Key Issues > Funding the Nation's Surface Transportation System - High Risk Issue
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Funding the Nation's Surface Transportation System - High Risk Issue

The nation's surface transportation system—roads, rails, ports, and public transit—is critical to the economy and affects the daily lives of most Americans. However, the system is under growing strain, and costs to repair and upgrade it to meet current and future demands are estimated in the hundreds of billions of dollars—at a time when traditional funding sources are eroding.

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Funding the nation’s surface transportation system has been on GAO's High Risk List since 2007, because the federal government lacks a long-term sustainable strategy to do so. 

The Highway Trust Fund, the principal source of federal surface transportation funding, is increasingly unable to maintain current spending levels for highway and transit programs. 

  • The tax base is eroding. Federal motor fuel tax rates have not increased since 1993, and drivers of passenger vehicles with average fuel efficiency currently pay about $96 per year in federal gasoline taxes. Because of inflation, the 18.4 cent-per-gallon tax on gasoline enacted in 1993 is worth about 11 cents today. The tax base will likely continue to erode as demand for gasoline decreases with the introduction and adoption of more fuel-efficient and alternative fuel vehicles.
  • The fund relies increasingly on general revenues. To maintain spending levels of about $45-50 billion a year for highway and transit programs and to cover revenue shortfalls, Congress transferred a total of about $141 billion in general revenues to the Highway Trust Fund on eight occasions from 2008 through 2015. This funding approach has effectively ended the long-standing principle of "users pay" in highway finance, breaking the link between the taxes paid and the benefits received by highway users.
  • Another funding gap is projected for 2021. After 2020, the gap between projected revenues and spending will recur. In March 2016, the Congressional Budget Office estimated that $107 billion in additional funding would be required to maintain current spending levels plus inflation from 2021 through 2026, as shown in the figure.

Figure: Projected Cumulative Highway Trust Fund Balance, Fiscal Years 2021 through 2026

Figure: Projected Cumulative Highway Trust Fund Balance, Fiscal Years 2021 through 2026

A sustainable funding solution has yet to be found. New Highway Trust Fund revenues from users can come only from taxes and fees. Ultimately, major changes in transportation spending, revenues, or both will be needed to bring the two into balance.  

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  • portrait of Susan Fleming
    • Susan Fleming
    • Director, Physical Infrastructure
    • flemings@gao.gov
    • (202) 512-2834