[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]

RUNNING ON EMPTY: THE HIGHWAY TRUST FUND

=======================================================================

(118-31)

HEARING

BEFORE THE

SUBCOMMITTEE ON
HIGHWAYS AND TRANSIT

OF THE

COMMITTEE ON
TRANSPORTATION AND INFRASTRUCTURE
HOUSE OF REPRESENTATIVES

ONE HUNDRED EIGHTEENTH CONGRESS

FIRST SESSION

__________

OCTOBER 18, 2023

__________

Printed for the use of the
Committee on Transportation and Infrastructure

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

Available online at: https://www.govinfo.gov/committee/house-
transportation?path=/browsecommittee/chamber/house/committee/
transportation

__________

U.S. GOVERNMENT PUBLISHING OFFICE
54-330 PDF WASHINGTON : 2023

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COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

Sam Graves, Missouri, Chairman
Rick Larsen, Washington, Eric A. ``Rick'' Crawford,
Ranking Member Arkansas
Eleanor Holmes Norton, Daniel Webster, Florida
District of Columbia Thomas Massie, Kentucky
Grace F. Napolitano, California Scott Perry, Pennsylvania
Steve Cohen, Tennessee Brian Babin, Texas
John Garamendi, California Garret Graves, Louisiana
Henry C. ``Hank'' Johnson, Jr., Georgiavid Rouzer, North Carolina
Andre Carson, Indiana Mike Bost, Illinois
Dina Titus, Nevada Doug LaMalfa, California
Jared Huffman, California Bruce Westerman, Arkansas
Julia Brownley, California Brian J. Mast, Florida
Frederica S. Wilson, Florida Jenniffer Gonzalez-Colon,
Donald M. Payne, Jr., New Jersey Puerto Rico
Mark DeSaulnier, California Pete Stauber, Minnesota
Salud O. Carbajal, California Tim Burchett, Tennessee
Greg Stanton, Arizona, Dusty Johnson, South Dakota
Vice Ranking Member Jefferson Van Drew, New Jersey,
Colin Z. Allred, Texas Vice Chairman
Sharice Davids, Kansas Troy E. Nehls, Texas
Jesus G. ``Chuy'' Garcia, Illinois Lance Gooden, Texas
Chris Pappas, New Hampshire Tracey Mann, Kansas
Seth Moulton, Massachusetts Burgess Owens, Utah
Jake Auchincloss, Massachusetts Rudy Yakym III, Indiana
Marilyn Strickland, Washington Lori Chavez-DeRemer, Oregon
Troy A. Carter, Louisiana Chuck Edwards, North Carolina
Patrick Ryan, New York Thomas H. Kean, Jr., New Jersey
Mary Sattler Peltola, Alaska Anthony D'Esposito, New York
Robert Menendez, New Jersey Eric Burlison, Missouri
Val T. Hoyle, Oregon John James, Michigan
Emilia Strong Sykes, Ohio Derrick Van Orden, Wisconsin
Hillary J. Scholten, Michigan Brandon Williams, New York
Valerie P. Foushee, North Carolina Marcus J. Molinaro, New York
Mike Collins, Georgia
Mike Ezell, Mississippi
John S. Duarte, California
Aaron Bean, Florida

Subcommittee on Highways and Transit

Eric A. ``Rick'' Crawford,
Arkansas, Chairman
Eleanor Holmes Norton, Daniel Webster, Florida
District of Columbia, Ranking Memberhomas Massie, Kentucky
Jared Huffman, California Mike Bost, Illinois
Chris Pappas, New Hampshire Doug LaMalfa, California
Marilyn Strickland, Washington Pete Stauber, Minnesota
Patrick Ryan, New York Tim Burchett, Tennessee
Robert Menendez, New Jersey Dusty Johnson, South Dakota
Val T. Hoyle, Oregon, Jefferson Van Drew, New Jersey
Vice Ranking Member Troy E. Nehls, Texas
Valerie P. Foushee, North Carolina Lance Gooden, Texas
Grace F. Napolitano, California Tracey Mann, Kansas
Steve Cohen, Tennessee Burgess Owens, Utah
Henry C. ``Hank'' Johnson, Jr., Georgiady Yakym III, Indiana
Julia Brownley, California Lori Chavez-DeRemer, Oregon
Greg Stanton, Arizona Chuck Edwards, North Carolina
Colin Z. Allred, Texas Thomas H. Kean, Jr., New Jersey
Jesus G. ``Chuy'' Garcia, Illinois Anthony D'Esposito, New York
Seth Moulton, Massachusetts Eric Burlison, Missouri
Emilia Strong Sykes, Ohio Derrick Van Orden, Wisconsin
John Garamendi, California Brandon Williams, New York
Dina Titus, Nevada Marcus J. Molinaro, New York
Salud O. Carbajal, California Mike Collins, Georgia
Jake Auchincloss, Massachusetts John S. Duarte, California,
Mark DeSaulnier, California Vice Chairman
Rick Larsen, Washington (Ex Officio) Aaron Bean, Florida
Sam Graves, Missouri (Ex Officio)

CONTENTS

Page

Summary of Subject Matter........................................ vii

STATEMENTS OF MEMBERS OF THE COMMITTEE

Hon. Eric A. ``Rick'' Crawford, a Representative in Congress from
the State of Arkansas, and Chairman, Subcommittee on Highways
and Transit, opening statement................................. 1
Prepared statement........................................... 3
Hon. Eleanor Holmes Norton, a Delegate in Congress from the
District of Columbia, and Ranking Member, Subcommittee on
Highways and Transit, opening statement........................ 4
Prepared statement........................................... 5
Hon. Rick Larsen, a Representative in Congress from the State of
Washington, and Ranking Member, Committee on Transportation and
Infrastructure, opening statement.............................. 7
Prepared statement........................................... 9

WITNESSES

Kris Strickler, Director, Oregon Department of Transportation, on
behalf of the American Association of State Highway and
Transportation Officials (AASHTO), oral statement.............. 11
Prepared statement........................................... 13
Chad Shirley, Ph.D., Principal Analyst, Microeconomic Studies
Division, Congressional Budget Office, oral statement.......... 18
Prepared statement........................................... 20
Jeff Davis, Senior Fellow, Eno Center for Transportation, oral
statement...................................................... 30
Prepared statement........................................... 32
Reema Griffith, Executive Director, Washington State
Transportation Commission, oral statement...................... 60
Prepared statement........................................... 61

SUBMISSIONS FOR THE RECORD

APPENDIX

Questions to Kris Strickler, Director, Oregon Department of
Transportation, on behalf of the American Association of State
Highway and Transportation Officials (AASHTO), from:
Hon. Rick Larsen............................................. 109
Hon. Marilyn Strickland...................................... 110
Hon. Patrick Ryan............................................ 110
Hon. John Garamendi.......................................... 111
Hon. Jake Auchincloss........................................ 111
Questions to Chad Shirley, Ph.D., Principal Analyst,
Microeconomic Studies Division, Congressional Budget Office,
from:
Hon. Rick Larsen............................................. 112
Hon. Patrick Ryan............................................ 113
Hon. Seth Moulton............................................ 114
Hon. John Garamendi.......................................... 115
Questions to Jeff Davis, Senior Fellow, Eno Center for
Transportation, from:
Hon. Patrick Ryan............................................ 115
Hon. John Garamendi.......................................... 116
Hon. Jake Auchincloss........................................ 117
Questions to Reema Griffith, Executive Director, Washington State
Transportation Commission, from:
Hon. Rick Larsen............................................. 119
Hon. Marilyn Strickland...................................... 120
Hon. Patrick Ryan............................................ 120
Hon. John Garamendi.......................................... 121
Hon. Jake Auchincloss........................................ 121

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

October 17, 2023

SUMMARY OF SUBJECT MATTER

TO: LMembers, Subcommittee on Highways and Transit
FROM: LStaff, Subcommittee on Highways and Transit
RE: LSubcommittee Hearing on ``Running on Empty: The
Highway Trust Fund''
_______________________________________________________________________

I. PURPOSE

The Subcommittee on Highways and Transit of the Committee
on Transportation and Infrastructure will meet on Wednesday,
October 18, 2023, at 9:30 a.m. ET in 2167 of the Rayburn House
Office Building to receive testimony on ``Running on Empty: The
Highway Trust Fund.'' The purpose of the hearing is to receive
testimony on the benefits to the Nation of a sustainable, long-
term funding solution for the Highway Trust Fund (HTF), the
challenges with the current funding mechanism, and
consideration of other funding options. At the hearing Members
will receive testimony from representatives from the American
Association of State Highway and Transportation Officials
(AASHTO), the Congressional Budget Office (CBO), the Eno Center
for Transportation (Eno), and the Washington State
Transportation Commission.

II. BACKGROUND

The HTF was established by the Highway Revenue Act of 1956
(HRA) (P.L. 84-627) to provide a dedicated Federal revenue
source for the construction of the Interstate Highway
System.\1\ The HRA established a user-pay system: highway users
would pay a 3 cents per gallon excise tax on motor fuels, the
tax receipts would be deposited in the HTF, and HTF balances
would be dedicated to the construction of Federal-aid
highways.\2\ This structure allowed the program to operate with
contract authority, thereby providing a more dependable source
of funding.\3\ This basic construct remains in place today,
however, subsequent acts of Congress increased the excise taxes
on motor fuels, imposed taxes on other users, and expanded the
number of activities eligible for funding under the HTF.\4\
---------------------------------------------------------------------------
\1\ The Highway Revenue Act of 1956, Pub. L. No. 84-627.
\2\ Id.
\3\ The Highway Trust Fund Explained, The Peter G. Peterson
Foundation, (Mar. 2, 2023), available at https://www.pgpf.org/budget-
basics/budget-explainer-highway-trust-fund#::text=
The%20Highway%20Trust%20Fund%20(HTF,of%20the%20interstate%20highway%20sy
stem.
\4\ DOT, FHWA, Funding Federal-Aid Highways, (Jan. 2017), available
at https://www.fhwa.dot.gov/policy/olsp/fundingfederalaid/07.cfm.
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For the first 50 years, the HTF funding mechanism was
viewed to have worked well and generally met the Congressional
goal of trust fund self-sufficiency.\5\ Since 2001, spending
from the HTF began growing faster than revenue deposits. In
2008, Congress began using transfers, mainly from the General
Fund (GF) of the Treasury, to keep the HTF solvent.\6\ CBO's
most recent projections indicate a cumulative shortfall of
nearly $150 billion over the five years following the Fiscal
Year (FY) 2026 expiration of the current surface authorization
act, the Infrastructure Investment and Jobs Act (IIJA) (P.L.
117-58).\7\ Therefore, Congress must evaluate and consider ways
to fund surface transportation infrastructure in the future.
---------------------------------------------------------------------------
\5\ Robert S. Kirk & William J. Mallett, Cong. Rsch. Serv.
(R47573), Funding and Financing Highway and Public Transportation Under
the Infrastructure Investment and Jobs Act, (May 24, 2023), available
at https://www.everycrsreport.com/files/2023-05-24_
R47573_2fdd993640445d646286ecfe0df6cc5570d409a6.pdf [hereinafter CRS
R47573].
\6\ Id.
\7\ Id.; CBO, Highway Trust Fund Accounts, (May 2023), available at
https://www.cbo.gov/system/files/2023-05/51300-2023-05-
highwaytrustfund.pdf.
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THE IMPORTANCE OF TRANSPORTATION INFRASTRUCTURE

Transportation infrastructure provides a strong physical
platform that facilitates economic growth, ensures global
competitiveness, creates American jobs, and supports National
security. It affords Americans quality of life by enabling them
travel to and from work, to conduct business, and to visit
family and friends.
Our Nation's transportation infrastructure is the backbone
of the United States economy. In 2021, all modes of
transportation moved an estimated 19.5 billion tons of goods
worth about $18.5 trillion (in 2017 dollars) on our Nation's
transportation network. Daily, 53.6 million tons of goods,
valued at more than $54 billion, are shipped throughout the
country on all transportation modes.\8\ In addition, nearly
15.8 million Americans, approximately 10.4 percent of the
United States workforce, are directly employed by
transportation related industries.\9\
---------------------------------------------------------------------------
\8\ DOT, Bureau of Transp. Statistics, Freight Figures and Facts
(2022), available at https://data.bts.gov/stories/s/Moving-Goods-in-
the-United-States/bcyt-rqmu/#::text=Freight
%20Movement,- [hereinafter Figures & Facts].
\9\ DOT, Bureau of Transp. Statistics, Transportation Economic
Trends (2022), available at https://data.bts.gov/stories/s/
Transportation-Economic-Trends-Transportation-Empl/caxh-t8jd/.
---------------------------------------------------------------------------
The surface transportation components of this broader
system play an integral part in the movement of people and
goods. In 2021, highways carried more than 3.1 trillion vehicle
miles. This includes cars, trucks, motorcycles, and buses.\10\
Consistent with post-pandemic ridership trends, public
transportation carried around 22.3 billion passenger miles,
down from 32.6 billion passenger miles in 2014.\11\ Of the
total freight moved on our Nation's transportation network,
trucks moved more than 12.6 billion tons, valued at over $11.6
trillion (in 2017 dollars).\12\
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\10\ DOT, FHWA, Highway Statistics Series (2021), available at
https://www.fhwa.dot.gov/policyinformation/statistics/2021/vm202.cfm.
\11\ DOT, Bureau of Transp. Statistics, 2017 Pocket Guide to
Transportation, (Apr. 2, 2019), available at https://www.bts.gov/sites/
bts.dot.gov/files/docs/browse-statistical-products-and-data/pocket-
guide-transportation/225411/pocketguiderevisedmay2017complete.pdf; DOT,
FTA, National Transit Summaries & Trends (2021), available at https://
www.transit.dot.gov/sites/fta.dot.gov/files/2022-10/
2021%20National%20Transit%20Summaries%20and%20Trends_1-0.pdf.
\12\ Figures & Facts, supra note 8.
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Congestion is a growing challenge across the United States,
affecting both freight shippers and commuters. According to the
Texas A&M Transportation Institute's 2021 Urban Mobility
Report, the National cost of congestion was $101 billion in
2020. This amounts to approximately $276 million per day.
Nationally, congestion also wasted 1.7 billion gallons of
gasoline and resulted in an extra 4.3 billion hours of travel
time. Further, in 2020, the average commuter spent an extra 27
hours stuck in traffic.\13\
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\13\ Texas A&M Transportation Institute, 2021 Urban Mobility Report
(June 2021), available at https://mobility.tamu.edu/umr/.
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FUTURE NEEDS FOR TRANSPORTATION INFRASTRUCTURE

Over the next 30 years, our Nation's transportation
infrastructure will need to keep pace with anticipated
increases in population and demand for freight transportation.
Forecasts predict that America's population will grow from
332.6 million in 2020 to approximately 404.5 million in
2060.\14\ The movement of freight is expected to increase by 50
percent in tonnage and double in value by 2050.\15\ In terms of
highway usage, vehicle miles traveled are projected to increase
at an average annual rate of 0.6 percent until 2049.\16\
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\14\ United States Census Bureau, Demographic Turning Points for
the United States: Population Projections for 2020 to 2060 (Feb. 2020),
available at https://www.census.gov/content/dam/Census/library/
publications/2020/demo/p25-1144.pdf.
\15\ DOT, BTS, Freight Activity in the U.S. Expected to Grow Fifty
Percent by 2050, Nov. 22, 2021 available at https://www.bts.gov/
newsroom/freight-activity-us-expected-grow-fifty-percent-2050.
\16\ DOT, FHWA, FHWA Forecasts of Vehicle Miles Traveled (VMT):
Spring 2023 (May 2023), available at https://www.fhwa.dot.gov/
Policyinformation/tables/vmt/2023_vmt_forecast_
sum.pdf.
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III. HIGHWAY TRUST FUND

SOURCES OF REVENUE

The HTF has three long-standing categories of income. These
are:
LFederal fuel taxes, which include gasoline and
diesel fuel tax, as well as special fuel, gasohol, and ethanol/
methanol taxes;
LFederal truck-related taxes, which include taxes
on truck tires, truck and trailer sales, and heavy vehicle
users; and
LInterest and penalties, which include interest
derived from HTF balances that are invested in special Treasury
securities with interest from these securities credited to the
HTF, and penalties for violations of certain tax and vehicle
safety laws.\17\
---------------------------------------------------------------------------
\17\ Supra note 4.

The HTF receives most of its revenue from the Federal
excise tax on motor fuel. Eno reports that the HTF receives
approximately 84 percent of its revenue from excise taxes on
motor fuel, 14 percent from truck related taxes, and 2 percent
from interest and penalties.\18\
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\18\ Jeff Davis, Highway Trust Fund 101, Eno Center for Transp.,
(updated Aug. 15, 2023), available at https://enotrans.org/article/
highway-trust-fund-101/ [hereinafter HTF 101].
---------------------------------------------------------------------------
Congress has increased the Federal motor fuel tax rates
four times since the establishment of the HTF.\19\ They were
last adjusted 30 years ago as part of the Omnibus Budget
Reconciliation Act of 1993 (OBRA 1993) (P.L. 103-66).\20\
Currently, the tax on diesel fuel stands at 24.4 cents per
gallon and gasoline stands at 18.4 cents per gallon (see
Appendix 1).\21\ The tax on gas and diesel fuel is not indexed
to inflation.
---------------------------------------------------------------------------
\19\ CRS R47573, supra note 5.
\20\ Id.
\21\ Supra note 4.
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ACCOUNT STRUCTURE

For 26 years, the trust fund had a single account and a
single purpose--to fund the Federal highway programs. That
changed with a political agreement referred to as the ``Great
Compromise'' or the ``80-20 highway-transit split.''
Implemented in the Surface Transportation Assistance Act (STAA)
of 1982 (P.L. 94-424), the result was a 5 cent per gallon
increase in the gasoline tax (for a total gas tax of 9 cents)
and the creation of a new mass transit account (MTA).\22\ The
compromise traded an increase in the gas tax for an agreement
to deposit 1 cent (20 percent of the new tax increase) into the
newly created MTA within the HTF. The remaining 4 cents (80
percent of the new tax increase) would be dedicated to the
highway account (HA).\23\ The Great Compromise agreement only
pertained to the gas tax increase in STAA, not total gas taxes
collected. Further, it did not dictate authorization amounts or
spending from either the HA or the MTA.\24\
---------------------------------------------------------------------------
\22\ HTF 101, supra note 18; DOT, FHWA, Public Roads--Federal Aid
Highway Act of 1956: Creating the Interstate System (1996), available
at https://highways.dot.gov/
public-roads/summer-1996/federal-aid-highway-act-1956-creating-
interstate-system-sidebars-
0#::text=The%20trust%20fund%20has%20two,cent%20of%20the%20new%20revenue

\23\ HTF 101, supra note 18.
\24\ Id.
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The HA continued to be largely devoted to construction and
maintenance of highways and bridges. The MTA was created to
fund public transportation such as buses, railways, subways,
and ferries, and also allows for the use of limited funds for
operating expenses in rural and small urbanized areas.\25\ This
new structure represented a move away from the user-pays
principle originally envisioned for the HTF. Road users began
to pay for transit programs, which constituted a diversion of
funds from highway program purposes.\26\ According to a 2013
study by the University of California, Berkley and the National
Bureau of Economic Research, ``the congestion relief benefits
alone may justify transit infrastructure investments.'' \27\
However, the same study acknowledged that ``previous economic
research does not support the hypothesis that transit generates
large reduction in traffic congestion.'' \28\
---------------------------------------------------------------------------
\25\ CRS R47573, supra note 5.
\26\ Richard Weingroff, Busting the Trust, FHWA Public Roads (July/
Aug. 2013), available at https://highways.dot.gov/public-roads/
julyaugust-2013/busting-trust.
\27\ Michael L. Anderson, Subways, Strikes, and Slowdowns: The
Impacts of Public Transit on Traffic Congestion, University of Calif.,
Berkley & NBER, (Aug. 30, 2013), available at https://are.berkeley.edu/
mlanderson/pdf/Anderson_transit.pdf.
\28\ Id.
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TAX DEPOSITS INTO HTF ACCOUNTS

Fuel taxes enacted prior to 1982 and truck-related taxes
continue to be deposited into the HA of the HTF, but all fuel
tax increases enacted in 1982 or later are deposited into the
HA and MTA consistent with the 80-20 highway-transit split (see
Appendix 2).\29\ The percentage of gasoline and diesel fuel tax
deposited into the MTA totals 15.6 percent.\30\ However, when
the Federal truck-related taxes are included, about 13 percent
of total HTF tax receipts are deposited into the MTA.\31\
---------------------------------------------------------------------------
\29\ HTF 101, supra note 18.
\30\ Id.
\31\ Id.
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SOLVENCY

Beginning in fiscal year (FY) 2001, and in each subsequent
fiscal year to date, HTF outlays have exceeded revenue
deposits.\32\ For example, in FY 2022, the HTF collected $47.9
billion in revenues and interest and spent $53.6 billion.\33\
Some reasons for the imbalance include:
---------------------------------------------------------------------------
\32\ CRS R47573, supra note 5.
\33\ Supra note 7.
---------------------------------------------------------------------------
LThe Federal fuel tax rates are stagnant--rates
have not increased at the Federal level since 1993 and are not
indexed to inflation. AASHTO estimates that the purchasing
power of the gas tax fell 43 percent from 1993 to 2021.\34\
---------------------------------------------------------------------------
\34\ Tanya Snyder, Drivers Used to Pay for Roads. Washington is
Killing that Idea., Politico, (June 30, 2021), available at https://
www.politico.com/states/california/story/2021/06/30/drivers-used-to-
pay-for-roads-washington-is-killing-that-idea-1387515.
---------------------------------------------------------------------------
LGas tax revenue has and will continue to decline
as people purchase more fuel-efficient vehicles, including
electric vehicles.\35\
---------------------------------------------------------------------------
\35\ HTF 101, supra, note 18.
---------------------------------------------------------------------------
LLabor and construction materials costs have
increased, specifically increasing more sharply with COVID-
related supply shortages, safety-related requirements, and a
tight labor market. AASHTO estimates that highway construction
costs have tripled in the past 28 years from 1993 to 2021, and
Eno states that highway construction costs have increased
another 50 percent over the last two years.\36\
---------------------------------------------------------------------------
\36\ Jeff Davis, Highway Construction Costs Have Risen 50% in Two
Years, Eno Center for Transp., (Apr. 18, 2023), available at https://
enotrans.org/article/highway-construction-costs-have-risen-50-in-two-
years/; Tanya Snyder, Drivers Used to Pay for Roads. Washington is
Killing that Idea., Politico, (June 30, 2021), available at https://
www.politico.com/states/california/story/2021/06/30/drivers-used-to-
pay-for-roads-washington-is-killing-that-idea-1387515.
---------------------------------------------------------------------------
LThe pandemic and resulting lockdowns caused a
temporary but sharp decline in economic activity, driving, and
commuting.\37\
---------------------------------------------------------------------------
\37\ John Gallagher, COVID-19 Draining the Highway Trust Fund,
Freight Waves (Apr. 15, 2020), available at https://
www.freightwaves.com/news/covid-19-draining-the-highway-trust-fund.
---------------------------------------------------------------------------
LCongress has continued to pass surface
transportation legislation that increases both highway and mass
transit authorizations far beyond what the HTF can support with
current revenue sources.\38\
---------------------------------------------------------------------------
\38\ Supra note 7.

Because of the nature of ``reimbursable'' programs like
those funded by the HTF, there may be cash in the fund that is
not needed for immediate use. It is important to understand
that this is not a ``surplus,'' or excess cash. Rather, those
amounts will be needed over time to pay States as they submit
vouchers related to prior obligations.\39\
---------------------------------------------------------------------------
\39\ Supra note 4.
---------------------------------------------------------------------------
Both the HA and the MTA have separate self-sufficiency
calculations to test for solvency, the Byrd and Rostenkowski
tests, respectively.\40\ Each test compares financial
commitments to projected financial resources in the account for
the next four fiscal years and requires automatic reductions in
program apportionments associated with the account that cannot
cover its commitments.\41\ The contract authority
authorizations for transit have exceeded MTA revenue
projections for the next four years, and therefore the
Rostenkowski Test was triggered beginning in FY 2020.\42\
Congress has continued to enact laws that cancel or suspend the
transit apportionment reductions required by the Rostenkowski
Test since FY 2020.\43\
---------------------------------------------------------------------------
\40\ HTF 101, supra note 18.
\41\ Id.
\42\ Id.
\43\ Id.
---------------------------------------------------------------------------
To ensure that the HTF could continue to pay its
obligations, Congress has transferred a total of $275 billion
from the GF and other sources into the HTF beginning in
2008.\44\ Most recently, IIJA transferred a total of $118
billion to maintain solvency through FY 2026.\45\
---------------------------------------------------------------------------
\44\ Id.
\45\ IIJA, Pub. L. No. 117-58, 135 Stat. 429.
---------------------------------------------------------------------------

IV. PROGRAMS FUNDED BY THE HIGHWAY TRUST FUND

The HTF provides funding for a number of highway, transit,
and highway safety programs (surface transportation programs)
administered by the Federal Highway Administration (FHWA), the
Federal Transit Administration (FTA), the Federal Motor Carrier
Safety Administration (FMCSA), the National Highway Traffic
Safety Administration (NHTSA), and the Office of the Secretary
of Transportation. These agencies administer surface
transportation programs in partnership with states, public
transit agencies, and other local authorities. While Federal
agencies provide financial and technical assistance, state and
local partners select projects and carry out the programs on a
day-to-day basis.\46\
---------------------------------------------------------------------------
\46\ Supra note 4.
---------------------------------------------------------------------------
Congress most recently reauthorized surface transportation
programs with enactment of IIJA. The law reauthorizes Federal
surface transportation programs through FY 2026. In total, it
authorizes approximately $530 billion for funding for Federal-
aid highways, Federal transit, and highway safety programs over
five years to improve our Nation's infrastructure.
Approximately $382.9 billion is authorized from the HTF.\47\ Of
this total, approximately $303.5 billion is administered by
FHWA, $69.9 billion by FTA, $4.5 billion by FMCSA, and $5.1
billion by NHTSA.\48\ Of the remaining funds, IIJA authorized
$89.1 billion in multiyear advanced appropriations from the
General Fund, which is a change to the funding structure of
highway and transit programs; and the remaining amount is
budget authority subject to future appropriations acts.\49\
---------------------------------------------------------------------------
\47\ IIJA, Pub. L. No. 117-58, 135 Stat. 429 (numbers tabulated by
Transp. and Infrastructure (T&I) Committee Staff).
\48\ Id.
\49\ Id.
---------------------------------------------------------------------------
IIJA's five-year average funding for HTF programs
administered by these modal agencies increased significantly
compared to the same average under the previous authorization,
the Fixing America's Surface Transportation Act (FAST Act)
(P.L. 114-94). Specifically, HTF-derived funding for FHWA
programs increased by 35 percent, FTA programs by 43 percent,
FMCSA programs by 38 percent, and NHTSA programs by 36
percent.\50\
---------------------------------------------------------------------------
\50\ Id.; FAST Act of 2015, Pub. L. No. 114-94, 129 Stat. 1312
(comparative numbers tabulated by T&I Committee staff).
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V. FUNDING OPTIONS FOR THE HTF

Presuming that Congress continues to support the HTF as a
funding mechanism for the Federal-aid highways, Federal
transit, and highway safety programs, long-term changes to the
funding structure of the fund are required. In order to rely
solely on the HTF as a funding source, Congress must either
increase revenue dedicated to the fund or reduce spending, or
some combination of the two.\51\ However, Congress has not
agreed on a long-term strategy. Considerations in the
development of a long-term strategy include the Federal
Government's responsibility for transportation funding, the
proper distribution of expenditures on highways as opposed to
mass transit, and other specific policy proposals.\52\
---------------------------------------------------------------------------
\51\ CRS R47573, supra note 5.
\52\ Id.
---------------------------------------------------------------------------
Several options that would increase revenues into the HTF
that have been discussed include:
LRaising motor fuel taxes and/or indexing the
motor fuel tax to inflation.\53\ This option would require a
significant increase and may not be viable in the long-term as
motor vehicles become more fuel efficient.\54\
---------------------------------------------------------------------------
\53\ Id.
\54\ Brianna Fernandez, Raising the Gas Tax is Not a Long-Term Fix
to the Highway Trust Fund, American Action Forum (Apr. 24, 2018),
available at https://www.americanactionforum.org/insight/raising-gas-
tax-not-long-term-fix-highway-trust-fund/
#::text=April%2024%2C%202018-
Raising%20the%20Gas%20Tax%20is%20Not%20a%20Long%
2DTerm,for%20the%20Highway%20Trust%20Fund&text=As%20of%202021%2C%20the%2
0
Highway,transit%20projects%20%E2%80%93%20will%20be%20insolvent.;
Addressing the Long-Term Solvency of the Highway Trust Fund: Hearing
Before the S. Comm. on Environment and Public Works, 117th Cong., (Apr.
14, 2021), available at https://www.cbo.gov/
publication/
57138#::text=Lawmakers%20have%20several%20options%20for,movement%2C
%20or%20on%20electric%20vehicles.
---------------------------------------------------------------------------
LImposing a Federal tax on electric vehicles (EVs)
and depositing the revenues into the HTF. Although this would
address a fairness argument by requiring EV motorists that do
not pay for their use of roads to pay into the HTF; it is
unlikely that such a tax would, by itself, result in a
sustainable HTF. In 2021, CBO testified that affects to the HTF
would be limited while the number of EVs remains small.\55\
---------------------------------------------------------------------------
\55\ Id.
---------------------------------------------------------------------------
LReplacing or supplementing motor fuel taxes with
a vehicle miles traveled (VMT) charge.\56\ VMT pilot programs
were first funded under the FAST Act. IIJA continued to provide
funds for these pilot programs and required the Department of
Transportation (DOT) to establish a Federal System Funding
Alternative Advisory Board as well as a National VMT pilot
program.\57\
---------------------------------------------------------------------------
\56\ CRS R47573, supra note 5.
\57\ The FAST Act of 2015, Pub. L. No. 114-94; IIJA, Pub. L. No.
117-58, 135 Stat. 429.
---------------------------------------------------------------------------
LTransfer general revenues from the GF into the
HTF and augment HTF authorizations with advanced
appropriations. Transferring funding into the HTF has been the
de-facto funding policy to sustain the HTF for 18 years until
FY 2026.\58\
---------------------------------------------------------------------------
\58\ CRS R47573, supra note 5.
---------------------------------------------------------------------------

VI. WITNESSES

LKris Strickler, Director, Oregon Department of
Transportation, on behalf of AASHTO
LChad Shirley, Ph.D., Principal Analyst,
Microeconomic Studies Division, Congressional Budget Office
Jeff Davis, Senior Fellow, Eno Center for
Transportation
LReema Griffith, Executive Director, Washington
State Transportation Commission
Appendix 1: Current Highway Trust Fund User Fees \59\
---------------------------------------------------------------------------
\59\ Supra note 4.

------------------------------------------------------------------------
Tax Type Tax Rate
------------------------------------------------------------------------
Federal Motor Fuel Taxes................................................
------------------------------------------------------------------------
Gasoline and gasohol...................... 18.4 cents per
gallon\\
Diesel.................................... 24.4 cents per
gallon\\
Special Fuels:
General rate............................ 18.4 cents per gallon
Liquefied petroleum gas................. 18.3 cents per gasoline-
equivalent gallon
Liquefied natural gas................... 24.3 cents per gallon diesel-
equivalent gallon
M85 from natural gas.................... 9.25 cents per gallon
Compressed natural gas.................. 18.3 cents per gasoline-
equivalent gallon
------------------------------------------------------------------------
Other Federal Taxes on Truck Users......................................
------------------------------------------------------------------------
Tires (maximum rated load capacity):
0-3,500 pounds.......................... No Tax
Over 3,500 pounds....................... 9.45 cents per each 10
pounds in excess of 3,500
Truck and Trailer Sales................... 12 percent of retailer's
sales price for tractors
and trucks over 33,000
pounds gross vehicle weight
(GVW) and trailers over
26,000 pounds GVW
Heavy Vehicle Use......................... Annual tax: Trucks 55,000
pounds and over GVW, $100
plus $22 for each 1,000
pounds (or fraction
thereof) in excess of
55,000 pounds (maximum tax
of $550)
------------------------------------------------------------------------
\\ $0.1 cent is deposited in the Leaking Underground Storage
Tank Trust Fund

Appendix 2: Federal Highway User Fees \60\
---------------------------------------------------------------------------
\60\ DOT, FHWA, Highway Statistics Series, (2020), available at
https://www.fhwa.dot.gov/policyinformation/statistics/2020/fe21b.cfm.
---------------------------------------------------------------------------
February 2020
Table FE-21B

----------------------------------------------------------------------------------------------------------------
Distribution of Tax
--------------------------------------------------
Highway Trust Fund
Tax Effective -----------------------------------------
User Tax Rate Date Leaking General
Highway Mass Underground Fund
Account Transit Storage Tank Trust
Account Fund
----------------------------------------------------------------------------------------------------------------
Fuel Taxes (Cents per Gallon)
----------------------------------------------------------------------------------------------------------------
Gasoline and Gasohol fuels............... 18.4 10/1/1997 15.44 2.86 0.1 -
Diesel and Kerosene fuels................ 24.4 10/1/1997 21.44 2.86 0.1 -
Alternative fuels \2\....................
Liquefied Petroleum Gas.................. 18.3 \ 1/1/2016 16.17 2.13 - -
3\
Liquefied Natural Gas.................... 24.3 \ 10/1/2006 22.44 1.86 - -
4\
Compressed natural gas................... 18.3 \ 10/1/2006 17.07 1.23 - -
3\
Other Special Fuels...................... 18.4 10/1/1997 15.44 2.86 0.1 -
----------------------------------------------------------------------------------------------------------------
Other Taxes--All Proceeds to Highway Account
----------------------------------------------------------------------------------------------------------------
Tires.................................... Tax is imposed on tires sold by manufacturers, producers, or
importers at the rate of $.0945 ($.04725 in the case of a bias ply or
super single tire) for each 10 pounds of the maximum rated load
capacity over 3,500 pounds.
Truck and trailer sales.................. 12 percent of retailer's sales price for tractors and trucks over
33,000 pounds gross vehicle weight (GVW) and trailers over 26,000
pounds GVW. The tax applies to parts and accessories sold in
connection with the vehicle sale.
Heavy vehicle use........................ Annual tax:
Trucks 55,000-75,000 pounds GVW, $100 plus $22 for each 1,000 pounds
(or fraction thereof) in excess of 55,000 pounds
Trucks over 75,000 pounds GVW, $550
----------------------------------------------------------------------------------------------------------------
Source: Office of Highway Policy Information, Federal Highway Administration.
\2\ Alternative fuels is any liquid other than gas oil, fuel oil or any product taxable under Section 4081 of
the Internal Revenue Code (gasoline, diesel, kerosene, and diesel-water emulsion.)
\3\ Changes to tax rate included in the Surface Transportation and Veterans Health Care Choice Improvement Act
of 2015. Amounts for these products are defined as having a rate ``per energy equivalent of a gallon of
gasoline.'' Computation details can be found in 26 USC 4041.
\4\ Changes to tax rate included in the Surface Transportation and Veterans Health Care Choice Improvement Act
of 2015. Amounts for these products are defined as having a rate ``per energy equivalent of a gallon of
diesel.'' Computation details can be found in 26 USC 4041.

.
RUNNING ON EMPTY:
THE HIGHWAY TRUST FUND

----------

WEDNESDAY, OCTOBER 18, 2023

House of Representatives,
Subcommittee on Highways and Transit,
Committee on Transportation and Infrastructure,
Washington, DC.
The subcommittee met, pursuant to call, at 9:30 a.m., in
room 2167 Rayburn House Office Building, Hon. Eric A. ``Rick''
Crawford (Chairman of the subcommittee) presiding.
Mr. Crawford. The Subcommittee on Highways and Transit will
come to order.
I ask unanimous consent that the chairman be authorized to
declare a recess at any time during today's hearing.
Without objection, so ordered.
I also ask unanimous consent that Members not on the
subcommittee be permitted to sit with the subcommittee at
today's hearing and ask questions.
Without objection, so ordered.
As a reminder, if Members wish to insert a document into
the record, please also email it to DocumentsTI@mail.house.gov.
I now recognize myself for the purposes of an opening
statement.

OPENING STATEMENT OF HON. ERIC A. ``RICK'' CRAWFORD OF
ARKANSAS, CHAIRMAN, SUBCOMMITTEE ON HIGHWAYS AND TRANSIT

Mr. Crawford. Good morning. I want to welcome our witnesses
today. Thank you for being here. The issue before us today is:
How do we ensure that we have the resources to build and
maintain a surface transportation system that will meet the
needs of our Nation and allow us to remain competitive in the
21st century?
As most here know, the Highway Revenue Act of 1956 created
the Highway Trust Fund to provide a dependable source of
funding for development of the interstate system. It was
established as a user-pays model. Highway users would pay
excise taxes on fuel, which would be deposited into the Highway
Trust Fund and dedicated to the construction of Federal-aid
highways.
Although subsequent acts of Congress increased taxes on
motor fuels, imposed new taxes, and expanded the programs
eligible for funding through the trust fund, the basic
construct remains in place today. Highway Trust Fund revenues
come from transportation-related excise taxes. The majority of
revenues--84 percent, to be exact--are from Federal taxes on
gasoline and diesel fuel, and 14 percent come from heavy-duty
truck-related taxes.
The Highway Trust Fund currently finances most Federal
Government spending for highways, transit, and highway safety
programs. Since 2001, however, spending from the trust fund has
exceeded revenue deposited into the fund.
Beginning in 2008, the trust fund has relied on a total of
$275 billion in transfers, mainly from the General Fund of the
Treasury, to remain solvent. Although critical to the Highway
Trust Fund's short-term operations, Government bailouts are not
a long-term solution, nor do they address the underlying,
multifaceted, and structural problem.
First, the purchasing power of fuel taxes, which have
remained unchanged since 1993, has eroded by 55 percent over
the last 30 years. At the same time, funding authorized from
the Highway Trust Fund for Federal-aid highway, highway safety,
and Federal transit programs has more than tripled.
Additionally, more fuel-efficient vehicles and the use of
alternative fuel sources have further eroded trust fund
receipts. For example, electric vehicle drivers pay nothing at
the Federal level for their use of roadways.
The Biden administration's desired CAFE standards could
result in reduced motor fuel consumption of 200 billion gallons
by 2050. That's billions of dollars in lost revenue, but not
lost wear and tear on our highways. These factors have
contributed to the widening gap between Highway Trust Fund
receipts and expenditures.
Meanwhile, the movement of freight on our roads and
highways is expected to increase by 50 percent in tonnage and
double in value by 2050. In terms of highway usage, vehicle-
miles traveled are projected to grow by 22 percent by 2049. At
the same time, driverless vehicles and other advances in
technology are going to change the way freight and passengers
move throughout our transportation network.
To keep pace with these developments, our system requires
sustainable and reliable resources. Unfortunately, the current
method of funding our Federal transportation programs no longer
meets those needs.
The Infrastructure Investment and Jobs Act, or IIJA,
authorized $118 billion in transfers into the Highway Trust
Fund to ensure the fund can meet its obligations until the law
expires. Beyond the expiration of IIJA in 2026, the Highway
Trust Fund will once again go broke, requiring additional
congressional action to provide solvency for the fund.
We need to work together to reform the Highway Trust Fund
to ensure that users who benefit from the system pay into the
system. A long-term, sustainable solution is necessary to
provide our State, local, and private-sector partners the
certainty they need to plan and build their projects.
We need a solution so that we can build a modern and
efficient transportation system to meet the needs of our 21st-
century economy. Our Nation demands and deserves a system that
will move people and goods safely and efficiently, expand
opportunities across all communities, enhance American
prosperity, and ensure American industry and innovation
continue to lead the world.
Our witnesses will offer potential solutions and discuss
innovative new approaches for funding our surface
transportation programs. I thank them for appearing before us
today.
[Mr. Crawford's prepared statement follows:]

Prepared Statement of Hon. Eric A. ``Rick'' Crawford, a Representative
in Congress from the State of Arkansas, and Chairman, Subcommittee on
Highways and Transit
The issue before us today is how do we ensure we have the resources
to build and maintain a surface transportation system that will meet
the needs of our nation and allow us to remain competitive in the 21st
century.
As most here know, the Highway Revenue Act of 1956 created the
Highway Trust Fund to provide a dependable source of funding for
development of the Interstate Highway System. It was established as a
user-pays model. Highway users would pay excise taxes on fuel, which
would be deposited in the Highway Trust Fund and dedicated to the
construction of federal-aid highways.
Although subsequent acts of Congress increased taxes on motor
fuels, imposed new taxes, and expanded the programs eligible for
funding through the Trust Fund, the basic construct remains in place
today.
Highway Trust Fund revenues come from transportation-related excise
taxes. The majority of revenues--84 percent to be exact--are from
federal taxes on gasoline and diesel fuel, and 14 percent comes from
heavy-duty truck-related taxes.
The Highway Trust Fund currently finances most federal government
spending for highways, transit, and highway safety programs. Since
2001, however, spending from the Trust Fund has exceeded revenue
deposited into the fund.
Beginning in 2008, the Trust Fund has relied on a total of $275
billion in transfers, mainly from the General Fund of the Treasury, to
remain solvent. Although critical to the Highway Trust Fund's short-
term operations, government bailouts are not a long-term solution, nor
do they address the underlying, multifaceted, and structural problem.
First, the purchasing power of fuel taxes, which have remained
unchanged since 1993, has eroded by 55 percent over the last 30 years.
At the same time, funding authorized from the Highway Trust Fund for
federal-aid highway, highway safety, and federal transit programs has
more than tripled.
Additionally, more fuel-efficient vehicles and the use of
alternative fuel sources have further eroded Trust Fund receipts. For
example, electric vehicle drivers pay nothing at the federal level for
their use of roadways.
The Biden Administration's desired CAFE standards could result in
reduced motor fuel consumption of 200 billion gallons by 2050. That's
billions of dollars in lost revenue, but not lost wear and tear on our
highways. These factors have contributed to the widening gap between
Highway Trust Fund receipts and expenditures.
Meanwhile, the movement of freight on our roads and highways is
expected to increase by 50 percent in tonnage and double in value by
2050. In terms of highway usage, vehicle miles traveled are projected
to grow by 22 percent by 2049.
At the same time, driverless vehicles and other advances in
technology are going to change the way freight and passengers move
throughout our transportation network. To keep pace with these
developments, our system requires sustainable and reliable resources.
Unfortunately, the current method of funding our federal transportation
programs no longer meets those needs.
The Infrastructure Investment and Jobs Act authorized $118 billion
in transfers into the Highway Trust Fund to ensure the fund can meet
its obligations until the law expires. Beyond the expiration of IIJA in
2026, the Highway Trust Fund will once again go broke, requiring
additional congressional action to provide solvency for the fund.
We need to work together to reform the Highway Trust Fund to ensure
that users who benefit from the system pay into the system. A long-
term, sustainable solution is necessary to provide our state, local,
and private sector partners the certainty they need to plan and build
their projects.
We need a solution so that we can build a modern and efficient
transportation system to meet the needs of our 21st century economy.
Our nation demands, and deserves, a system that will move people and
goods safely and efficiently, expand opportunities across all
communities, enhance American prosperity, and ensure American industry
and innovation continue to lead the world.
Our witnesses will offer potential solutions and discuss innovative
new approaches for funding our surface transportation programs. I thank
them for appearing before us today.

Mr. Crawford. I now recognize Ranking Member Holmes Norton
for 5 minutes for an opening statement.

