DALLAS — Federal and state gasoline tax revenues are not reliable long-term sources for financing transportation infrastructure in the future, Pew Charitable Trusts
The gasoline tax has not generated enough money over recent years to keep up with construction costs and that shortfall is a problem for governments at all levels, Pew senior researcher Phil Oliff said Tuesday at the unveiling of the state-by-state report on transportation spending.
"Declines in inflation-adjusted gas and vehicle tax revenue will require the federal government and the states to either raise additional revenue to maintain current spending levels or manage within existing resources by cutting spending in real terms," he told reporters and others on a conference call.
The federal Highway Trust Fund, the source of most federal highway and transit infrastructure funding, has seen revenues fall short of expenditures for more than a decade, Oliff said.
Revenues dedicated to the HTF include the federal gasoline tax of 18.4 cents per gallon and diesel tax of 24.4 cents.
Driving habits have changed and vehicle fuel efficiencies have improved since the federal gasoline tax was last increased in 1993, he said.
State fuel taxes have not been increased in 24 states in more than a decade, he said, and 16 states have gone 20 years without an increase in the gasoline tax.
"Federal gasoline tax revenues fell 30% in real terms, or $15 billion, while state revenues fell by 19% or $10 billion," Oliff said.
States have also seen an $8 billion drop in vehicle tax revenues, an important part of local transportation funding, in the last 10 years, he said.
"Complicating efforts to address these challenges are the broader fiscal difficulties confronting the federal government and the states, which leave policymakers with hard choices about how to pay for surface transportation in the years ahead," Oliff said.
The HTF faces annual gaps of up to $17 billion a year over the next six years between current spending levels and dedicated tax revenues, and that has implications to state and local transportation projects, he told those on the call.
"Roughly 98% of federal funding for surface transportation flows to state and local governments, primarily as reimbursements for expenses already incurred," he said. "As trust fund balances fall, states and localities could see those payments delayed or reduced."
Public-private partnerships, tax-exempt bonds, and state infrastructure banks are vital to transportation finance, Oliff said.
"But while financing is a vital tool for building transportation infrastructure, it is not by itself a funding solution," he said. "Ultimately, borrowed funds need to be repaid by using taxes, tolls, fees, or other revenue source."
Pew is not taking a position on which alternative highway funding sources might replace the gasoline tax, Oliff made clear.
"States and localities should adapt the way they fund transportation infrastructure to best complement a revised role for the federal government and each other," he said.
Total transportation spending at all levels of government averaged $207 billion a year between 2007 and 2011, or about 1.4% of the gross domestic product, the report said.
Expenditures averaged $82 billion a year by states, $74 billion by local governments, and $51 billion from the federal government, with most of federal spending coming as grants to states from the HTF for highway and transit projects.
In fiscal 2011, state transportation expenditures totaled $126.2 billion, including $46.4 billion of federal highway and transit grants and $79.8 billion of state taxes and fees. Local governments spent $107.1 billion on roads and transit in 2011, including $73 billion of local taxes and fees, $23.4 billion of state grants, and $10.6 billion of federal grants.
