Since its inception, the Interstate Highway System has been universally revered for its scale and accessibility. But the primary funding mechanism which supports it, the federal gas tax, is inefficient and fiscally unsustainable. This past weekend, the Oregon House and Senate moved to craft a new system for generating revenue for the building and maintaining of the state’s roads. Senate Bill 810 would allow the collection of highway revenue based on vehicle-miles traveled (VMT). This is occurring in a climate of uncertainty over the future federal involvement in highway funding. Currently, revenue for the federal Highway Trust Fund (HTF) is primarily generated from a tax of 18.4 cents on every gallon of gasoline sold for automobile consumption. While this system was built upon the idea that revenue collected from a state’s fuel consumption should directly go to maintaining its federal-aid highways, the reality is that the current system is highly redistributive. In 2005, Alaska received highway funding that was 6.44 times larger than the revenue it contributed to the HTF. Oregon on the other hand only received 95 percent of what it contributed into the HTF. Other flaws in the system include a widening gap between the revenue generated from the gas tax and the cost of building and maintaining America’s highways. Since 1993, the fuel tax rates for both gasoline (18.4 cents per gallon) and diesel (24.4 cents per gallon) has remained the same while the annual cost of highway maintenance increased by 55 percent -- right as more highway segments reach the end of their 50-year lifespans. At the same time, the fuel efficiency of the average car has increased by 5 percent, reducing the revenue generated by the fuel tax. As the chart below illustrates, today’s fuel efficient cars are driving more than ever but are not generating the revenue necessary to expand road capacity or maintain existing infrastructure.
- Vehicles must weigh 10,000 lbs. or less;
- The number of vehicles in the program cannot exceed 5,000;
- No more than 1,500 could achieve less than 17 miles per gallon; and
- Nor more than 1,500 could achieve between 17 miles and 22 miles per gallon.