OPENING STATEMENT OF HON. ELEANOR HOLMES NORTON OF THE DISTRICT
OF COLUMBIA, RANKING MEMBER, SUBCOMMITTEE ON HIGHWAYS AND
TRANSIT

Ms. Norton. Thank you. And I would like to thank
subcommittee Chair Crawford for holding this hearing on the
status of the Highway Trust Fund.
For decades, the Highway Trust Fund has provided a
predictable and stable funding source for the construction and
maintenance of roads, bridges, transit, and bicycle and
pedestrian infrastructure. Transportation projects take time to
plan and build. Having a dedicated revenue stream--largely
supported by the tax on gasoline and diesel--has allowed
Congress to provide States, cities, and transit agencies with
the certainty they need to plan and deliver transportation
projects.
However, because the gas and diesel taxes are flat taxes
that have not been adjusted in three decades, the purchasing
power of that revenue stream has eroded. Improved vehicle fuel
economy and the increased adoption of zero-emission vehicles
also represent an emerging challenge Congress will need to
address.
Congress needs to find a solution for the long-term
solvency of the Highway Trust Fund. That could mean increasing
user taxes--user fees, rather--or indexing them to inflation.
It also might mean transitioning to a new system based on
vehicle-miles traveled, which several of our witnesses are
piloting at the State level.
Whatever Congress decides, we need to ensure that our
solution meets several criteria.
First, we need to provide a sustainable revenue source for
the Highway Trust Fund that allows this committee to continue
to enact multiyear surface transportation bills. States,
cities, and transit agencies cannot build cohesive and
functional transportation systems if they do not know how much
funding they will receive year to year. Congress must continue
to provide that certainty.
Second, we need to continue investing in public
transportation. Cutting Federal support for transit would be
catastrophic, not just for transit riders, but for drivers as
well. Last Wednesday, here in the national capital region,
which I represent, Metro carried 440,000 riders on its rail
system alone. They have been carrying nearly 400,000 riders
each weekday on their bus network. Imagine if even a fraction
of those 800,000 transit riders had been forced to drive
instead. Everyone would lose out from more gridlock, more
pollution, and more time wasted in traffic. We must continue to
guarantee strong Federal transit funding.
Third, we need to continue building for the future. With
the passage of the Infrastructure Investment and Jobs Act and
the Inflation Reduction Act, Congress took steps to address
challenges that have been an afterthought for far too long. We
created the first-ever highway formula program to reduce carbon
pollution. We established two new programs to redress the harms
caused to neighborhoods that were divided by highways and bear
a heavy burden from pollution. We created the Safe Streets and
Roads for All grant program to provide safe and reliable
transportation choices for more people.
Those are not luxuries; those are essential to building
modern-day transportation systems that work for all people and
road users and address the challenges of the 21st century.
Addressing the solvency of the Highway Trust Fund is not an
easy task, but it is an essential one. I look forward to
hearing the recommendations and insights from our witnesses
today, and I yield back, Mr. Chairman.
[Ms. Norton's prepared statement follows:]

Prepared Statement of Hon. Eleanor Holmes Norton, a Delegate in
Congress from the District of Columbia, and Ranking Member,
Subcommittee on Highways and Transit
I would like to thank Subcommittee Chair Rick Crawford for holding
this hearing on the status of the Highway Trust Fund.
For decades, the Highway Trust Fund has provided a predictable and
stable funding source for the construction and maintenance of roads,
bridges, transit and bicycle and pedestrian infrastructure.
Transportation projects take time to plan and build. Having a
dedicated revenue stream--largely supported by the tax on gasoline and
diesel--has allowed Congress to provide states, cities and transit
agencies with the certainty they need to plan and deliver
transportation projects.
However, because the gas and diesel taxes are flat taxes that have
not been adjusted in three decades, the purchasing power of that
revenue stream has eroded. Improved vehicle fuel economy and the
increased adoption of zero-emission vehicles also represent an emerging
challenge Congress will need to address.
Congress needs to find a solution for the long-term solvency of the
Highway Trust Fund. That could mean increasing user fees or indexing
them to inflation. It also might mean transitioning to a new system
based on vehicle miles traveled, which several of our witnesses are
piloting at the state level.
Whatever Congress decides, we need to ensure that our solution
meets several criteria. First, we need to provide a sustainable revenue
source for the Highway Trust Fund that allows this Committee to
continue to enact multi-year surface transportation bills.
States, cities and transit agencies cannot build cohesive and
functional transportation systems if they do not know how much funding
they will receive year to year. Congress must continue to provide that
certainty.
Second, we need to continue investing in public transportation.
Cutting federal support for transit would be catastrophic not just for
transit riders, but for drivers as well.
Last Wednesday, here in the national capital region, Metro carried
440,000 riders on its rail system alone. They have been carrying nearly
400,000 riders each weekday on their bus network.
Imagine if even a fraction of those 800,000 transit riders had been
forced to drive instead. Everyone would lose out from more gridlock,
more air pollution and more time wasted in traffic. We must continue to
guarantee strong federal transit funding.
Third, we need to continue building for the future. With the
passage of the Infrastructure Investment and Jobs Act and the Inflation
Reduction Act, Congress took steps to address challenges that have been
an afterthought for far too long.
We created the first-ever highway formula program to reduce carbon
pollution.
We established two new programs to redress the harms caused to
neighborhoods that were divided by highways and bear a heavy burden
from pollution.
We created the Safe Streets and Roads for All grant program to
provide safe and reliable transportation choices for more people.
Those are not luxuries. Those are essential to building modern-day
transportation systems that work for all people and road users and
address the challenges of the 21st century.
Addressing the solvency of the Highway Trust Fund is not an easy
task, but it is an essential one. I look forward to hearing the
recommendations and insight from our witnesses today.

Mr. Crawford. I thank the gentlewoman.
And, at this point, I would recognize full committee
Chairman Sam Graves. Although he was unable to join us today
due to a schedule conflict, I ask unanimous consent to insert
this letter into the record on his behalf, a letter dated
October 18, 2023, signed by a coalition of 24 stakeholders
across industry which emphasizes the importance of finding a
long-term solution to Highway Trust Fund solvency, including
the exploration of a national VMT pilot program.
Without objection, so ordered.
[The information follows:]

Letter of October 18, 2023, to Hon. Sam Graves, Chairman, and Hon. Rick
Larsen, Ranking Member, Committee on Transportation and Infrastructure,
from 24 Transportation Stakeholder Organizations, Submitted for the
Record by Hon. Eric A. ``Rick'' Crawford on behalf of Hon. Sam Graves
October 18, 2023.
The Honorable Sam Graves,
Chairman of the House Transportation and Infrastructure Committee,
1135 Longworth House Office Building, Washington DC, 20515.
The Honorable Rick Larsen,
Ranking Member of the House Transportation and Infrastructure
Committee,
2163 Rayburn House Office Building, Washington DC, 20515.
Dear Chairman Graves and Ranking Member Larsen:
Thank you for today's hearing examining the financial solvency of
the Highway Trust Fund (HTF) and potential solutions, including the
creation and implementation of a national vehicle miles traveled (VMT)
program, titled ``Running on Empty: The Highway Trust Fund''. The
undersigned organizations represent a diverse set of transportation
stakeholders, all of whom support augmenting the current HTF user-fee
system to ensure financial solvency ahead of the next multi-year
surface transportation reauthorization law.
HTF revenues have long struggled to meet increasing infrastructure
investment needs. Federal motor fuels taxes have remained stagnant
since 1993, with the prospects of an increase dim. Instead, Congress
has chosen to provide General Fund and other transfers to keep the HTF
solvent, totaling $275 billion since 2008. The Congressional Budget
Office estimates that the HTF will require another $150 billion in
revenues to pay for continued spending at baseline levels from 2027-
2031, not including additional resources that will be necessary to
maintain advance appropriations investments included in the
Infrastructure Investment and Jobs Act (IIJA). Congress must consider a
long-term solution to ensure HTF viability and the future health of our
surface transportation system, while maintaining the user fee principle
upon which the HTF is founded. A VMT or mileage-based user fee to
replace all current motor fuel taxes and fees can certainly be a
potential solution, and work has been underway to explore feasibility.
Congress has created programs to explore alternatives to the gas
tax, like 2016's Surface Transportation System Funding Alternatives
(STSFA) Program, which has provided $73.7 million to 37 projects in
states across the nation to assist with the design, implementation, and
acceptance of user-based systems, such as a vehicle mileage-based user
fee.
While these programs have been invaluable to better understand this
user system and areas of improvement, there is more immediate work that
needs to occur in order to realize VMT potential and broader
implementation. Under IIJA, Congress required the Department of
Transportation (DOT) to establish a national pilot to ``test the
design, acceptance, implementation, and financial sustainability'' of a
VMT system.\1\ It requires the creation of a Federal System Funding
Alternative Advisory Board that will provide an annual report to
Congress and ultimately create recommendations for a possible permanent
VMT program. We urge DOT to convene this panel as quickly as possible
and utilize the $50 million over 5 years authorized under IIJA.
---------------------------------------------------------------------------
\1\ ENO Report: https://enotrans.org/eno-resources/driving-change-
advice-for-the-national-vmt-fee-pilot/
---------------------------------------------------------------------------
A national VMT pilot program will provide valuable lessons and
identify several important factors for the successful implementation of
a permanent, truly user-based VMT program. Getting this information now
and leveraging Congress's oversight function to ensure a national VMT
program is successful will help in answering the toughest question
facing the next surface transportation authorization: how do we fix the
HTF?
Thank you again for this important hearing and we look forward to
working with you and your staff to ensure we secure the information
needed to support a comprehensive national VMT program ahead of the
next surface transportation reauthorization package.
Sincerely,
American Association of State Highway and Transportation Officials.
American Concrete Pavement Association.
American Concrete Pipe Association.
American Council of Engineering Companies.
American Institute of Steel Construction.
American Iron and Steel Institute.
American Road & Transportation Builders Association.
American Society of Civil Engineers.
American Traffic Safety Services Association.
Associated General Contractors of America.
Associated Equipment Distributors.
Association of American Railroads.
Association of Equipment Manufacturers.
Concrete Reenforcing Steel Institute.
CRH.
FP\2\, Formerly the Foundation for Pavement Preservation.
Granite Construction.
Maryland Asphalt Association.
National Asphalt Pavement Association.
National Ready Mixed Concrete Association.
National Stone, Sand & Gravel Association.
National Steel Bridge Alliance.
Ohio Contractors Association.
Portland Cement Association.

CC: House Ways and Means Committee Chairman Smith and Ranking Member
Neal
Senate Environment and Public Works Committee Chairman Carper and
Ranking Member Capito
Senate Finance Committee Chairman Wyden and Ranking Member Crapo

Mr. Crawford. I now recognize the ranking member of the
full committee, Mr. Larsen, for 5 minutes.

OPENING STATEMENT OF HON. RICK LARSEN OF WASHINGTON, RANKING
MEMBER, COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

Mr. Larsen of Washington. Thank you, Chair and Ranking
Member Norton, for having this hearing today.
Today's hearing on the state of the Highway Trust Fund is
an opportunity to discuss a critical responsibility that faces
this committee: How do we ensure a continued, shared, reliable,
and robust funding package for surface transportation projects
across the country in the future?
States, local governments, Tribes, and transit agencies
rely on the certainty of funding from the HTF to plan and build
road, bridge, and transit projects that support the economy,
connect people to jobs, and provide safe transportation.
Today's hearing is titled ``Running on Empty'' because
revenues into the HTF have been insufficient to support
bipartisan infrastructure priorities and investment levels set
by Congress since 2001, as the chair noted. As a result,
Congress has transferred $275 billion from the General Fund to
the HTF since 2008 to maintain the system of Federal support
for State and local transportation projects, a system that has
been in place since the 1950s.
Revenues have not kept pace with investments because
Congress last acted to raise the Federal gas and diesel taxes--
the main sources of revenue for the Highway Trust Fund--back in
1993, 30 years ago. If the Federal fuel taxes were indexed, the
current rate for gasoline would be over 37 cents per gallon,
and diesel fuel would be at nearly 50 cents per gallon. So,
it's no surprise that we can see the purchasing power of this
revenue has deteriorated for over three decades.
So, while the future of the trust fund needs thoughtful
consideration, cutting investment in infrastructure is not an
option. The Bipartisan Infrastructure Law marks the largest
investment in transportation infrastructure since the founding
of the Interstate Highway System and the creation of the trust
fund. We cannot have a big league economy with little league
infrastructure. That is why we enacted the BIL: to respond to
decades of underinvestment at the Federal level.
Just last week, the Federal Highway Administration
announced over $60 billion for roads, bridges, and safety
projects distributed by formula to States so every State in the
country sees a direct and demonstrable benefit from the funds.
So, I have encouraged all Members to call your Governors and
tell them to get that money spent and jobs created in your
districts.
Even as the Federal Government operates under a continuing
resolution, dedicated revenues from the trust fund made that
announcement possible. This kind of consistent investment
should be the norm and not the exception. And thanks to the
continuity of the trust fund, States, local governments, and
Tribal governments go into every construction season with the
certainty needed to move ahead on planned projects without
delay.
In the coming decades, with anticipated increases in
population and demand for freight transportation, sustained and
predictable investment in our infrastructure and in safe
mobility will only grow in importance.
In the next surface transportation reauthorization,
Congress will have to decide how to fund transportation
investments and whether or not to adjust the sources and levels
of revenue that go into the Highway Trust Fund.
The Bipartisan Infrastructure Law directed the Department
of Transportation to establish a pilot program evaluating a
national motor vehicle per-mile user fee. The BIL also updates
and continues a grant program for State-level user fee pilot
programs. And, just as a matter of history, in 2007, in one of
these iterations of transportation legislation, we passed a
bill that included a transportation and revenue commission that
came back and recommended a vehicle-miles traveled fee. So,
that was 16 years ago by my math, and we are still treating
this as a pilot program.
So, my home State of Washington has established a pilot
program to test and analyze a road usage charge, or a RUC, for
vehicles as an alternative to gas tax. And I am happy to have
Reema Griffith, the executive director of the Washington State
Transportation Commission, which runs Washington State's RUC
program, here to share some lessons learned with the committee.
States across the country are taking action to increase
revenue to fund transportation projects. Thirty-one States have
approved plans to increase revenue through additional bonds,
fuel taxes, vehicle registration fees, and tolling.
Additionally, at least 33 States assess annual EV fees ranging
from $50 to $225. Although EVs are not the cause of the trust
fund insolvency, but as they become more prevalent, we will
need to decide how to incorporate them into a user-pay system.
As the States continue to explore options to fund investment,
we can learn from these efforts.
So, one more history lesson from me, I guess. Back in 2015,
I observed that ``Our country's transportation funding is
running on empty. Without predictable Federal transportation
investments, we slam the brakes on creating jobs and growing
our economy.'' Eight years later, I continue to appreciate the
sentiment and the urgency with which we must continue to press
for a long-term transportation funding solution and that we
carry that forward into today's hearing.
So, I really do thank the chair and the ranking member for
getting this together and getting this started and thinking
about this for the next go around. With that, I yield back.
[Mr. Larsen of Washington's prepared statement follows:]

Prepared Statement of Hon. Rick Larsen, a Representative in Congress
from the State of Washington, and Ranking Member, Committee on
Transportation and Infrastructure
Thank you, Chair Crawford and Ranking Member Norton, for holding
this hearing.
Today's hearing on the state of the Highway Trust Fund (HTF) is an
opportunity to discuss a critical responsibility facing this Committee:
how do we ensure a continued, shared, reliable, and robust funding
package for surface transportation projects across the country in the
future?
States, local governments, Tribes, and transit agencies rely on the
certainty of funding from the Highway Trust Fund to plan and build
road, bridge, and transit projects that support the economy, connect
people to jobs and provide safe transportation.
Today's hearing is titled ``Running on Empty'' because revenues
into the HTF have been insufficient to support the bipartisan
infrastructure priorities and investment levels set by Congress since
2001.
As a result, Congress has transferred $275 billion from the General
Fund to the HTF since 2008 to maintain the system of federal support
for state and local transportation projects. A system that has been in
place since the 1950s.
Revenues have not kept pace with investments because Congress last
acted to raise the federal gas and diesel taxes--the main sources of
revenue for the Highway Trust Fund--in 1993. That was 30 years ago.
If the federal fuel taxes were indexed, the current rate for
gasoline would be over 37 cents per gallon (compared to the 18.3 cents
per gallon today) and diesel fuel would be nearly 50 cents per gallon
(compared to 24.3 cents per gallon today). It is no surprise that the
purchasing power of this revenue has deteriorated over three decades.
While the future of the Highway Trust Fund needs thoughtful
consideration by this Committee, cutting infrastructure investment is
not an option.
The Bipartisan Infrastructure Law marks the largest investment in
our transportation infrastructure since the founding of the Interstate
Highway System and the creation of the Highway Trust Fund.
We cannot have a big-league economy with little-league
infrastructure. That is why we enacted the BIL, to respond to decades
of underinvestment at the federal level.
Just last week, the Federal Highway Administration announced over
$60 billion for roads, bridges, and safety projects distributed by
formula to states so every state in the country sees a direct and
demonstrable benefit from the funds. I would encourage all members to
call your governors, tell them to get that money spent and jobs created
in your districts. Even as the federal government operates under a
Continuing Resolution, dedicated revenues from the Highway Trust Fund
made that announcement possible.
This kind of consistent investment should be the norm, not the
exception.
Thanks to the continuity provided by the Highway Trust Fund,
states, local governments and Tribal governments go into every
construction season with the certainty needed to move ahead on planned
projects without delay.
In the coming decades, with anticipated increases in population and
demand for freight transportation, sustained and predictable investment
in our infrastructure and in safe mobility will only grow in
importance.
In the next surface transportation reauthorization, Congress will
have to decide how to fund transportation investments, and whether or
not to adjust the sources and levels of revenue that go into the
Highway Trust Fund.
The Bipartisan Infrastructure Law directed the Department of
Transportation to establish a pilot program evaluating a National Motor
Vehicle Per-Mile User Fee. The BIL also updates and continues a grant
program for state-level user fee pilot programs.
As a matter of history, in 2005, in one of these iterations of
transportation legislation being passed, that included a transportation
and revenue commission that came back and recommended a Vehicle Per-
Mile traveled fee--which was 16 years ago by my math--and we are still
treating this as a pilot program. My home state of Washington has
established a pilot program to test and analyze a road usage charge
(RUC) for vehicles as an alternative to the gas tax.
I am happy to have Reema Griffith, the Executive Director of the
Washington State Transportation Commission, which runs Washington
State's RUC program, here to share lessons learned with the committee.
States across the country are taking action to increase revenue to
fund transportation projects.
Since 2012, 31 states have approved plans to increase revenue
through additional bonds, fuel taxes, vehicle registration fees, and
tolling.
Additionally, at least 33 states assess annual EV fees, ranging
from $50 to $225. To be clear, electric vehicles are not the cause of
today's Trust Fund insolvency--but as they become more prevalent,
Congress will need to decide how to incorporate them if we retain a
user-pays system.
As states continue to explore options to fund transportation
investment, Congress can learn from these efforts.
One more history lesson. Back in 2015, I observed that ``Our
country's transportation funding is running on empty. Without
predictable federal transportation investments, we slam the brakes on
creating jobs and growing our economy.''
Eight years later, I continue to appreciate that this sentiment,
and the urgency with which we must continue to press for a long-term
transportation funding solution, is being carried forward in today's
hearing.
I look forward to hearing from our witnesses about the path
forward.

Mr. Crawford. The gentleman yields. Thank you.
And I want to welcome the witnesses, first, by saying thank
you for your flexibility and your graciousness to help us start
early as a result of the pending floor schedule. And, with that
said, we are on a hard stop at 11 o'clock. So, I would ask you
to closely observe the lights in front of you. As you know,
just like when you are driving on the road, when it's green,
you are good to go; if it turns yellow, step on the gas,
because it's fixing to change. And I would also say that, in
the context of our hearing today, less is more.
Mr. Kris Strickler, director of the Oregon Department of
Transportation; Dr. Chad Shirley, principal analyst at the
Congressional Budget Office, Microeconomic Studies Division;
Mr. Jeff Davis, senior fellow from the Eno Center for
Transportation; and Ms. Reema Griffith, the executive director
of the Washington State Transportation Commission.
Thank you, one and all, for being here.
And, Mr. Kris Strickler, you are recognized.

TESTIMONY OF KRIS STRICKLER, DIRECTOR, OREGON DEPARTMENT OF
TRANSPORTATION, ON BEHALF OF THE AMERICAN ASSOCIATION OF STATE
HIGHWAY AND TRANSPORTATION OFFICIALS (AASHTO); CHAD SHIRLEY,
Ph.D., PRINCIPAL ANALYST, MICROECONOMIC STUDIES DIVISION,
CONGRESSIONAL BUDGET OFFICE; JEFF DAVIS, SENIOR FELLOW, ENO
CENTER FOR TRANSPORTATION; AND REEMA GRIFFITH, EXECUTIVE
DIRECTOR, WASHINGTON STATE TRANSPORTATION COMMISSION

TESTIMONY OF KRIS STRICKLER, DIRECTOR, OREGON DEPARTMENT OF
TRANSPORTATION, ON BEHALF OF THE AMERICAN ASSOCIATION OF STATE
HIGHWAY AND TRANSPORTATION OFFICIALS (AASHTO)

Mr. Strickler. Thank you. Chair Crawford, Ranking Member
Norton, and members of the subcommittee, thank you for the
opportunity to testify on the Highway Trust Fund today. My name
is Kris Strickler, as mentioned, and I am privileged to serve
as the director of the Oregon Department of Transportation, as
well as sit on AASHTO's board, representing the State
departments of transportation of all 50 States, as well as the
District of Columbia and Puerto Rico.
I extend AASHTO and ODOT's utmost gratitude to you and your
colleagues on this subcommittee for your dedicated leadership
on surface transportation policy through the Infrastructure
Investment and Jobs Act. Stable and long-term policy and
funding provided through the robust multiyear Federal surface
transportation bill remains crucial for State DOTs to improve
safety, mobility, and access for everyone.
At ODOT, our priorities are to provide a modern
transportation system, advance equity, and--very relevant for
today's hearing--secure sufficient and reliable funding to
accomplish these goals. ODOT, along with all other State DOTs,
are experiencing funding challenges due to reductions in gas
tax revenues. And like the Federal Highway Trust Fund, we are
running on empty.
The Highway Trust Fund serves as the primary mechanism by
which the Federal Government provides resources to States,
local governments, Tribes, and transit agencies for highway and
transit investments. Bills like the IIJA provide contract
authority for several years at a time, giving State DOTs the
funding certainty to plan and manage the program into the
future.
In Oregon, this Federal funding has allowed us to address
safety improvements, preserve the state of good repair for both
our rural and urban transportation network, make our
transportation system more resilient to natural disasters, and
address transit needs in our small communities across the
State.
But the trust fund once again faces a fiscal cliff. At the
expiration of the IIJA, and since 2008, revenues have not kept
pace with the expenditures approved by Congress. And more than
$275 billion has been transferred into the trust fund from the
General Fund during the same time. Why this happened is
relatively straightforward, as the purchasing power for the
trust fund has declined substantially. Federal fuel taxes are
flat and have not been adjusted since 1993, and have therefore
lost more than half of their value over the last 30 years.
While the gas tax has not increased at all between 1993 and
2022, college tuition has gone up over 460 percent, and the
cost of healthcare has risen by 280 percent. We need to find a
long-term solution, and my written testimony includes a matrix
that demonstrates a universe of options that might be
available.
With fuel taxes losing their buying power, Congress is now
exploring a user-pay approach that charges people based on how
many miles they drive rather than how much fuel they buy. This
modernization is necessary to put the focus back on the actual
use of the system rather than just the consumption of fuel.
Oregon was the first State to create a gas tax more than a
century ago, and we were once again at the forefront of road
usage charging, launching the Nation's first pilot project in
2006 and the first operational road usage charge, or RUC,
program in 2015. We call our program OReGO. Our program
demonstrates a new way to fund road maintenance, preservation,
and improvements. Volunteers pay a per-mile charge and receive
a credit for the fuel taxes they pay at the pump.
In 2017, our State legislature demonstrated their
understanding of the revenue problem and their leadership by
establishing supplemental registration fees for hybrid and
electric vehicles to ensure that those highly efficient
vehicles that use little or no gas contribute their fair share
to the State system, or these vehicles could simply join OReGO.
We appreciate the concerns that have been raised about the
equity of road usage charges. We have seen data that rural
residents tend to drive longer distances and use less fuel-
efficient vehicles, and thus, pay more in the gas tax today
than their current counterparts. Under a RUC, rural residents
likely wouldn't pay much more than they do in a gas tax, and
urban residents, who tend to drive more efficient vehicles,
would likely pay a little more. A road usage charge is a fair
way to ensure that all vehicles pay for their use of the roads.
I also can't emphasize enough that user privacy is a
critical component of Oregon's program. ODOT never receives
location data on any vehicle, receiving only aggregated and
anonymized data. Our volunteers can choose a GPS base or non-
GPS option to help determine their road use. We have partnered
with private-sector account managers who are responsible for
administering individual transactions, and by statute, this
data must be destroyed within 30 days of account settlement.
Also, law enforcement must obtain a warrant in order to access
that data.
The trajectory of the Highway Trust Fund, which is the
backbone of the Federal surface transportation program, is
unsustainable. Given its foundational role in funding highway
and transit investments in every corner of the country, AASHTO
looks forward to assisting Congress in finding a viable set of
revenue options to ensure continued investment in our future
through transportation. And I thank you again for the
opportunity to provide testimony.
[Mr. Strickler's prepared statement follows:]

Prepared Statement of Kris Strickler, Director, Oregon Department of
Transportation, on behalf of the American Association of State Highway
and Transportation Officials (AASHTO)
Introduction
Chair Crawford, Ranking Member Norton, and Members of the
Subcommittee, thank you for the opportunity to appear today at this
important hearing on the federal Highway Trust Fund (HTF).
My name is Kris Strickler, and I serve as Director of the Oregon
Department of Transportation (ODOT) and on the Board of Directors of
the American Association of State Highway and Transportation Officials
(AASHTO). Today, it is my honor to testify on behalf of AASHTO, which
represents the state departments of transportation (state DOTs) of all
50 states, the District of Columbia, and Puerto Rico.
I would like to extend AASHTO and ODOT's utmost gratitude to you
and your colleagues on the House Transportation and Infrastructure
Subcommittee on Highways and Transit (the Subcommittee) for your
dedicated and tireless leadership on surface transportation policy that
ultimately led to the enactment of the Infrastructure Investment and
Jobs Act (IIJA). Stable and long-term policy and funding provided
through a robust multi-year federal surface transportation bill remains
crucial to the work of every single state DOT to meet its goal of
improving safety, mobility, and access for everyone, which is
articulated in AASHTO's 2021-2026 Strategic Plan \1\.
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\1\ 2021-2026 AASHTO Strategic Plan: https://www.aashtoplan.com/
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At ODOT, our mission is to provide a safe and reliable
transportation system that connects people and helps Oregon's
communities and economy thrive. ODOT's 4,700 employees work every day
to achieve this mission. Our priorities are to provide a modern
transportation system, advance equity, and secure sufficient and
reliable funding to accomplish these goals. This third goal aligns well
with the subject of today's hearing. Today I will focus my testimony on
the challenges that ODOT and all transportation agencies face as we see
the HTF running on empty while state and local funding from the gas tax
fades as well.
Today's hearing is an example of Congress' important oversight
responsibility. This Subcommittee understands the foundational role the
HTF plays in addressing this nation's transportation investment needs.
As the owners and operators of transportation infrastructure in every
corner of the country, AASHTO and the state DOTs appreciate the
opportunity to offer our perspective on this vital issue.
Importance of the Highway Trust Fund
In 1956, Congress created the HTF as part of the Highway Revenue
Act of that year. It serves today as the primary mechanism by which the
federal government provides resources to states, local governments, and
transit agencies for highway and transit investments. The sources of
revenue into the HTF fall into two separate categories--motor vehicle
fuel taxes on gasoline (18.4 cents per gallon) and diesel (24.4 cents
per gallon) and various fees related to heavy truck use. Motor fuel
taxes account for the vast majority of revenue into the HTF, at
approximately 90 percent of HTF receipts. Other revenues (not based on
motor fuel consumption) account for only about 10 percent of HTF
receipts.
The HTF has several key policy features from its inception 67 years
ago. It is based upon the important ``user pays'' principle, which
ensures federal highway users pay for the roads. It also ensures these
user fees are used for transportation purposes--as regularly defined
and updated by Congress--through the application of ``budgetary
firewalls'' that prevent the diversion of revenues to non-
transportation activities. The historical predictability and
reliability of annual HTF revenues supporting multiyear capital
investments has enabled this federal surface transportation funding
program to serve as the ideal means for supporting state DOTs, local
governments, and transit agencies throughout the country.
Resources from the HTF are provided in the form of contract
authority, a unique federal budgeting mechanism that allows for the
obligation of funds without the need for an annual appropriation.
Instead, the appropriations process provides the authority to liquidate
(i.e., pay) these obligations.
Federal surface transportation authorization legislation provides
contract authority on a multiyear basis, with the IIJA providing it for
five years from fiscal year 2022 through FY 2026. Providing annual
contract authority levels at the beginning of the five-year
authorization timeline allows state DOTs to plan and manage their
program of transportation projects, giving them the much-needed
certainty and stability to effectively and efficiently fund
transportation investments.
While the HTF provided stable, reliable, and substantial highway
and transit funding for decades, this is no longer the case. Since
2008, the HTF has been sustained through a series of General Fund
transfers. With the transfer of $118 billion into the HTF to pay for
the IIJA, the total amount transferred now stands at over $275 billion.
While state DOTs are grateful for past efforts to supplement the HTF
with general fund transfers, this is not a viable long-term solution
upon expiration of the IIJA and it leaves states uncertain about how to
plan for projects just three years from now.
According to the May 2023 Congressional Budget Office (CBO)
baseline, annual HTF spending is estimated to exceed receipts by about
$24 billion in FY 2028. If Congress were to reauthorize federal
transportation programs for five years after the expiration of the IIJA
just to maintain current investment levels from HTF adjusted for
inflation, CBO estimates the gap between revenue into the HTF and
expenditures from it would be roughly a staggering $150 billion.
The funding provided from the IIJA continues to play a critical
role in allowing every state and community across the country to
address their immediate and longstanding transportation needs. State
DOTs and their partners in the transportation industry do everything in
their power to deliver needed priority projects as quickly as possible,
but due to the nature of large capital programs, many of the projects
take several years to complete. We cannot emphasize enough the need for
stable and predictable funding from the HTF that makes it possible for
state DOTs to plan for large projects that need a reliable flow of
funding over multiple years. These projects are what connect people,
enhance quality of life, and stimulate economic growth in each
community where they are built.
In Oregon, multiyear federal surface transportation authorization
bills have allowed us to address a wide variety of surface
transportation needs across the state. Federal funding is helping us
invest in projects that address key safety issues on our highway
system, like the new roundabout we recently opened at the intersection
of OR-213 and Toliver Road near the city of Molalla. Prior to this
project, this section of highway was among the most dangerous in the
state with dozens of injury crashes occurring over a recent ten-year
period. Federal funds have allowed us to construct a proven solution
that will significantly reduce speeds and serious crashes.
We also rely on federal funding for the basic preservation of our
transportation system. Indeed, federal funds help us preserve the good
state of repair of rural highways and interstates alike. Repaving I-105
in Eugene is a recent example of the sort of nuts-and-bolts
preservation work for which we rely on federal funding. Similarly, we
are currently working to repave OR-99E in Canby. This project will not
only resurface the roadway, but it will also add features to help
residents get around more safely when biking, walking taking transit or
using mobility devices.
Federal funds also help us make our transportation system more
resilient to natural disasters and the impacts of extreme weather
events. We are currently designing a project on OR-58 in the Cascade
Range that will address loose talus slopes above the Salt Creek Tunnel.
In the event of an earthquake, this unstable slope could fail,
potentially blocking this key lifeline highway and trapping motorists
inside the tunnel.
ODOT works with rural communities around the state that rely on
federal formula dollars from the Federal Transit Administration to help
move citizens--particularly seniors for whom transit service is
critical to being able to age in place while accessing medical care.
Transit agencies in our larger cities are similarly reliant on federal
transit dollars to help workers access jobs. Whether it's a new
sidewalk or protected bike lane, a new bridge or simply a nice smooth
section of new asphalt, it's clear that a strong federal-state
partnership is critical to getting this important work done.
The Impact of Inflation on the Purchasing Power of the
Highway Trust Fund
The purchasing power of HTF revenues has declined substantially
over the years. Federal fuel taxes are flat, per-gallon excise taxes
that have not been adjusted since 1993 and have, therefore, lost more
than half of their value over the last 30 years. The loss of this
purchasing power is especially stark when compared to the cost of other
basic goods and services during the same period.

Table 1: Sample of Nominal Price Changes Relative to Federal Gas Tax
----------------------------------------------------------------------------------------------------------------
Percent
Item Desciption 1993 2022 Change
----------------------------------------------------------------------------------------------------------------
College Tuition.............................. Average Tuition for In-State $ 1,908 $ 10,940 463%
Student at 4-year Public
University.
House........................................ Median Home Price Q4........... $ 118,000 $ 479,500 306%
Healthcare................................... National Expenditure Per Capita $ 3,402 $ 12,914 280%
Gas.......................................... Per Gallon..................... $ 1.08 $ 4.06 276%
Movie Ticket................................. Average Ticket Price........... $ 4.14 $ 10.53 154%
Bread........................................ Per Pound of White Bread....... $ 0.75 $ 1.87 149%
Beef......................................... Per Pound of Ground Beef....... $ 1.97 $ 4.84 146%
Income....................................... National Median Household...... $ 31,241 $ 74,580 139%
Stamp........................................ One First-Class Stamp.......... $ 0.29 $ 0.60 107%
Electricity.................................. Per kWh........................ $ 0.09 $ 0.17 82%
8Federal Gas Tax............................. Per Gallon..................... $ 0.18 $ 0.18 0%0
----------------------------------------------------------------------------------------------------------------
Sources: Federal Reserve Bank of St. Louis, US Bureau of Labor Statistics, US Census Bureau, Centers for
Medicare & Medicaid Services College Data, US Energy Information Administration, National Association of
Theatre Owners, US Postal Service

Options for Addressing the Future Highway Trust Fund Funding Gap
Should Congress wish to address the HTF revenue gap, which AASHTO
would strongly urge you to do, there is no shortage of technically
feasible tax and user fee options that Congress could consider to
provide additional HTF receipts. Three broad categories of revenue for
the HTF exist:
Raising the rate of taxation or fee rates of existing
federal revenue streams into the HTF: Examples include motor fuel taxes
on gasoline and diesel (including indexing), user fee on heavy
vehicles, and sales tax on trucks, trailers, and truck tires;
Identifying and creating new federal revenue sources for
the HTF, and;
Redirecting current revenues (and possibly increasing the
rates) from other federal sources into the HTF: Examples include
customs duties, income taxes, and other revenues from the general fund.

The following is a matrix that demonstrates the breadth of
potential HTF revenue mechanisms, including a column that shows an
illustrative rate or percentage increase and the associated revenue
yield estimated.

Matrix of Illustrative Surface Transportation Revenue Options
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

\*\ Assumed yield in 2018 or the latest year data is available.

State Innovations To Address Transportation Funding Shortages
Just as the HTF relies primarily on the fuels tax, states have long
derived a large portion of their road funding from the gas tax.
However, the gas tax continues to be eroded due to inflation along with
the growing use of fuel-efficient vehicles. In Oregon, we project our
fuel tax revenue will peak next year and decline every year after that.
With this handwriting on the wall, states have been working to bridge
this ever-widening funding gap.
Since 2016, over two-thirds of all states and the District of
Columbia have enacted legislation to increase their transportation
revenues. These actions have included raising the rates of existing
transportation taxes or fees; indexing revenues so they automatically
track with inflation or rising construction costs; and establishing a
wide variety of new revenue sources. AASHTO's Transportation Governance
and Finance report (3rd edition), published in 2022, found over 100
sources of revenue in place at the state level just to support roads
and bridges.\2\
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\2\ https://store.transportation.org/Item/PublicationDetail?ID=5029
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The federal government is a critical partner in addressing
transportation and it should be noted that federal transportation
funding does not displace or discourage state and local investment. In
fact, as evidenced by significant transportation infrastructure
investment needs, further strengthening and reaffirmation of the
federally assisted, state-implemented foundation of the national
program is even more critical now than in the past.
Road Usage Charges as an Alternative to the Gasoline Tax
As the revenue yield from fuel taxes has decreased, interest has
grown in the potential of a user-pays approach that charges people
based on how many miles they drive rather than how much fuel they buy.
This modernization would unlink transportation revenues from fuel
consumption and instead would link revenue to the use and travel on the
transportation system. Many terms are used for this type of user-pays
system including a vehicle miles traveled (VMT) fee, a mileage-based
user fee (MBUF), and a road usage charge (RUC).
Recognizing the need for further demonstration, research, and
testing of road usage charging models, in 2015 Congress established the
Surface Transportation Systems Funding Alternatives (STSFA) program in
the Fixing America's Surface Transportation (FAST) Act. At this
juncture, 51 RUC-related pilots and studies in a number of states have
been funded through the STSFA program. In addition, multistate and
regional pilots on the East and West Coasts were completed with STSFA
support. These pilots have garnered findings and lessons learned on
topics such as reporting methods, account management, public
acceptance, interoperability, and impact on commercial vehicles, which
will help inform the future of any mileage-based system.
The IIJA continued the exploration of road usage charges through
two programs: 1) the Strategic Innovation for Revenue Collection, a 5-
year, $75 million grant program for states, local governments, and
metropolitan planning organizations to further study user-based funding
models and 2) the National Motor Vehicle Per-Mile User Fee Pilot,
providing $50 million to conduct a national RUC pilot for up to 1,000
participants in each of the 50 states, the District of Columbia, and
Puerto Rico. The establishment of the Federal System Funding
Alternative Advisory Board will provide practical state DOT
perspectives to inform the pilot.
Oregon was the first state to create a gas tax more than a century
ago, and we were once again at the forefront of road usage charging,
launching the nation's first pilot project in 2006 and the first
operational RUC program, OReGO, in 2015. The program demonstrates a new
way to fund road maintenance, preservation, and improvements.
Volunteers--no one is required to join the program--pay a per-mile
charge for the miles they drive and receive a credit for fuel taxes
paid at the pump. In 2017, the Oregon Legislature established
supplemental registration fees for hybrid and electric vehicles to
ensure highly efficient vehicles that use little or no gas contribute
their fair share for the use of the state's transportation system.
Hybrids and electric vehicles that choose to join OReGO don't have to
pay these supplemental registration fees because the OReGO system is
based on road usage rather than fuel consumption.
Concerns have been raised about the equity of road usage charges
compared to fuel taxes. The perception has been that RUC is unfair to
rural residents. States that have examined this issue have found that
while rural residents tend to drive longer distances, they use less
fuel-efficient vehicles to do so and thus pay more in gas tax--both in
total and per mile--than urban residents. Rural residents likely
wouldn't pay much more than they do under a gas tax, while urban
residents--who tend to drive more efficient vehicles--would likely pay
a little more. A RUC is a fair way to ensure that all vehicles--
including those that use little or no gas and thus pay little or no gas
tax--pay for their use of the roads.
Participant privacy is a critical component of Oregon's program.
Privacy is protected in the following ways:
ODOT never receives location data on any vehicle; we
receive aggregated and anonymized data only that tells us how many
miles each vehicle drove in the state.
Volunteers can choose a GPS-based option so they don't
have to pay for out of state miles; or, they can choose a non-GPS-based
option, in which case all miles driven are presumably driven in Oregon.
Private sector account managers--not ODOT--are
responsible for collecting the data and processing the individual
transactions.
Account managers are required by statute to destroy
personally identifiable data within 30 days of account settlement,
either payment or dispute resolution.
Law enforcement must obtain a warrant to access the data.

ODOT has also developed options for reporting miles manually and
proposed an ``opt out'' fee that could be implemented in any road usage
charge program that people are required to pay.
As the vehicle fleet becomes increasingly efficient and
electrified, Oregon is continuing to implement improvements and
enhancements to the OReGO program while also engaging the community and
conducting education campaigns to help the public understand the need
to fix the basic flaws in our revenue collection systems.
Conclusion
The current trajectory of the HTF--the backbone of the federal
transportation surface transportation program--remains unsustainable.
Given its foundational role in funding highway and transit investments
in every corner of the country, AASHTO looks forward to assisting you
and the rest of your House colleagues in finding and implementing a
viable set of revenue options for the HTF to ensure continued
investment in our future through transportation.
Thank you for the opportunity to provide testimony at this hearing.

Mr. Crawford. Well, I want to commend Mr. Strickler for his
comments. The yellow light is not working, and he was still
able to come in under time and under budget, so, thank you so
much for the that.
I would also like to extend my apologies to Representative
Hoyle for overlooking her, and thank you for your grace. And
because of the time constraint, thank you for your
understanding.
I now move to recognize Dr. Shirley for 5 minutes.

TESTIMONY OF CHAD SHIRLEY, Ph.D., PRINCIPAL ANALYST,
MICROECONOMIC STUDIES DIVISION, CONGRESSIONAL BUDGET OFFICE

Mr. Shirley. Good morning, Chairman Crawford, Ranking
Member Norton, Ranking Member Larsen, and members of the
subcommittee. Thank you for the invitation to testify. Today, I
want to focus on the outlook for the Highway Trust Fund and the
imbalances between spending and revenues for highways.
For many years now, the Federal Government has been
spending more each year from the Highway Trust Fund than the
revenues credited to the fund. Revenues come from taxes on
gasoline and diesel fuel and various taxes that apply to heavy
trucks. To cover the shortfalls, lawmakers have transferred
$275 billion to the trust fund, mostly from the Treasury's
General Fund, over the past 15 years.
Much of that was authorized 2 years ago as part of the
Infrastructure Investment and Jobs Act. With that recent
infusion, CBO projects that balances in the fund will last
until 2028. If balances in the highway account or the transit
account go to zero, the Federal Government can't make its
payments to State and local governments on a timely basis. And,
by 2033, which is the end of CBO's 10-year budget projections,
the cumulative shortfall would be $241 billion.
So, looking ahead, spending and revenues are out of
balance. Most Federal highway spending takes the form of grants
from the trust fund to State governments to build new roads or
rebuild existing ones. CBO projects highway spending from the
trust fund to grow to an average of $65 billion a year through
2033.
Increasing spending before 2028, or continuing projected
spending levels past that date, will require more revenues for
highways than the $37 billion a year expected through 2033.
Revenues ultimately come from the people who use the highway
system or taxpayers. So, one way lawmakers could increase
revenues is by charging users of the highway system more. Doing
that could help allocate resources more efficiently. Highway
users are responsible for many costs that they do not pay
fully, including wear and tear on roads and bridges; traffic
delays caused by congestion; fatalities, injuries, and property
damage from accidents; and harmful effects from greenhouse
gases and local pollutants.
One option to charge highway users more would be to
increase the existing taxes on gasoline and diesel fuel. Those
taxes haven't increased since 1993. For instance, an increase
of 15 cents per gallon would raise about $25 billion a year.
That would cover the Highway Trust Fund's projected shortfall
over the next 10 years.
Another option would be new taxes on highway use, such as
tax on vehicle-miles traveled. Each penny per mile driven by
commercial trucks, for instance, would raise about $3 billion a
year once the practical steps to implement it were in place.
Implementing a new tax like this would cost more for the
Government than raising the gas tax, and it could raise privacy
concerns if applied to personal vehicles depending on how it
was implemented.
Third option would be to raise a new tax specifically on
electric vehicles. In 2022, about 3 million electric vehicles
were on the road representing 1 percent of the stock of cars
and trucks. Even with substantial growth projected in EV sales,
the stock of vehicles turns over slowly. A $100 annual fee on
EVs would raise an average of $2 billion a year over the next
10 years.
Lawmakers could also increase revenues for highways by
continuing to make transfers from the General Fund or to spend
directly from it. That spreads highway costs more broadly
across taxpayers. Transfers financed by more Federal borrowing
would increase Federal deficits. Using borrowed funds would
boost GDP at first, but it would also reduce the amount of
money available for private investment, dampening GDP in later
years.
Last, let me say a few words about financing. The Federal
Government also subsidizes the financing of highway spending by
State and local governments through tax-preferred bonds, direct
loans and loan guarantees like TIFIA, and funds used to
capitalize State infrastructure banks. State and local
governments used $23 billion in today's dollars for federally
subsidized borrowing for highway spending each year on average
from 2007 to 2016. Tax-exempt bonds accounted for about three-
quarters of that total.
Financing allows State and local governments to pay for
highways over a period that more closely matches the useful
life of that infrastructure. Financing can be particularly
attractive when a government does not have funds available for
desired investment. However, financing is not a source of
revenues. It is a means of making future revenues available
sooner.
Let me stop there, and I will be happy to answer any
questions.
[Mr. Shirley's prepared statement follows:]

Prepared Statement of Chad Shirley, Ph.D., Principal Analyst,
Microeconomic Studies Division, Congressional Budget Office
The Status of the Highway Trust Fund: 2023 Update
Chairman Crawford, Ranking Member Norton, and Members of the
Subcommittee, thank you for inviting me to today's hearing. I will
discuss the status of the Highway Trust Fund, options for highway
spending, and approaches to paying for that spending.
Summary
Federal spending on highways (or, synonymously, roads) totaled $52
billion in 2022. Most of those outlays were for grants to state and
local governments to support their spending on capital projects. (Those
governments typically spend roughly three times as much of their own
funds on highways each year, not only on capital projects but also to
operate and maintain roads.) That $52 billion also included spending
for federal programs that subsidize state and local governments'
borrowing for highway projects; other subsidies for state and local
borrowing are provided through the tax code.
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. 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 Congressional Budget Office projects that balances in both the
highway and transit accounts of the Highway Trust Fund 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 Highway Trust Fund's highway and transit accounts
from 2024 to 2033 would total $241 billion, according to CBO's May 2023
baseline budget projections.\1\
---------------------------------------------------------------------------
\1\ Congressional Budget Office, ``Details About Baseline
Projections for Selected Programs: Highway Trust Fund Accounts'' (May
2023), www.cbo.gov/publication/51300. CBO's baseline budget projections
reflect the assumption that current laws governing taxes and spending
generally do not change. Some of the taxes that are credited to the
Highway Trust Fund are scheduled to expire on September 30, 2028,
including the taxes on tires and all but 4.3 cents of the federal tax
on motor fuels. However, under the rules governing baseline
projections, CBO's estimates reflect the assumption that all the
expiring taxes credited to the fund will continue to be collected after
fiscal year 2028.
---------------------------------------------------------------------------
The current authorization for federal highway programs expires on
September 30, 2026. As policymakers consider future reauthorization,
they have many decisions to make about federal highway programs,
including how much to spend on them, how to direct that spending, and
how to pay for those programs.
Federal Spending for Highways
As a share of total economic output, federal spending for highways
has been relatively stable for several decades. Almost all federal
spending is for capital projects rather than for operation and
maintenance and is restricted to federal-aid highways, which consist of
the Interstate Highway System and most other roads that are not local
roads. Federal highway funds are distributed to states on the basis of
formulas that depend on how much states received in earlier years, so
federal spending does not necessarily go to the projects that would
produce the greatest net benefits.
Lawmakers have many options for determining the amount of money
spent on highways, including these:
Maintain the current conditions and performance of the
highway system. Under the Federal Highway Administration's (FHWA's)
scenario in which federal-aid highways' conditions and performance are
maintained at their 2016 levels, an annual average of $61 billion per
year in federal spending would be needed over the 2024-2033 period, CBO
estimates. That amount is $4 billion less than the average annual
spending in CBO's 10-year baseline projections.

