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Congress is abandoning the principle that drivers should pay for highways

Mark Wilson

The trust fund that pays for federal transportation spending in the United States is running out of money in August, prompting a big congressional debate over how to refill its coffers. But the the main proposals offered by the Senate Finance Committee and the House Ways and Means Committee both miss a crucial fact: Americans are driving less than they used to.

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The decline in driving is relevant to the debate for two reasons.

One is that it directly impacts the revenue situation. Federal transportation spending has historically been financed by federal gasoline tax revenue. The idea was that money for highways should come from people who use highways. That worked until the mid-aughts when gasoline tax revenue started to fall.

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What happened? American cars have gotten more fuel efficient over time. Once the actual amount of driving started to plateau those improvement in fuel economy began driving nominal gas tax revenue downward. Meanwhile, each and every year inflation slightly eats away at the value of the gasoline tax. But congress kept on spending money on highways, rapidly depleting the trust fund until it was patched in 2012 with general revenue. The proposals on the table in congress right now are all proposals to find new kinds of patches.

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Right now, fees on drivers account for only 72 percent of federal transportation spending, and even less than that at the state and local level. This is offset partially by the fact that a share of transportation spending goes to mass transit rather than highways, but at all levels of government the highway share of total spending is larger than the user fee share.

Transportation policy was supposed to avoid this outcome for good reason — there's no point in building more roads than people want to use.

If the amount of driving happening in America is in decline, stepping up the level of financial subsidies offered to encourage driving is an absurd result. Either spending on roads should fall, or else road users themselves should be charged more money for their activity. Any other approach constitutes a deeply unwise ratcheting up of public subsidies to a polluting and dangerous activity, feeding a dynamic of overbuilding.

Highways and other roads are great. But they are also expensive to build. The traditional formula of trying to build a quantity of highways that's roughly proportionate to what highway-users are willing to pay to use them makes a lot of sense. The new paradigm in Congress where highway spending is unrelated to driving-related tax revenue is a bad idea, and its bipartisan embrace is one of the public policy disasters of the past few years.

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