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Reason Foundation

How to Increase Federal Highway Investment By $10 Billion a Year Without a Tax Increase

Refocusing federal transportation policy and federal gas tax revenue on the Interstate Highway System

August 3, 2010

Where can we find the money to modernize, rehabilitate and maintain our major highways? The federal government would have an additional $10 billion a year to spend on crucial highways if it simply stopped diverting federal gas tax money to projects with no national benefits, according to a new Reason Foundation study.

The federal gas tax was supposed to be used to build and maintain the Interstate Highway System. Today auto and truck drivers pay federal gas taxes that are diverted to ferryboats, trails and mass transit programs. Since these other programs are unable to generate significant user revenues and require large subsidies, the Reason Foundation report says they should be funded by state and local governments. The 18.4 cents a gallon federal fuel tax should be refocused on rebuilding and modernizing the aging but vitally important Interstates.

"Sooner or later Congress is going to have to deal with the major shortfall in highway investment," said Robert Poole, principal author of the report and director of transportation policy at Reason Foundation. "It is time to rethink and refocus the federal transportation role, in order to prioritize - to spend more on core federal purposes and less on peripheral concerns. Congress could dramatically increase funding to reduce the large backlog of cost-effective highway projects by shifting non-highway programs either to states or to general revenues. This would restore the users-pay/users-benefit principle of the Highway Trust Fund by focusing on rebuilding and modernizing the Interstate system, both urban and inter-city. This Interstate 2.0 approach would increase federal investment in the nation's most important arteries by nearly $10 billion a year without raising taxes."

The study explains how refocusing the Highway Trust Fund can restore the public's trust in infrastructure spending, which has been severely damaged by too many bridges to nowhere. Along with needed investment in an Interstate 2.0 system, the Reason proposal would also reduce federal mandates and give states more control over their transportation spending. The Interstate 2.0 approach would give states incentives to reduce waste and administrative costs; prioritize projects that will produce the largest benefits; embrace public-private partnerships that shift financing and risk away from taxpayers and onto private investors; and utilize technology, tolling, and congestion pricing to produce a sustainable, user-pays 21st-century highway system. 

Full Report Online

The full study Restoring Trust In the Highway Trust Fund is online here. The study's executive summary is here and frequently asked questions are here.

Reason's transportation research is here.

About Reason Foundation

Reason Foundation is a nonprofit think tank dedicated to advancing free minds and free markets. Reason Foundation produces respected public policy research on a variety of issues and publishes the critically acclaimed Reason magazine and its website, Reason.com. For more information, please visit Reason.org.

Contact

Chris Mitchell, Director of Communications, Reason Foundation, (310) 367-6109



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