As cars get more fuel-efficient and politicians redirect gas taxes to non-transportation projects, highways run out of money.
When it comes to finding a reliable revenue stream for the nation’s highways, Congress recently kicked the can down the road. Again. The latest $10.8 billion stopgap funds the nation’s highways until next spring. But sooner or later, Congress will have to tackle the long-term transportation issues facing the nation.
The most common thing you’ll hear about the Federal Highway Trust Fund is that we just need to raise the gas tax and index it to inflation. However, with hybrid and electric vehicles gaining market share, the current gas tax model simply isn’t going to be sustainable in the future. Tomorrow’s cars will go farther on less gas, diminishing the gas tax’s ability to repair and expand the nation’s roads.
The fairest way to fund the nation’s highways is to charge the drivers who use them. And Congress should consider refocusing the Highway Trust Fund on its original purpose, funding the Interstate highway system.
Established in 1956, the trust fund was sold to the public as a way to build and maintain the Interstate highway system. In 1983, however, Congress and President Ronald Reagan reneged on this promise, agreeing to siphon funds from highways into a mass transit account as part of a deal that raised fuel taxes.
The mass transit account now directly receives about 18 cents of every dollar in gas tax revenue. Further, states are allowed to flex parts of their highway funds into programs that have nothing to do with transportation. Federal fuel taxes now pay for recreational hiking trails, invasive weed removal and other non-highway infrastructure.
Clearly, Congress has abandoned the “user pays, user benefits” model that originally characterized the Highway Trust Fund. To supplement all these additional expenses, Congress has had to shift more than $65 billion from the general fund to the trust fund since 2008.
The best way forward is a model that charges drivers on how far they travel. Drivers with short commutes should not be subsidizing those who drive 100 miles or more per day. Replacing fuel taxes with true user fees, such as mileage-based user fees, will certainly take political will, but it has worked in Oregon.
Oregon created a permanent mileage-based user fee program for 5,000 drivers. The program is revenue neutral. It is not a tax increase. Participating motorists are refunded all gasoline taxes. Users are charged 1.5 cents per mile, which is around the same amount the average driver would pay in gas taxes.
The state offers three options. The first option uses a GPS-like device to record miles and notes when and where the driver travels. For drivers not comfortable with this technology, the second option is an annual odometer reading. This option calculates the number of miles driven, but not where the driver traveled. For those not comfortable with the second option, the third option allows participants to pay a flat monthly fee, without any monitoring of miles driven.
Most folks who use mileage-recording devices have liked the experience. A study by the University of Iowa found that out of 2,561 participants told to install mileage-recording devices in their vehicles, 71 percent held positive views of the user fees by the end of the study.
Several countries, including New Zealand, Germany and Switzerland, charge road users per-mile fees instead of per-gallon taxes. By charging vehicles according to the road wear they create, mileage-based user fees can render existing highways virtually self-sufficient.
Next May, members of Congress will again be forced to confront the fact the nation’s funding model for highways is unsustainable. Hopefully, by then they’ll recognize it is time to start eliminating the gas tax and replacing it with a system that charges drivers directly for the amount of driving they do — and that all of those fees must be put back into maintaining and expanding the highway system.
Baruch Feigenbaum is an Atlanta-based transportation policy analyst. Joseph Fichthorn is a transportation intern at Reason Foundation, a libertarian think tank online at www.reason.org.