Fund all projects for which the expected benefits meet or
exceed the costs. Under FHWA's scenario in which projects are funded
according to that criterion, an average of $99 billion per year in
federal spending would be needed over the 2024-2033 period, CBO
estimates. That estimate, which reflects the assumption that state and
local governments increased their spending for federal-aid highways
proportionally, is about $34 billion more than the average annual
amount in CBO's 10-year baseline projections.
Revenues Credited to the Highway Trust Fund
The Highway Trust Fund has two accounts--one for highways and the
other for mass transit--to which certain fuel and other vehicle-related
excise tax collections are credited. In CBO's May 2023 baseline
projections, revenues credited to the Highway Trust Fund in 2024 total
$47 billion, and outlays from the fund in that year exceed those
revenues by about $18 billion.
Policymakers have a number of options to increase the resources
available in the Highway Trust Fund:
Increase the existing fuel taxes. The tax on gasoline has
been 18.4 cents per gallon, and the tax on diesel fuel 24.4 cents per
gallon, since October 1993. Increasing those taxes by 15 cents per
gallon in January 2024 would raise $250 billion more in revenues for
the Highway Trust Fund over the 2024-2033 period than projected in
CBO's May baseline. An increase of that amount would eliminate the
fund's shortfall. However, the increase in fuel taxes would reduce
taxable business and individual income, resulting in $62 billion of
reductions in income and payroll tax receipts that would partially
offset the increase in fuel tax receipts.

Institute new taxes or fees. Policymakers could institute
new taxes or fees, such as taxes on vehicle miles traveled (VMT) or a
tax or fee on electric vehicles (EVs). One option would be to impose a
VMT tax on commercial trucks. CBO has estimated, using data from 2022,
that if such a tax was applied to all commercial trucks on all roads
and all the practical steps necessary to implement it were taken, each
cent of the tax would generate $3 billion per year. The federal
government's costs of implementing such a tax and ensuring compliance
could, however, be substantial. Another option, an annual tax on EVs,
would probably not have a substantial effect on the trust fund's
shortfall over the next 10 years because such vehicles are projected to
make up a relatively small portion of the total stock of vehicles.

Transfer money from the Treasury's general fund. Under
this option, the federal government would, in effect, pay for a portion
of highway spending in the same way that it funds other programs and
activities.
Status of the Highway Trust Fund
The federal government pays for most surface transportation
programs through the accounting mechanisms of the Highway Trust Fund's
two separate accounts--one for highways and one for mass transit. The
trust fund records specific cash inflows from revenues collected
through excise taxes on the sale of motor fuels, trucks and trailers,
and truck tires; taxes on the use of certain kinds of vehicles; and
interest credited to the fund. The Highway Trust Fund records cash
outflows for spending on designated highway and mass transit programs,
mostly in the form of grants to states and local governments.
In 2022, $48 billion in revenues and interest were credited to the
Highway Trust Fund; of that amount, $42 billion went to the highway
account and the remaining $6 billion to the transit account. Most of
those revenues came from taxes on gasoline and other motor fuels.
According to CBO's May baseline projections, if the excise taxes
were continued at their current rates and current funding for highway
and transit programs increased annually at the rate of inflation, the
revenues and accumulated balances of each of the Highway Trust Fund's
two accounts would be insufficient to cover spending from the
respective accounts starting in 2028 (see Figure 1). That year, in
CBO's projections, revenues and interest credited to the Highway Trust
Fund total $43 billion, and outlays exceed revenues and interest
earnings by about $39 billion.

Figure 1
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

Data source: Congressional Budget Office. See www.cbo.gov/publication/
59634#data.

Cash inflows to the Highway Trust Fund's accounts include tax
receipts, interest, intragovernmental transfers, and amounts
transferred between the highway account and the transit account, which
are known as flexed balances.

Some of the taxes that are credited to the Highway Trust Fund are
scheduled to expire on September 30, 2028, including the taxes on tires
and all but 4.3 cents of the federal tax on motor fuels. However, under
the rules governing baseline projections in the Balanced Budget and
Emergency Deficit Control Act of 1985, these estimates reflect the
assumption that all the expiring taxes credited to the fund will
continue to be collected after fiscal year 2028.

Under current law, the balances of the Highway Trust Fund cannot fall
below zero. However, to accord with the rules governing such
projections, CBO's baseline for surface transportation spending
reflects the assumption that obligations presented to the Highway Trust
Fund will be paid in full.

To cover the shortfalls recorded in the fund's accounts, lawmakers
have enacted legislation that since 2008 has transferred $275 billion--
mostly from the Treasury's general fund--to the Highway Trust Fund.
That total includes $118 billion that lawmakers transferred from the
general fund through the Infrastructure Investment and Jobs Act (IIJA,
Public Law 117-58)--$90 billion to the highway account and $28 billion
to the transit account.
Spending for Highways
Almost all spending on highway infrastructure in the United States
is funded publicly. Although the private sector participates in
building, operating, and maintaining projects, the federal government
and state and local governments typically determine which projects to
undertake and how much to spend on them.
In 2022, the federal government spent $52 billion on highways--an
amount equal to 0.21 percent of gross domestic product (GDP). Such
spending's share of total economic output has, in general, been stable
over the past few decades, though it is only half as large as it was in
the 1960s, when construction of the Interstate Highway System expanded
(see Figure 2).

Figure 2
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

Data source: Congressional Budget Office, using data from the Bureau
of Economic Analysis, the Census Bureau, and the Office of Management
and Budget. See www.cbo.gov/publication/59634#data.

State and local governments spent more than three times as much as
the federal government on highways in 2022--$180 billion, or 0.71
percent of GDP. Like federal spending on highways, state and local
governments' spending as a share of GDP peaked in the 1950s and 1960s,
when it accounted for about twice the share it has in recent years.
Characteristics of Federal Funding for Highways
Two characteristics of the ways that the federal government
typically spends on highways stand out. First, most federal highway
funding takes the form of grants to state and local governments, which
have broad discretion (with some constraints) in how they spend those
federal funds. Second, federal spending on highways is almost entirely
dedicated to capital projects that are intended to expand or
rehabilitate eligible federal-aid highways.
In 2022, most of the $52 billion that the federal government spent
on highways took the form of grants to state and local governments,
which own almost all highways. Federal agencies own less than 1 percent
of public roads (typically, those in national parks and forests, on
tribal lands, or on other federally owned land).
In general, state and local governments decide which projects to
undertake and, as construction proceeds, receive reimbursements from
the federal government for projects that meet federal eligibility
criteria for various programs. Most federal highway programs set a cap
on the portion of a project's total costs that a federal grant may
cover--typically 80 percent. State and local governments must cover the
remaining costs with nonfederal funds, such as tax revenues or proceeds
from issuing municipal bonds.
In 2022, $50 billion (or 96 percent) of federal spending for
highways went to capital investment (see Figure 3). That spending
includes outlays for the purchase of structures (such as new highways
and bridges) and equipment as well as expenditures that improve or
rehabilitate structures and equipment already in place. Such an
allocation between capital and operation and maintenance has been
typical of federal spending for highways since the 1950s.

Figure 3
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

Data source: Congressional Budget Office. See www.cbo.gov/publication/
59634#data.

Because the federal government does not generally own highways, the
responsibility to operate and maintain them falls to state and local
governments. Spending patterns reflect that: Operation and maintenance
accounted for 57 percent of state and local governments' spending on
highways, net of federal grants, in 2022. Operation and maintenance
costs include the costs of providing necessary operating services (such
as snow removal) and maintaining and repairing existing capital (such
as filling potholes) as well as the costs of funding other highway-
related programs (such as education about highway safety).
Unless additional funds are provided to the Highway Trust Fund
(either through an increase in revenues credited to the fund or through
additional transfers from general revenues), CBO estimates that,
starting in 2028, balances in the highway account of the trust fund
will fall to zero, and the Department of Transportation will be unable
to reimburse states in a timely fashion for the bills presented to the
fund. (The department may choose to more closely manage the timing of
reimbursements to states before balances reach zero. In the past, it
has, for example, considered partially reimbursing states to align
total reimbursements with semimonthly receipts.) The possibility of
delays in payments from the federal government increases uncertainty
among states when they plan transportation projects.
Federal Funding for Highways
The most recent authorization for highway spending--the Surface
Transportation Reauthorization Act (division A of the IIJA), which
became law in 2021--provided $383 billion in contract authority (a form
of mandatory budget authority) for a variety of transportation programs
(primarily highway and transit programs) over the 2022-2026 period.\2\
In addition to the funding provided through the Highway Trust Fund,
division J of the IIJA provided $71 billion for highways and transit in
discretionary appropriations from the general fund.
---------------------------------------------------------------------------
\2\ Congressional Budget Office, ``Senate Amendment 2137 to H.R.
3684, the Infrastructure Investment and Jobs Act, as Proposed on August
1, 2021'' (August 5, 2021, revised August 9, 2021), www.cbo.gov/
publication/57406. Budget authority, or funding, is the authority
provided by federal law to incur financial obligations that will result
in immediate or future outlays of federal funds.
---------------------------------------------------------------------------
Options for Determining Total Annual Spending Amounts
To construct its baseline projections for spending on highways from
the Highway Trust Fund, CBO starts with the funding provided in the
most recent appropriation law and adjusts that amount to reflect a
combination of the projected changes in the GDP price index and in the
employment cost index. However, lawmakers could choose to set annual
spending amounts for highway programs on the basis of different
criteria. CBO analyzed two options that the Congress could pursue.
Set Spending to Maintain Current Highway Conditions and
Performance. Under FHWA's scenario in which federal-aid highways'
conditions and performance--namely, pavement quality, bridge
conditions, and travel delays--are maintained at their 2016 levels, an
annual average of $61 billion in federal spending would be needed over
the 2024-2033 period, CBO estimates.\3\ That amount would average 0.18
percent of GDP annually in those years--14 percent less than the share
of GDP that spending for highway capital accounted for in 2022.
---------------------------------------------------------------------------
\3\ Federal Highway Administration and Federal Transit
Administration, Status of the Nation's Highways, Bridges, and Transit:
Conditions and Performance, 24th ed. (2021), www.fhwa.dot.gov/policy/
24cpr/. The $61 billion estimate is based on the sum of the $54.7
billion (in 2016 dollars) reported in Exhibit 10-2 of the agencies'
report for investments modeled in FHWA's Highway Economic Requirements
System (HERS) and the $14.3 billion (in 2016 dollars) reported in
Exhibit 10-15 for investments modeled in the National Bridge Investment
Analysis System (NBIAS). The resulting $69.0 billion sum for federal
and state spending was adjusted upward to $78.7 billion to account for
system enhancements not included in those models. That adjustment was
based on the HERS and NBIAS estimates accounting for 86 percent of the
total investment. To calculate total federal spending over the period
under that scenario, CBO applied an estimate of the federal
government's average share of capital spending on federal-aid highways
from 2006 to 2016--56 percent. CBO then used the GDP price index to
convert the result, which was in 2016 dollars, to nominal dollars.
---------------------------------------------------------------------------
Fund All Highway Projects for Which Benefits Exceed Costs. Funding
all projects for which benefits are expected to equal or exceed costs
would require increasing annual spending well above recent amounts and
the amounts in CBO's baseline projections. In its modeling of benefits,
FHWA includes benefits for highway users, such as reductions in travel
time, crashes, and vehicle operating costs; for government agencies,
through lower maintenance costs and longer service lives for roadways;
and for society as a whole, including reduced vehicle emissions. Under
FHWA's scenario in which federal-aid highways' conditions and
performance are improved by funding all potential projects with
benefit-cost ratios greater than or equal to 1.0, the federal portion
of the total average annual investment that would be needed over the
2024-2033 period would equal $99 billion, CBO estimates.\4\ That amount
would average 0.30 percent of GDP annually from 2024 to 2033--43
percent more than the share of GDP that spending for highway capital
accounted for in 2022.
---------------------------------------------------------------------------
\4\ Ibid. The $99 billion estimate is based on the $126.7 billion
(in 2016 dollars) in total average annual spending on federal-aid
highways such a scenario would require, as reported in Exhibit 7-6 of
that report. CBO estimates that the federal government contributed 56
percent of capital spending on federal-aid highways from 2006 to 2016.
It arrived at that estimate by comparing the federal government's share
of capital spending on federal-aid highways for the years reported in
Exhibit 2-9 of that report with total capital outlays for federal-aid
highways reported for those years in Exhibit 2-17. To convert the
federal amount over the 2024-2033 period from 2016 dollars to nominal
dollars, CBO used the GDP price index.
---------------------------------------------------------------------------
State and local governments would also have to increase spending on
federal-aid highways to achieve the total level of investment modeled
in the FHWA analysis. If those funds were spent only on projects whose
benefits were estimated by FHWA to meet or exceed costs, the share of
total vehicle miles traveled on federal-aid highways whose pavement was
rated good or fair (as opposed to poor) would increase from 86 percent
to 94 percent, and average travel delays per vehicle would be cut by
about 2 hours annually.\5\
---------------------------------------------------------------------------
\5\ Ibid., Exhibits 10-4 and 10-5.
---------------------------------------------------------------------------
Estimates of net benefits produced by benefit-cost analyses are
uncertain, however. Such analyses rely on judgments about a variety of
factors, including the value of benefits that are difficult to measure
(such as the value of travelers' time and of vehicle maintenance costs
avoided), the appropriate interest rate to use to discount future costs
and benefits to present values, and how highways will be used in the
future (for example, the number of vehicle miles traveled by passenger
vehicles and trucks).
Revenues Credited to the Highway Trust Fund
The federal government collects revenues for the Highway Trust Fund
primarily from taxes on motor fuels. Lawmakers could increase revenues
by raising those taxes or by instituting new ones.
Sources of Revenues
Of the revenues credited to the Highway Trust Fund in 2022, $40
billion (or 83 percent) stemmed from excise taxes on gasoline, diesel,
and other motor fuels (see Figure 4). Receipts from the tax of 18.4
cents per gallon on gasoline and ethanol-blended fuel contributed the
largest amount--$28 billion, or nearly 60 percent of the fund's
revenues. Receipts from the tax of 24.4 cents per gallon on diesel and
other fuels totaled $12 billion, or about one-quarter of the fund's
revenues. The taxes on gasoline and diesel fuel have been in place
since 1993, and the rates have not been adjusted since then. Most of
the per-gallon federal taxes on motor fuels are scheduled to expire on
September 30, 2028; after that date, the federal tax on motor fuels
would be only 4.3 cents per gallon.\6\
---------------------------------------------------------------------------
\6\ In accordance with the rules governing baseline projections
specified in the Balanced Budget and Emergency Deficit Control Act of
1985, CBO's baseline for surface transportation revenue reflects the
assumption that all the expiring taxes credited to the Highway Trust
Fund will continue to be collected after fiscal year 2028.
---------------------------------------------------------------------------

Figure 4
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

Data source: Congressional Budget Office, using data from the Federal
Highway Administration and the Internal Revenue Service. See
www.cbo.gov/publication/59634#data.

\a\ Includes interest income and civil penalties and fines. Excludes
intragovernmental transfers.

If those taxes were extended at their current rates, revenues from
gasoline and diesel taxes would decline at a rate of about 1 percent
per year over the next 10 years, CBO projects. Factors contributing to
that projected decline include the rising fuel economy of vehicles and
the slow rate of growth of the total number of miles traveled by
vehicles.
Not all the receipts from the excise taxes on motor fuels are
dedicated to highway spending. A portion of those receipts--2.86 cents
per gallon, which amounted to about $6 billion in 2022--goes to the
transit account of the Highway Trust Fund. In addition, 0.1 cent per
gallon goes to the Environmental Protection Agency's Leaking
Underground Storage Tank Trust Fund, which supports programs run by
state and local governments that prevent and clean up leaks from
underground petroleum storage tanks.
Revenues from three other taxes, which are specific to heavy
vehicles, are also credited to the Highway Trust Fund. The excise tax
on trucks and trailers--equal to 12 percent of the sales price of
tractors, trucks, and trailers that exceed a specified weight--
accounted for 10 percent of the trust fund's revenues in 2022. A tax on
the use of heavy vehicles (a $100 to $550 annual tax on trucks over
55,000 pounds) and an excise tax on certain tires for heavy trucks
contributed smaller amounts to the fund.
In addition to those taxes, various fees and interest on invested
balances are credited to the trust fund.
Options for Increasing Revenues
The options to increase resources available in the Highway Trust
Fund include increasing existing taxes, instituting new taxes or fees,
or making general fund transfers.
Increase Existing Fuel Taxes. CBO analyzed an option that would
increase federal excise tax rates on gasoline and diesel fuel by 15
cents per gallon.
According to estimates by the staff of the Joint Committee on
Taxation (JCT), increasing the tax rates on fuel by 15 cents in January
2024 would increase revenues to the Highway Trust Fund by $19 billion
in the remainder of fiscal year 2024 and by $27 billion in 2025. Over
the 2024-2033 period, cumulative fuel-tax receipts credited to the
Highway Trust Fund would exceed the amount in CBO's May baseline
projections by $250 billion. An increase of that amount would eliminate
the projected cumulative shortfall in the Highway Trust Fund and
provide an additional $9 billion in revenues to the fund by 2033.
Interest payments on any accumulated balances would further increase
the resources available in the trust fund.
However, that increase in fuel taxes would reduce other federal
income and payroll tax receipts by decreasing taxable business and
individual income. As a result, the net budgetary effects would be
smaller: deficit reductions totaling $188 billion over the 2024-2033
period.
Institute New Taxes or Fees. Another option is to impose new taxes
or fees that better align what people pay for using roads with the cost
of building those roads. The most recent national study of how
different types of vehicles contribute to the highway costs that
federal programs pay for was published by FHWA in 2000. Passenger
vehicles constituted the largest group of vehicles in use and were
estimated to account for about 60 percent of federal highway costs in
2000, even though their estimated cost per mile of highway use was, at
0.8 cents, the lowest of all vehicles.
Costs attributed to trucks accounted for the remaining 40 percent
of federal highway costs, but trucks provided about one-third of the
Highway Trust Fund's revenues. For each mile they traveled in 2000,
combination trucks (that is, tractors pulling one or more trailers)
were estimated to impose a cost of 8.4 cents. For all trucks, the
estimated cost per mile traveled ranged from 2.2 cents for the trucks
carrying the lightest loads to 20.3 cents for those with the heaviest
loads.\7\
---------------------------------------------------------------------------
\7\ Federal Highway Administration, Addendum to the 1997 Federal
Highway Cost Allocation Study Final Report (May 2000), Tables 4 and 6,
www.fhwa.dot.gov/policy/hcas/addendum.cfm.
---------------------------------------------------------------------------
More recently, some states have calculated cost shares for
different types of vehicles that are similar to the estimates in the
FHWA study. In 2019, Oregon estimated that light vehicles (mainly cars
and other passenger vehicles) would account for about two-thirds of
state highway costs in 2020 and heavy vehicles for about one-third.\8\
As the Oregon report noted, however, highway spending by state
governments includes maintenance costs, such as snow removal and
pothole patching, whereas federal spending does not.
---------------------------------------------------------------------------
\8\ Oregon Department of Administrative Services, Office of
Economic Analysis, Highway Cost Allocation Study, 2019-2021 Biennium
(prepared by ECONorthwest, 2019), www.oregon.gov/das/oea/pages/
hcas.aspx.
---------------------------------------------------------------------------
In recent years, revenues credited to the Highway Trust Fund have
declined. Because of improvements in vehicles' fuel efficiency, drivers
use less fuel and therefore pay less in fuel taxes to travel the same
distance. To ensure that any new taxes that were implemented reached
revenue targets and addressed highway users' equity and privacy
concerns, policymakers would have to make a number of decisions about
how to design and implement those taxes.
Impose a VMT Tax. Instituting a tax on vehicle miles traveled would
charge all vehicles for their highway use regardless of the vehicle's
fuel efficiency or energy source. Such a tax could help allocate
resources efficiently by making users pay for the costs they impose.
However, it would present several challenges. A VMT tax would be more
costly to administer than the current excise taxes on fuels. In
addition, such a tax would raise privacy concerns if calculating and
collecting the tax required the government to track people's movement
and use of vehicles. Apart from those challenges, a VMT tax would have
implications for equity that are similar to those of fuel taxes--
namely, the burden, relative to income, would be greatest for lower-
income households because the money paid in taxes for highway use would
constitute a larger share of their total income than of higher-income
households' total income.
Limiting a VMT tax to only commercial trucks would raise fewer of
those concerns. Because many trucking companies already track their
vehicles, implementing a VMT tax on only commercial trucks would
require overcoming fewer administrative and privacy hurdles than
implementing such a tax on all vehicles would.
To establish a truck VMT tax, lawmakers would have to consider
three sets of questions:
Which types of trucks would be subject to the tax? On
which roads would travel be subject to the tax?
What would the rates be for different types of trucks and
for different roads?
How would the tax be assessed? And how would payments be
made?

Establishing and operating a program to collect a VMT tax on
commercial trucks would entail not only costs to set up the program,
including capital costs for new equipment, but also ongoing
administrative and enforcement costs that are likely to be higher than
the costs to administer fuel taxes. Whereas gasoline and diesel taxes
can be administered at low cost because they are collected from a small
number of firms, a VMT tax would be collected from truck owners and
thus would have a larger share of its gross revenues offset by
implementation costs.\9\
---------------------------------------------------------------------------
\9\ Gasoline and diesel taxes are assessed at roughly 1,300 fuel
distribution terminals nationwide, and the number of distinct firms
operating those terminals is much smaller. Internal Revenue Service,
``Terminal Control Number (TCN)/Terminal Locations Directory''
(accessed October 10, 2023), https://go.usa.gov/xV5PB.
---------------------------------------------------------------------------
In a 2019 analysis, CBO considered the effects on revenues of
several possible formulations of a VMT tax on commercial vehicles.\10\
One example, updated for 2022 truck traffic volumes, suggests that if a
tax of 5 cents per mile traveled by trucks had been in place in 2022,
it would have generated between $5 billion and $15 billion in revenues
that year, depending on the types of trucks and roads that the tax
applied to. If a per-mile tax had been applied to all commercial trucks
(including box trucks and large pickup trucks) on all roads, each
additional cent of tax would have generated $3 billion that year. If,
instead, the tax had been applied only to combination trucks, it would
have generated less than that amount. Similarly, if the tax had been
applied only to travel on Interstates or on Interstates and arterial
roads, receipts would have been smaller (see Table 1).
---------------------------------------------------------------------------
\10\ Congressional Budget Office, Issues and Options for a Tax on
Vehicle Miles Traveled by Commercial Trucks (October 2019),
www.cbo.gov/publication/55688.
---------------------------------------------------------------------------

Table 1

Estimated Annual Revenues From a VMT Tax of 5 Cents per Mile If One Had
Been in Place in 2022
[Billions of dollars]
------------------------------------------------------------------------
All Combination
trucks trucks \\
------------------------------------------------------------------------
All roads................................. 14.6 8.7
Interstates and arterial roads............ 11.5 7.6
Interstates............................... 6.4 4.9
------------------------------------------------------------------------
Data source: Congressional Budget Office. See www.cbo.gov/publication/
59634#data.
VMT = vehicle miles traveled.
\\ Tractors pulling one or more trailers.

Those estimated revenues do not account for the reductions in
receipts from income and payroll taxes that would result from the VMT
tax. When estimating the effects of legislative proposals that would
raise excise tax revenues, CBO and JCT apply an offset--a calculated
value to account for those reductions--that varies over time, depending
on tax rates and economic projections. In calendar year 2023, the
offset is 24 percent.\11\
---------------------------------------------------------------------------
\11\ Joint Committee on Taxation, Income and Payroll Tax Offsets to
Changes in Excise Tax Revenues for 2023-2033, JCX-2-23 (February 22,
2023), www.jct.gov/publications/2023/jcx-2-23/.
---------------------------------------------------------------------------
Institute a Tax or Fee on Electric Vehicles. Under current law,
drivers of electric vehicles pay little or no federal or state fuel
taxes. (EVs include plug-in hybrid vehicles, which combine a gasoline
engine with a battery-powered electric motor that can be recharged by
plugging it into an external electricity source, as well as all-
electric vehicles, which run solely on battery power.) Many states have
begun charging owners of EVs an annual fee, typically in the range of
$50 to $200.
In 2022, about 3 million plug-in electric cars and light trucks
were on the road--a number that represents 1 percent of the stock of
light-duty vehicles.\12\ (EVs are expected to make up a growing share
of light-duty vehicle sales in coming years, but the stock of vehicles
is replaced slowly--the average age of passenger vehicles driven in the
United States is 12 years.) If in 2022 the federal government had
charged an annual EV fee of $100--comparable to the average amount that
drivers of light-duty vehicles would have paid in federal fuel taxes
that year--it would have raised about $300 million, CBO estimates,
using data from the Energy Information Administration. Even with
substantial growth in EV sales, a $100 annual EV fee would result in an
annual average of $2 billion in revenues credited to the Highway Trust
Fund over the 2024-2033 period.\13\ If owners of plug-in hybrids were
exempt from the EV tax (so that they did not have to pay both that tax
and the tax on gasoline), receipts from the tax would be smaller.
---------------------------------------------------------------------------
\12\ Energy Information Administration, Annual Energy Outlook 2023
(March 2023), Table 39, www.eia.gov/outlooks/aeo/.
\13\ For projections of EV sales and vehicle stock, see David
Austin, Modeling the Demand for Electric Vehicles and the Supply of
Charging Stations in the United States, Working Paper 2023-06
(Congressional Budget Office, September 2023), www.cbo.gov/publication/
58964.
---------------------------------------------------------------------------
CBO's estimate of revenues from a tax or fee on electric vehicles
does not account for two factors. One is that imposing such a tax would
reduce taxable business and individual income. The resulting reductions
in receipts from income and payroll taxes would not affect the Highway
Trust Fund, but in the overall budget, they would partially offset the
amount of money collected from the new tax. In addition, the estimate
does not account for the cost of the administrative and auditing
systems required to collect the tax. The development of such a
framework would take time and funding, as would the necessary outreach
to owners of electric vehicles.
Transfer General Revenues. Since 2008, lawmakers have transferred
$275 billion in revenues to the Highway Trust Fund. Most recently, in
September 2021, the IIJA authorized a transfer of $90 billion to the
highway account and a transfer of $28 billion to the transit account.
Further transfers could supplement the revenues collected from the
excise taxes dedicated to highway and transit programs. In CBO's 10-
year baseline projections, outlays from the highway account and from
the transit account exceed the accounts' respective balances and the
revenues credited to them in 2028. In the highway account, the
cumulative shortfall over the 2024-2033 period is projected to be $181
billion; in the transit account, it is projected to be $60 billion.
Continuing to use general revenues to fund federal highway spending
has two advantages. First, if taxes were increased to pay for highway
programs, the incremental costs of collection would be negligible
because income taxes and other broad-based taxes are already in place.
Second, compared with several of the other options for increasing the
amounts credited to the Highway Trust Fund, funding highways through
broad-based taxes would not impose a larger burden, relative to income,
on lower-income households.
That approach also has some disadvantages. If spending on other
programs was reduced to pay for highway programs, the benefits of
highway investments would be at least partially offset by a reduction
in the benefits that would have been provided by that other spending.
If, instead, lawmakers chose to pay for highway programs by taking on
additional debt, less money would be available for private investment;
a reduction in private investment would slow economic growth in the
long term.\14\ Finally, continuing to use general revenues to fund
highway spending further decouples that spending from the user charges
that pay for it. That decoupling not only reduces incentives to drive
less and to conserve fuel but also reduces or eliminates any gains in
fairness and efficiency that result from a system in which users pay
for the benefits they receive.
---------------------------------------------------------------------------
\14\ Congressional Budget Office, Effects of Physical
Infrastructure Spending on the Economy and the Budget Under Two
Illustrative Scenarios (August 2021), www.cbo.gov/publication/57327,
and The Macroeconomic and Budgetary Effects of Federal Investment (June
2016), www.cbo.gov/publication/51628.
---------------------------------------------------------------------------
Federal Support for State, Local, and Private Financing of Highways
In addition to providing grants from the Highway Trust Fund, the
federal government supports investment in highways by state and local
governments through several financing programs that subsidize the costs
that those governments incur when they borrow to pay for such spending.
From 2007 to 2016, the federal government subsidized an average of $23
billion (in 2023 dollars) per year of state and local governments' new
financing of highway projects through tax-preferred bonds, direct loan
and loan guarantee programs, and funds used to capitalize state
infrastructure banks.\15\ That federally subsidized financing
constituted about 20 percent of total public spending on capital over
that period. Tax-exempt bonds accounted for about three-quarters of
that borrowing.
---------------------------------------------------------------------------
\15\ Congressional Budget Office, Federal Support for Financing
State and Local Transportation and Water Infrastructure (October 2018),
www.cbo.gov/publication/54549.
---------------------------------------------------------------------------
In the case of tax-exempt bonds, federal support takes the form of
forgone federal tax revenues. But other mechanisms for providing that
support appear as spending in the federal budget, including direct-pay
tax credit bonds and direct federal credit programs such as the
Transportation Infrastructure Finance and Innovation Act (TIFIA)
program. TIFIA provides credit assistance to state and local
governments that is primarily for highway and mass transit
infrastructure, although it can be used for a broad range of surface
transportation projects. Spending for the TIFIA program comes out of
the Highway Trust Fund.
Financing allows state and local governments to pay for highways
and other infrastructure over a period that more closely matches the
useful life of that infrastructure. Financing can be particularly
attractive when a government does not have the resources on hand that
are required to fund a desired investment. However, financing is not a
source of revenues; it is a means of making future state and local
revenues--including taxes or tolls, or other user fees--available to
pay for projects sooner. When future revenues are committed to paying
back funds that are borrowed today, they may allow state and local
governments to avoid delays that would otherwise result from the need
to accumulate funds, but those revenues will not be available to pay
for other projects in the future.
In some instances, public entities have used public-private
partnerships to obtain financing to give them more flexibility to
pursue projects. Such partnerships may allow public entities to avoid
delays that would otherwise be involved in accumulating the necessary
public funds or to work around limits that exist on public borrowing by
state and local governments. Between 1991 and 2016, the value of such
partnership contracts for highway projects amounted to about 2 percent
of all public spending on highways.\16\ Highway partnerships have
shortened design and building phases and lowered costs, albeit not in
all cases and by small amounts, on average. Some partnerships have
resulted in bankruptcies for the private partners, canceled projects,
or unfavorable outcomes for the public partner because of poorly
written contracts or a loss of public control over the project. As with
projects paid for with other forms of financing, projects financed with
private financing are ultimately paid for with taxes or user fees.
---------------------------------------------------------------------------
\16\ Congressional Budget Office, Public-Private Partnerships for
Transportation and Water Infrastructure (January 2020), www.cbo.gov/
publication/56003.
---------------------------------------------------------------------------
__________
This testimony updates information in Congressional Budget Office,
Reauthorizing Federal Highway Programs: Issues and Options (May 2020),
www.cbo.gov/publication/56346. The testimony was prepared by Chad
Shirley with guidance from Joseph Kile and with contributions from
Nathan Musick, Robert Reese, and Joshua Shakin. In keeping with CBO's
mandate to provide objective, impartial analysis, the testimony makes
no recommendations.
Phillip L. Swagel and Jeffrey Kling reviewed the testimony, Bo
Peery edited it, and R. L. Rebach created the graphics and prepared the
text for publication. The testimony is available on CBO's website at
www.cbo.gov/publication/59634.

Mr. Crawford. Thank you, Dr. Shirley.
Mr. Davis, you are recognized.

TESTIMONY OF JEFF DAVIS, SENIOR FELLOW, ENO CENTER FOR
TRANSPORTATION

Mr. Davis. Chairman Crawford, Ranking Member Norton,
members of the subcommittee, my name is Jeff Davis. I am a
senior fellow with the Eno Center for Transportation, a
nonpartisan, nonprofit think tank founded by traffic pioneer
William Eno in 1921. I have been studying the Highway Trust
Fund since 1996, and I sat through the markups of the 1998,
2005, 2012, and 2015 surface transportation laws in this very
room.
The Highway Trust Fund was created by Congress on July 1,
1956, to reassure the House Members who had defeated the 1955
interstate bill that the taxes levied by the revised 1956
legislation would be held separately from general revenues and
would only be spent on specific highway programs, the user-pay/
user-benefit principle.
From that date and through August 31, 6 weeks ago, the
trust fund has received $1.392 trillion in user tax receipts
and interest, 83 percent of which came from motor fuel taxes,
and has paid out $1.537 trillion in outlays. This is a
cumulative user-pay deficit of $145 billion, which Congress has
met with General Fund transfers.
I have got a chart here that shows that, after the final
bailout transfers--the green columns are the bailout; the blue
are actual tax receipts and interest of users--are spent in
2028, the CBO baseline spending levels, the trust fund will run
deficits exceeding $40 billion a year.
How did we get here? Three reasons: First of all, the
average rate of increase in vehicle-miles traveled declined.
During the glory days of the interstate in the 1950s and 1960s,
VMT grew about 4.5 percent per year, doubling every 16 years.
That rate has dropped so that in the last 20 years, the average
increase is only 0.8 percent per year below inflation. VMT
increases were no longer enough to keep receipts high enough to
keep pace with inflation.
Two, Congress enacted laws mandating more fuel-efficient
vehicles. In 1976, the average passenger car on the road burned
7.2 gallons of gas for every 100 miles driven. That is now down
to 4 gallons of gas for every 100 miles. SUVs and pickup
trucks, they were 9.3 gallons per 100 miles, now they are down
to 5.6. It basically was a feature of Federal energy and
environmental policy to reduce the number of gallons used, but
it was still a feature of Federal transportation policy to base
transportation spending on the number of gallons used. The
environmental and energy policy and highway policy have been at
war with themselves for decades, and the trust fund finally
paid the price.
And, three, Congress and the President have been
collectively unwilling or unable to reconcile receipt levels
with spending levels.
What to do now? Policymakers need to ask three questions in
order: The first is philosophical. Should the Federal
Government bother to retain the user-pay system for surface
transportation? From a truth in budgeting perspective, you
should either mend it or end it. Make it self-sufficient on
user charges once again, or get rid of the trust fund and turn
those flat taxes over to the General Fund, and let everyone go
line up at the appropriations window every year. But that would
mean this committee would have much less to do.
So, if you decide to keep the user-pay system and the trust
fund, then ask yourselves a strategic question: What share of
surface transportation program should users pay, and which
specific program should users pay for versus general taxpayers?
Should user tax be prioritized towards capital or operational
maintenance? Towards large multiyear projects or smaller annual
projects? Strictly to national needs or a mix of national and
local? And should the relative benefit to the user be
considered?
At the end of this process, the goal is to get to a number,
how much money you want to spend based on taxes from users. And
then once you have that number, you can ask yourself the third
question, tactical. If you keep a user-pay system, how do you
raise whatever number of revenue you are looking for from
highway users?
The gas tax isn't dead yet, but the yields are going to
drop each year, and the political appetite to raise the gas tax
is appearing to be lacking. States have taken the lead in
testing new user-pay options by testing ways to charge vehicles
by the mile traveled, a VMT fee, also called a mileage-based
user fee or a road-user charge. These are promising.
The IIJA has mandated that DOT and Treasury conduct a 50-
State pilot program to test the VMT fee at a Federal level, and
they put $50 million in money towards this. However, DOT is
almost 2 years behind schedule getting this pilot program
started. And, if Congress chose to adopt such a fee at the
Federal level, there would be significant collection costs. I
go into detail in this in my voluminous written testimony.
In the interim, if Congress does decide to keep the user-
pay system, something has to be done to ensure that electric
vehicles pay their fair share of costs incurred by their road
use.
Thank you for the opportunity to testify, and I look
forward to your questions.
[Mr. Davis' prepared statement follows:]

Prepared Statement of Jeff Davis, Senior Fellow, Eno Center for
Transportation
Chairman Crawford, Ranking Member Norton, and members of the
Subcommittee, my name is Jeff Davis and I am a Senior Fellow at the Eno
Center for Transportation, a nonpartisan think tank founded by traffic
pioneer William Phelps Eno in 1921 to carry on his work increasing the
safety and flow rate of vehicular traffic. We are a 501(c)(3) nonprofit
organization that now studies all modes of transportation up and down
the federalist chain of government. I have been studying the Highway
Trust Fund since 1996, and I sat through the markups of the 1998, 2005,
2012, and 2015 surface transportation laws in this very room.
A federal trust fund is a visibility exercise--a special account on
the receipts side of the federal budget used to segregate the proceeds
of a specific tax on a specific group so that funding can be provided
from that account for programs benefitting that specific group, or
alleviating problems caused by that group.
The Highway Trust Fund is part of the ``user-pay, user-benefit''
tax principle which has dominated state transportation funding since
the early 20th century and which was first adopted by the federal
government after World War II. Federal aviation (1970), inland waterway
(1978), and harbor maintenance (1986) programs have since been put on
the user-pay system with their own dedicated excise taxes and trust
funds. (See a full history of the user-pay system and its involvement
in transportation in Appendix B of this testimony.)
The Highway Trust Fund was created by Congress on July 1, 1956 to
reassure the House members who had defeated the 1955 Interstate highway
bill that the increased taxes levied by the revised 1956 legislation
would be held separately from general revenues and would only be spent
on specific highway programs. After Congress killed the 1972 highway
bill, the Trust Fund was opened to mass transit spending as well, at
local option, in 1973 and on a permanent by establishing a Mass Transit
Account in 1982.
From its inception on July 1, 1956, through August 31, 2023, the
Trust Fund has received $1.392 trillion in normal receipts:
$869 billion in gasoline and gasohol excise taxes;
$293 billion in diesel and special motor fuel taxes;
$114 billion in new truck, tractor and trailer sales
taxes;
$39.8 billion from the Heavy Vehicle Use Tax on heavy
trucks;
$30.6 billion from the excise tax on heavy vehicle tires;
$4.9 billion in other taxes that have since been
repealed; and
$39.8 billion in interest on balances and safety
penalties.

During that same period, the Trust Fund has paid out $1.537
trillion in outlays--$1.33 trillion from the Highway Account and $207
billion from the Mass Transit Account.\1\
---------------------------------------------------------------------------
\1\ Source: FHWA Table FE-210 in Highway Statistics 2021 for FY
1957-2021; Treasury Table TF-6 in the March 2023 Treasury Bulletin for
FY 2022; and FHWA Table FE-1 on the FHWA website for part of FY 2023.
---------------------------------------------------------------------------
$1.392 trillion in receipts minus $1.537 trillion in spending
leaves a cumulative ``user-pay'' deficit of $145 billion, which
Congress has met by providing almost $276 billion in transfers from the
General Fund and the Leaking Underground Storage Tank Trust Fund since
2008. The last tranche of bailouts was $118 billion in the bipartisan
2021 infrastructure law.

Table 1
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

The $272 billion in General Fund bailouts were all deficit spending
and, when spent out of the Trust Fund as outlays, added to the national
debt. As of last week, the Treasury was having to pay 3.875 percent in
interest on new 10-year notes and 4.125 percent interest on new 30-year
bonds to finance that ongoing deficit spending.
The Congressional Budget Office currently projects the last of
those bailouts to spend out in the middle of 2028, and the prognosis
thereafter is much worse because of the spending increases provided by
the 2021 bipartisan infrastructure law, the IIJA:

Figure 1
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

CBO projects that after 2028, at baseline (current law plus
inflation) spending levels, the Trust Fund will have a $40 billion
revenue shortfall in 2029, and that shortfall will rise steadily each
year until it reaches $46 billion per year in 2032, the last year of
the forecast.
How did this happen?
Three reasons.
How We Got Here
1. The annual rate of increase in total vehicle-miles declined
From 1950 to the late 1970s, total VMT (vehicle miles-traveled) in
the United States increased at an average of 4.5 percent per year,
keeping pace with inflation and doubling every 16 years. Slow shifts in
demographics and changes in driver behavior after the 1970s oil shocks
led to a slowdown in the rate of VMT increase, down to an average of
2.5 percent per year from 1979 to 2003. At that rate, VMT doubles every
30 years. Then, the VMT increase rate dropped significantly in the
early 2000s--from 2004 to 2019, the rate of increase only averaged 0.8
percent per year, a rate at which it would take 90 years for VMT to
double.

Figure 2
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

There was, of course, a great deal of population growth in the U.S.
after World War II, but after you control for population, VMT per
capita peaked in 2004 and, in 2019, was at a level 2.7 percent below
2004.

Figure 3
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

Over the next 30 years, the Federal Highway Administration predicts
that car/light truck/SUV VMT will increase by an average of 0.56
percent per year, single-unit heavy truck VMT will increase by an
average of 3.37 percent per year, and combination truck VMT will
increase by an average of 1.90 percent per year. Total average VMT
growth for all vehicle types is projected to be 0.73 percent per year,
a rate at which it would take VMT 99 years to double.\2\
---------------------------------------------------------------------------
\2\ Federal Highway Administration, Office of Highway Policy
Information, ``2022 FHWA Forecasts of Vehicle Miles Traveled (VMT).''
July 2022. Retrieved from https://www.fhwa.dot.gov/
policyinformation/tables/vmt/
vmt_forecast_sum.cfm#::text=FHWA%27s%20Spring%202022
%20long%2Dterm,over%20the%20next%2030%20years. on May 14, 2023.
---------------------------------------------------------------------------
2. The number of gallons of fuel used per mile driven dropped
significantly
In the aftermath of the 1973-1974 OPEC oil shock, Congress enacted
energy policies including new Corporate Average Fuel Economy (CAFE)
standards to force automakers to make more fuel-efficient cars. After a
long plateau in those standards, new environmental policies in the
2000s caused an increase in these CAFE standards to fight global
warming. These have led to a significant increase in average mileage
achieved by new light-duty vehicles sold, as the chart below shows.
If you invert the miles per gallon fraction, you get gallons per
mile, which directly corresponds with fuel tax income to the Trust
Fund. In 1976, the average passenger car on the road burned 7.2 gallons
of gasoline for every 100 miles driven. Today, the average passenger
car on the road only burns 4.0 gallons of gas every 100 miles. For SUVs
and pickups, fuel efficiency has increased from 9.3 gallons per hundred
miles in 1976 to 5.6 gallons per hundred miles today.

Figure 4
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

Before CAFE, gallons of fuel taxed were an almost-perfect proxy for
VMT. After CAFE, they have been diverging significantly, as shown in
the chart below. (And bear in mind that the rate of increase of VMT has
been declining for much of this time, as mentioned above.)

Figure 5
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

It became a feature of federal energy and environmental policy to
reduce the number of gallons of fossil fuel used on roadways. But it
was still federal transportation policy to fund highways and transit
based on the number of gallons of fossil fuel used on roadways. In
effect, the separate federal policies have been at war with each other
since the 1970s, and although it took a while, the Highway Trust Fund
eventually paid the price.
This trend is set to accelerate significantly in the future, with
the aggressive new CAFE standards and separate EPA GHG emission
standards proposed by the Biden Administration, involving assumptions
of tremendous adoption rates of electric vehicles, which pay no taxes
into the Highway Trust Fund. Looking beyond the ten-year CBO horizon, a
July 2023 study from the MIT Mobility Initiative and the JTL Transit
Lab estimates that EV adoption will cause total gasoline tax receipts
in the U.S., at current law tax rates, to drop by almost two-thirds
over the next 25 years.\3\
---------------------------------------------------------------------------
\3\ James Aloisi, Bhuvan Atluri, Jinhua Zhao, Yunhan Zheng, and
Seamus Joyce-Johnson. ``Replacing the Gas Tax: Leveraging the Electric
Vehicle Transition to Build a Stronger Transportation Funding System in
the United States.'' MIT Mobility Initiative and JTL Transit Lab, July
2023, Figure 18 on p. 70. Retrieved from https://www.mmi.mit.edu/
_files/ugd/29d096_eb9d66f3b2394eb29e1a76ae9c8be156.pdf on October 14,
2023.
---------------------------------------------------------------------------
3. Congress failed to cut spending or increase tax rates to compensate
for these trends
With the underlying commodity being taxed (gallons of motor fuel
used per year) decreasing because of slowing VMT growth and increasing
fuel efficiency, Congress and several Presidents had the options of
increasing the tax rates on motor fuel, or increasing other taxes, or
reducing Trust Fund spending to match tax receipts.
They did none of those things.
Instead, Congress kept enacting, and Presidents kept signing,
multi-year authorization bills that pulled spending farther and farther
ahead of Trust Fund tax receipts.

