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2019 Highway Trust Fund Check In

We last examined the Highway Trust Fund back in 2015. For an introduction on the Highway Trust Fund go here. It’s been four years so let’s see what’s going on.

The DRIVE Act died in Congress but pieces of the DRIVE Act were enacted in a bill called the FAST (Fixing America’s Surface Transportation) Act. The FAST Act was passed on December 4, 2015 and it was the first bill in over 10 years that addressed long term funding for America’s infrastructure.

The FAST Act authorized $305 billion in funds for the next four years, until 2020. In addition to infrastructure this funding is also to be spent on highway and motor vehicle safety, public transportation, motor carrier safety, hazardous materials safety, rail, and research, technology, and statistics programs.

Where does that money come from? The FAST Act extended the current tax rate on fuel (18.4 cents on gasoline and 24.4 cents on diesel) into 2022. It also approved $51.9 billion in funds to be transferred from the General Fund to the Highway Trust Fund.

Transfers from the General Fund are not good. The Highway Trust Fund was initially funded by the fuel tax alone. But the tax is no longer sufficient because the tax was never adjusted for inflation (if it was adjusted from the original rate set in 1993 the tax would be about 25 cents for gas and 40 cents for diesel) and because Americans just aren’t using as much fuel. Electric cars, more fuel efficient cars, and improved public transit have all contributed to less fuel being used overall.

I expect a future gas and diesel tax increase and probably more tolls for heavily trafficked roads and interstates. The fuel tax increase would encourage the move to cleaner electric vehicles and it is also very easy to implement. The tolls would be a better way to tax vehicles based on use in addition to helping ease road congestion by encouraging drivers to use free, less crowded roads.

I also expect the Highway Trust Fund to become more focused on roads specifically. The Fund is currently used for many different things besides simply building and maintaining roads and clearly all of those expenditures are not sustainable based on the need for bailouts time and time again.

You can find a list of the things accomplished by the FAST Act here: https://www.fhwa.dot.gov/fastact/factsheets/.

To see the actual figure in the Highway Trust Fund currently and what has been allocated where go here: https://www.fhwa.dot.gov/highwaytrustfund/


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