What the FAST Act Means for Highway Funding

Posted By: garrettandassociates | April 8, 2016

Maintaining roadways is an important part of every city, state, and the federal budget. As recently as 2015, the government has been working to increase federal funding for highway improvements. The House and Senate finally agreed in December to extend the federal transportation funding for an additional five years.

Use It, Pay for It Approach

In order to fund any repairs and upgrades to the highways, the government has taken the stance, “If you use it, then you should help pay for it.” Consumers do this, in part, through the purchase of fuel. Thanks to the gas tax, the Highway Trust Fund is able to make the repairs necessary.

Unfortunately, this fund has been hit hard with rising costs to maintain the roads traveled every day. This is because, unlike the supplies needed, the tax has not been raised since 1993. For some reason, government officials have chosen to freeze this source of income at 18.4 cents per gallon. If the tax had risen with inflation, it would be closer to 33 cents per gallon at this time, almost double where it is currently resting.

Bill Passed in Dec 2015 Shifts Burden

The federal government is trying to add money to the Highway Trust Fund. In a last-minute save, the House and Senate agreed to a new federal funding bill on December 1, 2015.

The bill, known as Fixing America’s Surfaces Transportation Act, or FAST, does utilize the 18.4 cents per gallon tax. To make up the difference, the fund pulls the remaining $16 billion drawing from the general fund. This shift puts the burden on all taxpayers, instead of those who use the roadways.

Fixes the Problem, but Not Long-Term

The new funds help ensure that states continue to receive funding for roadway and infrastructure projects. It is only good for the next five years, however. Without more changes to the Highway Trust Fund, the nation’s roadways could face the same shortfalls in a few years.

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