Actually, Highway Builders, Roads Don’t Pay For Themselves

Cumulative Net Difference Between Spending on Highways and Highway “User Revenues”

Since 1947, American highways have run up a deficit bigger than $600 billion, in 2005 dollars. Source: U.S. PIRG

You’ve heard it a thousand times from the highway lobby: Roads pay for themselves through “user fees” — a.k.a. gas taxes and tolls — whereas transit is a drain on the taxpayer. They use this argument to push for new roads, instead of transit, as fiscally prudent investments.

The myth of the self-financed road meets its match today in the form of a new report from the U.S. Public Interest Research Group: “Do Roads Pay For Themselves?” The answer is a resounding “no.” All told, the authors calculate that road construction has sucked $600 billion out of America’s public purse since the dawn of the interstate system.

The Myth of the User Fee

First, let’s dispense with the idea that the gas tax – the primary source of financing for federal transportation projects – is a user fee.

“If you go to a state park and pay the fee to get in there, that’s a user fee,” report author Dan Smith, U.S. PIRG’s transportation associate, told Streetsblog. “If you’re driving down the road and you have to pay the toll for driving on that specific road, that’s a user fee.”

But people also pay gas taxes to fill up their lawnmowers. And those lawnmowers don’t usually end up on the highway. Just because you fill your tank doesn’t mean you ever drive on the roads funded by the gas tax you pay.

The Catch-22

Then there’s the huge contradiction underpinning the core arguments for highway expansion. Do new roads cut congestion, or do they “pay for themselves”? Highway lobbyists try to have it both ways, but the truth is that neither of these propositions hold water.

Highway expansions are often justified as projects that relieve traffic and, believe it or not, reduce pollution. So if a highway widening achieved its stated aims, it would cut congestion and fuel consumption, which would mean fewer gas tax dollars and roads that don’t pay for even a fraction of their construction costs. However, we know that new highway capacity doesn’t actually reduce driving – it induces more driving.

The additional traffic created by expanding highways does generate more gas tax revenue, but still not enough to come close to covering the costs of new roads.

U.S. PIRG cites the Pew Charitable Trusts’ SubsidyScope project, which found that “user fees paid for only 51 percent of highway costs, down 10 percent over the course of a single decade.”

Even if gas taxes were the direct user payment they’re made out to be, no one seems to have much appetite for making sure they actually pay for the infrastructure needs in this country. Gas taxes haven’t risen to accommodate more fuel efficient cars or even for plain old inflation. Nor have they compensated for the fact that driving is declining, meaning less gas consumption (but, puzzlingly, not less road-building).

The federal gas tax hasn’t gone up since 1993.

The Highway Funding System as a Subsidy for Driving

The argument that drivers pay for roads might be somewhat more credible if they weren’t taking money away from other public funding streams. Gasoline is exempt from sales taxes in 37 states and the District of Columbia. So rather than paying into the general revenues for the state, motorists are paying into an already narrowly prescribed pot of funding, which highway advocates want to see prescribed even more narrowly to exclude transit and bike/pedestrian projects.

In New Jersey, the savings on the sales tax exceeds the gas tax drivers have to pay. In that way, the government actually provides a financial incentive to purchase gas and drive. And since gas taxes are fixed and sales taxes are percentages of the purchase price, more and more states could end up with this perverse subsidy as gas prices rise.

What About Tolls?

Tolls are, indeed, an honest-to-goodness user fee, charging drivers directly for the road they’re driving on. But the overwhelming majority of roads are not funded by tolls. Local streets don’t have tolls. Rural highways don’t often have them. And tolls don’t come close to covering the costs of roads. According to U.S. PIRG, “In the 1950s, experts estimated that no more than 9,000 miles of highway (compared with the more than 3 million miles of highway in existence at that time) could support themselves with tolls.”

Founding Fathers

The report goes into ancient history (the Hoover administration), investigating the original intent of the gas tax at both the state and federal levels, and debunking the myth that they were always intended to pay only for highways. Indeed, federal gas taxes originated in the 1930s and were dedicated exclusively for highways only for a 17-year period, starting in 1956, covering the construction of the interstate highway system. Since 1973, the gas tax has been used for a variety of transportation programs and has even been used, on occasion, to pay down the deficit.

External Costs

And now the obvious: You can’t measure all the costs of driving with the price of asphalt. The U.S. PIRG report gives a laundry list of external costs associated with driving, including:

  • Changes in the risk of accidents, including injuries to non-drivers and damages to property.
  • Environmental and public health impacts, including smog, greenhouse gases, water pollution from highway runoff, and the impacts on wildlife and outdoor enthusiasts.
  • National security and economic implications of protecting access to foreign oil.
  • Increased pressure on those without cars.
  • Quality of life and the impact of roads on active transportation, such as walking and biking.
  • Car-centric development patterns, sprawl, and the resulting infrastructure costs for the expansion of water, sewer, and other services.

The report cites one study that finds that, just to pay for roads, user fees need to be 20 to 70 cents higher, and another study that finds that, to pay for external costs like these, we’d have to add another $2.10 a gallon.

The Cost of the Myths

“Road advocates use these myths about the gas tax being this user fee and that highways pay for themselves to get preferential treatment, and to get a larger chunk of the dedicated fund,” says Smith of U.S. PIRG. “Advocates of any type of policy would like a dedicated fund, because it is a stable source of funding.”

The myths associated with road financing put all other forms of transportation at a disadvantage, said Smith. “Conservatives say all other transit is social policy and should come from the general fund.”

With a Republican majority in the House, the myth that roads pay for themselves will again be enlisted to prioritize highways over transit, as the GOP begins shaping a transportation agenda around “getting back to basics” and cutting spending, especially for transit.

“We want to make sure that those falsehoods are not a part of this debate,” said Smith. “People will think twice before saying roads pay for themselves when the numbers say they don’t.”