Table 2
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

And, to make matters worse, the purchasing power of the dollars
raised by the Trust Fund's excise taxes declines each year due to
inflation. The federal gasoline tax was set at 3 cents per gallon by
the 1956 Act and raised to 4 cents per gallon in 1959, after the Trust
Fund first ran out of money. In terms of purchasing power, that 4 cents
per gallon in 1960 was worth 70 cents per gallon in 2022 buying power,
steadily declining to today's 18.3 cents per gallon:

Figure 6
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

What To Do Now
Policymakers need to ask and answer three questions, in order--the
first philosophical, the second strategic, and the third tactical.
1. Philosophical question--should the federal government retain the
user-pay system for surface transportation?
Although the user-pay paradigm served U.S. surface transportation
well in the past, and continues to finance the world's safest aviation
system, most of our OECD peer nations no longer use a centralized user-
pay fund for their national surface transportation programs. The U.K.
abandoned user-pay for roads in 1937 (though they been talking about
bringing it back lately). The Eno Center produced a report in 2014
called How We Pay for Transportation: The Life or Death of the Highway
Trust Fund that analyzed how several peer nations fund their road
networks, though some of the information may now be outdated.\4\
---------------------------------------------------------------------------
\4\ Eno Center for Transportation. How We Pay for Transportation:
The Life or Death of the Highway Trust Fund. Retrieved from https://
enotrans.org/wp-content/uploads/2023/02/Highway-Trust-Fund.pdf on
October 14, 2023.
---------------------------------------------------------------------------
In their new book The Drive for Dollars: How Fiscal Politics Shaped
Urban Freeways and Transformed American Cities (Oxford U. Press, 2023),
Professors Brian Taylor, Eric Morris, and Jeffrey Brown credit federal
and state user-pay road funds, reliant primarily on gasoline taxes,
with the tremendous economic productivity and safety gains that stem
from today's well-developed freeway system. But they also note that
because the federal and state highway bureaus were so well funded, and
cities were not, the user-pay model is also responsible for urban
freeways being built by state engineers over the objections of city
planners in many cities, with all the problems that caused.
Right now, we have the worst of both worlds. We are pretending that
the Highway Trust Fund is still solvent on a user-pay, user-benefit
basis, and continue to give Trust Fund programs a privileged place in
the budget process. But the reality is that the Trust Fund is only
projected to be 82 percent self-sufficient this year (fiscal 2024),
with that solvency dipping rapidly until the Trust Fund is only 60
percent self-sufficient in the last year of the IIJA (fiscal 2026), and
dipping below 50 percent self-sufficient in 2031.\5\
---------------------------------------------------------------------------
\5\ U.S. Congressional Budget Office. ``Highway Trust Fund
Accounts--May 2023.'' Retrieved online from https://www.cbo.gov/system/
files/2023-05/51300-2023-05-highwaytrustfund.pdf on October 14, 2023.
---------------------------------------------------------------------------
That bears repeating--at current tax rates and IIJA spending
levels, CBO forecasts that every other dollar being outlaid by the
Trust Fund will be from a general fund transfer or other non-user
source in just eight years.
From a truth-in-budgeting perspective, the choice seems clear: it's
time to either mend, or end, the Highway Trust Fund. Either cut
spending and/or increase user revenues to the point that they meet once
again, or abolish the Trust Fund, devote the five existing user taxes
back to the General Fund, and have highway, mass transit, and highway
and motor carrier safety funding fight it out with all other programs
through the budget process.
Either of those outcomes would be more honest than maintaining a
purported user-pay trust fund by simply printing dollars as needed to
keep the Trust Fund afloat, depositing those dollars as needed into the
Trust Fund, and using the ``intragovernmental transfer'' budget
loophole to avoid having to budget for the bailouts.
Neither option would be easy. (The option for a relatively painless
off-ramp from this situation passed us by circa 2010 or 2011.) Real
revenue increases are always politically painful, and spending cuts of
the magnitude required here would also be severely painful. But
retaining the user-pay Trust Fund option would allow this committee to
retain its privileged place in the transportation decision-making
process.
Before 2021, I would have told you that the ``abolish the Trust
Fund'' scenario would leave the authorizing committees out of the
funding process and put the Appropriations Committees in complete
control. But in 2021 and 2022, Congress used the budget reconciliation
process to order this committee and its Senate counterparts, among
others, to produce general fund mandatory budget authority for things
like mass transit, Amtrak, airports, and new Federal Highway
Administration grant programs.
It would be complicated, but a budget process could be established
to allow this committee and the Appropriations Committee to split
duties for funding these programs out of general revenues. However,
given the difficulty of getting eight-way unanimity between House and
Senate Budget, Appropriations, tax-writing, and transportation policy
committees to establish such a process, draconian spending cuts and/or
huge tax increases might be an easier political lift.
2. Strategic question--if the federal government keeps the user-pay
system, what share of surface transportation programs should
users pay, and which specific programs should users pay for,
versus general taxpayers?
The 2018 budget caps deal and the IIJA have combined to increase
significantly the annual General Fund support for the four modal
administrations traditionally supported by this subcommittee. In the
last pre-COVID fiscal year, the General Fund provided 11 percent of the
total funding for the highway, transit, and safety administrations. In
the just-ended fiscal year, the General Fund provided 22 percent of a
greatly increased total funding level.

Table 3
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

The decisions as to which programs to fund from the Trust Fund and
which to fund from the General Fund have been made on a somewhat ad hoc
basis over the years, and the decisions made by the IIJA were made
without this committee's input. If Congress decides to retain a solvent
user-pay Trust Fund to support some surface transportation programs,
which ones are more appropriately supported by highway users and which
by general revenues?
If Congress were to examine these programs from the ground up and
ask, which kinds should be supported by the dedicated user-pay revenue
stream and which should be supported by general revenues, some decision
options include:
Capital programs vs operations and maintenance. Across
most modes of infrastructure, the tradition is for the federal
government to concentrate on capital funding, while state and local
government partners focus on operational and maintenance funding. For
example, the Airport and Airway Trust Fund is governed by statues that
give the FAA's capital programs and airport grants priority over FAA
operations for Trust Fund dollars. If Congress were to act to split up
current Trust Fund programs and give a portion to general revenues,
they might use this principle as a guide.

Long-term vs short-term planning horizons. It certainly
makes sense to reserve scarce user-pay funding secured with a long-term
revenue stream to fund the projects that take the longest to build or
which have the longest planning horizons. Consider, then, if Congress
continues to fund mass transit from the Trust Fund, how incongruous it
is that the Capital Investment Grant (CIG) program funds all the big
new transit system extensions that take the longest to plan and build,
but that is the only FTA program authorized to be reliant solely on
annual appropriations. This makes a mockery of the ``full funding grant
agreements'' signed by FTA and project sponsors, which are replete with
boilerplate language reminding people that a FFGA is not a contract and
does not actually require the federal government to provide any money,
ever. These programs were formerly funded out of the Trust Fund in
recognition that multi-year funding was preferable for projects that
take six to ten years to construct. On the highway side, Congress could
likewise choose to fund the longest lead-time projects from the Trust
Fund while leaving routine resurfacing and other quickly completed
projects from general revenues.

National vs state/regional. Support from the general fund
traditionally goes to programs for the general welfare. User-pay
programs are generally biased towards going where the users are. An
honestly budgeted general fund component of surface transportation
funding in the future should be isolated from any mention of, or
connection to, how much money a state pays in user taxes. The donor-
donee debate (currently obsolete because of Trust Fund solvency--see
Appendix A to this testimony) must never apply to general fund
programs.

Relative benefit to user-taxpayer. The other half of the
user-pay model has always been user-benefit (the user pays for programs
that give him or her direct benefit, and in this instance, the user of
the roads pays for construction and upkeep of those roads). Using user
fees to pay for programs that only give indirect benefit to users, like
mass transit (at best, it decreases the congestion faced by road users
to some degree) has always been controversial. A fundamental redesign
of the system could address that.

When taking current Trust Fund programs out of the Trust Fund,
Congress could keep those programs federal and transfer them to the
General Fund, or they could shift the burden to state or local
governments. In recent decades, some in Congress have felt that, post-
Interstate, there was no more need for a large federal transportation
program, and have sought to ``devolve'' most of that duty to the
states, abolishing federal programs while lowering federal excise taxes
at the same time.
Setting aside the philosophical and policy aspects of devolution,
the fundamental problem has always been math. Highway Trust Fund
programs are among the slowest-spending in government. If we had shut
down the entire Trust Fund, permanently, 18 days ago at the start of
the fiscal year, and put a permanent end to all its programs (no new
projects, contracts, or grants, ever, and fire everyone), CBO says that
the Trust Fund would still have to pay $130 billion over the next
decade just to pay off all of the contracts and grants that were signed
prior to October 1, 2023.
At a current user tax yield of around $43 billion per year, that
means that you would have to maintain the current federal taxes at
their current rates for three full years after you devolve all the
programs to the states. But the states, having balanced budget
requirements, would have to raise their own taxes immediately to take
over their share of the programs, leading to three-year transition
period of double taxation, which would certainly be noticed by
motorists.
(The same math also applies to any effort to downsize Trust Fund
programs to make them fit within current tax rates--you have to cut the
rate of new contracts being signed several years before you see
significant reductions in the cash going out the door.)
The most important thing is that, in any future system where Trust
Fund user taxes and General Fund resources both pay for surface
transportation, the General Fund money must be appropriated outside of,
and in addition to, the Highway Trust Fund instead of being transferred
into the Trust Fund and making the user-pay imbalance worse.
At the end of this process, the goal is to get to a number--the
amount of money that needs to be received in user taxes or fees from
system users each year in order to pay for the Trust Fund programs that
remain at the end of this reevaluation. The third question can then be
asked and answered and those user receipts raised. (Alternatively, if
one answers the third question before the second question, the Trust
Fund revenue number would then govern the decisions made in answer to
the second question.)
3. Tactical question--if the federal government keeps the user-pay
system, and if the amount we want to raise from system users
exceeds the forecast of proceeds from current tax rates, how
should we raise user revenues in the future?
Current projections are for the number of gallons of gasoline taxed
for the Trust Fund to steadily decline over the next decade at an
average rate of 1.4 percent per year. Diesel fuel receipts should fare
a little better because increased freight trucking volume will offset
more fuel-efficient trucks to some degree.

Table 4
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

These rates of decline are not yet to the point where an increase
in the motor fuels tax rates would not capture significant revenue,
though projections indicate that returns will diminish rapidly in the
15 to 30-year timeframe. (There are, of course, severe political
problems with increasing motor fuel taxes, on both sides of the aisle.)
Motor fuel taxes have always been a proxy for vehicle miles
traveled. It is a simple matter to take the latest FHWA data on average
miles traveled and fuel efficiency, cross it with current federal fuel
tax rates, and deduce how many cents per mile that different types of
vehicle are currently paying into the Highway Trust Fund. (The year in
question being 2021, the average distance numbers may still be slightly
COVID-depressed.)

Table 5
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

The most-discussed idea for retaining the user-pay paradigm while
transitioning away from motor fuel taxes is some sort of fee charging
individual vehicles for their miles-traveled, called a VMT fee
(alternately called a mileage-based user fee (MBUF), or a road user
charge (RUC)).
As Director Strickler has mentioned, there has already been
significant interest in this idea at the state level, with Oregon
taking the lead in testing back in 2001 and now having its own
permanent program where motorists can choose to pay by the mile instead
of by the gallon. Hawaii, Utah, and Virginia now also have permanent
VMT fee programs, while several other states are currently testing
pilot programs or conducting research.

Figure 7
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

At the federal level, the IIJA mandates that DOT and Treasury must
carry out a pilot project testing a VMT fee in all 50 states, the
District of Columbia, and Puerto Rico, and provides $50 million for
that purpose. The pilot program must include both personal vehicles and
commercial trucks, and volunteers will have their mileage fees
deposited in the Highway Trust Fund. The Eno Center recently issued a
report, Driving Change: Advice for the National VMT-Fee Pilot, which
reviews the various state (and international) efforts and suggests some
best practices for DOT to follow in establishing the program.
States have given DOT a wealth of options from which to choose--
having miles measured by vehicle telematics; by on-board diagnostic
(OBD) port boxes that can either have GPS info or just mileage; by an
app on the driver's cell phone that can either have GPS or just
mileage; or by periodic odometer readings. And they have multiple
options for reporting the miles and paying the fees, including at the
pump, or with state income taxes, or other kinds of periodic filings.

Figure 8
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

However, DOT is almost two full years behind schedule in
establishing the pilot program, raising questions about whether or not
information from the program will be available to Congress when it
comes time for the IIJA to be reauthorized in 2026.
A VMT fee is attractive for several reasons. It its most basic
form, it records how many miles were driven, and that can be combined
with vehicle axle-weight to be a good measure of wear-and-tear incurred
on roads. If measured by GPS, it could also allow proper cost
allocation between federal, state, and local roads. And if the system
has interactive electronics in the car, it could be combined with local
options such as tolls, congestion or cordon pricing, and dynamic time-
of-day pricing. The fee structure could also take into account personal
considerations and give lower rates to low-income drivers or to rural
drivers.
However, any transition from motor fuel taxes to a similarly broad-
based user-tax system must reckon with collection costs. From a federal
level, motor fuel taxes are fantastically easy to administer, since
they are levied at the refinery or wholesale tank farm. CBO has
estimated that there are only 1,300 or so points of collection, and it
doesn't take much IRS manpower to collect estimated taxes twice
monthly, process quarterly returns, and do audits and make corrections,
all to bring in around $35 billion per year in federal receipts.
Retaining user-pay but switching from fuels to cars or drivers
involves going from about 1,300 points of collection to either drivers
(233 million in 2021) or vehicles (278 million in 2021). Either way,
this is around a 200,000-fold increase in the number of points of
collection. In addition, many people drive cars who don't file income
taxes, and don't have bank accounts, and may even lack smartphones,
making compliance difficult. Congress has yet to hear from the IRS as
to how much the administrative cost would be to run such a program.
In the interim, there are other sources of user revenue that could
be addressed. There has been much discussion of electric vehicles
(EVs), which currently pay nothing into the Highway Trust Fund yet use
federal-aid roads just like taxpaying, fuel-burning vehicles.
A federal registration charge for EVs has the same problem that all
registration fees have--a car that drives 2,500 miles per year pays the
same as a car that drives 25,000 miles per year, even though one has
ten times the road use as the other. A mileage tax on EVs, if set at
the same approximate level that an internal combustion vehicle of the
same axle-weight pays per mile in fuel taxes, would be the fairest
outcome but has the same implementation problems as the VMT fee listed
above.
Senator Cornyn has proposed a tax on EV batteries dedicated to the
Trust Fund. There have been other proposals to tax the electricity used
to charge EV and dedicate those proceeds to the Trust Fund, which is
easy enough at commercial charging stations, but is currently somewhere
between very expensive and impossible for the majority of charging,
which currently takes place in a private home.
All methods of raising Trust Fund money from EVs, however, run up
against the sheer incongruity that is the left arm of Uncle Sam paying
people $7,500 up front to buy new EVs (through the IRA tax credits)
while the right arm of Uncle Sam takes a hundred bucks or so out of
that $7,500 back each year for road user charges into the Highway Trust
Fund.
A July 2023 study from the MIT Mobility Initiative and the JTL
Transit Lab suggests that any motor fuel tax replacement revenue source
be evaluated through two ``lenses'': ``a performance lens and an
efficiency lens. The performance lens considers (i) ease of
administration, (ii) resistance to easy evasion, (iii) stability over
time, and (iv) fairness. The efficiency lens considers how well or
poorly certain revenue alternatives address key negative externalities
of vehicular mobility: (i) traffic congestion, (ii) road wear and tear,
(iii) safety and (iv) emissions.'' \6\
---------------------------------------------------------------------------
\6\ Aloisi et al p. 59.
---------------------------------------------------------------------------
The summary tables 6 and 7 of that report are too long to reprint
here, but variable VMT fees at the regional/national level, and
variable tolls (called, for some reason, Road User Charges in the MIT/
JTL report even though that is very confusing to the RUC Coalition
people who use that name for their VMT fee) at a local level, score
best on both the performance assessment and the efficiency assessment.
The IIJA directed the Federal Highway Administration to conduct the
first highway cost allocation study since 1997. When complete, the
information from that study could be used to set an axle-weight based
vehicle fee in such a way that it fairly captures the costs incurred by
various kinds of vehicles.
But all potential new revenue sources run up against the same
problem: replacement level is not enough in an insolvent fund. Current
tax rates only bring in $43 billion per year in receipts. Trust Fund
spending was around $60 billion in the fiscal year that finished last
month and will be around $75 billion in 2026. Simply replacing current
Trust Fund revenue levels will not be nearly enough unless you also cut
Trust Fund spending significantly. Dollars going out have to equal
dollars going in.
Thank you for the opportunity to testify, and I look forward to
your questions. (My written testimony also includes two appendices--
five myths about the Highway Trust Fund, and a brief history of the
user-pay concept as applied to U.S. transportation.)
Appendix A: Five Myths About The Highway Trust Fund
Myth #1: Mass transit gets 20 percent of Trust Fund spending, or the
Mass Transit Account gets 20 percent of Trust Fund revenues.
Reality: Not even close.
In 1982, a political deal was struck whereby urban legislators
would vote for a huge 5 cent-per-gallon gasoline and diesel fuel tax
increase demanded by highway interests (taking the total from 4 cents
per gallon to 9 cents per gallon, more than doubling the tax rate), in
exchange for 1 cent of the tax increase--20 percent--going to a new
Mass Transit Account in the Highway Trust Fund.
This 80-20 split of fuel tax increases was retained when the 5 cent
gas/diesel tax increase from the 1990 budget deal was eventually
deposited in the HTF, and was also retained when the 4.3 cent fuels tax
increase from the 1993 budget deal was eventually deposited in the
Trust Fund.

Table 6
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

HTF excise taxes have not been increased since 1993. However, the
taxes that were in existence prior to 1982 are all still retained in
the Highway Account, and none of that money goes to the Mass Transit
Account. This includes the 12 percent sales tax on new heavy trucks and
tractor-trailers, which is the only one of the Trust Fund taxes that is
a percentage of a sales price, which means it is the only one of the
Trust Fund taxes that is effectively indexed for inflation.
As a result, Mass Transit Account tax receipts have never come
close to being 20 percent of total Trust Fund tax receipts. Over the
last 20 years, the average has hovered around 13 percent of total Trust
Fund tax receipts--not 20 percent. In the most recent year we have full
records, the Mass Transit Account only got 12.3 percent of total Trust
Fund tax revenues.

Table 7

HTF Net Excise Tax Revenues (Billion $$)
------------------------------------------------------------------------
HA MTA Total MTA Pct.
------------------------------------------------------------------------
FY03............................... 28.962 4.762 33.724 14.1%
FY04............................... 29.785 4.926 34.711 14.2%
FY05............................... 32.893 4.984 37.877 13.2%
FY06............................... 33.672 4.858 38.530 12.6%
FY07............................... 34.270 5.111 39.381 13.0%
FY08............................... 31.323 5.043 36.366 13.9%
FY09............................... 30.135 4.809 34.944 13.8%
FY10............................... 30.150 4.811 34.961 13.8%
FY11............................... 31.961 4.922 36.883 13.3%
FY12............................... 35.143 5.003 40.146 12.5%
FY13............................... 31.800 4.648 36.448 12.8%
FY14............................... 34.066 4.965 39.031 12.7%
FY15............................... 35.740 5.049 40.789 12.4%
FY16............................... 36.032 5.162 41.194 12.5%
FY17............................... 35.699 5.286 40.985 12.9%
FY18............................... 37.265 5.322 42.587 12.5%
FY19............................... 38.267 5.307 43.574 12.2%
FY20............................... 37.458 5.198 42.656 12.2%
FY21............................... 37.933 5.425 43.358 12.5%
FY22............................... 40.865 5.748 46.613 12.3%
------------------------------------------------------------------------

Mass transit started off receiving money from the General Fund of
the Treasury, and even after transit started getting money from the
Highway Trust Fund as well, the General Fund continued to play a
significant part in supporting transit program funding.
Over the 1983-2003 period (the spans of the 1982, 1987, 1991 and
1998 multi-year transportation funding authorization laws), total
funding authorizations for mass transit programs averaged 19.7 percent
of total funding authorizations for highway and highway safety
programs, from all sources.
This started out as a coincidence--if there was a plan to have an
80-20 split of total authorizations, no one ever mentioned it at a
committee hearing or on the House floor or Senate floor prior to 2002.
The earliest reference we can find to an 80-20 split of funding was a
statement by the Surface Transportation Policy Project in a September
2002 House hearing, noting that ``We are at the point where the
relative distribution of roughly 80/20 split may have to be revised to
meet the rising needs for transit capital.''
Bizarrely, even as the Mass Transit Account's share of total actual
tax receipts in the Trust Fund keeps declining, Congress continues to
increase the Mass Transit Account's share of new spending authority.
Getting 18.1 percent of the spending while only getting 12.3 percent of
the dedicated revenues means that the Mass Transit Account is much more
insolvent, on a percentage basis, than the Highway Account.

Table 8
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

Myth #2: Many states are still ``donor states'' that have paid more tax
dollars into the HTF Highway Account than they have received in
highway funding.
Reality: Not anymore.
This was once true, but since the Trust Fund went broke in 2008 and
became dependent on general fund bailouts, it has ceased to be true for
all states save one. From its inception in 1956 through September 2021,
states had paid an estimated $1.090 trillion in taxes into the Highway
Account (or the entire Trust Fund before the establishment of a Mass
Transit Account) and had received a total of $1.31 trillion in highway
funding (apportionments and allocations) drawn from the Account. The 50
states, collectively, have drawn $222 billion more from the Account
than they have paid in excise taxes.

Table 9
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

The exception was Texas, which still had a $2 billion lifetime
deficit as of the end of 2021. But the IIJA's funding levels are so
disconnected from Trust Fund tax payments that Texas is gaining between
$1 billion and $1.5 billion per year. So the Lone Star State may
already have crossed the 100 percent rate of return line--and if they
haven't, they most certainly will by the end of the IIJA.
Former donor state advocates will be quick to point out that the
above table, and its FHWA source data, does not take into account the
Mass Transit Account, and because mass transit apportionments are based
on ridership and the extent of existing transit systems, and this is
undoubtedly true. But the Mass Transit Account is more properly viewed
as the price charged by urban legislators to continue their share of
funding a program of that primarily benefits suburban and rural areas.
And, while in the past, the Federal Transit Administration did not
make it easy to find state-by-state funding totals, they have started
to do so in fiscal 2023. As it turns out, Texas got $663 million in
mass transit formula apportionments in 2023 and has only been paying
around $600 million into the Highway Account.
Myth #3: Giving mass transit a dedicated fuel tax revenue stream and
establishing a Mass Transit Account resulted in more money for
mass transit.
Reality: Not really.
The law creating the Mass Transit Account was signed in January
1983. The Congressional Budget Office's incredibly helpful report
Public Spending on Transportation and Water Infrastructure: 1956 to
2017 totaled all federal outlays on mass transit for every year and
converted those to constant 2017 dollars using the producer price index
for government transportation spending. The results, shown below, are
surprising.

Figure 9
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

According to CBO, federal spending on mass transit peaked in 1981
at $13.6 billion--before the creation of the Mass Transit Account--then
declined and did not surpass that peak again for 20 years before
declining again due to the early 2000s construction cost inflation and
then one last spurt to the 1981 level during the peak of 2009 ARRA
stimulus spending in fiscal 2010.
While the COVID bailouts and then the IIJA have certainly pushed
mass transit outlays well beyond these levels starting in 2020, the
inescapable conclusion of this chart is that, once mass transit got its
own revenue stream, the Appropriations Committees stopped working as
hard to give mass transit annual appropriations.
Myth #4: If you just get rid of mass transit, bike paths, and other
``non-traditional'' uses of Trust Fund money, current tax rates
will be enough to pay for road and bridge needs.
Reality: Not anymore.
While this was arguably true years ago, the mammoth funding
increases under the IIJA mean that even core highway funding spending
is now vastly outpacing user tax revenues.
Assume that, once the IIJA ends in fiscal 2026, Congress decides to
throw the Federal Transit Administration out of the Trust Fund. And the
Federal Motor Carrier Administration and the National Highway Traffic
Safety Administration. And then, Congress also decides to either
abolish all of the ``non-traditional'' Federal Highway Administration
programs or turn them over to the General Fund as well.
Even if you did all that, a comparison of FY 2026 IIJA contract
authority levels for FHWA programs with CBO's forecast of FY 2026 Trust
Fund tax receipts shows that new spending is still $11.4 billion above
user tax receipt levels:

Table 10
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

Getting the FHWA budget, by itself, down to the $43-ish billion per
year forecast for current law highway user tax receipts would involve
significant cuts in real asphalt, concrete, and steel-using road and
bridge construction and maintenance, even if Congress had the political
will to get rid of the rest of the programs currently receiving Trust
Fund moneys.
Myth #5: Diesel fuel is federally taxed at a rate 6 cents higher than
gasoline because trucks do more damage to roads and bridges
than cars.
Reality: That's not the reason.
In the Highway Revenue Act of 1982, Congress tried to solve two
problems. The Highway Trust Fund needed more revenues, and the revenue
structure needed to be changed to reflect the May 1982 Highway Cost
Allocation Study so the tax burden was distributed fairly.
The law solved the revenue problem by increasing gasoline and
diesel taxes from 4 cents per gallon to 9 cents per gallon, and it
solved the cost allocation problem with a massive increase in the
annual Heavy Vehicle Use Tax (HVUT), particularly on vehicles weighing
over 70,000 pounds which do, by far, the most damage to roads and
bridges. Under the new law, the annual HVUT paid by the owner of an
80,000-pound truck would increase almost twelvefold, from $162 per year
to $1,900 per year.
Truckers, particularly owner-operators, were not happy about this,
and staged nationwide protests throughout 1983. Eventually, in 1984, as
part of a larger tax bill, Congress lowered the maximum HVUT to $550
per year (where it remains to this day). The Joint Committee on
Taxation estimated that this cut in the HVUT would cost the Treasury
$2.1 billion over five years, so the same law increased diesel fuel
taxes by six center per gallon, raising $2.2 billion over that same
period and making the HVUT reduction deficit-neutral.
The 6-cent diesel differential, still in place today, actually
makes truck cost allocation worse, not better, because it spreads the
tax burden across all diesel-using vehicles, regardless of wait, and
away from the 70,000-plus pound trucks that do so much damage to roads
and bridges.
Appendix B: The User-Pay Paradigm
Theories of Taxation
For centuries, there were two competing philosophical theories
around which a just tax structure could be based. The first was to tax
based on the taxpayer's ability to pay taxes (e.g. higher taxes for
those with greater wealth or greater income); and the second was to tax
based on the governmental benefits received by the taxpayer.
The two ideas were not always in opposition, as this debate dates
back to the days before governments spent significant money on programs
specifically benefitting the poor who lacked the ability to pay
significant levels of tax. Adam Smith conflated the two in his First
Maxim of Taxation: ``The subjects of every state ought to contribute
towards the support of the government, as nearly as possible, in
proportion to their respective abilities; that is, in proportion to the
revenue which they respectively enjoy under the protection of the
state.'' \7\
---------------------------------------------------------------------------
\7\ Adam Smith. An Inquiry into the Nature and Causes of the Wealth
of Nations (5th Ed., Methuen & Co. 1789). Book V, Chapter II, Part II.
Retrieved online from https://www.econlib.org/library/Smith/
smWN.html?chapter_num=36#book-reader on June 18, 2023.
---------------------------------------------------------------------------
According to a recent NBER paper, ability taxation and benefit
taxation began to diverge in the 1800s, with John Stuart Mill
advocating ability taxation on its own, and later when Erik Lindahl
(and, 35 years later, Paul Samuelson) took benefit taxation into the
field of pricing public goods.\8\ The pricing of public goods was later
incorporated into the larger field of ``public choice theory'' by the
work of James M. Buchanan beginning in 1962.
---------------------------------------------------------------------------
\8\ Matthew Weinzierl. ``Revisiting the Classical View of Benefit-
Based Taxation.'' National Bureau of Economic Research Working Paper
20735 (2018). Retrieved online from https://www.nber.org/papers/w20735
on June 18, 2023.
---------------------------------------------------------------------------
A related idea to benefit taxation was popularized by economist
Arthur Pigou in 1928, who explored taxes levied to collect the costs of
``spillovers,'' or ``externalities''--defined as ``costs borne or
benefits enjoyed by one party due to activities of another party where
no voluntary exchange or market transaction occurs.'' \9\ The most
widespread use of this principle has been in taxes to capture the
effects of pollution.
---------------------------------------------------------------------------
\9\ United States. Congressional Research Service. Economics of
Federal User Fees. Report R45463, January 22, 2019, p. 4. Retrieved
online from https://sgp.fas.org/crs/misc/R45463.pdf on June 18, 2023.
---------------------------------------------------------------------------
An influential Congressional Budget Office report used the overall
rubric of ``user charges'' to describe four different types of
governmental income:
Benefit-based taxes (if formally linked to spending
accounts for programs specifically benefitting those taxpayers);
Pigouvian liability-based taxes (if formally linked to
spending accounts for programs specifically remediating the liabilities
caused by those taxpayers);
Actual ``user fees'' (fees paid for goods or services
provided by the government, consumed voluntarily, and not shared by
other members of society); and
``Regulatory fees'' (charges for the exercise of the
government's power to regulate).\10\
---------------------------------------------------------------------------
\10\ United States. Congressional Budget Office. The Growth of
Federal User Charges. Self-published: August 1993. Retrieved from
https://www.cbo.gov/publication/20892 on June 18, 2023.

In the United States, this user-pay paradigm has seen particularly
wide use in the field of transportation spending.
User-Pay Policies at the State and Local Level
The user-pay paradigm for transportation originally began at the
level of state government. However, as a 1954 study noted, ``History
reveals that no carefully worked out theory anteceded the adoption of
user taxation as we know it today. The theoretical foundation, such as
it is, was built after the framework was erected.'' \11\
---------------------------------------------------------------------------
\11\ Richard M. Zettel, ``Objectives and Concepts of Highway-User
Taxation,'' in Highway Research Board Bulletin 92, January 1954, p. 2.
Retrieved online from https://onlinepubs.trb.org/Onlinepubs/
hrbbulletin/92/92.pdf on June 23, 2023.
---------------------------------------------------------------------------
The idea of the users of a transportation facility paying for the
use of that facility has been active at the state and local level since
the Founding. The official history of the federal highway program
recounts that, in the late 1780s, ``there was widespread agitation for
State assistance to help maintain the principal roads. The debt-
burdened State governments met this challenge by appealing to private
capital for the funds to build better highways. They chartered private
turnpike companies, conferring on them authority to build roads and
charge tolls to the public for their use.'' \12\
---------------------------------------------------------------------------
\12\ United States. Federal Highway Administration. America's
Highways 1776-1976. Washington: Government Printing Office, 1976 p. 8.
Retrieved from https://library.si.edu/digital-library/book/
americashighways00unit on June 18, 2023.
---------------------------------------------------------------------------
Along with canals (which also charged tolls), the toll turnpike
road dominated intercity travel until supplanted by the railroads
starting in the 1830s. The railroads were like the turnpikes in that
governments gave right-of-way to private companies in exchange for the
private companies building infrastructure, but they differed in that
with the railroads, the act of transportation itself was also carried
out by the railroad company, so that the public user was paying for
both the infrastructure access and the transportation activity
thereupon, instead of only paying for infrastructure access under the
turnpike model.
(Throughout the 19th Century, local roads were maintained by a
``statute labor'' system, which one could call ``user-do'' instead of
``user-pay.'' Every able-bodied man in a county was required to spend a
certain number of days in a year working on a road crew to maintain the
roads in their area.)
The advent of the automobile in the late 19th Century, in
combination with the other elements of the ``Good Roads Movement,''
created significant pressure on states to provide better roads. At this
time, the primary source of state revenue was the property tax, which
was also the major source of road funding.\13\
---------------------------------------------------------------------------
\13\ Zettel, ``Objectives and Concepts of Highway-User Taxation,''
p. 2.
---------------------------------------------------------------------------
(This explains the ``sliding scale'' that increases the federal
share of the cost of federal-aid highway projects in states where the
federal government owns a high percentage of the land. That provision
was enacted in 1921, when many states still paid for a majority of
their road spending with property taxes. Yet somehow, the provision has
remained in law long after all states switched from property taxes to
the user-pay model, where the sliding scale (still codified in section
120 of title 23, United States Code) makes much less sense.)
The drive for states to raise general revenues from a new economic
sector, and the need to increase spending on roads so they could
support automobiles, eventually came together into a user-pay system.
But it happened in stages. Mid-century historians broke the various
auto-centric taxes and fees into three ``structures.''
First structure--taxing the existence of vehicle itself. The first
state to require that automobiles be registered, and to pay a
registration fee, was New York in 1901, with a one-time perennial fee.
By 1915, all states had enacted some sort of auto registration fee.\14\
---------------------------------------------------------------------------
\14\ United States, Federal Highway Administration, Highway
Statistics Summary to 1995. Table MV-230. Retrieved from https://
www.fhwa.dot.gov/ohim/summary95/ on June 22, 2023.
---------------------------------------------------------------------------
The best early history of the fees noted that in the beginning, the
fees charged for the one-time-only registrations were so low that
``little attention was given to the collection of revenue. After 1909,
however . . . The growth of the revenue idea is apparent from the
increase in the average rates, from the tendency to make the licenses
annual instead of permanent, and, indirectly, from the attempt to
secure a just distribution, evident in the graduation on the basis of
horsepower.'' \15\
---------------------------------------------------------------------------
\15\ James W. Martin, ``The Motor Vehicle Registration License,''
in The Bulletin of the National Tax Association, vol. XII, No. 7 (April
1927), article at p. 193, quote from p. 195. Retrieved from https://
hdl.handle.net/2027/uc1.b2929206 on June 25, 2023.
---------------------------------------------------------------------------
A 1913 snapshot showed that most states varied the amount of the
registration fee based on the horsepower of the vehicle's engine,
following the British practice (more horsepower being more expensive,
making it a progressive tax, and engine horsepower also being a good
proxy for the Pigouvian externality of the dust stirred up by the
vehicle's operation). Four states even had lower registration fees for
electric vehicles because of their lower top speeds.\16\
---------------------------------------------------------------------------
\16\ United States. Joint Committee on Federal Aid in the
Construction of Post Roads. Federal Aid to Good Roads (final report of
the committee, January 21, 1915), printed as House Document 1510, 63rd
Congress, table on p. 236.
---------------------------------------------------------------------------
States quickly began to dedicate their registration fees to the
state road fund--by 1916, 42 of the 48 states dedicated at least part
of their registration fees to highway purposes.\17\ But the use of the
fees to pay for roads created a ``free rider'' problem, which begat
resentment of out-of-state motorists. Some states enacted interstate
registration reciprocity with other states, but others did not.
---------------------------------------------------------------------------
\17\ America's Highways 1776-1976 p. 124.
---------------------------------------------------------------------------
For example, ``New York had full reciprocity with 15 other states
but not with New Jersey. As a result, thousands of New Yorkers who had
their summer homes on the Jersey coast had to register their machines
for the full year in both States.'' \18\
---------------------------------------------------------------------------
\18\ America's Highways 1776-1976 p. 57, citing Albert C. Rose,
Historic American Highways--Public Roads of the Past (AASHTO, 1953) pp.
153-154.
---------------------------------------------------------------------------
And things could get more aggressive: ``General resentment and
widespread resistance [to interstate registration requirements]
occasioned the flaring up of so-called `border tag wars' in various
sections of the country . . . a funeral cortege, corpse and all,
enroute to the place of interment in a State of non-registration was
arrested and held until the drivers could be tried and fined and the
hearse and the automobiles licensed and tagged.'' \19\
---------------------------------------------------------------------------
\19\ Walter R. McDonald, address delivered to the Panel on
Reciprocity at the 19th Annual Convention of the Georgia Motor Trucking
Association, May 22, 1954, quoted in David H. McKinney and Lewis C.
Bell, The Role of Third Structure Taxes in the Highway User Tax Family
(Prepared for the Bureau of Public Roads by the University of
Mississippi Bureau of Business and Economic Research), Washington DC,
GPO, 1968, p. 21. Retrieved from https://hdl.handle.net/2027/
uiug.30112063714882 on June 28, 2023.
---------------------------------------------------------------------------
Growth in the number of vehicles, and the money generated by annual
registration fees, was exponential. In 1910, nationwide fee receipts
totaled $2 million. Ten years later, they had increased 45-fold, to
$102 million. Ten years after that, the 1930 receipts totaled $356
million. (The number of registered vehicles only increased 18-fold from
1910-1920 and almost threefold to 1930, as the average amount of
registration fee per vehicle climbed from $4.88 in 1910 to $12.49 in
1920 to $15.48 in 1930.) \20\
---------------------------------------------------------------------------
\20\ United States, Public Roads Administration, Highway Statistics
Summary to 1945. Tables MV-201 and MV-202. Washington: GPO 1947.
---------------------------------------------------------------------------
Second structure--taxing the fuel on which the vehicle runs. The
federal government taxed gasoline, along with other lamp and lantern
fuels, briefly during the Civil War, and Congress debated taxing
gasoline as a motor fuel several times during the 1914-1918 period, but
nothing ever came of it.\21\
---------------------------------------------------------------------------
\21\ Jeff Davis. ``The Gas Tax at 100: Federal Gasoline Tax Debate,
1864-1918.'' Eno Center for Transportation, February 22, 2019.
Retrieved online from https://enotrans.org/article/the-gas-tax-at-100-
federal-gasoline-tax-debate-1864-1918/ on June 25, 2023.
---------------------------------------------------------------------------
The first taxation of gasoline as a motor fuel was left to Oregon,
in February 1919, when they levied a 1 cent-per-gallon gasoline tax,
levied at the wholesale level, as part of the means to pay for a new
$10 million bond issuance for road construction.\22\
---------------------------------------------------------------------------
\22\ Jeff Davis. ``The Gas Tax at 100: Oregon Enacts America's
First-Ever Motor Fuel Tax, February 25, 1919.'' Eno Center for
Transportation, February 25, 2019. Retrieved online from https://
enotrans.org/article/the-gas-tax-at-100-oregon-enacts-americas-first-
ever-motor-fuel-tax-february-25-1919/ on June 25, 2023.
---------------------------------------------------------------------------
Two other Western states, New Mexico and Colorado, adopted similar
gasoline levies so quickly after Oregon that it is unlikely that one
state inspired another, and in both instances, the gas taxes went into
the state road fund. Later that year, the road commissioners of the
three states traveled to the annual meeting of the American Association
of State Highway Officials in Kentucky and sold all the other state
highway officials on the wonder of their new revenue source, after
which, according to one historian, ``There can be no doubt that all
highway officials present were cognizant of the possibilities of a
gasoline tax by the time they returned home, and state highway
officials continued to be the chief source of gasoline tax agitation.''
\23\
---------------------------------------------------------------------------
\23\ John Chynoweth Burnham, ``The Gasoline Tax and the Automobile
Revolution,'' in The Mississippi Valley Historical Review, Vol. 48, No.
3 (December 1962), article on p. 435, quote from p. 445. Retrievable
from http://www.jstor.org/stable/1891987
---------------------------------------------------------------------------
From then on, states adopted gasoline taxes remarkably quickly. At
the end of 1919, only the aforementioned three states had adopted such
taxes. Five years later, at the end of 1923, 31 states and the District
of Columbia had adopted gasoline taxes. By the end of 1929, only a
decade after Oregon went first, New York became the last holdout state
to levy a state gasoline tax. The levels at the end of 1929 ranged from
two cents per gallon to six cents per gallon.\24\
---------------------------------------------------------------------------
\24\ Highway Statistics Summary to 1945, Table G-205.
---------------------------------------------------------------------------

Figure 10
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

A 1924 study indicated that, in the states that had already enacted
motor fuel taxes, in most instances they enhanced, and did not replace,
motor registration revenue (half of the gasoline tax states had also
increased registration fees since taxing gasoline, while only 13
percent of the gasoline tax states had lowered registration fees.) \25\
---------------------------------------------------------------------------
\25\ Beulah Bailey, ``The Effect of the Gasoline Tax on Motor
Vehicle Fees in the Various States,'' in The Bulletin of the National
Tax Association, vol. X, No. 9 (June 1925), article at p. 277, quote
from p. 281. Retrieved online from https://hdl.handle.net/2027/
uc1.b2929204 on June 25, 2023.
---------------------------------------------------------------------------
During the Great Depression, massive unemployment and stock market
crashes severely reduced income tax revenues at the same time that
deflation and defaults were hurting property taxes. But gasoline tax
receipts by states remained remarkably robust, to the point that states
began to divert more of their gasoline tax revenue to non-highway
purposes. The federal Hayden-Cartwright Act of 1934 provided that any
state would lose one-third of its annual federal highway funding if it
diverted any additional gasoline tax revenue away from highways after
June 30, 1935.\26\ (This provision actually stayed on the books until
being repealed in July 1998.)
---------------------------------------------------------------------------
\26\ 48 Stat. 993, section 12 on p. 995.
---------------------------------------------------------------------------
At present, there is a wide discrepancy in state gasoline tax
levels. Including all types of taxes (excise and sales) and fees, the
American Petroleum Institute's most recent calculation is that the
state (and local, averaged out) taxes range from a low of 15.13 cents
per gallon in Alaska to a high of 68.15 cents per gallon in
California.\27\
---------------------------------------------------------------------------
\27\ American Petroleum Institute, fact sheet entitled ``Gasoline
Taxes--January 1, 2022.'' Retrieved from https://www.api.org/-/media/
files/statistics/state-motor-fuel-notes-summary-january-2022.pdf on
June 25, 2023.
---------------------------------------------------------------------------
Many states expanded their motor fuel tax laws to include diesel
fuel and other fuels early on. However, diesel-powered trucks on
highways were largely a post-WWII phenomenon (a 1954 study found that
only 13 percent of combination trucks were diesel-powered, and a
negligible share of other trucks, but 55 percent of commercial buses
were already running on diesel).\28\ So the revenues from (and
attention paid to) diesel as a highway tax revenue source were de
minimis until after the war.
---------------------------------------------------------------------------
\28\ Edwin M. Cope, John T. Lynch, and Clarence A. Steele,
``Estimates of User Taxes Paid by Vehicles in Different Type and Weight
Groups,'' in Highway Research Board Bulletin 92, January 1954, Table 3
on p. 26. Retrieved online from https://onlinepubs.trb.org/Onlinepubs/
hrbbulletin/92/92.pdf on June 23, 2023.
---------------------------------------------------------------------------
A 1946 study commissioned for the California legislature found that
``the ton-miles of operation per gallon of fuel were 57 percent greater
for diesel trucks than for gasoline-powered trucks.'' As a way to treat
both classes of trucks fairly (from the user-pay point of view), the
report recommended that from then on, the diesel tax be increased to a
level 50 percent higher than the gasoline tax, whatever the gasoline
tax rate happened to be. (This was the original source of the idea that
diesel tax rates should be higher than gasoline tax rates--not because
commercial trucks do more damage to roads than smaller cars, but as a
way to even out the per-mile tax burden between kinds of trucks.) \29\
---------------------------------------------------------------------------
\29\ Bertram H. Lindman. A Proposed System of Highway Financing for
the State of California (Submitted to the Joint Fact-Finding Committee
on Highways, Streets and Bridges), November 14, 1946, p. 80. Retrieved
from https://hdl.handle.net/2027/mdp.39015081930144 on June 25, 2023.
---------------------------------------------------------------------------
The federal government did not begin to track the use of diesel
fuel on highways until 1949, but in that year, they estimated that
about 75 gallons of gasoline were used on U.S. roads for every gallon
of diesel similarly used. By 1959 the ratio had only dropped to 24 to
1, and to 13 to 1 by 1969. In 2021, the ratio of gasoline (and gasohol)
to diesel (and other special fuels) use on American highways was 2.85
to 1.\30\
---------------------------------------------------------------------------
\30\ Highway Statistics to 1995, Table MF-221, and Highway
Statistics 2021, Table MF-27.
---------------------------------------------------------------------------
Today, state taxes on diesel fuel tend to be higher than the taxes
on gasoline, but the discrepancy is now justified as part of higher tax
rates on the trucking sector. The American Petroleum Institute
estimates that state and local diesel taxes on highway use of diesel
fuel range from a low of 15.08 cents per gallon in Alaska to a high of
$1.00 per gallon in California.\31\
---------------------------------------------------------------------------
\31\ American Petroleum Institute, fact sheet entitled ``Diesel
Taxes--January 1, 2022.'' Retrieved from https://www.api.org/-/media/
files/statistics/state-motor-fuel-notes-summary-january-2022.pdf on
June 25, 2023.
---------------------------------------------------------------------------
Third structure--taxing the use of the vehicle. If the first
structure was taxing the existence of the vehicle itself, and the
second structure was taxing the fuel used by the vehicle, the third
structure was taxing the use of the vehicle. A groundbreaking 1968
study, The Role of Third Structure Taxes in the Highway User Tax
Family, found that:
`` . . . fuel consumption does not adequately reflect costs
occasioned by vehicles of different types and weights. The registration
tax based on the gross weight of the vehicle may be graduated in its
application; however, the tax does not reflect the variation in mileage
by the same vehicle from year to year nor the variation in mileage by
different vehicles of the same type and gross weight. On the other
hand, a third-structure tax , for example one based on weight and
mileage, if a significant part of the total highway-user tax system,
could counteract the (alleged) shortcomings of the other two imposts.
It is because of this that many jurisdictions impose some type of
third-structure tax.'' \32\
---------------------------------------------------------------------------
\32\ The Role of Third Structure Taxes in the Highway User Tax
Family, p. 9.
---------------------------------------------------------------------------
As of 1946 (the first year that Highway Statistics was published),
16 states and the District of Columbia levied some kind of weight-mile
tax on commercial vehicle operation. 11 states also taxed the gross
income of motor carrier companies specifically, and 13 states also
issued annual weight-based taxes on motor carrier vehicles.\33\
---------------------------------------------------------------------------
\33\ United States, Public Roads Administration. Highway Statistics
1946. Table MC-1.
---------------------------------------------------------------------------
By 1965, the number of states levying gross receipts taxes had
dropped from 11 to 6, and the number of states using some kind of
weight-mile tax formula had dropped by one. 4 states taxed freight
movement by the ton-mile, 7 states taxed by the weight-mile of the
truck, 2 states levied an axle-mile tax, and 2 others had a flat
vehicle-mile truck tax rate.\34\
---------------------------------------------------------------------------
\34\ The Role of Third Structure Taxes in the Highway User Tax
Family, pp. 11-12.
---------------------------------------------------------------------------
Since then, the federal deregulation of trucking in 1980, and the
1991 requirement for interstate cooperation in motor carrier fuel tax
collection, crediting, and reciprocity, have led most states to abolish
their third structure taxes. (This is also due to persistent opposition
from the trucking industry over the years. The industry has
consistently supported concentrating state trucking taxes into the
first two structures--annual registration and motor fuels--for ease of
compliance.)
Four states still levy weight-distance taxes on motor carrier
operation.
Kentucky--All motor carriers operating in Kentucky with a
combined license weight of 60,000 pounds or more must pay a flat rate
of 2.85 cents per mile.\35\
---------------------------------------------------------------------------
\35\ Kentucky Transportation Cabinet. ``Kentucky Weight Distance
(KYU)'' webpage. Retrieved online from https://drive.ky.gov/Motor-
Carriers/Pages/KYU.aspx on June 29, 2023.
---------------------------------------------------------------------------
New Mexico--All motor carriers operating in New Mexico
with a declared gross vehicle weight of 26,000 pounds or more must pay
a weight distance tax ranging from 1.1 cents per mile for trucks at the
bottom end of the weight range to 4.4 cents per mile over 78,000
pounds. Discounted rates are charged for one-way hauls with empty
return.\36\
---------------------------------------------------------------------------
\36\ New Mexico Taxation and Revenue Department. ``Regulations
Pertaining to the Weight Distance Tax Act'' (3.12 NMAC), Revised July
2023. Retrieved from https://rb.gy/fo0v3 on June 29, 2023.
---------------------------------------------------------------------------
New York--All commercial vehicles operating in New York
must pay a graduated weight-mile tax with multiple possible measures of
weight (gross weight or unladen weight). The rates vary from 0.84 cents
per mile for the lightest trucks (gross weight of 18,000 pounds) to
5.46 cents per mile for 80,000 pound trucks, plus 0.28 cents per ton or
fraction of a ton per mile over 80,000 pounds. The state law gives
discounted rates to trucks hauling wood products or dairy products.\37\
---------------------------------------------------------------------------
\37\ New York State Department of Taxation and Finance. Tax
Bulletin HU-40 and Tax Bulletin HU-360, Schedule 1. Retrieved from
https://www.tax.ny.gov/pubs_and_bulls/tg_bulletins/hut/introduction.htm
on June 29, 2023.
---------------------------------------------------------------------------
Oregon--All commercial vehicles operating in Oregon with
a registered weight over 26,000 pounds must pay a graduated weight-mile
tax ranging from 7.2 cents per mile for trucks barely over 26,000
pounds to 23.7 cents per mile for trucks at 80,000 pounds. For trucks
over 80,000 pounds, an axle-weight computation is used that tops out at
33.3 cents per mile.\38\
---------------------------------------------------------------------------
\38\ Oregon Department of Transportation, ``Mileage Tax Rates
Effective January 1, 2022.'' Retrieved online from https://
www.oregon.gov/odot/Forms/Motcarr/9928-2022.pdf on June 29, 2023.

