Federal spending for highways, which takes place largely through grants to state and local governments, has equaled a fairly stable percentage of gross domestic product over the past 30 years. Since 2001, that spending has exceeded the revenues from fuel and other taxes that are credited to the Highway Trust Fund for highway programs. Policymakers have various options for changing the ways in which the federal government spends on highways and raises money to fund those expenditures.

1. Congressional Budget Office
Transportation Research Board, 99th Annual Meeting
Standing Committee on Revenue and Finance
January 14, 2020
Sheila Campbell
Microeconomic Studies Division
Federal Highway Spending and Revenues

2. 1
CBO
Federal Spending for Highways

3. 2
CBO
GDP = gross domestic product.
Public Spending for Highways as a Share of GDP
Federal Spending
State and Local
Spending
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1956 1960 1964 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008 2012 2016
Percent

4. 3
CBO
Federal Spending for Highways, Adjusted for Inflation
Adjusted With
Government-
Specific Capital
and Consumption
Price Indexes
Adjusted With GDP
Deflator
0
10
20
30
40
50
60
70
1956 1960 1964 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008 2012 2016
Billions of 2017 Dollars

5. 4
CBO
Policymakers could use a number of different criteria to guide decisions about
how much the federal government should spend for highways.
 In the Federal Highway Administration’s (FHWA’s) Improve Conditions and
Performance Scenario, projects would be funded if their benefits met or
exceeded their costs.
 In the FHWA’s Maintain Conditions and Performance Scenario, projects would
be funded to keep overall conditions and performance unchanged by the end of
20 years.
 Alternatively, policymakers could set spending equal to expected revenues in
the Highway Trust Fund.
Federal Spending for Highways in the Future

6. 5
CBO
Shares of Total Federal-Aid Highway Spending Devoted to
Various Purposes

7. 6
CBO
Highway Trust Fund Revenues

8. 7
CBO
Sources of Revenues Credited to the Highway Trust Fund, 2018
0 5 10 15 20 25 30
Other Taxes and Fines
Tires and Tread Rubber Tax
Use Tax on Certain Vehicles
Truck and Trailer Tax
Diesel Tax
Gasoline and Other Fuels
Tax Taxes on
Fuels
($36.2 billion)
Taxes Specific
to Heavy
Vehicles
($6.3 billion)
Billions of Dollars

9. 8
CBO
These are the values in CBO’s May 2019 baseline budget projections. For surface transportation programs funded from the Highway Trust Fund, CBO’s baseline projections of outlays
do not consider whether projected balances in the trust fund are sufficient to support any particular amount of spending. Rather, CBO’s projections of the balances or shortfalls in the
trust fund reflect the cash flows that would stem from the spending and revenues as projected separately in CBO’s baseline. For more information, see Congressional Budget Office,
The Highway Trust Fund and the Treatment of Surface Transportation Programs in the Federal Budget (June 2014), www.cbo.gov/publication/45416.
Receipts, Outlays, and End-of-Year Balance or Shortfall in the
Highway Account of the Highway Trust Fund
Outlays
Receipts
-150
-125
-100
-75
-50
-25
0
25
50
75
100
2012 2014 2016 2018 2020 2022 2024 2026 2028
Billions of Dollars
End-of-Year
Balance or Shortfall
Actual Projected

