Wednesday, May 18, 2011

$14 Billion Per Year More Than Current Spending Needed To Maintain US Highway System, CBO Statement

According to CBO testimony before the US Senate Finance Committee, the government needs to spend an additional $14 billion dollars per year over current spending levels to maintain the US highway system.

From Statement of Joseph Kile, Assistant Director for Microeconomic Studies, "The Highway Trust Fund and Paying for Highways" before the Committee on Finance, United States Senate, May 17, 2011:
Status of the Highway Trust Fund
The United States spends about $160 billion annually on highways, with about one-fourth of that total, or roughly $40 billion, coming from the federal government. Federal highway spending is funded mainly through taxes on gasoline and other motor fuels that accrue to the Highway Trust Fund. In recent years, the Congress has spent more on highways than the revenues accruing to the fund for that purpose, and it has supplemented the trust fund’s balance with money from the general fund of the Treasury.

The law that authorizes collection of taxes for and spending from the Highway Trust Fund is set to expire on September 30, 2011. Even if the provisions of that law are extended, the trust fund will be unable to meet its obligations in a timely manner by the summer or fall of 2012, CBO projects, unless transfers similar to those in the past are made, other sources of revenue are identified, or spending is reduced.

How Much Should the Federal Government Spend on Highways?
The Congress has a range of options for future spending on highways, and the one it selects will influence the amount and distribution of economic benefits from the nation’s network of highways and roads. Those options include the following:
  • Limit spending to the amount that is collected in current taxes on fuel and other transportation activities; doing so would result in spending that would be about $13 billion per year below the current amount.

  • Maintain current capital spending, adjusted for inflation.

  • Spend enough to maintain the current performance of the highway system; doing so would require about $14 billion per year more than current spending.

  • Fund projects whose benefits exceed their costs; doing so would require even more spending than maintaining current services, up to about $50 billion more than current spending, depending on the degree to which benefits would be expected to exceed costs.
Read the full statement on the CBO site here or on Scribd here.
The Highway Trust Fund and Paying for Highways

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