Unfortunately, the Federal Highway Administration has ceased
updating Table MV-2 in its Highway Statistics Series, which lists
annual state tax receipts from various motor carrier taxes, after the
2009 edition, leaving the official record vacant. But back in 2009,
receipts from the four state weight-mile taxes were: Kentucky $76.9
million; New Mexico $81.3 million; New York $98.7 million, and Oregon
$196.2 million.
The National Association of State Budget Officers estimated that,
in fiscal year 2022, state governments paid for 74 percent of their
transportation spending (excluding the pass-through proceeds of federal
grants) with funds taken from a dedicated transportation fund, with the
remaining 26 percent split roughly evenly between state general fund
appropriations and bond proceeds.\39\
---------------------------------------------------------------------------
\39\ National Association of State Budget Officers. 2022 State
Expenditure Report. Information from Table 38 on page 74. Retrieved
from https://www.nasbo.org/reports-data/state-expenditure-report on
June 29, 2023.
---------------------------------------------------------------------------

Figure 11
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

Federal User Charge Policy
The federal government began levying user charges at the Founding,
in the form of postal fees (paid by the recipient until the advent of
sender-purchased postage stamps in the 1840s).\40\ By 1900, postal user
charges still represented 15 percent of total federal revenues (and
paid for all Post Office Department expenses).\41\
---------------------------------------------------------------------------
\40\ U.S. Postal Service, ``Postal history.'' Retrieved from
https://about.usps.com/who/profile/history/stamps-postcards.htm on
October 23, 2022.
\41\ United States. Department of the Treasury. Annual Report of
the Secretary of the Treasury on the State of the Finances for the
Fiscal Year Ended June 30, 1900, p. xvii. Retrieved from https://
fraser.stlouisfed.org/files/docs/publications/treasar/
AR_TREASURY_1900.pdf?utm_
source=direct_download on October 23, 2022.
---------------------------------------------------------------------------
In 1918, some national parks began charging parking revenues.\42\
In January 1940, President Roosevelt proposed small public admissions
fees for parks, national forests, and historic monument in order to
offset the cost of park roads, trails, and facilities. He also
suggested charging the public for the cost of federal aid to maritime
transportation (``dredged channels, buoys, lighthouses, lifesaving
stations, and so forth''). Roosevelt wrote that ``It would seem
reasonable that some portion of these annual expenditures should come
back in the form of small fees from the users of our lakes, channels,
harbors and coasts.'' \43\
---------------------------------------------------------------------------
\42\ United States. Department of the Treasury. Annual Report of
the Secretary of the Treasury on the State of the Finances for the
Fiscal Year Ended June 30, 1918 p. 133. Retrieved from https://
fraser.stlouisfed.org/files/docs/publications/treasar/
AR_TREASURY_1918.pdf?utm_
source=direct_download on October 23, 2022.
\43\ United States. Bureau of the Budget. The Budget of the United
States Government for the Fiscal Year Ending June 30, 1941 p. xiii.
Retrieved from https://fraser.stlouisfed.org/files/docs/publications/
usbudget/bus_1941.pdf?utm_source=direct_download on October 23, 2022.
---------------------------------------------------------------------------
World War II interrupted the development of the user-pay paradigm
at the federal level, but in January 1947, President Truman was the
first to propose a general user charge principle: ``the Government
should receive adequate compensation for certain services primarily of
direct benefit to limited groups.'' Like Roosevelt, Truman singled out
the field of transportation: ``For example, I believe that a reasonable
share of the cost to the Federal Government for providing specialized
transportation facilities, such as airways, should be recovered.'' \44\
---------------------------------------------------------------------------
\44\ United States. Bureau of the Budget. The Budget of the United
States Government for the Fiscal Year Ending June 30, 1948 p.M12.
Retrieved from https://fraser.stlouisfed.org/files/docs/publications/
usbudget/bus_1948.pdf?utm_source=direct_download on October 23, 2022.
---------------------------------------------------------------------------
In April 1951, the House Subcommittee on Independent Offices
Appropriations included, in its fiscal 1952 spending bill, a general
provision expressing the sense of Congress that government work done
for a specific person or group should be ``self-sustaining to the full
extent possible,'' and that the President should levy ``fair and
equitable'' fees, charges and prices to do so.
Interestingly, the appropriations bill went through the House and
Senate floor with no mention whatsoever of this provision during
debate. The bill was signed into law on August 31, 1951.\45\
---------------------------------------------------------------------------
\45\ The bill was H.R. 3880, 81st Congress. It became Public Law
137 of the 81st Congress (65 Stat. 268).
---------------------------------------------------------------------------
That language, as modified, remains on the books today, expressing
the ``sense of Congress that each thing of value provided by an agency
. . . to a person . . . is to be self-sustaining to the extent
possible.'' \46\
---------------------------------------------------------------------------
\46\ Section 9701 of title 31, United States Code. (31 U.S.C.
Sec. 9701)
---------------------------------------------------------------------------
This law was implemented quickly by the Bureau of the Budget via
the issuance of Circular A-25 in November 1953, requiring federal
agencies to charge fees for licensing, registration, and related
activities (including Civil Aeronautics Board, Civil Aviation
Administration, Interstate Commerce Commission, and Coast Guard
certification and inspection services), and again in January 1954 with
Circular A-28, requiring agencies to charge for copying, certification,
and search of records.\47\
---------------------------------------------------------------------------
\47\ The original versions of Circulars A-25 and A-28 can be found
in Appendix A of Senate Report 1467, 84th Congress (Senate Committee on
Government Operations, report entitled Fees for Government Services,
February 1, 1956). Retrieved online from https://hdl.handle.net/2027/
mdp.39015073709688 on June 3, 2023.
---------------------------------------------------------------------------
In 1957, the Eisenhower Administration decided to build on this
principle and requested, in Budget Bureau Bulletin 58-3, that all
federal agencies draft legislation allowing them to ``recover full
costs for Government services which provide a special benefit.'' The
Budget Bureau then issued a new version of Circular A-25 in September
1959 (and folded the old Circular A-28 into it), which provided
additional guidance, including on the question of whether specific user
fees should be fungible with general revenues or earmarked for a
specific spending program.\48\
---------------------------------------------------------------------------
\48\ The original versions of Bulletin 58-3 and Circular A-25 (1959
version) can be found as Appendixes VI and VII, respectively, in U.S.
General Accounting Office, Review of Selected Activities of the Bureau
of the Budget, Executive Office of the President, Fiscal Year 1960 (B-
133209), June 1961. Retrieved online from https://hdl.handle.net/2027/
mdp.39015016740626 on June 3, 2023.
---------------------------------------------------------------------------
Every President from Franklin Roosevelt through Joe Biden has
endorsed the user-pay principle in general, and endorsed specific user-
pay rationales for certain transportation charges, taxes and fees, in
their annual budget messages.
Office of Management and Budget Circular A-25 governing user
charges was last amended in 1993 and is still active. Section 7c of the
current version mentions the operational differences between a user fee
and a user tax: ``Excise taxes are another means of charging specific
beneficiaries for the Government services they receive. New user
charges should not be proposed in cases where an excise tax currently
finances the Government services that benefit specific individuals.
Agencies may consider proposing a new excise tax when it would be
significantly cheaper to administer than fees, and the burden of the
excise tax would rest almost entirely on the user population (e.g.,
gasoline tax to finance highway construction). Excise taxes cannot be
imposed through administrative action but rather require legislation.
Legislation should meet the same criteria as in Section 7b; however, it
is necessary to state explicitly the rate of the tax.'' \49\
---------------------------------------------------------------------------
\49\ United States. Office of Management and Budget. Circular A-25,
section 7c. Retrieved online from on https://www.whitehouse.gov/wp-
content/uploads/2017/11/Circular-025.pdf on June 3, 2023.
---------------------------------------------------------------------------
In fiscal year 2022, the Office of Management and Budget estimated
that the federal government took in $572 billion in user charges,
which, by OMB definition, does not include those excise taxes (such as
those supporting the Highway Trust Fund) that are used in lieu of user
fees.\50\
---------------------------------------------------------------------------
\50\ See Table 18-3 in United States. Office of Management and
Budget. Budget of the U.S. Government, Fiscal Year 2024: Analytical
Perspectives, p. 197. Retrieved online from https://www.whitehouse.gov/
wp-content/uploads/2023/03/ap_18_offsetting_fy2024.pdf on June 3, 2023.
---------------------------------------------------------------------------
Nomenclature and the Constitution
In public debate, the term ``user fee'' has often been used to
describe a benefit-based or liability-based excise tax. Politically,
this is understandable, but constitutionally, it is usually incorrect.
The Constitution has two clauses that have led federal courts, and
Congress itself, to set strict standards for what is a ``bona fide''
user fee.
Origination Clause. Article I, Section 7, Clause 1 provides that
the Senate may not originate ``Bills for raising Revenue''--only the
House of Representatives may do so. But the Supreme Court held in 1897
(and reaffirmed in 1990) that ``a bill creating a discrete governmental
program and providing sources for its financial support is not a
revenue bill simply because it creates revenue . . . '' \51\
---------------------------------------------------------------------------
\51\ United States v. Munoz-Flores (495 U.S. 385, 400).
---------------------------------------------------------------------------
The most recent prominent example of a Senate-originated user fee
is the aviation security fee charged to all enplaning air passengers to
defray a portion of the Transportation Security Administration's
screening costs. The fee was originated in a Senate bill that became
law in 2001.\52\
---------------------------------------------------------------------------
\52\ The bill was S. 1447, 107th Congress. It became Public Law
107-71 (115 Stat. 597).
---------------------------------------------------------------------------
The Origination Clause is enforced by the House of Representatives
far more often than it is enforced by the courts.\53\
---------------------------------------------------------------------------
\53\ See a short summary of precedents in House Rules and Manual
(117th Congress), pp. 51-53. Retrieved from https://www.govinfo.gov/
content/pkg/HMAN-117/pdf/HMAN-117-pg4.pdf on June 18, 2023.
---------------------------------------------------------------------------
In the past, the Speaker of the House of Representatives, together
with the House Parliamentarian, have expressed that the House's own
enforcement of the Origination Clause (the ``blue slip'' rejection of
Senate revenue bills) ``will continue to be viewed broadly to include
any meaningful revenue proposal that the Senate may attempt to
originate.'' But the same announcement also listed specific criteria
for House committees other than Ways and Means to write their own bona
fide user fees.\54\
---------------------------------------------------------------------------
\54\ Congressional Record (bound edition), January 3, 1991, p. 66,
item 8 (``Jurisdictional Concepts Related to Clause 5(b) of Rule XXI.''
---------------------------------------------------------------------------
Export Clause. Article I, Section 9, Clause 5 provides that ``No
Tax or Duty shall be laid on Articles exported from any State.'' But
the courts have ruled that this clause does not apply to bona fide user
fees.
The most statement by the Supreme Court was in 1998, when the Court
invalidated the Harbor Maintenance Tax (a levy of 0.125 percent of the
cargo moving in and out of U.S. seaports, deposited in the Harbor
Maintenance Trust Fund, and to be used to defray Army Corps of
Engineers costs for harbor dredging) as it was applied to exports.
The Court held that because the tax was based on the value of the
cargo (not the ``size and tonnage of the vessel, the length of time it
spends in port, and the services it requires''), it did not ``correlate
reliably with the federal harbor services used or usable by the
exporter'' and was thus a tax, not a bona fide user fee.\55\
---------------------------------------------------------------------------
\55\ United States v. United States Shoe Corp. (523 U.S. 360, 369).
---------------------------------------------------------------------------
The Federal gasoline excise tax is not a user fee under these
standards for several reasons. (It is labeled a ``tax'' in statute; it
is part of the Internal Revenue Code; it is levied ``upstream'' at the
refinery, causing non-highway users to have to pay the tax and then
apply for a refund or a tax credit, and when first levied in 1932, it
was not formally linked to road spending.) But a charge on vehicle
mileage could, conceivably, be structured as a bona fide user fee.
Classifying, and Accounting for, Federal User Fees and Taxes
The federal budget essentially has two separate sets of books--one
for the spending side of the budget, and the other for the receipts
side. The sum totals of the two sets of books are compared on a daily,
monthly, and annual basis to determine the size of the federal deficit
(or surplus). All accounts in the federal budget, generally speaking,
are classified as either spending accounts or receipt accounts.\56\
---------------------------------------------------------------------------
\56\ The exceptions are ``revolving fund accounts'' which are
beyond the scope of this report. For more information, see United
States. Government Accountability Office. A Glossary of Terms Used in
the Federal Budget Process (GAO-05-734 SP), September 2005, pp. 2-5.
Retrieved from https://www.gao.gov/products/gao-05-734sp on June 20,
2023.
---------------------------------------------------------------------------
From the first centralized federal budget in 1921 through late
1960s, user fees were shown on the receipt side of the budget (except
for those the Post Office and, later, government-owned corporations
like the Tennessee Valley Authority, which were netted against total
department/corporation spending). That earlier treatment was overruled
by the 1967 final report of the President's Commission on Budget
Concepts, which still governs budget practice today.
The Commission recommended that ``For purposes of summary budget
totals, receipts from activities which are essentially governmental in
character, involving regulation or compulsion, should be reported as
receipts. But receipts associated with activities which are operated as
business-type enterprises, or which are market-oriented in character,
should be included as offsets to the expenditures to which they
relate.'' \57\
---------------------------------------------------------------------------
\57\ United States. President's Commission on Budget Concepts.
Report of the President's Commission on Budget Concepts. (Washington:
GPO, 1967) p. 65.
---------------------------------------------------------------------------
The most recent President's Budget explains: ``Offsetting
collections and offsetting receipts are recorded as offsets to spending
so that the budget totals for receipts and (net) outlays reflect the
amount of resources allocated by the Government through collective
political choice, rather than through the marketplace . . . Offsetting
receipts and offsetting collections are recorded in the budget in one
of two ways, based on interpretation of laws and longstanding budget
concepts and practice. They are offsetting collections when the
collections are authorized to be credited to expenditure accounts.
Otherwise, they are deposited in receipt accounts and called offsetting
receipts.'' \58\
---------------------------------------------------------------------------
\58\ United States. Office of Management and Budget. Budget of the
United States Government--Fiscal Year 2024: Analytical Perspectives.
Washington: GPO, p. 195. Retrieved from https://www.govinfo.gov/
content/pkg/BUDGET-2024-PER/pdf/BUDGET-2024-PER.pdf on June 20, 2023.
---------------------------------------------------------------------------
But that still leaves out excise taxes like those used to defray
federal highway and transit spending. After describing how the purchase
of postage stamps to defray part of the cost of delivering a letter
should qualify as a bona fide user fee and be treated as negative
spending, the Commission's report said:
``A different treatment is indicated, however, in the exercise of
the Government's sovereign tax powers for the collection of highway
excise taxes. The proceeds of such tax collections are earmarked for
highway construction [via the Highway Trust Fund]. Even though the
taxpayer may regard such excise taxes as a `price for services
rendered,' the individual taxpayer's contributions are not in any
direct way related to the particular highway services provided by the
Government. The Federal Government retains complete allocative
authority over the collected taxes and the taxpayer may never use the
resource constructed or provided by the Government out of the highway
excise taxes earmarked for the general purpose of highway construction.
Accordingly the collection of highway excise taxes and the expenditures
for highway construction should not be netted in the budget.'' \59\
---------------------------------------------------------------------------
\59\ Report of the President's Commission on Budget Concepts p. 70.
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Whereas true user fees can be applied directly to an account or
agency budget on the spending side of the budget, defraying some or all
of their expenses and reducing the net level of spending, this is not
possible for benefit-based and liability-based taxes, which must be
kept on the receipts side of the budget, because they are based on the
sovereign power of the government to raise revenue. The only way to
link tax receipts to a specific spending account, program or agency is
through the creation of a trust fund--a visibility exercise to link a
specific tax with specific spending programs over multiple years.
Federal Excise Taxes as Proxies for Road Use
Federal Excise Taxes Relating to Road Usage
The 20th Century saw three great waves of new federal excise taxes:
1917-1919: to prepare for and wage World War I and pay
down war debt.
1932: to balance the budget at the start of the Great
Depression under President Hoover.
1941-1945: to prepare for and wage World War II.

The ``user-pay'' paradigm never entered into any of these debates.
Most of the excise taxes were viewed by Congress as ways to raise
revenues on items that were not ``essentials of life.'' The gasoline
tax, first levied in 1932, was a tax on an essential, but it was so
essential that the state gasoline tax receipts were holding up much
better than income taxes during the Great Depression, and there was
nothing else Congress could think of to raise the level of revenues
they thought necessary.
Congress has levied fifteen separate excise taxes related to road
use over the years--thirteen on products, and two on the act of using
public roads. They are listed by the year of their initial levy. Not
all of these taxes were redirected from the General Fund to the Highway
Trust Fund in 1956.\60\
---------------------------------------------------------------------------
\60\ United States. Federal Highway Administration. Highway
Statistics 2020, Tables FE-101A and FE-101B.
---------------------------------------------------------------------------
Automobiles (1917)--a sales tax on the manufacturer's
sales price of a new automobile, ranging from 3 percent to 10 percent.
Never attributed to HTF; repealed in 1971.
Buses (1917)--a sales tax on the manufacturer's sales
price of a new bus, ranging from 3 percent to 10 percent. Never
attributed to HTF; repealed in 1978.
Motorcycles (1917)--sales tax on the manufacturer's sales
price of a new motorcycle, ranging from 3 percent to 10 percent. Never
attributed to HTF; repealed in 1971.
Trucks (1917)--includes both single-unit trucks and the
tractor portion of a combination vehicle--sales tax on the
manufacturer's sales price of a new truck, ranging from 3 percent to 12
percent. Repealed from 1926 and then reinstated in 1932. Attributed to
HTF beginning July 1, 1956; still on the books at 12 percent.
Operating or renting passenger automobiles for hire
(1919)--annual occupational tax paid per vehicle, based on passenger
capacity ($10 per year per vehicle for up to 7 passengers and $20 per
year per vehicle for over 7 passengers). Repealed in 1926.
Parts and accessories for automobiles and trucks (1919)--
manufacturer's excise tax of between 2.5 and 8 percent. Attributed to
HTF starting in 1966; repealed in 1983.
Tires (1919)--manufacturers excise tax originally levied
on all tires at a rate between 2.5 and 5 percent of price and then
repealed in 1926. Levied again in 1932 as a weight-based tax on all
tires starting at 2.25 cents per pound and eventually increasing to 10
cents per pound. Starting in 1983, tires weighing less than 40 pounds
are exempt from tax and a graduated weight-based tax is in place for
heavier tires. Attributed to the HTF since 1956; still on the books.
Inner tubes (1919)--manufacturers excise tax originally
levied on all tubes at a rate between 2.5 and 5 percent of price and
then repealed in 1926. Reinstated in 1932 as a weight-based tax ranging
from 4 to 10 cents per pound over time. Attributed to the HTF starting
in 1956; repealed in 1984.
Gasoline (1932)--manufacturers excise tax ranging from 1
cent per gallon to 18.4 cents per gallon over time. Now includes
gasohol. Attributed to HTF starting in 1956; still on the books at 18.4
cpg, of which 18.3 cpg goes to the HTF.
Lubricating oil (1932)--manufacturers excise tax on all
types of lubricating oil 1932-1978 and highway oil use only from 1978-
onward, ranging from 4 to 6 cents per gallon. Dedicated to the HTF
starting in 1966; repealed in 1983.
Trailers (1941)--manufacturers excise tax on trailers for
highway use ranging over time from 5 percent to 12 percent of original
price. Attributed to HTF starting in 1956; still on the books at 12
percent.
Use of a motor vehicle on public highways (1942)--a flat
$5 annual tax on the use of a motor vehicle, paid by the registrant.
Repealed in 1946.
Diesel and special fuels (1951)--manufacturers excise tax
varying from 2 to 24.4 cents per gallon. Now also include biodiesel.
Attributed to HTF starting in 1956; currently on the books at 24.4 cpg,
of which 24.3 cpg goes to the HTF.
Heavy vehicle use (1956)--annual tax on the use of a
motor vehicle over 26,000 pounds gross weight. Taxes are weight-based
and currently capped at $550 per year. Dedicated to the HTF from its
inception, still on the books today.
Tread rubber (1956)--manufacturers excise tax varying
from 3 to 5 cents per pound. Attributed to HTF starting in 1956;
repealed in 1984.

Figure 12
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

Mr. Crawford. Thank you, Mr. Davis.
Ms. Griffith, you are recognized.
Ms. Griffith. Chair Crawford----
Mr. Crawford [interrupting]. Can you hit your microphone,
ma'am?
Ms. Griffith. Is it working now? OK.

TESTIMONY OF REEMA GRIFFITH, EXECUTIVE DIRECTOR, WASHINGTON
STATE TRANSPORTATION COMMISSION

Ms. Griffith. Chair Crawford, Ranking Member Norton,
Ranking Member Larsen, and members of the subcommittee, my name
is Reema Griffith, and I serve as the executive director of the
Washington State Transportation Commission. Thank you for the
opportunity to testify today on the future of transportation
funding and the work Washington State has done on assessing a
per-mile road usage charge as a replacement to the gas tax.
Vehicle fuel efficiency is on the rise, and alternative
fuels are advancing, leading to decline in fuel tax revenues.
In Washington State, where the gas tax is constitutionally
dedicated for highway purposes, forecasts indicate our gas tax
revenues will decrease 50 percent per mile driven by 2040.
Facing this trend, our State Transportation Commission has
concluded that we must end our reliance on the gas tax and
transition to a road usage charge, or RUC, where drivers pay by
the mile rather than by the gallon of gas for their use of
publicly owned roads and bridges.
We have spent over a decade assessing, researching, and
testing road usage charging to ensure our transition away from
the gas tax is informed and deliberate, approaching it like a
slow turn of a dial rather than the sudden flip of a switch.
Our research shows we will need approximately 10 years to
methodically transition our statewide vehicle fleet from paying
a gas tax to paying a road usage charge.
Our research has uncovered many findings. Perhaps the most
important one is that road usage charging is fairer than our
current gas tax. It levels the playing field, and it ensures
all drivers, regardless of their car type, MPG, or fuel source,
pay their appropriate share for using the roads. In doing so,
road usage charging restores the simple principle of user pay/
user benefits that the gas tax once embodied.
While most don't think about it this way, we are paying by
the mile today under the gas tax. We just aren't paying the
same per-mile rate. With wide-ranging vehicle fuel efficiency,
drivers could be paying nothing for the roads through the gas
tax, or they could be paying up to 5 or even 6 cents per mile
under our State's 49.4 cent per-gallon gas tax.
Another key finding from our research is that the lower
income households and rural drivers are paying more in gas
taxes today than they would pay under a road usage charge. This
is largely due to the fact that, on average, these drivers tend
to drive lower MPG vehicles, meaning they are likely paying in
excess of 3 cents per mile today under our State gas tax. Under
a flat RUC rate of 2.4 cents per mile, which is what is being
considered in Washington State, they would see a tax reduction.
For drivers of fuel-efficient and zero-emission vehicles
who are paying very little, if any, gas tax today, paying a
road usage charge is not a disincentive for them. In fact,
these drivers will continue to maintain significant operating
cost advantages compared to those driving less fuel-efficient
cars when we factor in the cost of fuel and the need to
frequently fill up. Also, in Washington State, EV owners who
pay a road usage charge will no longer have to pay the State's
annual $225 EV fee, and hybrid owners will no longer have to
pay the $75 annual hybrid fee, which is on top of other State
and local registration taxes.
Federal investments in State research and testing through
the Surface Transportation System Funding Alternatives Grant
Program and now the Strategic Innovation for Revenue Collection
Program have enabled States across the country to pilot test
and demonstrate that road usage charging can work and can serve
as transportation's next sustainable funding source. And States
are moving forward. The States of Hawaii, Oregon, Utah, and
Virginia have enacted road usage charging programs. Vermont is
in process, and Washington State will be considering
legislation in the near future.
The partnership between the States and the Federal
Government to maintain our Interstate Highway System and other
critical infrastructure depends on reliable, long-term funding
generated by users of the system. The attention Congress is
giving this topic today, coupled with investments in ongoing
research and preparing for a national road usage charge pilot,
is exactly what is needed to help our Nation navigate to a more
resilient, fair approach to funding our surface transportation
system.
Thank you.
[Ms. Griffith's prepared statement follows:]

Prepared Statement of Reema Griffith, Executive Director, Washington
State Transportation Commission
Chair Crawford, Ranking Member Norton, and Members of the
Subcommittee, thank you for the opportunity to appear today at this
important hearing on the Highway Trust Fund.
My name is Reema Griffith, and I serve as Executive Director of the
Washington State Transportation Commission. Today, it is my honor to
testify on their behalf. The Washington State Transportation Commission
(WSTC) is a seven-member body of citizens appointed by the Governor for
six-year terms. The Washington State Department of Transportation
Secretary and a representative from the Governor's Office serve as ex
officio members. The Commission provides an open public forum for
transportation policy development. It reviews and assesses how the
entire transportation system works across the state and issues the
state's 20-year Transportation Plan. As the State Tolling Authority,
the Commission adopts state highway tolls and sets ferry fares. The
Commission also conducts special studies and projects as directed by
the Legislature.
The WSTC has been conducting a legislatively directed assessment of
Road Usage Charging since 2012, carrying out extensive research and
testing on the topic. A Road Usage Charge (RUC), also referred to as a
Mileage Based User Fee (MBUF), or a Vehicle Mileage Tax (VMT), is a
per-mile charge drivers pay for the use of public roadways, embodying
the ``user pay, user benefits'' concept. In Washington State, RUC is
being assessed as a replacement to the 49.4 cent-per-gallon state gas
tax, and as such, during a transitional time where RUC and gas tax
would both be collected, drivers would receive gas tax credits for
taxes paid, and those credits would be applied towards their RUC. This
approach was successfully demonstrated in Washington State's year-long,
2000-driver statewide pilot test of RUC in 2018 and 2019.
The Need for a New Approach
State and federal gas taxes provide vital funding for our
transportation infrastructure, including critical maintenance and
preservations needs. In Washington State, the gas tax also funds the
nation's largest marine highway system operated by Washington State
Ferries. However, revenues from the gas tax are already declining in
some states and face a steep decline nationally due to the continued
growth of vehicle fuel economy (as measured in miles per gallon, or
MPG) and the fact that gas tax is not indexed to inflation in many
states or nationally. At the federal level, the gas tax has not been
increased in 30 years. As vehicles drive farther on a tank of gas,
drivers are buying less gas and thus paying less in gas taxes to use
the roads (Exhibit 1).
While the nation and automakers make continued investments that
enable a transition to a zero-emission passenger vehicle fleet, our gas
tax revenues are on a path to decline. Washington State has enacted a
requirement for all new cars sold by 2035 to be zero-emission (e.g.,
electric, plug-in hybrid electric, fuel cell, or other alternative
clean fuels). Our forecasts indicate that gas tax revenues generated
for each mile driven will decline by nearly 50% by 2040 (Exhibit 2).
Avoiding this decline in revenue requires a broad-based approach
that ensures all vehicles contribute to funding our roads and bridges,
regardless of engine type or fuel source. This will require a shift
away from relying on the consumption of gas to pay for our roads and
bridges via the gas tax, and to move to a modernized user fee such as a
Road Usage Charge (RUC) in which drivers pay for the miles they drive.
RUC provides long-term revenue stability and sustainability by removing
the impacts that growing vehicle fuel efficiency and alternative fuels
have on today's consumption-based gas tax revenue generation.
Washington State's Road Usage Charge Assessment
Washington State has conducted extensive research and testing on
Road Usage Charging since 2012 (Exhibit 3). The Washington State
Legislature directed the Washington State Transportation Commission
(WSTC) in 2012 to begin an assessment of RUC as a replacement to the
state's 49.4-cent-per-gallon gas tax. The WSTC convened a 30+ member
Steering Committee made up of various public, private, and non-profit
stakeholders, charged with advising the WSTC on its RUC Assessment and
pilot testing.
From 2012 to 2015, state funding supported the work of the WSTC and
the Steering Committee, which included setting forth high-level
parameters for the research program including the following:
Ensure that during a transition period of moving from the
gas tax to a road usage charge, drivers would owe only one or the
other, but not both.
Use a per-mile RUC rate of for all analysis and testing
equivalent to what an average driver pays under the state gas tax of
49.4 cents per gallon (2.4 cents per mile, based on an of average 20.5
MPG for passenger vehicles in Washington).
Provide drivers choices for how they report their vehicle
mileage and pay their RUC.

Under the guidance of the Steering Committee, the WSTC adopted a
set of guiding principles that formed the basis for the research
program that would move forward over the course of a decade. With the
overall goal of identifying a sustainable, long-term revenue source for
transportation to replace the gas tax, the guiding principles establish
the path for how to achieve that goal. The guiding principles are as
follows:
Transparency: A road usage charge system should provide
transparency in how the transportation system is paid for.
Cost-effectiveness: The administration of a road usage
charge system should be cost effective and cost efficient.
Equity: All road users should pay a fair share with a
road usage charge.
Privacy: A road usage charge system should respect an
individual's right to privacy.
Data Security: A road usage charge system should meet
applicable standards for data security, and access to data should be
restricted to authorized entities.
Simplicity: A road usage charge system should be simple,
convenient, transparent to the user, and compliance should not create
an undue burden.
Accountability: A system should have clear assignment of
responsibility and oversight and provide accurate reporting of usage
and distribution of revenue collected.
Enforcement: A road usage charge system should be costly
to evade and easy to enforce.
System Flexibility: A road usage charge system should be
adaptive, open to competing vendors, and able to evolve over time.
User Options: Consumer choice should be considered
wherever possible.
Interoperability and Cooperation: A Washington road usage
charge system should strive for interoperability with systems in other
states, nationally, and internationally, as well as with other systems
in Washington. Washington should proactively cooperate and collaborate
with other entities that are also investigating road usage charges.
Phasing: Phasing should be considered in the deployment
of a road usage charge system.
Complementary policy objectives: A road usage charge
system should, to the extent possible, be aligned with Washington's
energy, environmental, and congestion management goals.

The WSTC started its assessment by determining and reporting to the
state legislature that RUC was feasible to carry out from a technical
standpoint, but public acceptance would require significant outreach
and public education around the topic. With guidance from the Steering
Committee, a concept of operations was developed, essentially serving
as the blueprint for an operational RUC system which formed the
foundation for Washington State's RUC pilot test in 2018. A business
case analysis was also conducted to quantify how RUC would perform
financially compared to the gas tax. The analysis determined that, even
while holding the RUC rate constant and accounting for higher costs of
administration, RUC would out-produce the gas tax over time as the
vehicle fleet transitions to higher MPG and alternatively-fueled
vehicles.
Federal Support for Road Usage Charging Research & Testing
In 2016, the Surface Transportation System Funding Alternatives
(STSFA) grant program became available. As one of the first states to
apply, Washington secured $8.4 million to carry out research alongside
the launch of statewide public outreach and demonstration testing,
which occurred from 2016 to 2020. During this time, the WSTC conducted
a year-long, statewide RUC pilot test with over 2,000 drivers, which
fully simulated a RUC program from enrollment to mileage collection to
invoicing. No real money was exchanged except in the interoperability
test with Oregon discussed below. In the pilot, drivers were given a
credit for the estimated gas taxes paid, and the invoices indicated if
they owed RUC charges or if they had a credit due to overpayment of gas
taxes.
The 2,000 participating drivers were given three surveys during the
pilot, at the beginning, middle, and end. A key take-away from
Washington's pilot is that public demonstrations are ideal as
educational tools for helping the public understand the funding
challenges we face, the choices available for addressing them, and the
impacts a RUC would have on drivers both from a participation
perspective and a financial impact perspective. The results from our
pilot participant surveys showed that support for RUC as a replacement
to the gas tax rose from 50% at the start of the pilot to 72% by the
end of the pilot. Preference for RUC over the gas tax as a funding
mechanism rose from 52% at the start of the pilot to 68% by the end of
the pilot. When asked what participants would recommend to officials in
considering next steps, 61% of participants urged moving forward with
RUC as soon as possible, in the next 5-10 years so that it can
eventually replace the gas tax (Exhibit 4, Exhibit 5, and Exhibit 6).
The key components of Washington's RUC pilot included:
Testing multiple RUC mileage reporting methods with
drivers and allowing them to choose between reporting options ranging
from low-technology approaches to GPS-based technology (Exhibit 7).

An interoperability demonstration with Oregon was carried
out to test how the movement of RUC revenues between two states with
RUC programs could be reconciled and executed efficiently. This aspect
of our pilot program involved conducting the nation's first cash-
transaction test between our two states. A small group of drivers from
each state drove across our borders, remitting their mileage and state-
location information. On a monthly basis, they received and paid
invoices for total miles driven in each state, with the RUC rates of
each state applied to miles driven. They also received a credit for gas
taxes paid, corresponding to miles driven in each state and per the gas
tax rates in each state. Utilizing a cloud-based ``clearinghouse''
approach designed as part of this demonstration, our two states were
able to successfully and efficiently collect, reconcile, and transmit
the RUC revenues owed to each state based upon the data gathered from
drivers.

Further testing of interoperability occurred with Idaho
where a small group of drivers demonstrated RUC in the context of
cross-border travel, mileage reporting, and invoicing in a simulated
manner. This served to demonstrate multi-state operational capability
in the case of one state that does have a RUC program and one that does
not.

Testing the collection and reconciliation of RUC charges
between two countries was also demonstrated via a small pool of drivers
from British Columbia who utilize one of the busiest border crossings
in the country located in Blaine, Washington, to enter the U.S. The
test highlighted some of the difficult but surmountable challenges of
international cross-border RUC administration including cellular
network availability for data transmission and compatibility of privacy
laws.
Forward Drive--Further Research and Pilot Testing Takes Place in
Washington
In 2020, Washington State received an additional $5.5 million STSFA
grant award for the ``Forward Drive'' program now nearing completion
following three years of research and additional testing. This portion
of our RUC research has focused on the following activities:
Building a custom revenue forecasting model calibrated to
Washington State that is capable of modeling the long-term impacts of
various factors and estimating their financial impacts. Factors include
the impacts of EV adoption on fuel consumption, impacts of increased
telecommuting, and impacts of autonomous vehicles and ridesharing on
total miles driven. Analysis revealed many findings, including steep
declines in gas tax revenues in coming years as fuel efficiency
increases and adoption of alternatively fueled vehicles accelerates.

Assessing equity impacts of RUC on low income and under-
represented communities and conducting statewide outreach and gathering
qualitative input. Outreach to historically underserved communities
highlighted concerns about the potential cost impacts of RUC.

Exploring RUC operational options and innovations, along
with opportunities for cost of collection reductions that will enhance
efficiencies, lower overall costs, and improve the driver experience.

Determining what RUC program features need to be
standardized to ensure interoperability across states, maximize the
ease of revenue reconciliation, and create consistent approaches to
reciprocity between states. Through a series of meetings with
participants from several states and national organizations, two
``mock'' standards for vehicle classification and jurisdiction
identification was developed. While more work remains to be done in
this space, this effort took the first steps in addressing the many
interstate dynamics of RUC operations.

The ``Forward Drive'' research program culminated in the detailed
design of an interactive, web-based RUC enrollment, reporting, and
payment simulation. Consistent with the project's overall objectives,
the simulation aimed to address user experience, equity, and cost
efficiency. The simulation provided Washington State drivers with the
opportunity to experience signing up for RUC for the first time,
experiencing the process from end to end. Once participants completed
the online enrollment and payment simulation, they were given a survey
to share their thoughts and perspectives on the experience. The
research team was able to measure participant perceptions and opinions,
as well as interaction behaviors observed within the simulation.
Over one thousand Washingtonians participated in the simulation and
completed a survey about their experiences, of which a portion
constituted a statistically representative statewide sample of drivers.
Key findings of the 2022-2023 online RUC enrollment and payment
simulation include the following:
70% were satisfied or very satisfied with the process of
enrollment and payment, and 56% reported taking less than 5 minutes to
complete the entire process.
88% of participants selected self-reporting their miles
via a manual/non-GPS approach like providing an odometer read (Exhibit
8).
The average amount of RUC due among participants, net of
gas tax credits, was $29.64 per year.
While 85% of participants wanted to pay their RUC charges
in one payment, 15% wanted to make four equal payments. Among
households earning less than $50,00 per year, 36% preferred to pay
their RUC in four installments rather than all at once.
Rather than detailing exempt miles driven out of state or
on private roads, 80% of participants selected a standard exemption of
200 miles from their chargeable annual miles, as a proxy for their non-
chargeable miles.
After experiencing the simulation, participants supported
transitioning away from the gas tax to RUC by a margin of 56% to 44%,
the highest measured level of support among a representative statewide
sample in Washington.
Findings of Washington State's Research Program Spotlight Benefits and
Opportunities
Thanks to the STSFA grant program and knowledge sharing among
states, RUC programs have been enacted in four states. RUC research
efforts have also spread across the country with more states joining
the research effort (Exhibit 9). As states build their collective
knowledge base, there are some common conclusions around the benefits
RUC offers:
Drivers pay by the mile today under the gas tax, but they
do so inequitably. The gas tax is based upon the simple principle of
``user pays, user benefits.'' But today, as vehicles become more fuel
efficient and alternative fuels become available, this principle is
shifting to ``some users pay, while all users benefit.'' This is
because drivers of fuel-efficient vehicles are buying less gas today
and are thus paying less in gas taxes. For example, in Washington
State, if you drive a car that gets over the state average 20 MPG, you
could be paying as little as 1 or 2 cents per mile under the gas tax.
However, if a Washingtonian drives a vehicle that gets less than the
state average 20 MPG, they will pay more than 2.4 cents per mile, and
as much as 5 cents per mile for a vehicle that gets 10 MPG under the
gas tax (Exhibit 10). RUC preserves the original user-pay paradigm.

RUC harmonizes the current conflict between the need for
transportation revenue via gas consumption, with policy objectives to
reduce harmful tailpipe emissions and improve fairness. Currently, 34
states impose annual EV fees on top of other vehicle registration fees
(Exhibit 11). RUC provides the opportunity to waive those fees and
replace them with a user-based approach. And depending on a given
state's priorities, RUC provides policy levers that do not exist today
under the gas tax. Lawmakers could choose to vary RUC rates by factors
such as vehicle weight, emissions rating, owner income, and more.

While the price per gallon at the gas pump is not
something states can control, a flat per-mile RUC rate allows all
drivers to pay the same per mile regardless of how often they have to
fill-up. This will generate some tax relief for drivers of gas-powered
cars who must fill up frequently, while still maintaining a significant
operating cost advantage for drivers of more fuel-efficient and zero-
emission vehicles (Exhibit 12).

Lower income households and rural drivers pay more in gas
taxes today than they will under a RUC. Based upon 2020 Census data
coupled with state vehicle registration data, research conducted under
``Forward Drive'' revealed a correlation between income, geographic
location of residence, and the amount of gas taxes paid. Our analysis
shows that low-income and rural areas tend to have lower-MPG vehicles
on average, which equates to higher total fuel costs and thus paying
more in gas taxes. However, under RUC, drivers of low-MPG vehicles
would pay less at a RUC rate of 2.4 cents per mile in Washington State.
Our analysis further indicates that households that make less than
$50,000 per year currently pay the most in gas taxes per mile driven,
on average, but would see a tax reduction under RUC of about $7 per
10,000 miles driven (Exhibit 13). While this tax reduction is modest,
it is not insignificant when every penny counts.

Through our research, we have determined that in general,
transportation taxes are a relatively small proportion of total
household costs. As lawmakers contemplate ways to provide tax relief to
those who need it most, it is important to understand what policy
measures will produce meaningful impact to drivers. Analysis of
transportation costs as a percentage of household expenditures by
income level reveal that transportation accounts for 40% of
expenditures on average for households making less than $30,000 per
year, while households making over $150,000 per year devote only 9% of
expenditures to transportation. Nearly 95% of transportation costs are
derived from owning a vehicle, with gas tax or an equivalent RUC
comprising just 4% of household transportation costs (Exhibit 14).

Through pilot testing of four mileage reporting options
that require no location information, Washington State has demonstrated
that RUC does not require the use of GPS technology to be implemented.
By offering drivers choices for how they remit their miles driven,
including ``manual'' options that do not involve the use of GPS, we
have learned that RUC can be as simple as providing an odometer reading
once per year during vehicle registration renewal. Other non-GPS
mileage reporting options include: taking a picture of one's odometer
(submitted via text or mobile app); using a plug-in device without GPS
to count and wirelessly transmit total miles driven; or using a
smartphone app with the ability to toggle GPS on or off that can
collect and transmit miles driven by state.

In addition to offering drivers choices that include non-
GPS mileage reporting, it is critical to enact privacy and data
protection laws with a RUC program. Washington State has developed a
model privacy policy and statutory language to reflect key provisions
that protect drivers from risks associated with sharing road usage
data.

Moving from the gas tax to RUC should not be a sudden
change, but rather should be approached as a slow transition where
portions of the vehicle fleet are moved over to RUC over time, while
still keeping the gas tax in place. Under a slow transition, gas taxes
paid by drivers should be treated as credits toward their RUC, as was
demonstrated in Washington's RUC pilot test. A gradual transition to
RUC allows several benefits: it supports seamless interstate travel
while some states enact RUC programs and others do not; it enables
small, incremental payments (gas taxes paid at the pump) to count
toward RUC owed; it allows the existing gas tax to serve as a backstop
against tax evasion; and for states like Washington that have bonded
their gas tax revenues, keeping the gas tax in place enables them to
meet legal requirements around revenues to cover outstanding debt
payments to bondholders.
Next Steps in Washington State
The WSTC's RUC research program has produced several significant
reports with findings and recommendations that span policy development
to program implementation to revenue forecasting. The state legislature
has seen bills introduced in the 2021, 2022, and 2023 sessions. While
legislation has not passed yet, the knowledge base and level of
acceptance for a transition to RUC is growing, helping to lay the
foundation for the enactment of a small-scale RUC program in the near
future. Meanwhile, the WSTC is concluding its current federal research
program, ``Forward Drive,'' and will issue the final findings in
January 2024 to the United States Department of Transportation, the
Washington Legislature, and the Governor.
Appendix of Exhibits
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

Exhibit 1: Washington's state gas tax is 49.4 cents per gallon. The
amount of gas tax paid per 10,000 miles driven varies based on vehicle
fuel economy as measured in miles per gallon (MPG). Newer vehicles
largely earn higher MPG ratings and pay less in gas taxes per mile
driven.
__________
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

Exhibit 2: By 2040, revenue per mile driven from the Washington state
gas tax of 49.4 cents per gallon is expected to decline by 50% from
2020 levels (from 2.5 to 1.25 cents per mile). Approximately half of
this decline is attributable to zero-emission vehicles (ZEVs), while
the other half is attributable to improving efficiency of internal
combustion engine vehicles.
__________
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

Exhibit 3: Washington's program of research, testing, and policy
development for a per-mile road usage charge spans over a decade.
__________
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

Exhibit 4: Washington pilot participant responses in 2018 (survey 1,
prior to the beginning of the pilot test, at left) and 2019 (survey 3,
at the conclusion of the pilot test, at right), to the question, ``How
do you feel about implementing a road usage charge as a replacement to
the gas tax to fund transportation infrastructure?''
__________
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

Exhibit 5: Washington pilot participant responses in 2018 (survey 1,
prior to the beginning of the pilot test, at top) and 2019 (survey 3,
at the conclusion of the pilot test, at bottom), to the question,
``Knowing what you know today, which method to fund transportation
would you prefer?''
__________
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

Exhibit 6: Washington pilot participant responses in 2019 (survey 3, at
the conclusion of the pilot test), to the question, ``Which of the
following best represents your advice to elected officials as they
consider the next steps in implementing a road usage charge (RUC)
system statewide?''
__________
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

Exhibit 7: Method, description, and popularity of road usage charge
mileage reporting methods tested in the statewide 2018-2019 Washington
pilot, among over 2,000 participating vehicles.
__________
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

Exhibit 8: Preferred choice of road usage charge mileage reporting
method among a statewide representative sample of pilot participants in
2022-2023.

