Who Will Pay for the Roads?

President Joe Biden’s $1.2 trillion Infrastructure Investment and Jobs Act was signed into law by him in November. It shifts federal highway policy away from the market-based model of user pays, benefit, and requires taxpayers to pay more for socialized roads.

Both major party legislators supported infrastructure legislation. The law allocates approximately $54 billion per year to federally subsidised highways. They account for about 25% of all U.S. roads. This represents a substantial increase on the $45 billion that was included in the previous highway bill. The law allows for $110 billion of new road and bridge spending.

Is that where all the money coming from? It won’t come from road users.

Biden’s commitment (unjustly honored) to not raise taxes on those earning less that $400,000 a tax year precludes an increase in federal gasoline tax. He also swiftly renounced mileage-based fees and tolls.

Instead the money will be sourced from the general fund of federal government. The federal government’s general fund will cover the cost of repairing bridges or rebuilding freeways. This is an increase in a disturbing trend.

Federal gas tax revenues have covered federal highway spending for decades. While fuel taxes aren’t a charge for driving, they can be used to pay people who use roads.

Another market-oriented option would give the private sector a bigger role in maintaining and building highways and cities streets and shift costs to motorists, truckers, or other road users via tolls.

However, the gap between gas tax revenue from gasoline and rising federal transportation spending since 2008 has necessitated a $157 million infusion from general fund. The gap was predicted by the Congressional Budget Office even before the passage of the infrastructure bill for 2021.

A few minor reforms were included in the infrastructure package. A pilot program was established to examine a mileage-based fee. Private activity bonds were also expanded, which allow private firms to access capital for infrastructure projects. The overall trend towards freeloading is positive.