Lockdowns and stay-at-home orders mean fewer cars on the road. This must mean the nation’s roads get a break from the daily wear and tear of millions of vehicles pounding the pavement. But this historic time only highlights another historic moment: the insolvency of our nation’s Highway Trust Fund.
Our roadways are funded through gasoline taxes. You pay 18.4 cents for every gallon you pump at the station in federal tax alone. It is easy to think that when people drive less, that means the roads experience less wear and tear, so the lesser tax collected is proportionate. This is not the case.
The gas tax is a proxy for road use, not a direct proportionate tax or fee. Some vehicles drive vastly farther on the same gallon of gas and therefore use more road for the same amount paid in tax as another driver. Some vehicles are vastly heavier than others and impact roadways differently. And some vehicles use no gasoline at all, using electricity and skipping over the federal gas tax altogether.
Even more relevant is that we have a backlog of maintenance needs. So even if everyone stopped driving, we would still have roads and bridges to repair and maintain.
COVID-19 has highlighted – not created – this problem. When most of America stayed home for the last two months, they stopped filling up their tanks. So while they did not add new wear and tear to the highways, they also did not support the revenue of the Highway Trust Fund.
The Fund is slated to go insolvent within the next two years. These months of low revenue will hasten the demise of the Fund, and the lack of driving will be a virtually meaningless reprieve for the roads in terms of needed maintenance and repair.
Ultimately, the COVID-19 incident should be a wakeup call for those who still believe in a gas tax. The gas tax does not tax road use or wear and tear – it only taxes gasoline (and diesel fuel). Because some cars travel much farther than others, some have different numbers of tires, and some weigh different amounts, the gas tax simply cannot serve as a measure of actual road use or actual road impact.
Without drivers on the road, tax revenue is falling in many areas. Tollways, state and federal fuel taxes, and even lost local tax revenue from businesses will impact our infrastructure.
It is past time to consider how to transition to a Road Usage Charge (RUC) or Vehicle Miles Traveled (VMT) model of taxing. These represent a setup that taxes the actual road use and impact and are not reliant on some fuel proxy. Moreover, these fees can be adjusted to inflation – which the gas tax is not.
As we begin to emerge from our homes and hit the road again, we have lost revenue the Fund will never make up, inflation will cause the maintenance backlogs to increase in cost, and the revenue we do have to pay for it from the gas tax will not align with the current and future use and impact of the road when accounting for fuel efficiency, vehicle weight, and number of tires on the surface.
Learn more about The Revenue Failure of the Highway Trust Fund.
Written by Benjamin Dierker, Director of Public Policy
The Alliance for Innovation and Infrastructure (Aii) is an independent, national research and educational organization. An innovative think tank, Aii explores the intersection of economics, law, and public policy in the areas of climate, damage prevention, energy, infrastructure, innovation, technology, and transportation.