Exhibit 9: Status of enacted programs, pilot programs, studies and
research, and multi-state research among the states.
__________
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

Exhibit 10: Washington state gas tax expressed in cents per mile
driven. Vehicles below the statewide average of 20.5 MPG pay more per
mile driven in gas taxes than vehicles above the statewide average MPG.
__________
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

Exhibit 11: States with an annual registration surcharge applied to
electric, plug-in hybrid electric, hybrid, and/or highly fuel-efficient
vehicles as of 2023 (note: fees are waived for participants in per-mile
road usage charge programs in Virginia, Utah, and Oregon, and starting
July 2025 in Hawaii).
__________
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

While RUC does result in drivers of fuel efficient vehicles paying a
little more in taxes for transportation as compared to the gas tax, the
overall cost advantage of owning a fuel efficient, hybrid, or EV
remains significant. For example, under RUC, owners of a Prius will pay
$210 per month less than the Ford pickup truck driver.

Exhibit 12: Cost of fuel and road usage charge of 2.4 cents per mile,
per 10,000 miles driven for five vehicle types in Washington. This
chart assumes removal of the state gas tax of 49.4 cents per gallon, EV
fees of $225 per year, and hybrid fees of $75 per year.
__________
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

Exhibit 13: Vehicles registered in Census tracts with an average
household income less than $50,000 would save an average of $7 per
10,000 miles driven under a road usage charge of 2.4 cents per mile,
compared to the gas tax of 49.4 cents per gallon. Meanwhile households
in Census tracts with average household incomes over $150,000 would pay
an average of $21 more per 10,000 miles driven under RUC.
__________
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

Exhibit 14: Transportation costs as a percentage of total household
expenditures by income level (right) and break down of transportation
costs among low-income households (left), showing fuel tax or road
usage charge as 4% of all transportation household costs.

Mr. Crawford. Thank you, all, for your comments.
I ask unanimous consent that the witnesses' full statements
be included in the record.
Without objection, so ordered.
I ask unanimous consent that the record of today's hearing
remain open until such time as our witnesses have provided
answers to any questions that may be submitted to them in
writing.
Without objection, so ordered.
I also ask unanimous consent that the record remain open
for 15 days for any additional comments and information
submitted by the Members or witnesses to be included in the
record of today's hearing.
Without objection, so ordered.
And, finally, I ask unanimous consent to reduce Member
question time to 3 minutes to allow more Members' questions.
Without objection, so ordered.
With that, I would recognize myself for 3 minutes.
Mr. Strickler, Ms. Griffith, about 60 percent of Americans
live paycheck to paycheck, and our economic situation is
exacerbated by the persistent inflation that we are
experiencing right now. I am concerned that an annual or even
quarterly vehicle-miles traveled or road usage charge would
cause more harm to lower income individuals. I understand that
many believe that lower income individuals pay less under RUC,
but the timing of RUC bills may be a problem. How many low-
income individuals have participated in your programs thus far?
Mr. Strickler. Mr. Chair, thank you for the question.
Again, Kris Strickler for Oregon Department of Transportation.
I don't have the data, but I can certainly get it for you for
how many low-income users are a part of our RUC program right
now. But I can tell you that low-income users of our system in
general is a priority for ODOT.
Mr. Crawford. Gotcha. Appreciate it.
Ms. Griffith.
Ms. Griffith. Thank you. We conducted a pilot of 2,000
drivers, of which a small percentage was considered low income.
We have continued to do our research, though, deliberately
reaching out to low-income communities and underrepresented
communities across our State through focus groups and through
interviews. We continue to get input from them, and through
that education process, we have learned a lot around their
challenges but also what we can do to make sure it is equitable
going forward.
Mr. Crawford. I am concerned about what would happen if an
individual couldn't fully pay off their RUC bill. Any
considerations there?
Ms. Griffith. Yes. In Washington State, there are options
and there are levers that policymakers don't have today with
the gas tax. For example, with road usage charging, lawmakers
could use to cap the amount of total RUC charges a driver
incurs each year. They could exempt certain levels of income
from paying a RUC or perhaps offer a discount. These are
options we don't have today under the gas tax. It is collected
at a flat rate at the rack.
Mr. Crawford. Thank you.
Did you want to add to that, Mr. Strickler?
Mr. Strickler. Yes. Just a quick addition, Mr. Chair. In
our program, our program is voluntary, and so, at this point,
it is not a problem that we have experienced, but we understand
the importance of it as well.
Mr. Crawford. OK. Excellent. In the interest of time, I am
going to yield the balance of my time and recognize Ms. Norton.
Ms. Norton. Thank you, Mr. Chairman.
Mr. Strickler, transit provides social benefits through
reduced congestion and improved air quality. Yet we have
witnessed periodic attempts in Congress to eliminate the
Federal funding for public transit from the Highway Trust Fund
based on the argument that these funds should only go toward
helping drivers. Would eliminating dedicated transit funding
from the Highway Trust Fund help or hurt drivers?
Mr. Strickler. Mr. Chair, Ranking Member Norton, thank you
for that question. What we know about the transportation system
is that each of the parts is intricately linked, and so, the
drivers rely on the users for the transit system and vice
versa, frankly, in order to make the entire transportation
system work, as well as our active transportation uses for
bicycles, pedestrians, et cetera. So, unequivocally, reducing
the funding for transit agencies would hurt the overall
transportation system and should continue to be part of the
dialogue.
Ms. Norton. Thank you.
Ms. Griffith, your testimony notes that the Washington
State Transportation Commission has researched the equity
impacts of road usage charges on lower income and
underrepresented communities. How could road usage charges
affect lower income individuals, who already spend a
disproportionate amount of their income on transportation
costs?
Ms. Griffith. Thank you. As I mentioned in my testimony
today, those drivers are paying indeed a lot at the pump in gas
taxes. Our research indicates that households less than $50,000
will see a reduction in gas taxes owed or in taxes owed. While
modest, we estimate that it is around $7 per 10,000 miles
driven. So, while maybe not a lot, it is important when
families are counting every penny.
We would also indicate that in our research we did take a
close look. When we talk about, quote/unquote, ``transportation
costs,'' what do we really mean by that? And what we learned is
that households that make less than $30,000 per year, 40
percent of their total household costs is attributable to
transportation. That is a significant portion of that
household's income.
When we expand it and look to what that transportation cost
component was made up of, we learned that only 4 percent was
attributable to gas tax or RUC, or equivalent RUC rate; 95
percent was attributable to the cost of owning a vehicle. So,
these are important takeaways for us as we think about making
policy and looking at ways we can indeed help people who need
some relief on the tax side as we assess the equity and impacts
of the road usage charge.
Ms. Norton. Thank you, Ms. Griffith.
I yield back.
Mr. Crawford. The gentlewoman yields.
Mr. Webster.
Mr. Webster of Florida. Thank you, Mr. Chairman.
Mr. Davis, I sponsored the Federal Infrastructure Bank Act
with Congressman Allred, and it is referred to this committee.
Its purpose is to provide infrastructure money in lieu of
anything else that might be out there, so, it would be non-
Federal money, nontax money. It would just be free money
provided by investments made by everything from, I guess,
retirement funds to rich people. I don't know. But anyway, it
would do that. But some community banks have said that they are
concerned about competing with Federal Infrastructure Bank. And
so, I just wondered, do you know any banks that loan to
infrastructure projects right now?
Mr. Davis. In terms of actual financial institutions
regulated by the Fed banks, no. There are several multinational
wealth funds, and things like Macquarie in Australia springs to
mind, that invest in these funds, but not banks per se. But
there are large financial entities that do invest in these
projects.
However, loans have to be repaid, so, there has to be a
revenue stream from somewhere, whether it is a toll or
something else, to repay those loans in order to make them
attractive to whoever is going to make the loan. And that has
always been the problem is that Federal restrictions on tolling
can hamstring the abilities of local governments to provide the
revenue stream to repay infrastructure bank loans.
Mr. Webster of Florida. So, if these banks were up and
running, loaning money, creating jobs, all the things that
happen when money is spent, don't you think that would
complement the local existing banks that are there as opposed
to deterring them from their regular business?
Mr. Davis. I don't see how regular banks like, you know,
whether your local bank or Citigroup would have much conflict
with a Federal Infrastructure Bank. They are two different
lines of business. But, again, the Federal Infrastructure Bank
would have to loan the projects that would eventually be
repaid, so, there would have to be a revenue stream somewhere.
And, also, the infrastructure bank relies on the Federal
Government borrowing money at the lowest interest rate possible
and then loaning it back out to people at a slightly higher
interest rate. But, as you have probably noticed, the Federal
Government's borrowing costs aren't what they used to be even 2
years ago, so, the interest rates have gone up to the point
where you have got to take a step back and doublecheck to make
sure that some of the assumptions in infrastructure bank
proposals from years past are still valid.
Mr. Webster of Florida. Thank you very much. I yield back.
Mr. Crawford. The gentleman yields.
Mr. Larsen.
Mr. Larsen of Washington. Thanks.
Ms. Griffith, thanks for coming today. Our Washington State
Constitution says gas tax has to be used for transportation.
Has the commission looked at, whether or not you move from a
gas tax to something called a RUC, is that an equivalent as far
as the constitutional requirements in our State, or does that--
I don't know if any other State has that issue, but have you
looked at that, whether or not we need to change the State's
constitution to accommodate so that the money goes to
transportation versus siphoned off by the legislature for
General Fund purposes?
Ms. Griffith. Yes. We have assessed that, and we believe
that in order to ensure the same treatment of the RUC as we do
gas tax, it would require a constitutional amendment. However,
the legislature could codify in law, of course, provisions to
protect those dollars for those intended purposes. But,
ultimately, we do believe they would have to do a
constitutional amendment if they wanted to have it in the same
requirement as gas tax.
Mr. Larsen of Washington. Yes, that which legislatures
codify, they can decodify----
Ms. Griffith [interposing]. Correct.
Mr. Larsen of Washington [continuing]. As well, right?
Ms. Griffith. Yes.
Mr. Larsen of Washington. It happens around here sometimes.
With regards to--you talked about disproportionate impacts.
Has your pilot looked at rural versus urban or rural, suburban,
urban impacts of the--looking at your 2,000 or so participants,
did you try to create a broad base of folks that would fit all
these categories?
Ms. Griffith. Yes. Yes. Our pilot intentionally
oversubscribed drivers in the rural parts of our States to
ensure they were represented and could test and experience what
a road usage charge would have in terms of impact to their
households financially as well as participation. So, we were
intentional about making sure they were very involved in that
pilot.
Mr. Larsen of Washington. Yes. Now, we have the third
highest gas tax of any State in the country or so. We also are
tied for lowest income tax for those who question Washington
State's tax system. So, you are all welcome to move to
Washington State and not have any State income tax. But, given
that, has the commission looked at the RUC as a complement, a
supplement, a replacement to that gas tax, because it is a
relatively high compared to other States?
Ms. Griffith. Yes, so, the legislature directed and has
stated intent over and over that it would be a replacement to
the gas tax. So, as we contemplated transition, a slow
transition, where the gas tax would remain in place for some
time--and I will note, Washington State has leveraged its gas
tax revenues quite heavily with bonds, so, we do have a long
runway in terms of repaying and diffusing those.
However, when we think about that, we tested in our pilot,
and we believe this would be the case in an actual program,
where drivers would continue to fill up at the pump and pay
those gas taxes but they would receive credits for the gas
taxes paid towards their RUC charges.
So, in essence, drivers would see incremental payments
being made towards those RUC charges, minimizing the bills that
they would get or the balances owed on those RUC invoices.
Mr. Larsen of Washington. Yes. Great. Thanks.
Thank you. I yield back.
Mr. Crawford. The gentleman yields. Thank you.
Recognizing Mrs. Chavez-DeRemer.
Mrs. Chavez-DeRemer. I got so lucky today. Thank you.
Director Strickler, thank you for being here and
representing Oregon. I think it only can be a benefit that
there is another Oregonian in the house, Val, and so, there are
three of us in this room to get it figured out. So, thank you.
Mr. Strickler, Director Strickler, thank you for appearing
before the subcommittee.
As you know, Secretary Buttigieg came before the full
committee last month. And it is no surprise that I am going to
spend my time today with ODOT's plan to impose tolling on
Oregonians. You know that I oppose tolling. We discussed many
concerns when you visited my office in March, and since then,
the list of reasons of tolling have grown.
Mr. Strickler, I hope you took a few minutes to watch the
exchange with Secretary Buttigieg regarding tolling. The
Secretary emphasized the importance of following Federal laws
governing the process, and this includes conducting that
meaningful public outreach. He stated that tolling must meet
certain Federal requirements for the U.S. Department of
Transportation to sign off on it.
I also wrote a letter to the Secretary to summarize how
ODOT's tollings rollout has been deeply flawed and mishandled.
My letter relayed recent concerns from meetings with mayors,
public comments from Clackamas County, and other communities.
So, let's start with the environmental assessment for I-
205, or, rather, the draft EA, as it is technically called,
issued in February. That EA--firestorm of opposition from
county and city leaders. They pointed out that congestion will
not be resolved by tolling. Traffic will divert from the
highways in nearby cities and county roads. These communities
are not equipped to handle that increased traffic volume.
Letters also raise questions about ODOT's modeling and the
lack of a cohesive mitigation strategy. There are concerns
about accommodating those with financial hardships as well, not
to mention hard-working Oregonians who are dealing with
inflation and the economy.
As of today, ODOT cannot unequivocally present the plan for
tolling. ODOT has downgraded tolling on I-205 to just the
Abernethy Bridge without a third lane, but we must wait for the
supplemental EA for those details. And as for the Regional
Mobility Pricing Project, there are multiple options still
under consideration.
I am going to skip a couple of things because we are on
limited time.
So, for the first question, does ODOT intend to officially
respond to public comments on that EA for Clackamas County and
the affected cities? And do we have to wait for that
supplemental EA?
Mr. Strickler. Chair Crawford, Congresswoman, we do intend
to respond to the public comments as part of the EA process.
And we continue to evaluate different options associated with
each of the toll-related projects moving forward.
Mrs. Chavez-DeRemer. When can we expect to see ODOT move
past the various proposals and present the final tolling plan
for I-205 and I-5?
Mr. Strickler. Congresswoman, at this point, as you know,
the evaluation period going through the EA right now is really
to gather that data, gather the public input, and to have the
conversation with each of----
Mrs. Chavez-DeRemer [interrupting]. Director Strickler,
this has----
Mr. Strickler [continuing]. The affected communities.
Mrs. Chavez-DeRemer [continuing]. Been going on since
March. I really want to kill this bill, and I would expect that
you are going to help me do that.
With that, I yield back.
Mr. Crawford. The gentlewoman yields.
Mr. Pappas.
Mr. Pappas. Thank you very much, Mr. Chairman.
I appreciate the comments of the panel here today. I think,
while we might not leave with all the answers, we certainly--
you help us understand the problem and the questions that we
can continue to refine as we do our work moving forward.
Obviously, the solvency of the Highway Trust Fund is so
critical to all of our States in ensuring that projects can
continue to move forward.
And I will also just add that, on the other side of the
ledger, as we think about equity and sustainability in terms of
the revenue, we should also think about how we modernize the
highway formula, which disadvantages a number of States,
including mine. And that is something that we have to continue
to focus on.
Ms. Griffith, maybe I could start with you. I appreciate
the ways in which the States have been laboratories on this
issue, because the same forces that are impacting the Highway
Trust Fund at the Federal level are obviously hurting our State
budgets when it comes to transportation funding.
One of the issues that I hear about in my State all the
time is privacy and concerns around that. Could you talk about,
in your pilot, how you worked to address privacy concerns? And
is that a hurdle that can be overcome?
Ms. Griffith. Thank you for that question. Yes, it has been
a focal point, an important point that we address, and we are
ready to address it.
It is largely solvable through an approach of offering
drivers options for how they would participate in a road usage
charge program, how they would remit their miles, essentially.
You do not have to use GPS in order to do a road usage
charge program. In fact, in Washington State, we are looking at
the foundational approach to a road charge being a simple
odometer read. It could be self-reported by drivers online when
they go to renew their vehicle tags, making it very easy for
drivers to comply. But also, there are ways you could use
technology to support that and make it easy for drivers,
through either taking a photo of your odometer and texting it
in, so there are ways to validate and ensure there is not tax
evasion associated with self-reporting. It does happen to be
also the most cost-effective and efficient way of doing it.
So, we feel that it is a foundational, important point that
drivers have the choice between if they would like to use GPS
or a technology approach or their vehicle's telematics to remit
their miles or if they would like to go with a more what we
call manual approach of simply reporting your odometer. This
gives drivers the opportunity to customize how they would
participate, and it removes the concerns that many would have
utilizing GPS.
Mr. Pappas. Well, thanks for that.
I would like to shift to Mr. Strickler in the time that I
have left and ask about a different topic, the August
redistribution process, which I know is a concern to a lot of
State DOTs. I have heard it from my State, too.
I know that AASHTO has been engaged in conversations with
the Federal Highway Administration to modernize this
redistribution process.
Can you talk a little bit about your thoughts in the
remaining time?
Mr. Strickler. Absolutely. And I'll be brief as well.
I think the greatest concern for State DOTs is being able
to actually obligate and spend the funds that come in through
the redistribution process. So, I think my primary comment
would be to ensure that we can obligate it under a timely
fashion as opposed to all upfront.
Mr. Pappas. Thank you.
I yield back.
Mr. Crawford. The gentleman yields.
Mr. LaMalfa.
Mr. LaMalfa. Thank you, Mr. Chairman. Appreciate it.
I was noting the different taxes that my colleague from
Washington was talking about a while ago here. And California,
indeed, my home State, has the highest gas tax, highest car
tax, highest cap-and-trade carbon tax, and highest income tax,
pretty much. So, it's a lot of laughs, when we talk about
having to raise something and take that back to my home State.
But, anyway, I do want to point out, for heavy-duty trucks
and trailer vehicles, that there is a Federal excise tax
specific to them of 12 percent on a new vehicle--12 percent.
Now, we want to promote newer, cleaner burning, safer, better
trucks to be on our highways, and so, the disincentive for that
is to hit them with a 12-percent tax on the purchase of that
new vehicle.
And as we note with the other forms of taxation with the
Highway Trust Fund, there is a user-pay, user-benefit aspect to
all the other different forms of it. And this one here is not a
user-pay, user-benefit, because it's indeed every time you buy
one of those new vehicles, if you should choose to do so.
And, also, we see that it is cyclical, because truck sales
are going to more or less move with the economy, move with the
amount of goods that are going in a particular time. Like,
truck sales weren't great during the COVID fiasco. So, it is
not a source of funding that is constant or steady as it might
be more so in other forms.
So, I think it is very important that, when we have this
discussion here on the Highway Trust Fund and the continuity of
the revenue on that, we also look at a way to relieve the
burden on people that would buy new trucks. And check out my
bill, H.R. 1440, that would remove that tax and distribute that
burden over a wider population.
So, indeed, with it being inconsistent like that, you
really can't count on what is going to be in the trust fund,
and I think that is a big thrust of what we are trying to do
here today in this conversation.
So, I wanted to pose this to Ms. Griffith and Mr.
Strickler. At the State level, as you implement transportation
projects, how important is it to have the consistency of
funding when planning projects that use funds out of the
Highway Trust Fund?
Mr. Strickler. As it relates to consistency and reliability
in the funding, I think I can say pretty directly that it is
really important we rely on that.
I often say that we have a long timeframe on our
transportation projects. Sometimes they take much longer than
most folks would anticipate. A lot of processes involved in
making sure that we get it right. And so, that consistency and
reliability is extremely important for us----
Mr. LaMalfa [interrupting]. Thank you.
Mr. Strickler [continuing]. As we deliver that----
Mr. LaMalfa [interrupting]. Those 3 minutes flew by.
Ms. Griffith, do you want to touch on it with just a----
Mr. Crawford [interrupting]. Quick answer, Ms. Griffith.
Ms. Griffith. Yes. It is important to be consistent. When
we have a number of projects that we consider mega-projects
that go on for years and years, the cyclical funding and flow
of funds is critical to ensuring that we are delivering them
efficiently. So, delays in that funding ultimately result in
cost increases on the bottom line of the delivery.
Mr. LaMalfa. Thank you.
Thank you, Mr. Chairman.
Mr. Crawford. The gentleman yields.
Mr. Carbajal.
Mr. Carbajal. Thank you, Mr. Chair.
Dr. Shirley, in your testimony, you highlight that the
projected balances in both the highway and transit accounts of
the Highway Trust Fund will be exhausted in 2028. Your
projections indicate that the accumulated shortfall will be
$241 billion over 2024 through 2033.
I know there are a variety of options that Congress can
take to close this funding gap. I have introduced H.R. 3360,
the National Infrastructure Investment Corporation Act of 2023,
with Representative Webster, as he touched on it earlier, to
establish a national infrastructure bank to help leverage
private dollars and provide local governments with another
financing tool for necessary infrastructure projects.
I know there are existing financing programs, like TIFIA
and the Railroad Rehabilitation and Improvement Financing,
RRIF, program. What do you think the advantages of having an
infrastructure bank would be?
Mr. Shirley. So, as you have pointed out, there are
different financing mechanisms in place to potentially either
assist States or to assist private entities that are interested
in participating in financing highway infrastructure.
Depending on how it was implemented--I haven't had a chance
to take a look at the details of your legislation--you would
be, sort of, shifting the decisionmaking responsibility in
terms of where projects would be funded, which projects would
be financed, away from either, necessarily, the State and local
governments or from the Department of Transportation. So, I
know that certainly would be a difference with a national
infrastructure bank.
And then I think it would depend on the incentives that you
have in place for, sort of, additional participation in it, in
terms of tax preferences or in terms of other funds being
provided to it.
Mr. Carbajal. Thank you.
Mr. Strickler, one of the biggest obstacles to addressing
the projected shortfalls for the Highway Trust Fund and finding
alternative sources of revenue is educating the public about
the need for a new idea or approach.
How have you handled educating the public in Oregon?
Mr. Strickler. Congressman, thank you for that question.
Frankly, we have been out having detailed conversation, not
just about what the incoming revenue is, but what we are buying
for that revenue. So, I think part of the actual conversation
has to entail what the public gets. We have long been an
industry that serves for the things that we build, and we need
to have a focus on the people.
I would say that, as we looked at our RUC program, for
example, some lessons learned there would be having more
detailed conversation with the public so that they understand
the complexities of highway funding and transportation funding
across the board, because, frankly, the public doesn't
understand all of the different revenue streams that we have,
and then how, then, that could benefit them in comparison to a
RUC.
So, I would say increased communication.
Mr. Carbajal. Thank you.
Mr. Chair, I yield back.
Mr. Crawford. The gentleman yields.
Mr. Owens.
Mr. Owens. Thank you, Chairman Crawford and Ranking Member
Norton and all the witnesses today, that we have an opportunity
to learn, listen, and discuss the Highway Trust Fund.
America's highway system has long been the foundation of
robust economy growth. Job creation and interstate commerce has
produced a quality of life that Americans have come to expect
as normal. This infrastructure has been foundational to our
prosperity, as goods, services, and people move rapidly across
our 2,800-mile expanse of our Nation.
However, with each passing year, we need to modernize how
we fund this critical infrastructure asset as it grows more
urgent. I do know that the answer is not simply raising the
Federal fuel tax. As cars become more efficient and more
Americans switch to electric vehicles, revenue sources are
decreasing and the Nation's costs increasing.
What we do know is a short-term injection of Government
funds cannot continue to be the solution, nor the increase of
taxes, which disproportionately affect poor and middle-class
families who are unable to afford top-dollar EVs. For this
reason, I look forward to learning from today's witnesses and
moving this subcommittee closer to getting a consensus. The
American people and our constituents expect it.
Thank you, first of all, for your opening statements. And
forgive me for any redundancy, but there is one area that I did
have some concerns about. So, I have one question, really, for
Mr. Strickler and Ms. Griffith.
Much of my district is disproportionately affected by an
increase in fuel tax due to the long distances my rural
constituents have to travel for basic goods and services. These
tens of thousands of constituents are certainly not going to be
buying EVs.
From the solutions that you have considered, how do you
bridge the urban-rural divide to ensure rural Americans are not
footing the bill?
Ms. Griffith, why don't you start off, please?
Ms. Griffith. Thank you for the question.
We have looked at options to mitigate potential negative
financial impacts on rural drivers, recognizing they do put on
more miles than their urban counterparts.
I will note, suburban drivers, with their long commutes
into city centers where they work, also put on significant
miles as well. So, long total miles per year is a concern in
general when you think about charging by the mile.
Our lawmakers are considering approaches that we have
recommended--potential, again, levers that the road charge
provides that we don't have with the gas tax--such as thinking
about either, again, capping total amounts that you could
accrue in a year. So, if you drove 20,000 miles and potentially
faced, let's say, $500 or $600 in RUC charges, the State
legislature or Congress could certainly put a cap and say,
``Well, you will never be liable for anything over $300.'' So,
it provides that level of certainty.
We have also looked at ways of a tiered approach of RUC
rates. So, you might think about portions of miles, say,
anything up to 5,000 miles, you pay one rate; 5,000 to 10,000,
and so on, and you start creating a tiered RUC system where
drivers have that certainty and perhaps get a cost break as
they drive further.
So, those are just a couple of ideas.
Mr. Owens. Thank you. Thanks so much.
I will yield back my time.
Mr. Crawford. The gentleman yields.
Mr. Menendez.
Mr. Menendez. Thank you, Chairman.
I want to echo the ranking member's comments about
continuing to fund mass transit that so many of my residents,
constituents, rely on, and I believe we need to continue to
heavily invest in, throughout the country but specifically in
New Jersey's Eighth Congressional District.
In addition, in my home State of New Jersey, most of our
roads and bridges were built over 100 years ago. The American
Society of Civil Engineers found that 57 percent of our roads
are in poor or fair condition. In a recent article, it was
cited that the most heavily traveled structurally deficient
bridge in the State of New Jersey is the Route 495 East Bridge
that carries traffic to the Lincoln Tunnel over Route 3. Built
in 1951, it is used by over 137,000 vehicles a day.
So, this is critically important, that we continue to fund
these projects. Capital projects are critical for my State and
district to repair our deteriorating infrastructure.
Mr. Strickler, how does the Highway Trust Fund help State
DOTs plan for capital projects to improve infrastructure even
when the Federal budget and, therefore, the future of Federal
grant programs, is uncertain?
Mr. Strickler. Congressman, I would say that the most
important aspect is it allows us to plan over longer periods of
time. So, the contract authority that comes with the Highway
Trust Fund allows us to project into the future the projects
that are coming down the pike.
I will say that, as you just described, I think every State
has difficulties in funding some of their larger projects, and
that will continue. But funding all of the system, on the
transit side as well as the roadway improvement side, and
preservation, I will assert, in a project like you just
described, is vitally important.
If we don't have the long-term contract authority that
allows us to extend beyond a year or two, then it is much more
difficult to plan for those projects, because they do take
quite a bit of time and a considerable amount of public
dialogue to make sure that we get them right.
Mr. Menendez. Absolutely. We are seeing that right now in
New Jersey with a plan that the State DOT has. There is
community input, there is planning, there are environmental
considerations, right? So, we are talking about years of
planning.
That planning includes a significant amount of money that
goes into the planning, not just the construction. So, we are
talking about a minimum of 5 to 7 years for any project of this
size and scale?
Mr. Strickler. That is correct. And I am aware of other
projects that take even longer.
Again, part of the dialogue really does inform what the
right outcome is, because these investments will be in place
for a century. And so, as we look----
Mr. Menendez [interrupting]. If done properly and planned
properly, exactly.
Mr. Strickler. Correct.
Mr. Menendez. Just to sum it up quickly, what would
eliminating the Highway Trust Fund mean for States' ability to
plan multiyear transportation projects?
Mr. Strickler. I am sorry. I didn't hear the beginning,
sir.
Mr. Menendez. Sure. What would eliminating the Highway
Trust Fund mean for States' ability to plan multiyear
transportation projects?
Mr. Strickler. That is a great question. It would be
extremely detrimental, because it would limit our ability to
plan into the future and start some of the projects that take
those multiyear investments in time and energy and
communication with the public.
Mr. Menendez. Absolutely. Thanks so much.
I yield back.
Mr. Crawford. The gentleman yields.
Mr. Johnson.
Mr. Johnson of South Dakota. Mr. Davis, I thought one of
the most striking parts of your testimony was walking through
the fact that by 2026, the deficit in the trust fund is going
to be 40 percent a year. That is how upside down we are. And,
of course, getting much, much worse in the out-years.
You talk about potential replacement revenues. You
mentioned vehicle-miles traveled; that has been a big
discussion today. Are there technical reasons why we don't talk
more about a pay-at-the-pump approach? I mean, that's what
works for gasoline. What, technically, means that can't work at
the charger?
Mr. Davis. For, you mean, only electric vehicles or all
vehicles?
Mr. Johnson of South Dakota. Well, clearly, pay-at-the-pump
already works for the internal combustion engine. Why can't
that same mechanism work for EVs at the charging stations?
Mr. Davis. It can. The problem is that the majority of EV
charging is done at home. So, it is a question of how do you
tell how much of the kilowatthours from your utility bill are
going to charging your car versus other things. And right now,
that is only possible if you install a very expensive sub-meter
in your home. Who is going to pay for that?
And so, that is the issue. There are also potential privacy
issues on looking at that. So, that is the biggest holdup.
But pay-at-the-pump at a public charging station is
certainly consistent with the user-pay principle.
Mr. Johnson of South Dakota. But you talk about expensive
infrastructure and privacy. But don't we have those same
concerns in a vehicle-miles traveled--I mean, you are going to
have technology in the vehicle if it is really on the basis of
how many miles they are driving, right? That has to be hardware
and software, and that is certainly a privacy concern.
Mr. Davis. You can. There are about five different ways
that States have found to bill the RUCs. There are onboard
telematics in the car. That has privacy issues. There is that
little OBD port by your left knee. You can put a little box in
there, with or without GPS, so, it could either just track
miles or GPS. And, of course, these [indicating cell phone].
Mr. Johnson of South Dakota. Yes.
Mr. Davis. We are all giving our privacy location away to
Apple and Microsoft already. Or just a simple odometer reading
either at your State annual inspection or on a voluntary basis.
So, there are three or four ways of doing it either with or
without GPS in each area. So far, it has been up to States, and
most States are offering multiple options to [inaudible] in the
VMT pilot as their choice.
Mr. Johnson of South Dakota. And, of course, to the extent
that everybody paying at the pump still puts us into a 40-
percent deficit, everybody paying at the pump or the charger or
however they are doing it doesn't fill the void.
I mean, you say that, listen, if we can't fix it, we really
need to end it. That is a pretty dramatic suggestion, isn't it?
Mr. Davis. It is budgetarily honest. If you are going to
keep--$43 million a year is what the current taxes are bringing
in, indefinitely. And we are spending $77 million a year right
now, which is the new contract authority for fiscal year 2024.
So, if you cannot take 43 up or bring 77 down, then at least
just have the General Fund money appropriated through the
regular budget process instead of these off-budget transfers
into the trust fund.
Mr. Johnson of South Dakota. And my time has expired.
Thank you, Mr. Chairman.
Mr. Crawford. The gentleman yields.
Mr. Garcia.
Mr. Garcia of Illinois. Thank you, Mr. Chairman and Ranking
Member Norton. It is a pleasure to be here today.
In discussing the funding structure of the Highway Trust
Fund and how it should adapt to progress in the transportation
industry, we are getting to an important underlying question
about the direction of the Highway Trust Fund itself.
As we heard from our witnesses, the Highway Trust Fund was
created in 1956. The most recent structural changes were in
1982 when the current 80/20 split was established, that is, 80
percent for highways and 20 percent for public transit.
So, to summarize, we have a 40-year-old structure couched
in a 70-year-old paradigm that is still dictating the present
and future funding priorities of our Nation's transportation
system.
Those outdated paradigms have proven inadequate. They have
contributed to crumbling public transit, sprawl, and traffic
congestion. And they are at odds with the ongoing and necessary
push toward multimodal transportation.
Since communities of color and low-income people
disproportionately rely on public transit, supporting car
alternatives is a matter of racial equity and economic
opportunity.
So, getting back to the HTF, since 2008, it has been
sustained through a series of General Fund transfers rather
than user fees. That means that taxpayer dollars are supporting
a fund whose outdated paradigms are increasingly at odds with
the needs of communities across the country.
My question here is for you, Ms. Griffith.
Earlier this year, Washington State DOT Secretary Roger
Millar said at an AASHTO conference, quote, ``There is no way
that we can grow our highway system to keep up with increasing
congestion . . . . So, we need to think about our
transportation infrastructure in smarter ways--ways to get more
out of what we have. When we need to add capacity, we need to
be strategic about it and multimodal about it,'' end of quote.
My question is this: How would shifting the funding split
in the Highway Trust Fund toward transit and active
transportation investment and less toward highways positively
help accomplish the goals of Secretary Millar, what he laid
out?
Ms. Griffith. Thank you for the question.
While I cannot speak to Secretary Millar's comments, I do
believe that there are opportunities to think about creating a
funding system for the future transportation system. And I
think your points are well taken.
What the right mix or percentage splits are I think is
something I would leave to the deliberation of Congress to
determine.
I do believe, though, that when we think about funding,
sustainability is the first and foremost decision point and
action that needs to happen. We need to get money in the
coffers, right? And then we can debate and discuss how we
distribute and use those dollars.
So, for us, the priority is to first create a sustainable
funding source, like road usage charging, so that we at least
resolve the threat to the revenue coming in, and then we can
shift to how we are going to allocate.
Mr. Garcia of Illinois. Thank you.
And thank you, Mr. Chairman, for your indulgence.
Mr. Crawford. The gentleman yields.
Mr. Yakym.
Mr. Yakym. Thank you, Mr. Chairman.
And thank you to our witnesses for being here today.
I believe our true north for infrastructure funding should
be a user-pay system with no General Fund transfers. I don't
know that a silver bullet exists that immediately gets us to
that, but I do believe that should always be our guiding
principle as we seek to chip away at that gap.
Electric vehicles aren't covered by existing fuel taxes.
And so, 33 States have instituted annual electric vehicle
registration fees in an attempt to capture that lost gas-tax
revenue. My home State of Indiana charges $150. Mr. Strickler's
home State of Oregon charges $110. And Ms. Griffith's home
State of Washington charges $225.
Dr. Shirley, your testimony indicates a $100 Federal EV
registration fee would raise about $2 billion, which would be
roughly on par with the heavy vehicle use tax's contribution to
the Highway Trust Fund. Again, I am not talking about silver
bullets here.
Mr. Strickler and Ms. Griffith, do you agree that your
States' registration fees ensure electric vehicles pay their
fair share of infrastructure funding?
Mr. Strickler.
Mr. Strickler. Congressman, I would say that our States and
our legislature has recognized that paying the fair share is an
important question, and they have acted accordingly----
Mr. Yakym [interrupting]. Great. Thank you.
And Ms. Griffith.
Ms. Griffith. I would say it depends on the use of the
roadway, right? And that is why we have seen Plug in America,
Seattle Electric Vehicle Association, and others advocate for
road usage charging over these flat fees to ensure that they do
pay for the roads they use.
Mr. Yakym. Great. Thank you.
And in either of your opinions, have these fees prevented
or slowed electric vehicle adoption?
Starting with you, Mr. Strickler.
Mr. Strickler. I don't think they have slowed the adoption.
Mr. Yakym. Great. Thank you.
And Ms. Griffith.
Ms. Griffith. Yes, I don't think there is any correlating
data that would suggest that.
Mr. Yakym. Great.
The Sierra Club has said that these fees are being pushed
by Big Oil.
Mr. Strickler, did Big Oil play a role in influencing
Oregon to adopt its EV registration fee?
Mr. Strickler. That is actually not a question that I can
answer cohesively. I wasn't here in 2017 as they passed the
legislation.
But they did recognize, frankly, that the cost overall for
EV registration should be commensurate with the use and did
their very best to make that calculation.
Mr. Yakym. And, Ms. Griffith, do you believe that Big Oil
played a role in ensuring that Washington, your State,
instituted these fees?
Ms. Griffith. I cannot speak to the intent of why the
legislature enacted the fee, although I can say that they have
dedicated those funds to purposes that support electric vehicle
charging.
Mr. Yakym. Thank you.
And, very briefly, there was an article in the Washington
Post the other day, and its premise is that electric vehicle
registration fees are nothing more than a Republican tool in
the culture wars.
Mr. Strickler, are these a Republican tool in the culture
wars? Is this part of the culture wars in your State, in
Oregon?
Mr. Strickler. I would say my State tackled it from the
position of equity, recognizing that each of the different
vehicles should pay their fair share.
Mr. Yakym. And, Ms. Griffith, was this part of the
Republican culture wars in your State, yes or no?
Mr. Crawford. Quick answer.
Mr. Yakym. Quick answer, Ms. Griffith.
Ms. Griffith. I believe that the electric vehicle fee was
put in place to provide funding for EV infrastructure.
Mr. Yakym. Thank you. I am glad we can clear that up.
And, Mr. Chairman, I yield back.
Mr. Crawford. Thank you.
The gentleman yields.
Mr. Stanton.
Mr. Stanton. Thank you very much, Mr. Chairman, for having
this important hearing on the Highway Trust Fund.
Thank you to the witnesses for being here today.
In the Bipartisan Infrastructure Law, we voted to invest in
our highways and transit, putting important resources in the
Highway Trust Fund and other transportation programs. That was
necessary, and we are already seeing such positive impact in
our communities.
But even with this investment, my home State of Arizona is
doing more with less, as the current funding formulas continue
to rely on the woefully outdated census data from 2000 and
traffic volumes from that same period.
This disproportionately impacts States like Arizona and the
Phoenix metro region, which has the highest population growth
in the country. Tying these 20-year-old population numbers to
investments for the next 5 years hinders our ability to tackle
our significant and growing infrastructure needs, like the
expansion of I-10.
Federal legislation should reflect current conditions and
be responsive to the needs of fast-growing States like Arizona,
which has experienced huge population growth--more than 2
million people just since 2000.
Mr. Strickler, as you know, the Federal highway formulas
that distribute funding from the Highway Trust Fund have not
been changed for over 20 years. This means States like mine
that continue to see tremendous increases in our population do
not receive funding from the Highway Trust Fund that reflects
this growth.
How do you suggest we adjust funding formulas to account
for population growth to keep up with the rate of inflation and
rising construction costs?
Mr. Strickler. Congressman, thank you for the question. I
would submit that the actual equation and split is probably
more something for Congress to negotiate.
But I will say that every transportation department across
the country needs more revenue. And so, in order for us to keep
pace with what we have for deterioration of assets, we do need
more, whatever the equation ends up being.
Mr. Stanton. Should we be using the most recent census data
in Federal highway funding formulas?
Please.
Mr. Strickler. I am sorry?
Mr. Stanton. Please. Should we be using the most recent
census data in Federal highway formulas?
Mr. Strickler. Again, I would probably defer that to
Congress to come up with the most equitable form.
Mr. Stanton. OK.
I want to thank my colleagues in the Senate, including
Senator Kelly, who have been working on language to study the
formula and modernize it. And I appreciate those efforts.
I look forward to working with the committee on the
solvency issue of the Highway Trust Fund and the issue of the
inequity for fast-growing States like Arizona, where we have to
keep up with that growth, but having funding formulas that keep
up with modernized information on census and population.
With that, I yield back.
Mr. Crawford. The gentleman yields.
Mr. Williams.
Mr. Williams of New York. Thank you, Mr. Chairman.
Ms. Griffith, I have a question. Do you drive an electric
vehicle for your personal use?
Ms. Griffith. No, I do not.
Mr. Williams of New York. OK.
One of the concerns I have about the infrastructure
requirements for electric vehicles is actually the charging
infrastructure. And, obviously, that is different than weight
on the roads and repairing the roads. But when we think about a
vehicle usage tax, has anyone given consideration to the
electrical infrastructure that is required? Is there any taxing
mechanism considered in vehicle use to augment and offset the
cost of the changing in our power generation and distribution
system for electric vehicles? Is anyone aware of any studies
along those lines?
[No response.]
Mr. Williams of New York. I am surprised. That is a huge,
multitrillion-dollar investment that is required to see
electric vehicles come to fruition.
Ms. Griffith, do you share your location data currently?
For example, like, in your phone, would you feel comfortable
sharing all of your transportation, your movement data, for
example, with the tax authority?
Ms. Griffith. Yes, I would. I share it with private
companies, and I would trust sharing it with the Government as
well.
Mr. Williams of New York. That is fascinating. I think very
few of your fellow citizens would share that enthusiasm for
sharing private data with the Federal Government.
The essence of the VMT requires that this kind of personal
and private information be shared with our tax authorities. In
fact, with very little data, even without real-time GPS data,
using artificial intelligence, you can actually correlate a
person's habits. You can predict where they will be. You can
predict where they go to church, you can predict where their
children go to school, where they shop, all of these things,
even with what is called metadata or just high-level
information, from this. And I think it is a great concern.
Dr. Shirley, one of the things that I have seen from your
chart, which I really appreciated, is the increase of subsidies
and shortfalls that have been added since 2007. And those seem
to only get larger and larger. This seem unsustainable. And it
seems like electric vehicles are accelerating that or
exacerbating that.
As you look at your chart, do you have concern that the
Federal Government will perhaps stop providing these kinds of
subsidies?
Mr. Crawford. Quick answer, Dr. Shirley.
Mr. Shirley. I certainly agree that the shortfalls are
increasing. I don't know--that would be something for you and
your colleagues to work through, how best to handle the
shortfall and the discrepancies between revenues and outlays.
Mr. Williams of New York. Thank you for your time.
Mr. Crawford. The gentleman yields.
Mr. Cohen.
Mr. Cohen. Thank you, Mr. Chair.
Mr. Davis, I haven't had an opportunity to go through all
of your data here, but you mentioned that one of the--number 3,
that ``Congress failed to cut spending or increase tax rates to
compensate for these trends.''
Just a quick, cursory look on Google, a couple different
sources. It looks like 3 cents in 1956 would be 30 cents today
with inflation. There are two or three different sources, and
they all come to about the same conclusion.
Have you done any work on that, and would that be about the
right level?
Mr. Davis. It depends if you are looking at the way it
feels to the consumer, which is CPI. But that doesn't tell you
much about the price of actually building--you know, of asphalt
and concrete.
So, it peaked when Eisenhower raised it to 4 cents in 1959.
Mr. Cohen. Right.
Mr. Davis. In purchasing power, that was about 70 cents
equal today because of construction cost inflation.
Mr. Cohen. Well, let's just assume 10. That is about two-
thirds. That would be--18 is what we are at now, give or take.
That would be up 12. That is two-thirds of what it is now.
If you add two-thirds more money in that fund, we would be
OK, would we not? Because I think we have 40 right now and----
Mr. Davis [interposing]. Yes.
Mr. Cohen. Yes. So, the problem is Congress. And Jim
Oberstar, if he was still here, we wouldn't have had this
problem. No, if he was here, and he was a one-man Government,
we wouldn't have had this problem.
Mr. Davis. Well, if he was still here, we would be in the
fourth hour of this hearing, but yes.
[Laughter.]
Mr. Cohen. But we would learn a lot and have a lot of
opportunities.
We passed, I think, in this committee, to fund the Highway
Trust Fund, with Representative Oberstar, an increase in the
gas tax. That is the last time I think we did it.
Mr. Davis. Well, but, again, as I recall, Mr. Rangel was
then chairman of the Ways and Means Committee and was not as
completely on board with the idea as this committee was. And
the buck stops over at Longworth with them. So, that was part
of the problem, is that this committee controls the spending
side of the trust fund but Ways and Means controls the revenue
side. So, when they disagree . . .
Mr. Cohen. Well, the bottom line is, if Congress would have
kept the gas tax at the rate it was when it was initiated, we
would have been OK. So, it----
Mr. Davis [interrupting]. If it had been indexed for any
kind of inflation from the beginning, yes, we would still be
fine.
Mr. Cohen. And I understand people are fearful of raising
taxes and all that, but it was a duty and responsibility we
should have had in this committee at least to get it going.
Let me ask you this, maybe Ms. Griffith, about the idea of
taxing based on miles. And I understand that, too, but isn't
there a difference in the damage that cars do based on their
size?
Ms. Griffith. So, at least for State highways, they are
engineered to carry the weight of about 10,000 pounds or under.
So, it is de minimis to think about in terms of weight for the
passenger fleet. However, it certainly could be a proxy of
rate-setting where you set rates by weight to accommodate or
cover those cost impacts.
Mr. Cohen. Is the diesel tax compared to the gas tax
appropriately different to compensate for how much a truck
would damage the roads as distinguished from a Mini Cooper?
Ms. Griffith. From a context purpose, it appears it would
be so, given it's higher. I think there would have to be
further research, and it has probably been done, on what a
correlating rate would need to be for the heavier vehicles.
Mr. Cohen. Mr. Crawford, thank you for scheduling this
hearing.
And thank you all for attending.
Mr. Crawford. You bet.
The gentleman yields.
Mr. Collins.
Mr. Collins. Thank you, Mr. Chairman.
I am on a fact-finding mission, so, most of my questions
are just asking, trying to get some information for me
personally, since I am in this industry and pay taxes.
Right now, we pay 24 cents a gallon on fuel taxes. FET tax
is usually about $15,000 per truck on new trucks. Federal
highway use tax, $550 per truck per year. And then we have
international registration plan for our tags to pay for, which
is about $1,300 per truck.
And then, since I own over 100 trucks, I have to join the
UCR, which is the Unified Carrier Registration program, which
costs me around $4,000 a year.
That adds up to over $10,000 per truck per year right now
that I pay in taxes.
So, I guess my question--I want to ask Dr. Shirley, the
Highway Trust Fund, is it only made up of fuel tax, or are any
of these other taxes included?
Mr. Shirley. I mean, there are these additional taxes on
heavy trucks, vehicles, like you were saying. I believe they
comprise, those additional taxes outside of the fuel taxes----
Mr. Collins [interrupting]. I guess what I am asking, what
is the Highway Trust Fund fund made up of? Just fuel tax? I
mean, that's all we're talking about.
Mr. Shirley. No, no. More than fuel tax. Those other----
Mr. Collins [interrupting]. So, it is all these taxes
combined?
Mr. Shirley. I am not familiar with the UCR program, but
other than that, yes.
Mr. Collins. OK. All right. So, we got that over.
Does the fuel tax pay for anything besides roads and
bridges? Or this Highway Trust Fund, is it for just roads and
bridges, or does it cover mass transit, bike paths, sidewalks?
Mr. Shirley. Yes, it covers the transit account as well.
Funds go into that and----
Mr. Collins [interrupting]. But we are going to look at
making the deficit up on the back of truckers across this
country? Is that what we are saying?
I am just asking.
Mr. Shirley. I can speak to how the revenues are coming in
now and decisions about how best----
Mr. Collins [interrupting]. Is that what we are looking at?
That is all I am hearing, is fuel tax, correct? On diesel.
Bicycles don't use diesel fuel, do they?
Mr. Shirley. I haven't had a chance to----
Mr. Collins [interrupting]. People don't buy diesel by
riding the bus or mass transit.
Mr. Shirley. VMT fees or----
Mr. Collins [interrupting]. OK.
So, I guess here's my last question for you. When you all
are looking at these analyses and we have these deficits, are
we taking into any account how much extra that the Federal
Government costs these projects just in the delays that they
cost, with the EPA and all these other Federal agencies that
are out of control and cause a 2-year program to go to a 20-
year program, or project?
Mr. Shirley. There are some contexts in which we have
started to take a preliminary look----
Mr. Collins [interrupting]. So, I would say the Federal
Government is a large part of the problem that we have with
the--we spend too much money in the Federal Government now. And
a lot of it is causing the private sector to spend more money,
as well, just to get our roads and bridges up to standards.
With that, I yield back, Mr. Chairman.
Mr. Crawford. The gentleman yields.
Mrs. Foushee.
Mrs. Foushee. Thank you, Mr. Chairman and Ranking Member
Holmes Norton, for holding this hearing today, and to the
witnesses.
In the interest of time, I will simply ask one question and
ask each of you to respond.
Would you agree that investing in railway systems would
alleviate the burden on the Highway Trust Fund to sufficiently
serve every State?
Mr. Davis. Could you say that again, please, ma'am?
Mrs. Foushee. Again, would you agree that investing in
railway systems--if that would alleviate the burden on the
Highway Trust Fund to sufficiently serve every State?
Mr. Davis. I don't know that--again, if you are talking
intercity passenger rail like Amtrak or rail-based mass transit
systems within an urban area. But, either way, it doesn't
really change the fundamental revenue problem, that we are only
taking in $43 billion from user taxes a year and we are paying
$76 billion, $77 billion a year on something, and whether you
switch that something from being highways and mass transit to
railroads or whatever.
The Senate voted back in 1997 or 1998 to actually dedicate
a half cent of the gas tax to railroads, to Amtrak, and that
got lost in conference.
But whatever you are spending it on, that doesn't really
matter, because that is not going to bring any more revenue to
that $43-billion-a-year number. And as long as we are running
that systemic deficit, I am not sure how it balances out.
Mrs. Foushee. Would anyone else like to respond?
[No response.]
Mrs. Foushee. Thank you.
Mr. Crawford. Does the gentlewoman yield?
Mrs. Foushee. She does. Thank you.
Mr. Crawford. I thank the gentlewoman.
Mr. Duarte.
Mr. Duarte. Thank you. Thank you, Mr. Chair.
Thank you to the witnesses for being here today.
I represent a rural district just outside of the San
Francisco Bay Area. And we have quite a few commuters, lower
income commuters, that go back and forth. And I am very
concerned that a mile formula will quickly evolve into a
congestion pricing formula to disadvantage lower income
commuters from getting to the optimal jobs at the optimal times
they need to be there.
Do any of you have quick comments--because I have another
question--on where congestion pricing is impacted and being
utilized and how we can make sure that if we go to a miles-
traveled formula we don't invite a congestion pricing mechanism
to quickly follow?
Ms. Griffith. I will just say, in Washington State, my
organization is the toll authority for the State, and we have
recommended that tolling and road usage charge remain separate.
Road usage charge is being looked at as a foundation
replacement for the statewide system, replacing the gas tax.
So, we do not recommend they be mixed or utilized in the same
way.
Mr. Duarte. So, we--I agree with Congresswoman Chavez-
DeRemer on tolling. I am against that, too.
Mr. Strickler, are American taxpayers getting a bang for
their buck for the dollars we do put into highway travel-miles?
I know the Infrastructure Investment and Jobs Act commingles
funding with a lot of the Highway Trust Fund funding. We have
DEI contracting requirements, carbon-neutral requirements,
made-in-the-U.S.A. requirements, on top of already-established
prevailing-wage and NEPA requirements.
Compared to inflation, what has the cost of a freeway-mile
done in the last 30 years compared to the Consumer Price Index?
Mr. Strickler. Yes, Congressman, I might be able to give
you a better answer based upon our Oregon experience and some
of our State funding from what we've seen.
As we look at the most recent major investment in
transportation in 2017 in Oregon, what we see is that just the
inflationary time period from then until now, the dollar buys
less today, even after the increase in funding that came in
House bill 2017. So, we are seeing an impact.
But that impact, I think, creates an important question
about how much we are investing overall and the sustainability
of those revenue streams coming in.
Mr. Duarte. Thank you.
Mr. Davis, do you have comments on that? What is the cost
of a highway travel-mile--a highway-mile doing in the last 7 or
8 years or the last 20 years, whatever perspective you can give
us there?
Mr. Davis. The Federal Highway Administration publishes a
quarterly National Highway Construction Cost Index, NHCCI, ever
since 2003. And after a long lull, unfortunately, that index
has risen almost 50--five-zero--percent since the fourth
quarter of 2020.
There were some supply-chain issues, but also, there is
only so much capacity in gravel pits and steel mills and cement
kilns at any one time, and some of the upfront money in the
IIJA may have pushed that capacity a bit.
Mr. Duarte. Do you believe that the social justice
contracting requirements, the carbon-neutrality requirements,
the made-in-the-U.S.A. requirements are factored in completely
to the current cost structure that you are referring to?
Mr. Davis. Somewhat.
Mr. Crawford. Quick answer.
Mr. Davis. I believe, so far, that the Buy America is
probably much more significant than the other one you
mentioned, at least right now. But, yes, there are significant
issues with the Buy America requirements for construction
materials in the IIJA that the administration and the industry
are still working through.
Mr. Duarte. Thank you very much.
Mr. Chair, I yield back.
Mr. Crawford. The gentleman yields.
Let me thank the witnesses for being here today and for
your flexibility. We greatly appreciate it. We have been able
to, I think, jam about 50 pounds of back-and-forth into a 10-
pound bag, so, we appreciate it.
And I thank the ranking member for her willingness to be so
flexible, and to the Members, as well.
So, seeing no further questions from the Members, this
concludes our hearing today. I would like to thank each of you
again. And the committee stands adjourned.
[Whereupon, at 11:05 a.m., the subcommittee was adjourned.]

