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Bumpy Road Ahead for the Highway Trust Fund, Say Texas A&M Researchers

April 10, 2015

Highway Trust fund cover

To address the deteriorating condition of America’s roads, researchers at Texas A&M University say that instead of a series of one-time fixes, a more permanent solution is needed to provide the Highway Trust Fund (HTF) with sufficient revenues to keep up with increasing needs: a vehicle mileage tax (VMT) on commercial vehicles and a higher gas tax on private vehicles.

In “Bumpy Road Ahead, Bracing for Insolvency in the Highway Trust Fund,” a new issue of “The Takeaway,” Jawad Dar, a graduate research assistant and student at The Bush School of Government and Public Policy, and Dr. Lori Taylor, an economist and Director of the Mosbacher Institute, report that while the Congressional Budget Office estimates that the HTF faces a shortfall of $167 billion over the next 10 years, the American Society of Civil Engineers calculates that poorly maintained and congested roads are already costing travelers an estimated $101 billion in wasted time and fuel, and another $67 billion in extra repairs and operating costs annually.

Dar and Taylor contend that the federal gas tax, which is the primary source of funding for the HTF, has not only failed to keep up with inflation, but that increases in vehicle fuel efficiency have resulted in a steep decline in gas tax revenues per mile travelled. 

The authors recommend a congestion-adjusted vehicle mileage tax (VMT) as an economically efficient means of tackling infrastructure funding issues in a way that reflects the costs of road use. Given the serious privacy issues associated with tracking road use, they propose it may be more politically viable to target only commercial vehicles with a VMT, since they have lesser expectations for privacy and a higher impact on road wear, while private vehicles pay only a higher gas tax. The authors acknowledge that no one likes higher taxes, but if road repairs are worth having, they are worth paying for.

“The Takeaway” is a publication of the Mosbacher Institute for Trade, Economics, and Public Policy. The full text of the article can be found here.

 

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