Congress should bite the bullet and raise the gas tax to fund highway repairs and construction. And it should make sure highway taxes are used for the roads not to finance politicians' pet projects and line union pockets.
The Federal Highway Trust Fund was established in 1956 with a 3 cent gasoline tax to finance the construction of the Interstate Highway System and federal contributions to other projects undertaken with the states.
The gasoline tax was last raised in 1993 to 18.4 cents per gallon and is supplemented by a 24.4 cents diesel tax and levies on truck tires and other assorted fees on trucks and trailers. However, one quarter of these highway use taxes are tapped off for other purposes—about 15 percent for mass transit construction and the remainder for bike paths, recreational trails, scenic overlooks and other noble purposes.
Initially, the fund built up a surplus, but spending has outpaced revenue since 2001. Since 2008, the fund has been teetering on insolvency, and Congress—reluctant to raise the unpopular gas tax—has passed 34 temporary trust fund extensions and funding patches.
If Congress does not pass a new funding measure before it adjourns for its August recess, the fund will be out of money to finance badly needed highway maintenance and new projects.
To keep it going another 3 years, Majority Leader McConnell and California Senator Boxer have crafted a bill that includes 15 separate funding sources including sales from the strategic petroleum reserves and cutting the dividends banks receive on their paid in capital to the regional Federal Reserve banks. Unrelated to highway use and benefits, many of those revenue raisers have attracted opposition in both houses of Congress.
Going forward the Trust Fund will spend about $50 billion a year, and taxes on fuel and commercial vehicles only generate about $35 billion. The McConnell-Boxer fix is temporary at best—for example, only so much oil can be sold from the strategic reserve.