Submissions for the Record

----------

Letter of October 17, 2023, to Hon. Sam Graves, Chairman, and Hon. Rick
Larsen, Ranking Member, Committee on Transportation and Infrastructure,
and Hon. Eric A. ``Rick'' Crawford, Chairman, and Hon. Eleanor Holmes
Norton, Ranking Member, Subcommittee on Highways and Transit, from
Michael W. Johnson, President and CEO, National Stone, Sand & Gravel
Association, Submitted for the Record by Hon. Sam Graves
October 17, 2023.
The Honorable Sam Graves,
Chairman,
House Committee on Transportation and Infrastructure, 2165 Rayburn
House Office Building.
The Honorable Rick Larsen,
Ranking Member,
House Committee on Transportation and Infrastructure, 2165 Rayburn
House Office Building.
The Honorable Rick Crawford,
Chairman,
House Subcommittee on Highways and Transit, 2165 Rayburn House Office
Building.
The Honorable Eleanor Holmes Norton,
Ranking Member,
House Subcommittee on Highways and Transit, 2165 Rayburn House Office
Building.
Dear Chairman Graves, Ranking Member Larsen, Chairman Crawford and
Ranking Member Holmes Norton:
I am writing on behalf of the National Stone, Sand & Gravel
Association (NSSGA) to express our sincere gratitude to you and your
committee for holding the upcoming hearing, ``Running on Empty: The
Highway Trust Fund.'' On behalf of our 450 member companies, we applaud
your work to examine the Highway Trust Fund (HTF) and solutions to
address the shortfalls of funding infrastructure projects along with
future financing options. This is a matter of paramount importance to
the aggregates industry and the broader construction sector, which
relies on the stability and adequacy of infrastructure funding to build
our communities and move our nation.
NSSGA members consist of stone, sand and gravel producers;
industrial sand suppliers; and the equipment manufacturers and service
providers who support them. With upwards of 9,000 locations, the
aggregates industry produces 2.5 billion tons of materials used
annually in the United States. Aggregates are the building blocks of
our modern society and are needed to construct and maintain roads,
railways, bridges, tunnels, water supply, sewers, electrical grids and
telecommunications.
The action to hold the hearing on the HTF underscores your
unwavering commitment to the development and maintenance of our
nation's infrastructure. We understand the numerous challenges and
complexities associated with ensuring that the HTF remains a reliable
and sustainable source of funding for essential infrastructure
projects, and your willingness to engage in this dialogue is
commendable.
We are particularly appreciative of your recent efforts in
advancing the Vehicle Miles Traveled (VMT) national pilot program, as
established under the Infrastructure Investment and Jobs Act (IIJA).
This pilot program holds significant promise in exploring innovative
ways to fund our transportation infrastructure, and your support in
advancing it is crucial to developing innovative ideas to meet the
funding challenges we face. It is a testament to your commitment to
modernizing our infrastructure financing methods and seeking more
equitable, efficient and sustainable solutions.
In this context, we would like to stress the critical importance of
financing certainty for the HTF to the success of the aggregates
industry. The HTF is an essential component of the economic ecosystem
that supports our industry, providing businesses with the certainty
they need to make long-term investments in people, technology and
communities. A reliable HTF ensures that our members can plan and
execute projects that create jobs, support local economies and enhance
the nation's infrastructure that keeps people and goods moving. A
modern infrastructure program supported by a robust HTF is essential to
our global competitiveness, as sound transportation networks provide
the backbone for economic growth and development of our communities.
The aggregates industry plays a fundamental role in supplying the
materials required for infrastructure construction. A well-maintained
and adequately funded HTF will enable us to continue providing the
resources essential for infrastructure development, thereby
contributing to job creation and economic growth across the United
States.
Once again, we extend our heartfelt gratitude for your leadership
and dedication to addressing the funding challenges that our nation's
infrastructure faces. We look forward to working closely with you and
your committee to find sustainable solutions that support the
aggregates industry and the broader construction sector.
If you require any further information or assistance from NSSGA,
please do not hesitate to reach out to us. Your continued support is
invaluable, and we are committed to collaborating with you to secure
the future of our nation's infrastructure.
Sincerely,
Michael W. Johnson,
President and CEO, National Stone, Sand & Gravel Association.

Letter of October 18, 2023, to Hon. Eric A. ``Rick'' Crawford,
Chairman, and Hon. Eleanor Holmes Norton, Ranking Member, Subcommittee
on Highways and Transit, from Sean O'Neill, Senior Vice President of
Government Affairs, Portland Cement Association, Submitted for the
Record by Hon. Sam Graves
October 18, 2023.
The Honorable Rick Crawford,
Chair,
Subcommittee on Highways and Transit, Transportation and Infrastructure
Committee, Washington, DC 20515.
The Honorable Eleanor Holmes Norton,
Ranking Member,
Subcommittee on Highways and Transit, Transportation and Infrastructure
Committee, Washington, DC 20515.
Dear Subcommittee Chair Crawford and Subcommittee Ranking Member
Norton:
The Portland Cement Association (PCA) appreciates the Subcommittee
on Highways and Transit holding today's hearing, Running on Empty: The
Highway Trust Fund. The cement industry supports Congress addressing
the long-term solvency of the Highway Trust Fund, which is critically
important to address our Nation's surface transportation infrastructure
needs.
The primary funding mechanism for the Highway Trust Fund, the tax
on motor fuels, has remained unchanged for the past 30 years. During
this time, these taxes have lost significant purchasing power, while
authorized funding from the Highway Trust Fund for federal-aid highway,
highway safety, and Federal transit programs have more than tripled.
Cement, the primary ingredient in concrete, is critical to construction
of transportation projects funded by the federal-aid highway program.
Additionally, as there has been a move to more fuel-efficient and
electric vehicles, revenue to the Highway Trust Fund has further
eroded. Collectively, these factors have contributed to the widening
gap between Highway Trust Fund revenues and expenditures. Since fiscal
year 2008, Highway Trust Fund outlays consistently exceed Highway Trust
Fund revenues, and Congress has transferred a total of $275 billion in
General Revenue to the Highway Trust Fund to ensure that the trust fund
remains solvent. This further demonstrates the need to find a long-term
funding solution to the Highway Trust Fund.
Considering the challenges in raising federal motor fuels taxes,
there have been a number of state and regional studies on a vehicle-
miles traveled fee as an alternative to the motor fuel tax as a
mechanism for funding the Highway Trust Fund and ensuring its long-term
solvency. Additionally, a number of states have moved away from a state
fuel tax to a vehicle-miles traveled fee, including two of the
witnesses today. We look forward to hearing about their experience with
a vehicle-miles traveled fee.
Section 13002 of the Infrastructure Investment and Jobs Act (IIJA)
seeks to build on the state and regional pilot programs focused on a
vehicle-miles traveled fee by establishing a national motor vehicle
per-mile user fee pilot program. PCA supports the U.S. Department of
Transportation (U.S. DOT) moving forward with a national pilot program
and are encouraged that the Federal Highway Administration (FHWA) has
finally solicited requests for nominations to serve on the Federal
System Funding Alternative Board to provide U.S. DOT recommendations
related to the structure, scope, and methodology for developing and
implementing the pilot program. This is an important first step.
PCA hopes U.S. DOT will not only appoint members to the Federal
System Funding Alternative Board soon but also get to work on studying
how a national vehicle-miles traveled fee could be structured as a
long-term solution to the Highway Trust Fund.
Thank you for holding today's hearing to bring more attention to
what must be done to address the solvency of the Highway Trust Fund and
how a vehicle miles traveled fee is an essential solution to be
discussed to address this ongoing problem. PCA looks forward to working
with Congress in the lead up to reauthorization of the surface
transportation programs to identify and build support for addressing
the long-term solvency of the Highway Trust Fund. Please do not
hesitate to reach out to Sean O'Neill with any further questions.
Sincerely,
Sean O'Neill,
Senior Vice President, Government Affairs, Portland Cement
Association.

Statement of the American Traffic Safety Services Association,
Submitted for the Record by Hon. Eric A. ``Rick'' Crawford
The American Traffic Safety Services Association (ATSSA)
appreciates the opportunity to submit this Statement for the Record to
the House Committee on Transportation and Infrastructure Subcommittee
on Highways and Transit (Subcommittee) regarding the hearing entitled
``Running on Empty: The Highway Trust Fund.'' Given the importance of
the Highway Trust Fund (HTF), this Subcommittee is to be commended for
providing much-needed attention and focus to this important topic.
Incorporated in 1970, ATSSA is an international trade association
with over 1,500 members who are focused on advancing roadway safety.
ATSSA members manufacture, distribute, and install roadway safety
infrastructure devices such as guardrail and cable barrier, traffic
signs and signals, pavement markings and high friction surface
treatments, and work zone safety devices, among many others. As a
leader in roadway safety infrastructure, ATSSA was the first
nongovernmental organization to adopt a Towards Zero Deaths vision and
ATSSA members are committed to making zero fatalities a reality
nationwide.
Tragically, reaching zero fatalities remains a serious challenge.
From 2016 to 2019, some progress was made to reduce the roadway
fatality and serious injury rates.\1\ But we have now seen a reversal
of these improvements. Despite the best efforts of ATSSA members, the
broader construction industry, state departments of transportation
(state DOTs) and local transportation agencies, the United States has
been experiencing high levels of fatalities and serious injuries over
recent years. Earlier this year, the National Highway Traffic Safety
Administration (NHTSA) estimated that almost 43,000 people died on
roadways across the country in 2022.\2\
---------------------------------------------------------------------------
\1\ National Highway Traffic Safety Administration, Overview of
Motor Vehicle Crashes in 2020, https://crashstats.nhtsa.dot.gov/Api/
Public/ViewPublication/813266.
\2\ National Highway Traffic Safety Administration, Early Estimate
of Motor Vehicle Traffic Fatalities in 2022, https://
crashstats.nhtsa.dot.gov/Api/Public/ViewPublication/813428.
---------------------------------------------------------------------------
The federal government is an important partner in addressing
roadway fatalities and serious injuries through contract authority
apportioned from the HTF. Contract authority is a unique budgetary
feature that allows funds to be obligated without the need for an
annual appropriation. The five-year Infrastructure Investment and Jobs
Act (IIJA) provides contract authority from the HTF annually, which
allows states and local governments to plan and manage their program of
projects on a multi-year basis.
One critical core formula program funded from the HTF is the
Highway Safety Improvement Program (HSIP). The IIJA funds the HSIP
(including the Railway-Highway Crossings Program) at $16.8 billion over
five years, which represents an important and much-needed increase over
prior authorization legislation. The HSIP provides dedicated funding to
help state DOTs and local governments meet today's roadway
infrastructure safety needs, be proactive in preventing future roadway
hazards and reduce highway fatalities and injuries.
But the HTF is not on stable financial footing. Since 2008, more
than $270 billion has been transferred from the General Fund to the
HTF. This is simply not sustainable into the future. In fact, the May
2023 Congressional Budget Office (CBO) baseline highlights the
precarious situation facing the HTF after the expiration of the IIJA in
FY2026. CBO estimates more than $150 billion in additional revenue will
be needed from FY2027-FY2031 just to maintain current federal highway
and transit program funding levels (adjusted for inflation).\3\ Once
again, federal highway programs will be facing a fiscal cliff at the
end of an authorization bill--creating substantial instability and
uncertainty that could impact transportation projects across the
country.
---------------------------------------------------------------------------
\3\ Congressional Budget Office, May 2023 Baseline--Highway Trust
Fund Accounts, https://www.cbo.gov/system/files/2023-05/51300-2023-05-
highwaytrustfund.pdf.
---------------------------------------------------------------------------
ATSSA has been a leader in the industry in working with Congress to
find long-term HTF funding solutions. For example, ATSSA works with
other stakeholders exploring the feasibility of transitioning from the
current federal excise taxes on a gallon of gas and diesel to a system
of payment based upon the usage of the highway system. This new system
has been called a road usage charge, vehicle-miles traveled or mileage-
based user fee. Regardless of the name, this type of system needs to be
further studied and developed so that Congress and the public has the
information needed to decide if this is the solution for the future of
the HTF.
Having a dedicated trust fund for transportation construction
projects, including roadway safety projects, is critical to meeting
this nation's transportation investment needs. There is no question
that with increased vehicle fuel efficiency and growth in the number of
electric or alternative fueled vehicles, relying on motor fuel taxes
will not be viable at some point in the future. Without a modernized
user fee, the argument for having a HTF wanes, which is problematic.
Without the HTF, the ability to enact multi-year transportation
authorization bills is lost, and any meaningful, strategic federal
investment in roadway safety infrastructure projects is lost as well.
It is too important to wait until the expiration of the IIJA to
tackle this problem and we urge Congress to continue the dialogue with
the transportation industry, state DOTs, and local governments. ATSSA
members stand ready to work with this Subcommittee and others in the
House and Senate in the coming months to address the funding challenges
facing the HTF. The stakes are high and failure to act will have
serious consequences. Let's roll up our sleeves and get to work on a
solution.

Statement of the Association of Equipment Manufacturers, Submitted for
the Record by Hon. Eric A. ``Rick'' Crawford
Chairman Crawford, Ranking Member Holmes Norton, and Members of the
Committee:
The Association of Equipment Manufactures (AEM) appreciates the
opportunity to offer this statement for the record as the U.S. House
Committee on Transportation and Infrastructure examines the status of
the Highway Trust Fund (HTF).
AEM represents more than 1,000-member companies manufacturing
equipment and providing services for the agriculture, construction,
utility, mining, and forestry sectors worldwide. Our industry supports
2.3 million jobs across all 50 states, representing 11 percent of all
manufacturing jobs in America, and contributes $316 billion a year to
the U.S. economy.
Over the past 15 years, a decrease in highway use and increase in
vehicle fuel efficiency have pushed the HTF into financial insolvency.
The HTF has had to rely on general fund transfers, most recently a $118
billion infusion under the Infrastructure Investment and Jobs Act
(IIJA) to remain solvent through Fiscal Year 2026.
The solvency of the HTF is a critical life blood for the equipment
manufacturing industry. Federal lawmakers, states, and localities
depend on funding certainty to plan short-term and long-term projects.
U.S. equipment manufacturers in turn depend on that same funding
certainty to anticipate demand for products, to expand their
facilities, to invest in research and development, and to create more
jobs. In Q3 2023, U.S. construction equipment manufacturers reported
that a temporary softening in demand is on track to rebound given
investment levels outlined in the IIJA that support the construction of
transportation infrastructure, energy, and utilities. They are forging
ahead with innovation and investment to ensure U.S. infrastructure
projects are built with the very best equipment available.
Insolvency of the HTF is not an option. Careful exploration of a
variety of modern funding mechanisms such as the use of a vehicle miles
traveled (VMT) fee will pay dividends in ensuring the long-term
stability of the HTF. Further, transitioning from the current federal
gas tax to a VMT could provide fairness and equity among all road
users, including electric vehicles. By providing the U.S. Department of
Transportation (DOT) with an accurate breakdown of all road user
vehicle statistics, this data will help predict accurate receipts for
highway formula funds needed to pay for vital projects and repairs.
AEM and other infrastructure stakeholders took the initiative to
fund a private study directed by the ENO Center for Transportation
entitled Driving Change: Advice for the National VMT Fee Pilot. This
report seeks to inform and assist the Advisory Board in establishing
the federal pilot initiative. The report also provides insight on
existing implementation efforts, potential hurdles, and key takeaways
as it pertains to rate structures and equity. While this private study
has many key points valuable in guiding the conversation, AEM urges the
committee to thoroughly consider the impacts on rural communities and
what potential flexibility is needed to provide optimal equity.
AEM is encouraged that the implementation of Section 13002(g) of
the IIJA, which requires the Secretary of Transportation to establish
the ``Federal System Funding Alternative Advisory Board'' is moving
forward. This Advisory Board will play a critical role in developing
recommendations on the structure, score, and methodology behind a
national vehicle-per-mile user-fee pilot program.
We cannot continue to put a band-aid on this issue. Solvency of the
HTF is paramount to supporting infrastructure jobs directly and
indirectly, including the 2.3 million jobs supported by the equipment
manufacturing industry. We look forward to serving as a resource to the
Committee on Transportation and Infrastructure, the U.S. Department of
Transportation, and the Advisory Board.

Letter of October 18, 2023, to Hon. Sam Graves, Chairman, and Hon. Rick
Larsen, Ranking Member, Committee on Transportation and Infrastructure,
from NATSO and SIGMA, Submitted for the Record by Hon. Eric A. ``Rick''
Crawford
October 18, 2023.
The Honorable Sam Graves,
Chairman,
Committee on Transportation and Infrastructure, U.S. House of
Representatives, Washington, DC 20515.
The Honorable Rick Larsen,
Ranking Member,
Committee on Transportation and Infrastructure, U.S. House of
Representatives, Washington, DC 20515.
Dear Chairman Graves and Ranking Member Larsen:
NATSO, Representing America's Travel Centers and Truckstops, and
SIGMA: America's Leading Fuel Marketers (together, the
``Associations'') \1\ appreciate that the House Transportation and
Infrastructure Highways and Transit Subcommittee (the ``Subcommittee'')
has convened a hearing to discuss the resources needed for the Highway
Trust Fund. As both the Subcommittee and the full Committee continue to
explore these issues, the Associations offer their support for
effective, efficient funding mechanisms to invest in surface
transportation programs. At the same time, Congress should oppose
counter-productive ``shortcuts'' to real infrastructure investment,
namely commercializing Interstate rest areas and tolling existing
Interstates.
---------------------------------------------------------------------------
\1\ NATSO currently represents approximately 5,000 travel plazas
and truckstops nationwide, comprising both national chains and small,
independent locations. SIGMA represents a diverse membership of
approximately 260 independent chain retailers and marketers of motor
fuel. Together, the Associations represent approximately 90 percent of
retail sales of motor fuel in the United States.
---------------------------------------------------------------------------
I. The Associations Support Effective, Efficient Infrastructure
Investment.
As the Subcommittee considers possible funding mechanisms for
surface transportation infrastructure investments, the Associations
support policies to fund the Highway Trust Fund and that are consistent
with the following principles:
Simple--It should be efficient and inexpensive to
collect.
Difficult to Evade--It should be difficult for taxpayers
to evade paying the fee.
User-Based--The primary stream of funding should be user-
based.
Energy-Source Neutral--All energy sources must be subject
to the same fee on a gallon/energy equivalent basis.
Transparent--Users must be able to understand the amount
they are being charged.
Dedicated to Infrastructure--Funds raised in the name of
improving surface transportation infrastructure should be dedicated to
surface transportation infrastructure for the benefit of the payer.
Reallocating such funds for other purposes should be prohibited.
Long-Term--The revenue generated by the funding solution
should not significantly diminish over time.

The Associations recognize that multiple funding solutions may be
consistent with these principles. It is also undeniable that recent
market and technological innovations (e.g., electrification of the
fleet, autonomous vehicles, ride-sharing, and overall fuel efficiency)
present tempting opportunities to dramatically alter how we fund
surface transportation in the United States. Forward-looking trends and
uncertainty around these innovations should not distract from the real
need for sustainable, ongoing investment in infrastructure that
captures all users of the nation's roads and bridges.
II. The Associations Oppose Inefficient, Counterproductive
Infrastructure Policies.
Congress should oppose counterproductive revenue sources such as
tolling existing Interstates and commercializing Interstate rest areas.
These funding mechanisms are inefficient, disrupt travel and freight
movement, and undercut off-highway businesses and communities.
a. Tolling
Tolling is an inefficient way to collect revenue. Tolls also divert
traffic onto secondary roads that were not designed to handle
Interstate-level traffic. This contributes to traffic accidents,
increased maintenance costs, and delays for first responders. Tolling
existing Interstates likewise harms off-highway businesses that have
invested in real estate along newly tolled corridors by diverting
potential customers onto secondary roads. Finally, tolling treats rural
America unfairly. Many of the country's crumbling roads and bridges are
in less populated areas that are not traveled frequently enough to
generate sufficient toll revenue. If Congress relies on tolling to pay
for infrastructure, rural America's needs would go unfulfilled.
b. Rest Area Commercialization
When Congress created the Interstate Highway System, Congress and
community leaders feared that local businesses, jobs, and tax bases
would shrink as motorists and truck drivers bypassed their cities and
towns. Congress therefore prohibited new Interstate System rest areas
from offering commercial services, such as food and convenience items.
Since then, businesses have clustered near the Interstates interchanges
to provide services to Interstate travelers.
Commercializing rest areas will not generate ``new'' revenue for
infrastructure. It would simply transfer sales away from the current
competitive environment off highway exits to the business contractor
that pays the largest amount to rent the location on the shoulder of
the highway. When the government competes with private business in this
way, it results in a monopoly, undermining the free market and raising
prices for consumers.
While the Associations support investment in a range of fueling
options for consumers, including electricity as well as other
alternatives to petroleum-based fuels, these offerings are a commercial
service. Congress prohibited states from offering commercial services
at Interstate rest areas specifically so that private sector entities
would grow and provide those services to travelers. Installing electric
vehicle charging infrastructure on the Interstate right-of-way would
require overturning the rest area commercialization ban that has been
in place for more than 60 years. Many off-highway fuel retailers and
other businesses have invested significant resources in alternative
fuels such as electric vehicle charging infrastructure, biofuels, and
natural gas. If such alternative fuels were made available at rest
areas on the Interstate right-of-way, it would discourage the private
sector and these off-highway businesses from making such investments
and ultimately hinder growth in these alternative fuels.
Finally, permitting commercial services at rest areas would
undercut other Subcommittee transportation policy priorities, such as
increasing commercial truck parking availability. Commercializing rest
areas would inevitably decrease the overall number of commercial truck
parking spots available in the United States.
III. Conclusion.
Thank you for the opportunity to submit this letter and for your
consideration of this important issue. The Associations stand ready to
be of any further assistance as the Committee continues its important
work.
Sincerely,
NATSO, Representing America's Travel Centers and
Truckstops.
SIGMA: America's Leading Fuel Marketers.

Letter of October 16, 2023, to Hon. Sam Graves, Chairman, and Hon. Rick
Larsen, Ranking Member, Committee on Transportation and Infrastructure,
and Hon. Eric A. ``Rick'' Crawford, Chairman, and Hon. Eleanor Holmes
Norton, Ranking Member, Subcommittee on Highways and Transit, from Jim
Ward, President, Truckload Carriers Association, Submitted for the
Record by Hon. Eric A. ``Rick'' Crawford
October 16, 2023.
The Honorable Sam Graves,
Chairman,
House Transportation and Infrastructure Committee, U.S. House of
Representatives, 2165 Rayburn House Office Building,
Washington, DC 20515.
The Honorable Rick Larsen,
Ranking Member,
House Transportation and Infrastructure Committee, U.S. House of
Representatives, 2165 Rayburn House Office Building,
Washington, DC 20515.
The Honorable Rick Crawford,
Chairman,
The Subcommittee on Highways and Transit of the Committee on
Transportation and Infrastructure, U.S. House of
Representatives, 2165 Rayburn House Office Building,
Washington, DC 20515.
The Honorable Eleanor Holmes Norton,
Ranking Member,
The Subcommittee on Highways and Transit of the Committee on
Transportation and Infrastructure, U.S. House of
Representatives, 2165 Rayburn House Office Building,
Washington, DC 20515.
Dear Chairman Graves, Ranking Member Larsen, Chairman Crawford,
Ranking Member Norton, and Members of the Subcommittee on Highways and
Transit:
I am writing in response to the hearing ``Running on Empty: The
Highway Trust Fund'' that will be held on October 18, 2023. The
discussion about the financial challenges faced by the Highway Trust
Fund is of critical importance. On behalf of the Truckload Carriers
Association (TCA) and its membership, I want to urge the importance of
the truckload industry's support for an increase in the Federal Fuel
Tax and other issues that the truckload industry faces.
The truckload industry has been a long-time advocate for increasing
the Federal Fuel Tax as a viable and effective solution to allocate
essential funds to the Highway Trust Fund. The current funding levels
are insufficient to address the maintenance and improvements needed for
our nation's highways and infrastructure. An increase in the Federal
Fuel Tax would not only bridge the funding gap but also provide a
reliable source of revenue for critical infrastructure projects,
supporting economic growth and enhancing road safety.
In addition to advocating for the fuel tax increase, TCA has
suggested the suspension or repeal of the Federal Excise Tax, a
mechanism that was implemented to support our nation during World Ward
I. We acknowledge that repealing or suspending the Federal Exercise Tax
would reduce funding for the Highway Trust Fund, necessitating an
increase in the Federal Fuel Tax to offset the impact of the repeal or
suspension.
The initiative to repeal the Federal Exercise Tax would help
alleviate financial burdens on the truckload industry and allocate
better resources towards investments in modern day equipment that will
support our environment. A careful review of the Federal Excise Tax and
its implications on the industry would be highly beneficial.
Furthermore, the truckload industry recognizes the pressing need
for more truck parking spaces across the country. A shortage of
adequate truck parking facilities poses significant challenges to truck
drivers and the efficient functioning of the industry. Finding viable
solutions to enhance truck parking availability and accessibility is
crucial to ensure the safety and well-being of truck drivers and the
successful operation of the truckload industry.
I commend your dedication to addressing these critical issues that
directly impact the truckload industry and the overall transportation
infrastructure of our nation. Your efforts to explore sustainable
funding methods and improve infrastructure are vital steps towards a
safer, more efficient, and prosperous future.
Thank you for your commitment to these essential matters. I look
forward to seeing the positive outcomes and solutions that will occur
from your discussions.
Sincerely,
Jim Ward,
TCA President.

Letter and Attachment of October 23, 2023, to Hon. Eric A. ``Rick''
Crawford, Chairman, and Hon. Eleanor Holmes Norton, Ranking Member,
Subcommittee on Highways and Transit, from Jack Waldorf, Executive
Director, Western Governors' Association, Submitted for the Record by
Hon. Eric A. ``Rick'' Crawford
October 23, 2023.
The Honorable Rick Crawford,
Chairman,
Subcommittee on Highways and Transit, Committee on Transportation and
Infrastructure, House of Representatives, 2165 Rayburn House
Office Building, Washington, DC 20515.
The Honorable Eleanor Holmes Norton,
Ranking Member,
Subcommittee on Highways and Transit, Committee on Transportation and
Infrastructure, House of Representatives, 592 Ford House Office
Building, Washington, DC 20515.
Dear Chairman Crawford and Ranking Member Norton:
With respect to the Subcommittee's October 18, 2023, hearing,
Running on Empty: The Highway Trust Fund, attached please find Western
Governors' Association (WGA) Policy Resolution 2021-07, Transportation
Infrastructure in the Western United States. This resolution includes
Western Governors' collective and bipartisan policy recommendations
concerning transportation in the Western United States.
Western Governors believe the Highway Trust Fund (HTF) and the
programs it supports are critically important to the success of efforts
to maintain and improve America's surface transportation
infrastructure. Western Governors urge Congress to provide a long-term
solution to ensure HTF solvency and provide for increased, sustainable
federal transportation investment through the HTF.
I request that you include this document in the permanent record of
the hearing, as it articulates Western Governors' policy positions and
recommendations on this important issue.
Thank you for your consideration of this request. Please contact me
if you have any questions or require further information.
Sincerely,
Jack Waldorf,
Executive Director, Western Governors' Association.

Attachment
__________

Attachment
Western Governors' Association
Policy Resolution 2021-07
Transportation Infrastructure in the Western United States
A. BACKGROUND
Surface Transportation

1. The American West encompasses a huge land mass representing 2.4
million square miles or over two-thirds of the entire country. Over 116
million people live in these states and they reside in large, densely
populated cities, smaller cities and towns and in rural areas.

2. Perhaps more than any other region, terrain and landownership
patterns in the West underscore the purpose and vital need for a
federal role in surface transportation. Western states are responsible
for vast expanses of national highways and interstates that often do
not correlate with population centers but serve as critical national
freight and transportation routes for the nation.

3. Western states ports are national assets, moving needed parts
and retail goods into the country, while also providing the gateway for
our nation's exports. Although they benefit the entire country, the
financial burden of developing, expanding and maintaining them to meet
the demands of growing trade is almost entirely borne at the state and
local level.

4. The vast stretches of highways and railroad track that connect
the West to the nation do not have the population densities seen in the
eastern United States.

5. Raising private funds to carry forward infrastructure projects
in the rural West will be extremely challenging. The low traffic
volumes in rural states will not support tolls, even if one wanted to
impose them. Projects in rural areas are unlikely to generate revenues
that will attract investors to finance those projects, even if the
revenues are supplemented by tax credits. Some western states have
implemented or are developing mileage-based fee programs as an
additional tool to enhance funding.

Transportation Infrastructure

6. Jobs, the economy and quality of life in the West depend on
high quality transportation infrastructure that efficiently,
effectively and safely moves goods and people. Western transportation
infrastructure is part of a national network that serves national
interests. Among other things, transportation infrastructure in the
West: moves agricultural and natural resource products from source to
national and world markets; carries goods from western ports on western
highways and railroad track to eastern and southern cities; and enables
travelers to visit the great National Parks and other destinations in
the West.

7. The transportation and transit needs in the West differ
significantly from our eastern counterparts. Western states are
building new capacity to keep up with growth, including new
interstates, new multimodal systems including high-speed passenger rail
and light rail transit systems, biking and pedestrian options, and
increased capacity on existing infrastructure.

8. The infrastructure in the region is under strain from both
increased movement of goods and people and from underinvestment in
preservation and repair and new infrastructure needed to keep pace with
this growth and change. Positive and productive partnerships between
state department of transportation offices and their local U.S.
Department of Transportation (DOT) Federal Highway Administration
(FHWA) office have enabled innovative advances in infrastructure
funding and development.

9. Modernizing and maintaining the West's network of
infrastructure relies upon permitting and review processes that require
close coordination and consultation among state, federal and tribal
governments. State, federal and tribal coordination is necessary to
ensure that infrastructure projects are designed, financed, built,
operated and maintained in a manner that meets the needs of our
economies, environment, public health, safety and security. Early,
ongoing, substantial, and meaningful state-federal consultation can
provide efficiency, transparency, and predictability for states and
tribes, as well as prevent delays, in the federal permitting and
environmental review process.

10. State and local governments often have the best available
science, data and expertise related to natural resources within their
borders. In cases where the states have primary management authority,
such as wildlife and water governance, states also possess the most
experience in managing those resources and knowledge of state- and
locality-specific considerations that should inform infrastructure
siting decisions.

11. The National Environmental Policy Act (NEPA), since its
enactment in 1970, has required that federal agencies consider how
proposed federal actions may affect natural, cultural, economic and
social resources for present and future generations of Americans. The
process by which NEPA is implemented has been defined over time through
regulations and guidance issued by the Council on Environmental Quality
(CEQ).

12. On April 27, 2021, FHWA issued a guidance document, State DOTs
Leveraging Alternative Uses of the Highway Right-of-Way Guidance. The
guidance encourages FHWA division offices to work with state
departments of transportation in order to leverage highway rights-of-
way (ROWs) for the siting of renewable energy projects, transmission
and distribution assets, broadband infrastructure, and alternative
fueling facilities.

Electric Vehicle Infrastructure

13. WGA recently executed the Electric Vehicles Roadmap
Initiative, its signature policy project for Fiscal Year 2021. The
Initiative was principally focused on the planning, siting and
coordination of electric vehicle (EV) charging infrastructure in
western states and explored a number of federal policy issues that
affect the buildout of this infrastructure.

14. Western Governors and states are exhibiting strong leadership
on EV infrastructure planning, coordination, and investment. Many
western states are actively collaborating with each other via their
engagement in the West Coast Electric Highway \1\ and Regional Electric
Vehicles Plan for the West \2\ (REV West).
---------------------------------------------------------------------------
\1\ California, Oregon and Washington are members of the West Coast
Electric Highway.
\2\ Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah,
and Wyoming are members of the REV West.

15. Western states face a suite of challenges related to planning
and siting EV infrastructure, including the unique needs of both
underserved and rural communities, vast distances between communities,
limited electric grid infrastructure in sparsely populated areas, and a
patchwork of federal, state, and private lands ownership boundaries.
These factors combine to make EV infrastructure installations more
logistically challenging and costly, regardless of whether the
infrastructure is funded by public or private sources or a combination
---------------------------------------------------------------------------
of the two.

16. Many western states have engaged with and submitted corridor
nominations to the FHWA's Alternative Fuel Corridors Program. The
Program assigns ``Corridor-Pending'' and ``Corridor-Ready''
designations for interstate, U.S. route, and state highways.

17. In order to meet the ``Corridor-Pending'' and ``Corridor-
Ready'' metrics, charging or alternative fueling infrastructure must be
sited every 100 or 50 miles, respectively, along the proposed corridor.
A number of western states have experienced challenges in meeting these
defined metrics due to lacking electric infrastructure and suitable
charging locations in sparsely populated areas.

18. 23 U.S.C. 111 prohibits Interstate System rest areas built
after January 1, 1960, from offering commercial services such as fuel
and food on the Interstate System right-of-way. Due to this
prohibition, EV charging stations may be sited at Interstate System
rest areas, but no fee may be charged for the electricity that is
dispensed. This significantly complicates the business case for siting
EV charging infrastructure at these rest areas. Western Governors
support amending 23 U.S.C. 111 to allow commercial EV charging at all
rest areas along the Interstate, but we would note that western states
are especially affected by the current prohibition because many rest
areas in the West are located far from communities or businesses that
could offer suitable locations for EV charging.

19. Western states contain many public federal lands, including
areas managed by the Bureau of Land Management, National Park Service
and U.S. Forest Service. Many of these federal lands serve as regional
tourism attractions and support economic development in rural western
communities. Creating and implementing efficient practices for
permitting and siting EV infrastructure on federal lands will help
support continued tourism and economic opportunities across the West.

20. Private investments in zero-emission vehicle (ZEV) charging
and fueling infrastructure can be aided by supportive investment tax
credit structures. The current Alternative Fuel Vehicle Refueling
Property Investment Tax Credit could be enhanced to improve the
business case for private sector investment in ZEV charging and fueling
infrastructure.

21. The U.S. Department of Energy's (DOE) Vehicle Technologies
Office manages the Clean Cities Coalition (CCC) Program, which has
active members across the West. CCCs often serve a crucial role at the
local level by leading EV infrastructure planning and implementation
projects.

22. The COVID-19 pandemic highlighted disruptions to domestic
supply chains across many sectors. On February 24, 2021, President
Biden signed an Executive Order on America's Supply Chains (EO 14017).
The EO launches a comprehensive review of certain U.S. supply chains
and directs federal departments and agencies to identify ways to secure
U.S. supply chains against a wide range of risks and vulnerabilities.
Two supply chains included in the review are critical minerals,
including rare earth elements, and large capacity batteries such as
those used in electric vehicle production.

23. Battery EVs require a number of critical minerals in their
production, including lithium, nickel and cobalt, among others.
Consumption of these critical minerals essential to EV supply chains
will rise as more EV batteries are produced. EVs sold in 2019 alone
accounted for more than one quarter of the total battery capacity
deployed nationwide.\3\ With increasing demand for EVs, it is projected
that demand for these minerals will concurrently increase in coming
decades.
---------------------------------------------------------------------------
\3\ https://www.ucsusa.org/sites/default/files/2021-02/ev-battery-
recycling-fact-sheet.pdf

---------------------------------------------------------------------------
Aviation

24. Lack of reliable air service is a significant barrier to
fulfilling the needs of rural communities in the West. Air service is
essential infrastructure for connecting many remote communities. It is
important not only to recreation and emergency services, but to
economic, social and cultural needs. In some communities it is the only
way to bring doctors or other non-local workers in and out of where
they work but may not live.

25. The DOT Essential Air Service (EAS) Program was put into place
in 1978 to guarantee that small communities served by certificated air
carriers before passage of the Airline Deregulation Act maintained a
minimum level of scheduled air service. This is generally accomplished
by DOT subsidizing two round trips a day with 30- to 50-seat aircraft,
or additional frequencies with aircraft with 9 seats or fewer, usually
to a large- or medium-hub airport. The Department currently subsidizes
commuter and certificated air carriers to serve communities in Alaska
and in the lower 48 contiguous states that otherwise would not receive
any scheduled air service.\4\
---------------------------------------------------------------------------
\4\ DOT Essential Air Service Program

26. Of the communities that participate in EAS, 63 percent are in
the West, illustrating the rurality of these areas and their need for
connectivity. EAS has a significant economic effect on rural
communities. A 1 percent increase in traffic to an EAS airport results
in a 0.12 percent increase in income for the entire community, and an 8
percent increase in traffic results in a 1 percent income increase.
Businesses need connectivity to the national and global economy to
succeed and rural communities with good air service are more attractive
to remote workers.\5\
---------------------------------------------------------------------------
\5\ WGA Reimagining the Rural West Initiative Appendix

27. The Small Community Air Service Development Program (SCASDP)
is a DOT grant program designed to help small communities address air
service and airfare issues. SCASDP's eligibility criteria are broader
than EAS and provide a grant applicant the opportunity to self-identify
its air service deficiencies and propose an appropriate solution
compared to an EAS direct subsidy.\6\ Air service started by the SCASDP
often continues without further funding once the grant is over,
exemplifying that the service proves itself to be commercially viable
beyond its value to the community and the public.\7\
---------------------------------------------------------------------------
\6\ DOT Small Community Air Service Development Program
\7\ WGA Reimagining the Rural West Initiative Appendix
---------------------------------------------------------------------------
B. GOVERNORS' POLICY STATEMENT
Surface Transportation

1. Western Governors believe there is a strong federal role, in
partnership with the states and local governments, for the continued
investment in our surface transportation network--particularly on
federal routes and in multimodal transportation networks throughout the
West that are critical to interstate commerce and a growing economy.
These routes and networks traverse hundreds of miles without traffic
densities sufficient to either make public-private partnerships
feasible or allow state and local governments to raise capital beyond
the historic cost share.

