Summary: Amid projections that freight traffic will increase 65 percent by 2020 and that traffic congestion will worsen, many transportation officials are concerned about the challenge of maintaining and improving the condition and performance of the nation's highway infrastructure. In 1998, the Transportation Equity Act for the 21st Century increased funding for highways by 27 percent in real terms over the previous surface transportation authorization act--the Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA). Nevertheless, the Federal Highway Administration estimates that the nation will need to spend about $76 billion--or 18 percent more than it spent in 2000--each year through 2020 to maintain the average conditions and performance of the nation's highways and bridges, and about $107 billion or 65 percent more than it spent in 2000 to efficiently improve the highway system. These projections raise concerns because both the federal government and state governments are facing budget deficits in the years ahead, totaling hundreds of billions of dollars. As the Subcommittee on Transportation and Infrastructure, Senate Committee on Environment and Public Works prepares to reauthorize TEA-21 and establish funding levels for the next several years, it asked us to provide historical information on the nation's investment in its highway infrastructure. In particular, the Subcommittee asked that we (1) identify overall trends in the nation's capital investment in its highway system over the past 20 years, particularly since the enactment of TEA-21 in 1998--and compare the trends in federal spending with the trends in state and local government spending; (2) determine how these trends in highway capital investment compare with the fiscal capacity of both the nation and individual states to fund these programs, particularly since the enactment of TEA-21 in 1998; and (3) provide information on sources of funds used by states for their highway programs.
The nation's capital investment in its highway system has more than doubled in real terms over the past 20 years. Although the nation's highway investment has increased, the nation's "level of effort" on highway capital spending--that is, investment relative to fiscal capacity, as measured by Gross Domestic Product--has remained relatively steady. Taxes on motor fuels, such as gasoline and diesel, have been the primary source of state highway funding. In addition to motor fuel taxes, state use revenues from other sources for highway projects, including vehicle and motor carrier taxes, tolls, and general fund appropriations.
