The Growing Separation Between Markets and Government: Factors Affecting and Solutions for Highway Infrastructure Financing

The Growing Separation Between Markets and Government: Factors Affecting and Solutions for Highway Infrastructure Financing

Paul Greaves
Copyright: © 2018 |Pages: 10
DOI: 10.4018/978-1-5225-4177-6.ch012
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Abstract

The nation's surface transportation infrastructure represents a key component to economic growth in the United States for the 21st century. The establishment of the Interstate Highway System in 1956 represents one of the country's greatest public works achievements. The funding mechanism has been the Highway Trust Fund that collects fuel taxes to finance transportation projects. The rationale for this structure was to create a self-financed program. Over the last couple of decades, fuel taxes have not kept pace with highway needs. This chapter will examine the widening funding gap and options for making the program a true pay-as-you-go system once again.
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Overview Of The Highway Trust Fund

One of the greatest public works achievements of the 20th century was the creation of the Interstate Highway System in 1956 by the Highway Revenue Act (FHWA, 1998). This established the Highway Trust Fund (HTF) as the mechanism for funding highways. There were a set of federal highway user taxes on fuels, including gasoline and diesel that would fund HTF and help build the Interstate system. The federal government has mostly used revenues collected through federal fuel taxes to finance transportation projects (GAO -13-77, 2012). The goal was to make the program self-financing. It’s based on the principle that that those benefitting from the highways pay for it. Another portion of the HTF is providing federal grants provided to states and those states making a 10% match to build their part of the Interstate system. The states own the highways (built to federal standards) and its operated as a national system.

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