Home News Gas Tax Not Funding Highway Needs, Says Research Firm

Gas Tax Not Funding Highway Needs, Says Research Firm

Highway Projects

SBI Energy cites “growing disconnect” between fees collected and highway maintenance costs.

CDR Staff December 18, 2012

Market research firm SBI Energy, Rockville, Md., says “there is a growing disconnect on both the federal and state levels between the amount of money being generated from fees paid by users of the U.S. road system and the amount of money required to maintain and expand that system.”

The research firm says the trend toward more fuel-efficient cars and alternative energy vehicles also has created a reduction in fuel use that reduces the amount of gasoline tax revenue.

According to The U.S. Road, Bridge & Tunnel Construction Market study from SBI Energy, as long as both state and federal governments refuse to increase their respective gas taxes or implement other user-based funding schemes, long-term funding prospects are “bleak.”

Capital spending for roadways has averaged a 6 percent per 10-year compound annual growth rate (CAGR) since 1950, says SBI Energy. However, a new forecast anticipates the CAGR of spending during the next decade to be just 4.8 percent between 2013 and 2022.

“While the pay-as-you-go system has worked reasonably well for decades, it is no longer able to pay for all of the roadway construction required to maintain the U.S. road network at its current performance level,” says Norman Deschamps, SBI Energy analyst and author of the study.

The Federal Highway Trust Fund (HTF) is the primary vehicle through which the federal government collects and transfers money to the states to fund roadway construction. The HTF operates as a pay-as-you-go system, largely funded through taxes on gas and diesel fuel, with the collected funds transferred to the states through multi-year transportation bills.

“Almost half of the states have less than 60 percent of their transportation spending come from user-based taxes and fees. The pay-as-you-go system is failing at the federal level as well,” Deschamps comments. “Since 2008, the federal government has had to inject $32.1 billion dollars to maintain solvency of the HTF, and the Moving Ahead for Progress in the 21st Century Act (MAP-21), passed mid-year 2012, transfers an additional $18.8 billion into the HTF through fiscal year 2013 and fiscal year 2014. Unfortunately, MAP-21 also does not address the growing discrepancy between the amount of money collected through user-based fees by the HTF and how much money state and local governments are spending to maintain and improve the nation’s roadway infrastructure.”

For contractors and sub-contractors serving the road, bridge and tunnel construction market, the availability of public funding has been, and continues to be, a serious constraint on the market, says Deschamps.

SBI Energy, a division of MarketResearch.com, publishes research reports in the industrial, energy, building/construction, and automotive/transportation markets. More information about the company and the highway spending report can be found at www.sbireports.com.

 

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