America has a looming highway budget crisis

We can’t afford to maintain the roads we have, so why do we keep building more?

The Highway Trust Fund is the primary federal mechanism for surface transportation. It receives revenue mainly from the federal fuel tax (18.4 cents per gallon on gasoline and 24.4 cents per gallon on diesel) plus taxes on tires, heavy vehicles, and some other sources. The fund has two accounts: (1) the Highway Account (road construction, maintenance, and other surface transportation projects), and (2) the much smaller Mass Transit Account.

Debates about how Americans should pay for roads are endless: 

• General taxpayer funding, regardless of whether someone drives
• Per-mile charges (vehicle miles traveled fees)
• Weight-based fees, since heavy trucks and EVs cause disproportionate damage
• And the less common full privatization, letting owners/operators set tolls and other forms of charging road users

But the debates often sidestep or ignore any sense of urgency. The fact is there’s a massive and growing funding gap. Under the current setup, we can’t afford to maintain what’s already been built, let alone pay to build and maintain new construction projects. The Congressional Budget Office (CBO) sounds the alarm, even if it’s in dry, academic language.

Shortfall

Historically, most federal spending for highways has been paid for by revenues—largely from excise taxes on gasoline, diesel, and other motor fuels—that are credited to the highway account of the Highway Trust Fund (HTF). For more than two decades, those revenues have fallen short of federal spending on highways, prompting transfers from the Treasury’s general fund to the trust fund to make up the difference.

The CBO projects that balances in both the highway and transit accounts of the HTF will be exhausted in 2028. If the taxes that are currently credited to the trust fund remained in place and if funding for highway and transit programs increased annually at the rate of inflation, the shortfalls accumulated in the HTF’s highway and transit accounts from 2024 to 2033 would total $241 billion, according to CBO’s May 2023 baseline budget projections.

The HTF is in a state of bankruptcy, but we keep chugging along as if there’s no real financial urgency. For more than 20 years, taxpayers have been subsidizing roads because the people who use the roads don’t pay enough to cover the costs. The fund has avoided collapse only through repeated bailouts from the U.S. Treasury’s general fund totaling more than $275 billion since the mid-2000s.

Who should pay?

Tapping into the general fund might seem fair if all taxpayers put the same amount of wear and tear on the transportation system, but that’s obviously not the case.

About 19% of people ages 20 to 24 don’t have a driver’s license, and 30% to 40% of people older than 85 don’t have a driver’s license. Not to mention the wide variety of driving contexts of people who are licensed, the types of vehicles used, and how often they contribute to clogged street networks during rush hours.

The underlying revenue problem has to be fixed, which means the debate has to go deeper, from “Who should pay?” to “How do we make sure revenue covers road expenses?” 

Systemic problem is an overused term in urbanism, but that’s the best way to describe the transportation funding debacle. Cars are more fuel efficient, EVs pay no fuel tax, and other taxes have stayed the same since the early 1990s. I’m not even arguing in favor of taxes, I’m simply drawing your attention to the obvious problem that there isn’t enough money to cover the costs of road maintenance or road expansion. 

Basic budgeting

If we treated this issue like a household budget facing chronic overspending, the questions would be straightforward:

• How can we reduce expenses?
• How can we increase revenue?
• Is maintenance more important than new construction?
• If we can’t even afford to maintain the current system, how quickly can we halt new spending on expansions?
• What alternative mobility options (transit, biking, walking, ridesharing, remote work) can ease the burden using the infrastructure we already have?

This fiscal disaster isn’t abstract policy wonkery, it’s a hard constraint on what the U.S. can realistically build and maintain. Ignoring it risks more patchwork bailouts, more maintenance delays, and eventual service breakdowns. Bottom line, we need to ask better questions and vigorously explore and debate the trade-offs.

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