2. Western Governors believe the current project decision-making
role of state and local governments, with meaningful participation from
affected communities, particularly tribes and historically underserved
communities, in investment decisions should continue. Western Governors
desire additional flexibility to determine how and where to deploy
investment in order to maximize the use of scarce resources.

3. Western Governors believe that a viable, long-term funding
mechanism is critical to the maintenance and expansion of our surface
transportation network and encourage Congress to work together to
identify a workable solution that adequately funds the unique needs of
the West.

4. Western Governors believe in enhancing the ability to leverage
scarce resources by supplementing traditional base funding by creating
and enhancing financing mechanisms and tools that are appropriate for
all areas of the United States, including those with low traffic
densities where tolling and public private partnerships are not
feasible.

5. Western Governors believe using the historic formula-based
approach for the distribution of funds would ensure that both rural and
urban states participate in any infrastructure initiative and it would
deliver the benefits of an infrastructure initiative to the public
promptly.

6. Western Governors believe the Highway Trust Fund (HTF) and the
programs it supports are critically important to success in efforts to
maintain and improve America's surface transportation infrastructure.
Currently, the HTF will not be able to support even current federal
surface transportation program levels and will not meet the needs of
the country that will grow as the economy grows. Congress must provide
a long-term solution to ensure HTF solvency and provide for increased,
sustainable federal transportation investment through the HTF.

7. Western Governors strongly encourage western states port
operators and their labor unions to work together to avoid future work
slowdowns by resolving labor issues well before contracts are set to
expire. In recent years, protracted disagreement in bargaining between
parties has had an adverse effect on the American economy that should
not be repeated.

8. Western Governors believe modern ports infrastructure is
essential to strong national and western economy and urge Congress to
fully fund the Harbor Maintenance Trust Fund and to reform the Harbor
Maintenance Tax to ensure western ports remain competitive.
Furthermore, Western Governors believe the federal government must work
collaboratively with states, along with ports, local governments and
key private sector transportation providers like the railroads, to
ensure the necessary public and private investments to move imports and
exports efficiently through the intermodal system, as well as community
organizers and the Environmental Protection Agency's National
Environmental Justice Advisory Council to effectively mitigate
environmental and public health impacts to port communities.

Transportation Infrastructure

9. Western Governors believe regulation accompanying federal
transportation programs should be evaluated and if necessary, revised
to encourage expediting project delivery and streamlining the
environmental review process without diminishing environmental
standards or safeguards.

10. The federal infrastructure permitting and environmental review
process must be transparent, predictable, accessible and consistent for
states, project developers, and affected community stakeholders.
Federal processes must ensure that agencies set, and adhere to,
timelines and schedules for completion of reviews and develop improved
metrics for tracking and accountability.

11. Federal programs that increase bottom-up coordination among
agencies, state and local governments and that foster collaboration
among project proponents and diverse stakeholders, particularly rural
communities, underserved communities, and tribes can create efficiency
and predictability in the NEPA process, including reducing the risks of
delays due to litigation.

12. Western Governors encourage consistency in the implementation
of NEPA within and among agencies and across regions. The federal
government should identify and eliminate inconsistencies in
environmental review and analysis across agencies to make the process
more efficient.

Electric Vehicle Infrastructure

13. Western Governors emphasize western states' collaborative
efforts to improve the planning and siting of EV charging
infrastructure to promote equitable access, particularly along highway
corridors, rural areas, underserved communities, or anywhere that users
do not have the ability to charge at home. We encourage Congress and
the Administration to leverage these state partnerships when designing
federal programs and allocating surface transportation and
infrastructure funds focused on EV infrastructure. Coordinating with
these multi-state groups would help promote targeted investments and
partnerships that expand cohesive, regional EV charging networks.

14. Western Governors request that FHWA promote additional
flexibility within the Alternative Fuel Corridors program to recognize
the unique geographic and infrastructure conditions in western states.
Western Governors and states are eager to work with FHWA to ensure that
western states are not adversely affected by federal funding
opportunities that are tethered to Alternative Fuel Corridors
``Corridor-Pending'' and ``Corridor-Ready'' designations.

15. Western Governors support legislative measures that address
prohibitions within 23 U.S.C. 111 that limit the siting of EV charging
stations at Interstate System rest areas and the issuance of a fee for
the use of that infrastructure.

16. Promoting visitation to federal public lands and state parks
is a high priority for Western Governors. Western Governors would
welcome the opportunity to work with state and federal land management
agencies to address challenges that affect the permitting and siting of
EV charging infrastructure on state and federal public lands.

17. Western Governors support legislative efforts that seek to
extend and expand the Alternative Fuel Vehicle Refueling Property
Investment Tax Credit and improve the business case, especially in
rural and underserved areas, for private investment in ZEV charging and
refueling infrastructure.

18. Western Governors emphasize the important functions that Clean
Cities Coalitions have served in coordinating and implementing ZEV
infrastructure projects across the West and encourage Congress to
provide funding support for the DOE Vehicle Technologies Office and
Clean Cities Coalition Network.

19. Western Governors support strengthening domestic supply chains
of critical minerals vital to electric vehicle battery production
without compromising environmental and health and safety standards.
Governors also support development of emerging tools and technologies
that address barriers to mineral supply chain reliability, including
technologies that help recycle or reuse existing critical mineral
resources for use in electric vehicles and other clean energy
technologies.

Aviation

20. Western Governors encourage the executive branch to include
full funding for the EAS and SCASDP programs in the President's annual
budget request. Western Governors also support legislative actions to
maintain and secure the longevity of these programs.
C. GOVERNORS' MANAGEMENT DIRECTIVE
1. The Governors direct WGA staff to work with Congressional
committees of jurisdiction, the Executive Branch, and other entities,
where appropriate, to achieve the objectives of this resolution.

2. Furthermore, the Governors direct WGA staff to consult with the
Staff Advisory Council regarding its efforts to realize the objectives
of this resolution and to keep the Governors apprised of its progress
in this regard.

This resolution will expire in June 2024. Western Governors enact new
policy resolutions and amend existing resolutions on a semiannual
basis. Please consult http://www.westgov.org/resolutions for the most
current copy of a resolution and a list of all current WGA policy
resolutions.

Appendix

----------

Questions to Kris Strickler, Director, Oregon Department of
Transportation, on behalf of the American Association of State Highway
and Transportation Officials (AASHTO), from Hon. Rick Larsen

Question 1. Mr. Strickler, while the Highway Trust Fund operated
effectively for years based on the ``user-pay'' principle, since 2008,
Congress has repeatedly needed to use General Funds to continue federal
support for surface transportation, on which ODOT and other state DOTs
rely.
What is the primary reason for the HTF shortfall, and why has the
purchasing power of the existing federal user fees declined?
Answer. The primary reason for the shortfall is the loss of
purchasing power of Highway Trust Fund revenues which has declined
substantially over the years. Federal fuel taxes are flat, per-gallon
excise taxes that have not been adjusted since 1993. Since they have
not been adjusted to meet inflationary increases, federal fuel taxes
have lost more than half their value over the last 30 years. In
addition, with populations increasing in state around the country and
the number of users dramatically increasing on the nation's
transportation system, the costs associated with routine project and
maintenance activities has increased significantly for states--all
while we try to keep our workforce safe as they serve the public.

Question 2. Mr. Strickler and Ms. Griffith, one of the potential
challenges with administering a Road Usage Charge or Vehicle-Miles
Traveled program is accounting for travel that occurs outside of your
state or jurisdiction.
Can you describe the level of coordination between Washington and
Oregon on their RUC programs?
Answer. Oregon and Washington have coordinated and will continue to
work together as both states develop and enhance their RUC programs.
Oregon and Washington have collaborated on a clearinghouse project to
demonstrate how miles driven in both states can be accurately assigned
to the appropriate state for the purposes of calculating RUC fees. ODOT
is also preparing to undertake a project to improve program enrollment
at the point of sale at auto dealerships, and it seeks to include
participation by Southwest Washington dealers. ODOT staff have also
participated in meetings with Washington staff to share information
about how the program operates and what standards Oregon has adopted.

Question 3. Mr. Strickler, the Bipartisan Infrastructure Law
represents the largest investment in our transportation infrastructure
since the Interstate Highway System and the creation of the Highway
Trust Fund. Could you speak about the importance of maintaining federal
investment in transportation projects? What would happen to ODOT's
ability to improve mobility and safety if Congress cut highway and
transit spending from current levels in the next authorization?
Answer. It will absolutely be necessary to maintain the momentum of
the Bipartisan Infrastructure Law's transportation investment levels in
future years in order to ensure the completion of critical
infrastructure projects. Long-term, robust funding is necessary to meet
our nation's transportation infrastructure needs, especially given the
cost increases we've seen since the bill's passage. ODOT's ability to
maintain our current program and the levels of investment we need to
ensure the safety, preservation, and resilience of our transportation
system depend upon this continued federal investment.

Questions to Kris Strickler, Director, Oregon Department of
Transportation, on behalf of the American Association of State Highway
and Transportation Officials (AASHTO), from Hon. Marilyn Strickland

Question 1. Can you share some of challenges Oregon faced when
wrapping up its RUC pilot and transitioning to the permanent OReGO
program?
Answer. One of the biggest challenges in transitioning from the
pilot to a permanent program was public education and engagement. Mass
publications typically did not allow for enough detail for the public
to fully understand the program and surrounding context; in-person
engagement at events such as auto shows and the state fair provided
better venues to conduct education, but that meant limited reach in
terms of audiences. Before the program started, a public relations firm
was used to conduct a listening tour and focus groups throughout the
state.
Another challenge involved the additional development of system
requirements, such as IT architecture, business rules, and intra-agency
responsibilities. By keeping OReGO voluntary after transitioning from
the pilot to the permanent program, it allowed ODOT to work through the
details and develop additional system requirements and rules in
preparation for further scaling up.

Question 2. How has Oregon determined the RUC rate for the OReGO
program, while also considering factors like vehicle weight, owner
income, and emissions?
Answer. OReGO's per-mile rate is currently set in statute as 5% of
the gross fuels tax rate. This is equivalent to the fuels tax paid by a
vehicle rated at 20 MPG, which was average fuel efficiency at the time
the program launched. This means the RUC rate varies correspondingly
with any increases or decreases in the fuels tax. The method for
setting the RUC rate will be reviewed in the future as the vehicle
fleet continues to change.
Vehicle weight, owner income, and emissions are all factors that
could be considered in determining the RUC rate in a future, expanded
program. At this time, with OReGO operating as a voluntary program,
those factors are not incorporated into Oregon's per-mile fee.

Question 3. As you know, the IIJA provided funding to states to
establish RUC pilot programs. What have you seen with the cost of
administering your RUC programs and do you see a need for additional
funding from the federal government in the future?
Answer. RUC programs, in their nascent stages, have shown to have a
higher cost of administration than the fuels tax, which is collected
upstream and passed on to consumers. ODOT anticipates that
administrative costs will come down as the program expands and
increased enrollment produces additional economies of scale. Federal
funding has been invaluable in helping states conduct pilots and launch
RUC programs.

Question 4. Are there any best practices that you have learned in
ways to reduce administration costs to make RUC programs more
efficient?
Answer. Options for reporting vehicle mileage are a significant
factor in the cost to administer a RUC program. Low-tech options, such
as manual odometer reporting, and high-tech options, such as in-vehicle
telematics, will be important program components for reducing
administrative costs.

Questions to Kris Strickler, Director, Oregon Department of
Transportation, on behalf of the American Association of State Highway
and Transportation Officials (AASHTO), from Hon. Patrick Ryan

Question 1.b. Given the enormous economic benefit that communities
stand to gain from upgrades like this one, what can Congress do to
ensure that these projects are approved and accomplished in a timely
manner?
Answer. AASHTO members appreciate the flexibilities in the federal
highway program that allow us to transfer funds between programs to
keep projects moving forward. With regard to project delivery, even
with significant progress being made in the past decade, getting
projects done--especially larger improvements--can still be costly and
delay-prone. We believe there remain opportunities to not only make
continued improvements in the National Environmental Policy Act (NEPA)
process itself, but also in making the NEPA process work more
efficiently with other federal requirements, all the while carefully
and responsibly stewarding optimal environmental outcomes.

Question to Kris Strickler, Director, Oregon Department of
Transportation, on behalf of the American Association of State Highway
and Transportation Officials (AASHTO), from Hon. John Garamendi

Questions to Kris Strickler, Director, Oregon Department of
Transportation, on behalf of the American Association of State Highway
and Transportation Officials (AASHTO), from Hon. Jake Auchincloss

Question 1. Mr. Strickler, as a director of a state transportation
agency, do you think it is appropriate for Congress to control 85
percent of spending decisions while owning less than 1 percent of
public roads?
Answer. The heart and soul of the Federal-aid Highway Program are
the formula dollars supporting state and local investment decisions as
part of a federally funded, state-administered highway program. This
program has been perfectly suited to a growing and geographically
diverse nation.
Congress is a key partner, along with states and local governments,
in addressing the many transportation investment needs across the
country. While Congress provides the majority of funding from the
Highway Trust Fund through the use of funding formulas, federal
transportation policy does provide states and local governments with
some flexibility in how and where to spend formula funds. This stable
federal investment from annual formula funding has allowed states and
their local partners to fund locally critical projects.
State departments of transportation are appreciative of the
flexibility in the federal program that can support the right mix of
projects to meet the unique investments of their own states. But to
further enhance the effectiveness of federal funding, AASHTO has been a
strong proponent of increasing the flexibility of and transferability
between the various federal formula programs that will allow states and
local governments to meet the policy goals set by Congress.

Question 2. Do you think a gas tax that subsidizes state or locally
sponsored projects directly would better advance transit innovation
than our current system?
Answer. The federal Highway Trust Fund supports our nation's
highway and transit systems by providing formula-based funding to
advance program and project priorities determined by states and
localities through their own 20-year long range plans and
Transportation Improvement Programs. It should also be noted that in FY
2023, the share of outlays from the mass transit account of the HTF
amounted to 16.6 percent of total HTF outlays; the mass transit
account's net receipts amounted to 11.3 percent of total HTF net
receipts. What is clear is that local and state jurisdictions need more
funds overall to meet our transit demands.

Question to Chad Shirley, Ph.D., Principal Analyst, Microeconomic
Studies Division, Congressional Budget Office, from Hon. Rick Larsen

Question 1. Mr. Shirley, some have suggested that electric vehicles
are to blame for the Highway Trust Fund's insolvency. The Congressional
Budget Office has looked at options for charging fees for electric
vehicles.
How much revenue would those generate? Would that amount be
anywhere close to closing the projected shortfall in Highway Trust Fund
revenue?
Answer. An annual fee for electric vehicles (EVs) would probably
not have a substantial effect on the trust fund's shortfall over the
next 10 years because such vehicles are projected to make up a
relatively small portion of the total stock of vehicles. If in 2022 the
federal government had charged an annual fee of $100 for vehicles that
ran entirely on electricity and plug-in hybrids, it would have raised
about $300 million, CBO estimates.\1\ That $100 fee would be comparable
to the average amount that drivers of light-duty vehicles--cars and
light-duty trucks, including sport utility vehicles, crossover utility
vehicles, minivans, and pickup trucks--paid in federal fuel taxes in
2022.
---------------------------------------------------------------------------
\1\ In 2022, about 3 million plug-in electric cars and light trucks
were on the road--a number that represents 1 percent of the stock of
light-duty vehicles. Energy Information Administration, ``Reference
Case Projections Tables'' (supplemental tables for Annual Energy
Outlook 2023, March 2023), Table 39, www.eia.gov/outlooks/aeo/
tables_ref.php.
---------------------------------------------------------------------------
EVs are expected to make up a growing share of light-duty vehicle
sales in coming years, but the stock of vehicles is replaced slowly--
the average age of passenger vehicles driven in the United States is 12
years. Even with substantial growth in EV sales, a $100 annual EV fee
would result in an annual average of $2 billion in revenues credited to
the Highway Trust Fund over the 2024-2033 period.\2\ Over that period,
revenues from the fee would amount to about $20 billion, in CBO's
estimation. By comparison, projected shortfalls in the Highway Trust
Fund's highway and transit accounts over the same period total $241
billion.\3\
---------------------------------------------------------------------------
\2\ For projections of EV sales and vehicle stock, see David
Austin, Modeling the Demand for Electric Vehicles and the Supply of
Charging Stations in the United States, Working Paper 2023-06
(Congressional Budget Office, September 2023), www.cbo.gov/publication/
58964.
\3\ Congressional Budget Office, ``Details About Baseline
Projections for Selected Programs: Highway Trust Fund Accounts'' (May
2023), www.cbo.gov/publication/51300. CBO's baseline budget projections
reflect the assumptions that current laws governing taxes and spending
generally do not change and that funding for highway and transit
programs increases annually at the rate of inflation. Some of the taxes
that are credited to the Highway Trust Fund are scheduled to expire on
September 30, 2028, including the taxes on tires and all but 4.3 cents
of the federal tax on motor fuels. However, under the rules governing
baseline projections, CBO's estimates reflect the assumption that all
the expiring taxes credited to the fund will continue to be collected
after fiscal year 2028.
---------------------------------------------------------------------------
CBO's estimate of revenues from a fee for EVs does not account for
two factors. First, imposing such a fee would reduce taxable business
and individual income. The resulting reductions in receipts from income
and payroll taxes would not affect the Highway Trust Fund, but in the
overall budget, they would partially offset the revenues from the new
fee. And second, the estimate does not account for the cost of the
administrative and auditing systems required to collect a fee for EVs.
The development of such a framework would take time and funding, as
would the necessary outreach to owners of EVs.

Questions to Chad Shirley, Ph.D., Principal Analyst, Microeconomic
Studies Division, Congressional Budget Office, from Hon. Patrick Ryan

Question 1. The 17/I-86 upgrade is critical for continued economic
and community development in Orange County, the Hudson Valley, and
lower NYS.
The impact of the proposed Route 17 expansion is far-reaching--not
only will it advance commerce but will improve the everyday lives of
citizens in Orange County and the Hudson Valley. An additional lane
will improve mobility and provide critical access for first
responders--police, fire, ambulance services--and make the route safer
for everyone on the roads. It will result in less congestion and thus
reduce the environmental damage from vehicular emissions caused by
idling motorists.
The project itself will create good-paying jobs, catalyze new
economic development opportunities, and restore a sense of stability in
our communities.
Question 1.a. How does the Highway Trust Fund support projects like
this one in my district?
Question 1.b. Given the enormous economic benefit that communities
stand to gain from upgrades like this one, what can Congress do to
ensure that these projects are approved and accomplished in a timely
manner?
Answer to 1.a. & 1.b. The Highway Trust Fund supports projects by
providing federal funds for highways and other roads; that funding
totaled $52 billion in fiscal year 2022. Most of those outlays were for
grants to state and local governments to support their spending on
capital projects. Those grants are provided on the basis of funding
formulas determined by the Congress or through competitive programs
created by the Congress and administered by the Department of
Transportation. (State and local governments typically spend roughly
three times as much of their own funds on highways each year, not only
on capital projects but also to operate and maintain roads.) That $52
billion also included spending for federal programs that subsidize
state and local governments' borrowing for highway projects; other
subsidies for state and local borrowing are provided through the tax
code.
To attain the economic benefits of the federal highway grants in a
timely manner, the Congress could consider approaches that would make
highway spending more productive.\1\ Such approaches include the
following:
---------------------------------------------------------------------------
\1\ For more information, see Congressional Budget Office,
Approaches to Making Federal Highway Spending More Productive (February
2016), www.cbo.gov/publication/50150.
---------------------------------------------------------------------------
Having the federal government--or allowing states or
private businesses to--more often charge drivers directly for their use
of roads,
Allocating funds to states on the basis of the benefits
and costs of specific programs and projects, and
Linking spending more closely to performance measures--
such as measures of traffic congestion or road quality--by providing
additional funds to states that meet standards or penalizing states
that do not.

Lawmakers may also choose to fund highway projects to achieve
various other objectives--including boosting economic activity in the
short term, increasing employment, and increasing rural access to
transportation networks. They may want to avoid too much of a mismatch
between the gasoline taxes paid in each state and the federal funds
allocated to each state. Or they may wish to direct less of the
spending and, instead, provide money for states to pursue their own
objectives as long as the work is done, for instance, on the National
Highway System or some other set of roads with national significance.
Finally, lawmakers could change the regulatory process for highway
projects to allow such projects to be approved and completed more
quickly.

Question to Chad Shirley, Ph.D., Principal Analyst, Microeconomic
Studies Division, Congressional Budget Office, from Hon. Seth Moulton

Question 1. The Government Accountability Office has found that
under payment into the Highway Trust Fund by the trucking industry
distorts the competitive environment within the freight transportation
sector by ``making it appear that heavier trucks are . . . less
expensive . . . than they actually are, and puts other modes, such as
rail and maritime, at a disadvantage.'' Research from the Virginia
Department of Transportation shows that the damage from a single-axle
load of 18,000 pounds is equivalent to about 5,000 passenger vehicles.
States estimate that trucks are responsible for about 35-40% of all
highway maintenance costs. However, the current taxes are inadequate--
we currently have a 12% sales tax on tractors and trailers, a weight
tax for heavy trucks and a tax on large tires. According to a 2015 CBO
study. These are inadequate to cover the impact of trucks on road
conditions, congestion, road safety, and pollution. By raising taxes,
trucks would finally cover the full share of their damages--this would
also likely shift some freight to rail as trucking would finally be
priced at a fair, non-subsidized rate.
Mr. Shirley: What would be the effect on US infrastructure if the
trucking industry paid their fair share of costs to maintain our
nation's roads and bridges? How could this potentially affect modal
shift to freight rail?
Answer. The most recent national study of how different types of
vehicles contribute to the highway costs that federal programs pay for
was published by the Federal Highway Administration in 2000.\1\
Passenger vehicles constituted the largest group of vehicles in use and
were estimated to account for about 60 percent of federal highway costs
in that year, even though their estimated cost per mile of highway
use--about one cent--was the lowest of all vehicles. Trucks accounted
for the remaining 40 percent of federal highway costs but provided
about one-third of the Highway Trust Fund's revenues.\2\ For each mile
they traveled in 2000, combination trucks (that is, tractors pulling
one or more trailers) were estimated to impose a cost of 8 cents. For
all trucks, the estimated cost per mile traveled ranged from 2 cents
for trucks carrying the lightest loads to 20 cents for those with the
heaviest loads.\3\ If truck transportation were more expensive, trucks
would be driven less, and the reduction in miles traveled would lessen
wear and tear on the roads. Furthermore, if the trucking industry paid
more for using highways, more money would be available to improve them.
---------------------------------------------------------------------------
\1\ Federal Highway Administration, Addendum to the 1997 Federal
Highway Cost Allocation Study Final Report (May 2000),
www.fhwa.dot.gov/policy/hcas/addendum.cfm.
\2\ More recently, some state governments have calculated cost
shares for different types of vehicles that are similar to the
estimates in the Federal Highway Administration study. In 2019, the
state of Oregon estimated that light vehicles (mainly cars and other
passenger vehicles) would account for about two-thirds of state highway
costs in 2020 and heavy vehicles for about one-third. As that report
noted, however, highway spending by state governments includes
maintenance costs, such as snow removal and pothole patching, whereas
federal spending does not. Oregon Department of Administrative
Services, Office of Economic Analysis, Highway Cost Allocation Study,
2019-2021 Biennium (prepared by ECONorthwest, 2019), www.oregon.gov/
das/oea/pages/hcas.aspx.
\3\ Federal Highway Administration, Addendum to the 1997 Federal
Highway Cost Allocation Study Final Report (May 2000), Tables 4 and 6,
www.fhwa.dot.gov/policy/hcas/addendum.cfm.
---------------------------------------------------------------------------
The costs of transportation include not only wear and tear on roads
and bridges but also ``external'' costs to society, such as delays
caused by traffic congestion; injuries, fatalities, and property damage
from accidents; and harmful effects from exhaust emissions. In 2015,
CBO estimated that the unpriced external costs (per ton-mile) of
transporting freight by truck were about eight times the unpriced
external costs of transporting freight by rail; those costs, net of
existing taxes, represented about 20 percent of the cost of truck
transport and about 11 percent of the cost of rail transport.\4\ (A
ton-mile represents one ton of freight transported one mile.) By CBO's
estimate, adding unpriced external costs to the rates charged by each
mode of transport--via a weight-distance tax plus an increase in the
tax on diesel fuel--would have caused a 4 percent shift of ton-miles
from truck to rail and a 1 percent reduction in the total amount of
tonnage transported.
---------------------------------------------------------------------------
\4\ David Austin, Pricing Freight Transport to Account for External
Costs, Working Paper 2015-03 (Congressional Budget Office, March 2015),
www.cbo.gov/publication/50049.
---------------------------------------------------------------------------

Question to Chad Shirley, Ph.D., Principal Analyst, Microeconomic
Studies Division, Congressional Budget Office, from Hon. John Garamendi

Questions to Jeff Davis, Senior Fellow, Eno Center for Transportation,
from Hon. Patrick Ryan

Question 1. The 17/I-86 upgrade is critical for continued economic
and community development in Orange County, the Hudson Valley, and
lower NYS.
The impact of the proposed Route 17 expansion is far-reaching--not
only will it advance commerce but will improve the everyday lives of
citizens in Orange County and the Hudson Valley. An additional lane
will improve mobility and provide critical access for first
responders--police, fire, ambulance services--and make the route safer
for everyone on the roads. It will result in less congestion and thus
reduce the environmental damage from vehicular emissions caused by
idling motorists.
The project itself will create good-paying jobs, catalyze new
economic development opportunities, and restore a sense of stability in
our communities.
Question 1.a. How does the Highway Trust Fund support projects like
this one in my district?
Question 1.b. Given the enormous economic benefit that communities
stand to gain from upgrades like this one, what can Congress do to
ensure that these projects are approved and accomplished in a timely
manner?
Answer to 1.a. & 1.b. The Highway Trust Fund (HTF) is the primary
means of financial support for the Federal-Aid Highways program (FAHP).
The ``-Aid'' part of the name is significant, because the FAHP is not
directly carried out by the federal government. Instead, state
governments select, design, and construct projects, within broad
federal guidelines, and after the state government spends its own money
on the project, the federal government immediately provides financial
aid to the state to reimburse them for a portion of their costs,
usually 80 percent.
Therefore, if New York State wants to proceed with the project, the
HTF, through the FAHP, can pay for up to 80 percent of the cost of
Route 17 expansion if:
1. The specifics of the project meet the eligibility rules written
in title 23, United States Code, and its implementing regulations;
2. The project receives all of the necessary planning permits, and
3. The State of New York, or other local interests, can provide
their 20 percent of the project's costs.

Every transportation infrastructure law in this century has tried
to expedite the complicated federal process for permitting
infrastructure projects, and while progress has been made in lowering
the percentage of all projects that are subject to these processes, the
most expensive ones are still stuck with it. More work remains to be
done by Congress to force federal agencies to cooperate in a timely
manner through these processes.
The issue of delays also relates to the third problem, of scarce
resources at the state level. While the Infrastructure Investment and
Jobs Act (the IIJA) has increased the amount of federal aid given to
New York State for highways each year from $1.84 billion in 2021 to an
average of $2.31 billion per year for the five years of the law's
duration, the initial increase in IIJA funding has coincided with a 50
percent increase in highway construction costs, which has left many
states scrambling to find extra money to come up with their 20 percent
matching share for projects that have suddenly become more expensive.

Question to Jeff Davis, Senior Fellow, Eno Center for Transportation,
from Hon. John Garamendi

Question 1. I think it is clear to all of us that the funding
mechanism for the Highway Trust Fund needs to be rethought. One
potential avenue for that is a Vehicle-Miles Traveled, or VMT, charge.
California conducted a nine-month pilot study in 2016 to assess the
efficiency and fairness of a VMT program. The California state
legislature has extended and expanded this pilot until 2026. Of
particular concern to critics of a VMT charge is that it is unfair to
rural and low-income drivers. However, the final report published from
the California Road Charge pilot found no support for this claim. In
fact, the VMT program resulted in drivers of lower-fuel efficiency
vehicles, which were more common in rural areas, paying less than under
the current gas tax.
For all our panelists, we have an excellent study from California
which found minimal concerns over the equity of a VMT charge for rural
and low-income drivers. What more needs to be done to assess the
efficacy and fairness of a VMT charge so that Congress can have
reliable information to inform our decision-making before the next
Highway Bill?
Answer. In our recent Eno report, Driving Change: Advice for the
National VMT-Fee Pilot, my colleagues Garett Shrode, Robert Puentes,
and I discussed two interlinked ways that Congress can gather
information to inform decision-making prior to the next reauthorization
bill.
Section 13001 of the IIJA replaced the FAST Act's grant program for
state-level pilot programs to test various road user charge systems
with a new, expanded program that allows grant recipients to include
local governments and MPOs as well as state, and directed that the
program test, among other things, ``the design, acceptance, equity, and
implementation of user-based alternative revenue mechanisms, including
among--(i) differing income groups; and (ii) rural and urban drivers .
. .'' $75 million over five years was provided for these test programs.
And section 13002 of the IIJA directs USDOT and Treasury to conduct
the first-ever 50-state pilot program for a national VMT fee, and
provided $50 million over five years for that purpose.
Unfortunately, the Department of Transportation has been slow to
implement these programs. An Advisory Board to run the national VMT
pilot was supposed to be established within 90 days of the IIJA's
November 2021 enactment, but the first request for nominations to the
Board was not made until October 3, 2023. And because the state/local
VMT fee pilot grant program is technically a new program, not a
continuation of the old program, its startup is still stuck in OMB
Information Collection Hell (they have not issued a NOFO for fiscal
2022 or 2023 grants yet, and the Information Collection Federal
Register notice to allow them to eventually issue a NOFO for those
years was not published until October 18, 2023).
This initial two-year delay in getting these valuable research
programs started will make it difficult to get the full amount of
necessary data from them in order to inform the post-IIJA surface
transportation reauthorization bill (if that bill is produced by
Congress on schedule).
In our paper, we recommended the establishment of the Advisory
Board for the national pilot as soon as possible, and that the Board
should include a diverse range of voices, employ a subcommittee
structure to address topics such as interoperability and
standardization, and choose its chair from among its membership. The
board should have an active role in identifying the needs for the
national pilot, without overburdening it with explorations of elements
already explored at the state level.
The national pilot program should:
Commit to constructing the simplest implementation
possible. This will help determine which data elements are needed to
administer a full national VMT-fee program.
Distinguish between certain elements of a national
program versus what the states are exploring today, particularly the
uniquely federal roles such as cross-border traffic with Mexico and
Canada, and standardizing elements such as vehicle classifications,
weight definitions, and models for data formatting, sharing, and
protection across state lines.
Build on existing pilots and focus specifically on
options and potential obstacles for a VMT-fee pilot for commercial
trucks. For example, a national VMT-fee pilot for commercial vehicles
should test various rate structures including a fee based on gross
vehicle weight rating, gross registered weight, and vehicle class. This
rate structure should be straightforward and not present undue
reporting burdens for the trucking industry.
Employ phasing to use the funds and time available more
effectively. Certain VMT-fee implementations can be tested in different
regions, and they do not all have to take place at the same time or for
the same amount of time.
Test the minimum data required to administer a national
VMT fee, scalability, and administrative models in order to mitigate
concerns over privacy.
Carry out the public awareness campaign regarding a
national motor vehicle per-mile user fee authorized by the IIJA,
including distribution of information related to the pilot program, and
consumer privacy. It is important for the education to go beyond what
is proposed in IIJA and more generally provide education about the
transportation funding crisis in the United States.

Question to Jeff Davis, Senior Fellow, Eno Center for Transportation,
from Hon. Jake Auchincloss

Question 1. The Highway Trust Fund is running such a massive
deficit that the gas tax couldn't meet its needs even if it were five
times higher--and what is doled out is allocated without reference to
the metrics that matter most, like how well projects connect people to
jobs, services, and one another. To the detriment of state budgets, the
federal transportation system incentivizes states to build road after
road without regard to future costs of maintenance, operation, and
environmental impact. The solution is devolution. Congress should leave
highway taxation and spending to the states. We should commensurately
remove federal red tape and regulations on highways, beyond a minimum
standard of safety, so that states and cities can use their dollars to
address local mobility with organic solutions. The federal gas tax
should remain but be used, instead, to subsidize locally sponsored
projects that promote walkability, micromobility, and transit.
Mr. Davis, in your testimony you note that it is time to either
``mend'' or ``end'' the Highway Trust Fund. You note that, while
complicated, a budget process could be established that would allow
this committee and the Appropriations Committee to split duties for
funding key programs. Could you speak to what this process would look
like, and what the pros and cons of this would be relative to a
federalism system that would incentivize states to invest in mobility
innovation?
Answer. In my testimony before the Committee, I indicated that the
current system--filling the growing gap between highway user tax
receipts (currently c. $43 billion per year and static) and Highway
Trust Fund spending levels (currently c. $60 billion per year in
outlays and growing rapidly) with periodic general fund deposits into
the Trust Fund was the worst possible system, because it allows the
user tax to spending imbalance to keep getting worse while avoiding any
responsibility or accountability for the deficit spending needed to
keep the Trust Fund solvent.
If user tax receipts are not enough to keep the Trust Fund solvent,
then it would be preferable if Trust Fund spending levels were reduced
to the level of the tax receipts, and then any needed general fund
moneys would be provided in addition to, and outside of, the Trust Fund
instead of being deposited into the Trust Fund and made fungible with
user tax dollars.
Up until now, the costs of those bailout transfers to the Highway
Trust Fund ($272 billion to date, though those will spend out over a
total of 20 years) has not been borne by the Appropriations Committees.
In order for this burden to be placed on their books, two things would
be necessary: space under a budget ceiling, and a loosening of current
restrictions on making ``advance appropriations'' for future years.
1. Currently, the Appropriations Committees face statutory annual
ceilings on the total amount of new discretionary appropriations for
each year, reinstituted by the Fiscal Responsibility Act: a ceiling on
defense category appropriations, and a ceiling on non-defense category
appropriations. However, these category definitions change over time.
The original Budget Control Act of 1990's spending caps included a
third category for foreign aid. And the 1998 TEA21 law created two new
discretionary appropriations categories for highway and transit
funding. The intent of these categories was to take away any normal
motivation that the Appropriations Committees might have to under-fund
a category's full spending level in a given year. If savings from
cutting one category could not be shifted to, and spent in, another
category, the thinking goes, the appropriators would have no reason to
under-fund that category (and this proved correct). Those caps expired
in 2003. If Congress were to extend the Fiscal Responsibility Act's
spending caps past the expiration of the bipartisan infrastructure law,
there is no procedural reason why Congress could not reinstate separate
highway and transit caps with enough space for spending to supplement
Highway Trust Fund programs and keep them well above user-tax-supported
levels, if authorized in the next transportation bill. However, the
appropriators would take a dim view of new highway and transit spending
caps if they were offset by reductions in other spending caps.

2. The present budget process restricts the ability of the
Appropriations Committees to make ``advance appropriations'' that
become available in future years. This has been cited over and over by
transportation stakeholders as the biggest reason why trust funds and
contract authority are necessary--in order to provide funding that can
be relied upon to become available several years from now. Section 112
of the Fiscal Responsibility Act reiterated a provision found in most
recent Congressional budget resolutions that limits advance
appropriations to veterans health and Indian health programs, plus a
fixed amount for five specific accounts (three at Education and two at
HUD). However, the bipartisan infrastructure law found a way around
this, allowing the Appropriations Committees to provide $446 billion
for five full years of advance funding ($184 billion of it at USDOT
alone) by declaring it an off-budget emergency and exempt from normal
budget restrictions. This seriously abused the legal definition of
``emergency,'' part of which involves the expense being ``unforeseen,''
which is hardly true of the ``crumbling infrastructure'' that
policymakers had been bemoaning for years. So budget law could be
amended to make it easier for the Appropriations Committees to provide
appropriations for certain capital programs, including highway and
transit programs that fund big projects with long lead times, with
advance appropriations over multiple future years, without being
counted against the appropriators' regular annual ceiling. For capital
programs currently funded in whole or in part by the Highway Trust
Fund, this could be cone as part of reestablishing the new highway and
transit categories for discretionary appropriations, allowing
appropriations in those categories to be exempt from the general ban on
advance appropriations.

This kind of system would work best if planned out in advance by
all parties. The tax committees would re-evaluate what the user tax
rates for the Trust Fund should be, and what the appropriate split
between Highway Account and Mass Transit Account should be (currently
2.86 cents per gallon of all motor fuel taxes for Mass Transit, and the
remainder of all motor fuel taxes, plus all three trucking taxes, for
Highways).
That would then give the transportation authorizing committees
estimated tax receipt numbers for the reauthorization bill. My personal
preference would be to go with the 2010 recommendations of the
bipartisan Simpson-Bowles Commission and say that new contract
authority in a given year would be limited by law to the actual amount
of excise taxes collected by the Trust Fund in the most recent year, so
for each Account, the authorization law could take fixed dollar amounts
of contract authority ``off the top'' for each year for allocated
programs like administrative overhead, research, competitive grants, et
cetera, and then state that of any remaining funding, x percent goes to
Formula Program 1, y percent to Formula Program 2, etc.
The authorization bill would then also authorize the Appropriations
Committees to appropriate some blend of additional funding for these
programs, and possibly, some programs to be entirely funded by general
revenues.
The choice of which programs to fund entirely from the Trust Fund,
which programs to leave entirely to general revenues, and which to
split is a complicated one, which could reflect federalist concerns.
For example, there is probably no way to keep excise tax ``rate of
return'' issues away from programs being funded by those excise taxes,
but there is no reason in the world why a particular state's gas tax
payments should have any effect on their general fund apportionment
levels. Also, Congress could choose to focus Trust Fund programs more
towards Congress' traditional role facilitating interstate commerce,
and general fund programs more towards local transportation issues.
(Also, practically speaking, one should remember that if the
authorizers keep all of the most popular programs for themselves, and
leave the less popular programs to the appropriators, it becomes less
likely that the appropriators will respond with robust funding.)
The most important thing to remember is that the current blend of
Trust Fund excise taxes will only bring in around $43 billion per year
over the next decade, per the Congressional Budget office's May 2023
projections, while new contract authority for future spending to be
drawn on the Trust Fund totals $76.7 billion in the just-started fiscal
year 2024 and will rise to $80.6 billion in the final year of the IIJA.
That gap is almost certainly too large to be passed to the
Appropriations Committee in its entirety and would need to be addressed
by some combination of spending cuts and real revenue increases as
well.

Questions to Reema Griffith, Executive Director, Washington State
Transportation Commission, from Hon. Rick Larsen

Question 1. Ms. Griffith and Mr. Strickler, one of the potential
challenges with administering a Road Usage Charge or Vehicle-Miles
Traveled program is accounting for travel that occurs outside of your
state or jurisdiction.
Can you describe the level of coordination between Washington and
Oregon on their RUC programs?
Answer. Washington and Oregon have collaborated in several ways.
Washington transportation agencies collaborated with
Oregon DOT on its 2012-2013 road usage charge pilot program (RUCPP).
Oregon invited over 30 agency staff and lawmakers from Washington to
participate in a multi-state pilot to experience an early prototype of
how a RUC system could work for a period of about three months. This
led to more interest in the topic from Washington's Legislature.

The state DOTs of Washington and Oregon founded the
Western Road Usage Charge Consortium (later RUC West, now RUC America)
as a venue for state DOTs to conduct pooled fund research on the topic
of RUC.

In 2018-2019, The Washington State Transportation
Commission, as part of its decades-long RUC research program, conducted
a multi-state demonstration project within its statewide pilot test.
The multi-state demonstration featured the nation's first bi-state cash
collection RUC test where approximately 30 participants from
southwestern Washington and 90 participants from Oregon reported miles
driven in each state and paid RUC charges based on the rate prescribed
for each of the two states, less gas tax credits applied per the gas
tax rate for each state. The two states also co-operated a RUC
interoperability hub that successfully demonstrated reconciliation of
funds between the two states based on the number of miles driven by
participants in each state.

In 2022-2023, Washington, Oregon, and several other
states collaborated on a series of workshops to identify opportunities
for reducing the cost of RUC administration through multi-state
procurement and customer service provisions as well as shared best
practices for enforcement. As a follow up to the workshop series,
Washington, Oregon, and several other states participated in a mock RUC
standards development committee to demonstrate the process for and
prospective benefits of creating standards to guide RUC system
development and implementation nationwide.

Question 2. Ms. Griffith, as you know, Washington State sees
significant cross-border travel with Canada.
Has the Washington State Transportation Commission looked at how
the RUC program would work with cross border travel? How have you
engaged with your counterparts in British Columbia, Canada?
Answer. During Washington's 2018-2019 statewide pilot program, the
Commission collaborated with the City of Surrey, BC, on an
international RUC demonstration, the first of its kind. This aspect of
the pilot featured approximately 30 drivers from Surrey who reported
distance driven in both BC and Washington to a private account manager
and received invoices for miles driven in Washington. The test
highlighted some of the difficult but surmountable challenges of cross-
border RUC administration including cellular network availability for
data transmission and compatibility of privacy laws.

Questions to Reema Griffith, Executive Director, Washington State
Transportation Commission, from Hon. Marilyn Strickland

Question 1. Do you anticipate any challenges in Washington state's
efforts to move towards the adoption and roll out of a permanent RUC
program in the future?
Answer. The principal hurdles to adoption are public acceptance and
education. The Commission's research has illuminated pathways for RUC
that include many possible scenarios for initial launch of a RUC
program. Should the Legislature decide to move forward with RUC, it
must decide a range of policy questions such as who pays RUC, how is
the rate set, how will the revenues be invested, what mileage reporting
methods will be offered, how will privacy be protected, and how will
the system be enforced. Once these policy questions are addressed, and
a program is established, it will be important for the state to fund a
robust, active, and ongoing public education program that identifies
why RUC is being advanced, how the program will work, who can sign up
for it, and how the long-term transition away from the gas tax will
take place. Through consistent and active interaction and education
with the public and based upon the successful launch experiences of
other states, there are no challenges that are unsurmountable in
advancing RUC in Washington State.

Question 2. As you know, the IIJA provided funding to states to
establish RUC pilot programs. What have you seen with the cost of
administering your RUC programs and do you see a need for additional
funding from the federal government in the future?
Answer. Examining alternative deployment scenarios to identify cost
reduction opportunities has been a major feature of our research. The
primary drivers of cost in a RUC program include reporting/collecting
road usage data and administering user accounts including customer
service. Based on the research to date, the Commission believes a
system can be operated at a cost of less than 10% of revenue collected,
and likely less than 5% at scale.
With regard to the need for additional federal funding to support
RUC pilots and programs, Washington has benefited from federal funding
to help identify pathways forward, including careful design and
consideration of low-cost implementation approaches. Continued federal
funding will help Washington and other states continue to research and
explore the many operational details that must be resolved on the
pathway toward a mature RUC program. This includes collaboration across
state lines to ensure seamless interoperability of RUC programs to
reduce costs and improve the customer experience. It also includes
alternative approaches to pilot testing such as the web-based RUC
simulation that Washington deployed in 2022-2023. Federal funding can
also support states as they launch small-scale RUC programs and
optimize them before scaling.

Question 3. Are there any best practices that you have learned in
ways to reduce administration costs to make RUC programs more
efficient?
Answer. Washington's research has identified pathways to cost
reduction including development of a scalable, low-cost, user-friendly
odometer declaration method of mileage reporting; testing of a low-cost
smartphone app for verified odometer reporting and optional out of
state reporting; and collaboration with other states to identify cost
reduction opportunities through shared best practices and standards
development as RUC scales across the country.

Question to Reema Griffith, Executive Director, Washington State
Transportation Commission, from Hon. Patrick Ryan

Question to Reema Griffith, Executive Director, Washington State
Transportation Commission, from Hon. John Garamendi

Questions to Reema Griffith, Executive Director, Washington State
Transportation Commission, from Hon. Jake Auchincloss

Question 1. Ms. Griffith, as a director of a state transportation
agency, do you think it is appropriate for Congress to control 85
percent of spending decisions while owning less than 1 percent of
public roads?
Answer. Resource allocation decisions for transportation dollars in
Washington are made by an array of local and statewide agencies
including the Legislature, the Governor, the State Department of
Transportation, metropolitan planning organizations, counties, cities,
and tribal governments. Each of these bodies works within the fiscal,
legal, and regulatory constraints they are given to optimize their
investments. The Washington State Transportation Commission understands
there are sometimes competing priorities among federal, state, and
local governments for investing in the various layers of infrastructure
to achieve multiple purposes such as national, state, and local
connectivity and access to mobility to support safe, efficient movement
of people and goods to support a strong economy and quality of life for
our residents. As our agencies within Washington collaborate across
levels of government, the Commission's role is to serve as a sounding
board for public and stakeholder input to the long-range planning
process, and to serve as the toll authority and ferry authority, which
includes rate setting. In addition, the Commission undertakes special
studies as directed by the Legislature on topics of interest and
importance to achieving the state's long-term goals, such as long-term
sustainable, equitable transportation funding--an issue which affects
all levels of government.

Question 2. Do you think a gas tax that subsidizes state or locally
sponsored projects directly would better advance transit innovation
than our current system?
Answer. The gas tax in Washington is constitutionally dedicated to
investment in highway purposes. Transit is primarily a local or
regional function, with planning and operations provided by local
governments and transit authorities. Funding largely comes from farebox
recovery and local option taxes including motor vehicle excise taxes.
Transit agencies receive some support for capital investments including
rolling stock from the Federal Transit Administration. The Washington
State Transportation Commission does not play a role in funding or
provision of transit services, but the Commission has recommended that
the state identify a dedicated source of funding for multi-modal
investments including transit. In 2021, the state Legislature allocated
significant investments from driver licensing and vehicle registration
transactions as well as the state's Climate Commitment Act to multi-
modal investments including transit.

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