We’ve Run Out Of Money For Our Highways

cash flow of the highway trust fund

The federal gas tax is 18.4 cents per gallon.  It is not a percentage of the sales price.  Nor is the rate indexed to inflation.  It is simply a flat number.  So unless we’re all buying more gas, this fund is going to run out of money.  And thanks to the cost of gas and improving fuel mileage, the highway fund is running out of money, and fast.

As of right now we’ll more or less run out of funds this year.  Revenues have been lower than outlays since the economic recovery began, and there is no expectation that this trend will reverse.  In order to keep funding our highways, something will have to change.

We do have a few options though:

Raise the gas tax:  A very simple idea.  That 18.4 cents has been the same since 1993.  But as gas got more expensive, there was less political appetite to increase taxes to help pay for roads.  This hasn’t changed.

Tax per mile of driving: Instead of taxing the gasoline, just tax the odometer.  This is a great idea mathematically.  But, in a nation that prides its privacy, especially from government, it would be met with resistance.

Give more revenue power to the states:  This largely comes in the form of allowing more tolls.  That could be the wave of the future.  Pay for the road you’re using.  That’s pretty simple.  Economists love it, even if you and I might not.

Because the gasoline tax hasn’t been raised proportionately with our needs for road construction and maintenance, we’ve essentially been borrowing from our future selves.  One way or the other, the cost of driving is going to get more expensive.

Read: How Tolls Could Help Prevent a U.S. Transportation Crisis (The Atlantic Cities)

  • By The Weakonomist
  • Posted in economics
  • Tagged Cars, government
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