax is to fund the Highway Trust Fund (HTF). Since 2008, the fund has spent more than it has received in gas tax revenue, and the Congressional Budget Office says the HTF needs an additional 10 to 15 cents in taxes in order to close that gap.

What does the Highway Trust Fund pay for? While you'd think it pays for roads and bridges, it also funds mass transit, street car programs, ferries, sidewalks, hiking trails and landscaping, among other things. The idea behind the gas tax was that those using the highway system would pay for it, but the expansion in HTF funding makes that principle no longer applicable -- people putting gas in their tanks are paying for hiking trails.

According to the Wall Street Journal, since 2008 -- the same year that HTF spending trumped revenues -- spending on non-traditional projects such as street cars and bike lanes has grown by a whopping 38 percent. Spending on highways, on the other hand, has not increased. What if the government quit using the HTF to pay for things other than highways? Then there would be no funding crisis, and no need for a new tax. According to the Journal, using the HTF solely to fund highways would make the fund 98 percent solvent for the next 10 years.

Source: "Abolish the Gas Tax," Wall Street Journal, January 15, 2015. 


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