by BruceMcF, Daily Kos
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What The Big Highway Lie Is Not, Part I
There are some people who labor under the misconception that gas taxes fund highway maintenance cost.
The notion is quite absurd on the face of it. The share of the federal highway fund that goes to roadworks is greater than the share of driving that takes place on funded highways, so obviously driving on unfunded streets … mostly urban and inner-suburban city streets … yields gas taxes that cross-subsidize driving on funded highways.
For example, here is the 2008 FHA Highway Statistics on highway revenues as a percentage of total disbursements:
- 46.61% Motor Fuel and Vehicle Taxes
- 5.11% Tolls
- 4.57% Property Taxes and Assessments
- 22.19% General Fund Appropriations
- 9.60% Investment Income and other Receipts
- 10.95% Bond Issue Proceeds
Of course, the gas tax and vehicle tax revenues are collected for all road uses, and only directed to qualifying highways. While qualification of urban streets for state gas tax funding varies by state, urban streets that do not qualify for national or state highway designation are excluded from federal highway gas taxes.
Of course, over half a century of subsidy has channeled traffic onto these federally funded highways (that is, Interstate, National, State, County and Township highways), but still, according to the introduction to the 2011 CBO report on alternative approaches to highway funding:
About 25 percent of the nation’s highways, which carry about 85 percent of all road traffic, are paid for in part by the federal government.
… so the direct gas tax and vehicle tax proceeds from driving on federally funded highways is at most 85% of 46.61%, or about 40%.
And, of course, this is also a substantial overstatement, since that is about 15% from Federal gas taxes and about 25% from state gas taxes. And in most states, gasoline is exempt from state and local sales taxes, so that only a portion of state gas taxes are an actual additional user fee, with much of the state gas tax simply being a diversion from the general fund. It would be as if alcohol sales in a state charged a “drinks tax” which went into providing infrastructure in support of drinking parties ~ and were exempted from state sales tax.
I don’t have any recent figures on how much of total state gas tax revenues is an increment over what would be the sales tax proceeds on sales tax exempt gasoline sales, and how much is a diversion, but if the additional user tax component is between 40% and 60% of total state gas taxes, then total “farebox cost recovery” of the highway system is between 30% and 35%.
While “nobody serious seriously believes that gas taxes fully fund our nation’s highways”, anybody who has read the Tea Party Parade that fills many online newspaper comments sections when a rail project is covered knows that lots of people are happy to make the absurd claim.
Now, that absurd claim is simply wishful thinking. It collapses immediately when presented with the publicly available Federal Highway Administration figures. The fact that it is confidently stated by so many serves to establish how many people are happy to state facts that are blatantly false, often passed on from someone else equally misinformed because it sounded like something that ought to be true.
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B’ Spokes: It’s worth noting that the bulk of the “farebox cost recovery” of the highway system goes to interstate highways. And I will assert that in terms of simple dollars analogy all the money that cars pay in “user fees” go toward the interstate highway system… roads that cyclists are prohibited from using. So when it comes to roads that all modes use, we all help pay for. If cars get a specific “user” tax then why can’t we treat our sales tax as a user tax that helps fund the roads? Keep in mind that outdoor recreation spending is near twice that of motor vehicles (and a portion of motor vehicle spending is exempt from sales tax.)
the farebox recovery ratio above is not a ratio of physical cost imposed upon the highway system by driving, but a ratio of revenues to our inadequate highway spending. From the ASCE report cited above (p. 99), 5yr road spending of $380.5b can be set against total investment needs of $930b, for a 59% shortfall.