10. 9
CBO
All years shown are federal fiscal years. Components may not add up to totals because of rounding. Outlays, revenues, and interest projections are relative to CBO’s May 2019 baseline.
n.a. = not applicable.
a. Under current law, the Highway Trust Fund cannot incur negative balances. However, following the rules in the Balanced Budget and Emergency Deficit Control Act of 1985 for constructing the
baseline, this estimate for surface transportation spending incorporates the assumption that obligations presented to the Highway Trust Fund will be paid in full. The memorandum to this table shows the
shortfall of fund balances, assuming spending amounts consistent with CBO’s estimate for S. 2302 for the Federal-Aid Highway Program and CBO’s May 2019 baseline for the National Highway Traffic
Safety Administration and Federal Motor Carrier Safety Administration programs, which are part of the Highway Account of the Highway Trust Fund.
b. Some of the taxes that are credited to the Highway Trust Fund are scheduled to expire on September 30, 2022, including the taxes on tires and all but 4.3 cents of the federal tax on motor fuels.
However, under the rules in the Deficit Control Act for constructing the baseline, this estimate incorporates the assumption that all of the expiring taxes credited to the fund will continue to be collected
after fiscal year 2022.
c. End-of-year balances reflect amounts transferred from the trust fund’s highway account to its transit account—in 2018, $1.6 billion. CBO estimates that those transfers will equal $1 billion annually
over the 2020–2025 period.
Estimated Spending From the Highway Account of the Highway
Trust Fund Under S. 2302
Millions of Dollars
2020 2021 2022 2023 2024 2025 2020–2025
Start-of-Year Balance 23,542 13,518 303 (a) (a) (a) (a)
Revenues and Interestb
37,739 37,282 36,955 36,762 36,650 36,560 221,949
Outlays 46,763 49,498 53,357 55,391 56,560 57,941 319,510
End-of-Year Balancec
13,518 303 (a) (a) (a) (a) n.a.
———a ——— ——— ——— ——— ——— ————
Memorandum: Shortfall n.a.a n.a. -17,099 -19,629 -20,910 -22,381 -80,019

11. 10
CBO
These are the values in CBO’s May 2019 baseline budget projections. For surface transportation programs funded from the Highway Trust Fund, CBO’s baseline projections of outlays
do not consider whether projected balances in the trust fund are sufficient to support any particular amount of spending. Rather, CBO’s projections of the balances or shortfalls in the
trust fund reflect the cash flows that would stem from the spending and revenues as projected separately in CBO’s baseline. For more information, see Congressional Budget Office,
The Highway Trust Fund and the Treatment of Surface Transportation Programs in the Federal Budget (June 2014), www.cbo.gov/publication/45416.
Receipts, Outlays, and End-of-Year Balance or Shortfall in the
Transit Account of the Highway Trust Fund
Outlays
Receipts
-75
-50
-25
0
25
50
2012 2014 2016 2018 2020 2022 2024 2026 2028
Billions of Dollars
End-of-Year
Balance or Shortfall
Actual Projected

12. 11
CBO
Option to Increase Taxes on Motor Fuels and Index for Inflation
Changes in Revenues
Billions of Dollars
2019 2020 2021 2022 2023 2019–2023 2019–2028
Increase the Tax
Rates by 15 Cents 15.2 21.9 22.7 23.5 24.2 107.5 237.1
Increase the Tax
Rates by 35 Cents 35.1 50.2 51.3 52.2 53.1 241.9 514.9
In 2018, CBO published an estimate prepared by the staff of the Joint
Committee on Taxation of the effects on revenues of increasing excise
taxes on motor fuels, beginning in January 2019.

13. 12
CBO
CBO’s Analysis of Revenues From a
Tax on Vehicle Miles Traveled (VMT)
by Commercial Trucks

14. 13
CBO
Estimated Annual Gross Revenues From Uniform VMT Taxes on
All Roads

15. 14
CBO
Estimated Annual Revenues From a VMT Tax of 5 Cents per Mile,
by the Road Network Included in the Tax Base
0
2
4
6
8
10
12
14
All Trucks Combination Trucks
Billions of 2017 Dollars
All Roads
Interstates and Arterial Roads
Interstates
Limiting the roads covered
by a VMT tax would have
less effect on revenues if
the tax applied only to
combination trucks.

16. 15
CBO
Cost estimate for S. 2302, America’s Transportation Infrastructure Act of 2019
(November 12, 2019), www.cbo.gov/publication/55845.
Issues and Options for a Tax on Vehicle Miles Traveled by Commercial Trucks
(October 2019), www.cbo.gov/publication/55688.
Federal Investment, 1962 to 2018 (June 2019), www.cbo.gov/publication/55375.
Federal Support for Financing State and Local Transportation and Water
Infrastructure (October 2018), www.cbo.gov/publication/54549.
Public Spending on Transportation and Water Infrastructure, 1956 to 2017
(October 2018), www.cbo.gov/publication/54539.
Recent Publications From CBO About Federal Highway Spending