The Highway Trust Fund

The Federal-Aid Highway Act and the Highway Revenue Act of 1956, signed by President Dwight Eisenhower, launched the Interstate Highway System and created the Highway Trust Fund to pay for it with taxes on gasoline, diesel, tires, and trucks. The fund has a highway account and, since 1983, a mass transit account. Money flows to states mostly through formulas, and states and localities choose, build, and own most projects, usually paying 20 percent of the cost.

The federal gas tax is 18.4 cents a gallon and the diesel tax 24.4 cents, rates set in 1993 and not indexed to inflation. Since then inflation has cut their value by more than half, while cars have become more fuel efficient and electric vehicles pay no fuel tax at all. Since 2008 Congress has transferred more than 275 billion dollars from general revenue to keep the fund solvent, and the Congressional Budget Office projects the highway account will run short again around 2028.

Proposals to fix the fund include raising and indexing the gas tax, an annual fee on electric vehicles, and a tax on vehicle miles traveled, which several states have tested. Raising the gas tax is unpopular, and both parties have preferred general fund transfers. Some conservatives propose turning most highway responsibilities back to the states, while others argue for more federal spending on roads, transit, and safety.