Long-Term Solvency of the Highway Trust Fund

More inaction by Congress, more not telling Americans the truth about taxes and spending.

Nothing to see, move along.

Federal fuel taxes have not been increased in twenty eight years. Whoopee‼️ Unless you want your roads maintained.

A similar scenario is true for Social Security and Medicare. The revenue for both has been inadequate for years and the shortfall gets worse every year.

Programs are put in place, they are improved, citizens demand more while program funding is allowed to decline.

Politicians are a despicable lot, but there’s blame to go around. Citizens want all they are entitled to, but woe be on the person who suggests it be paid for.

A STATEMENT FROM THE CBO

The Trust Fund’s Status For more than a decade, the government has been spending more each year from the Highway Trust Fund than the revenues collected for it, which are mostly taxes on gasoline and diesel fuel and various taxes on heavy trucks. CBO estimates that the balances in the trust fund’s two accounts, which are for highway and mass transit spending, will be exhausted next year.

The total shortfall over the next 10 years is projected to be $195 billion if the taxes that are currently credited to the trust fund remain in place and if funding for highway and transit programs increases annually at the rate of inflation.

If the trust fund’s balances were to be exhausted, the federal government would not be able to make payments to states on a timely basis. As a result, states would face challenges in planning for transportation projects because of uncertainty about the amount or timing of payments from the Treasury…

If lawmakers wanted to increase revenues by charging users of the system, they would have various options.

  • One option would be to increase existing taxes on gasoline and diesel fuel. Those taxes have been unchanged since 1993. For instance, increasing them by 15 cents per gallon and indexing them to inflation would raise $26 billion in revenues in the first year. That amount would increase gradually over time.

  • Another option would be to impose new taxes on users of the system. For instance, the government could impose a tax on vehicle miles traveled (VMT). Some states—Kentucky, New Mexico, New York, and Oregon—already levy VMT taxes on commercial trucks. CBO recently found that each 1 cent per mile of federal tax would raise $2.6 billion per year if it was levied on all commercial trucks and all roads, once the practical steps to implement it were in place.

Source: A Statement to the Congress on the Long-Term Solvency of the Highway Trust Fund | Congressional Budget Office

One comment

  1. I fear that a VMT will be needed since electric vehicles do not buy fuel but still use the roads. In theory there will be some point in the future that almost no fuel will be sold and thus no road maintenance money.

    The other choice is to add another tax or fee to everyone’s electric bill. Of course no taxes or fees will be eliminated in this process.

    Liked by 1 person

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