The Highway Trust Fund brings in roughly $45 billion a year and spends closer to $80 billion. Congress keeps the system running by borrowing the difference and moving that money into a program still treated as if road users fully fund it. Rebecca Higgins, vice president of policy at the Eno Center for Transportation, explains how the fund reached this point and why the gap keeps growing. She and Chuck examine the choices lawmakers have avoided for decades, including higher taxes, lower spending, new fees, or a smaller federal role, and what happens when highway funding begins competing with other underfunded national priorities.
Hey everybody, this is Chuck. Today we're going to be talking about the Highway Trust Fund, and before we dig into that, I want to remind you that you can go to strongtowns.org/missionaccomplished and get our report on the Highway Trust Fund. The interstate program was finished, but the program that funded it never ended, and we have spent some time and energy delving into this as part of our ending highway expansions campaign. You can go to strongtowns.org/missionaccomplished, get the latest on that, sign up for email, so we'll keep you informed as things progress and things change, and download the white paper, pass it along.
This is information that will help not only expand your thinking about highways and highway expansions, but pass it on to someone else. Because what we really need more than anything is for people to recognize that highway money is not free, and highway expansions are not helping. Everybody, this is Chuck Marohn. Welcome back to the Strong Towns podcast. Today we are speaking with Rebecca Higgins. Rebecca is the vice president of Policy at the Eno Center for Transportation, the Eno Center for Transportation has released a report called "The Last Exit, which, by the way, I found to be a hilariously awesome title. "The Last Exit: Fixing the Highway Trust Fund While Solvency Is Still Solvable.
I want to talk to you all about this. There's a lot of, to me, like irony in that title, but let's just go with first of all, Rebecca. Welcome to the Strong Towns Podcast. Nice to have you here.
Thank you so much. It's nice to be here.
I don't want to read too much into that title, but the last exit, you are kind of setting up this idea that maybe we should have done transportation reform decades ago, and maybe we should take a look at this now. I want to delve into a lot of this, but maybe you can just give us a broad overview of what this is about and the point that you're trying to make with this research that you've done.
My co-author, Jeff Davis, and I brainstormed a number of titles. The other strong contender I suggested was, “How Many Kicks Does This Can Have Left?”
That’s your epilogue or whatever.
We’ve been kicking the can down the road for a long time, and there have been a number of times when Congress could have chosen to rationalize the spending to the level of revenues that we have, or to increase revenues to accommodate the higher spending goals that they had, and there has not been the will to do that. Even though I think there are a decent number of policymakers, and certainly plenty of external stakeholders who think it's a good idea, but there has not been that willingness to do so over the last 30 years, and it does feel like we are kind of just coasting along while things get more and more untenable on the revenue side, so it's honestly surprising that we've gotten this far without it creating a more significant crisis.
But here we are, and facing a new reauthorization, with most likely again going to have a large transfer of money from the general fund.
We've spoken on this podcast a number of times about the Highway Trust Fund and its history and what have you, but I feel like it would be a good reminder for our audience, or maybe people who are going to be tuning in for the first time, to just give a little bit of background on the Highway Trust Fund itself. There was a transition that happened earlier in this century, what was that transition, and where do we find ourselves at today from a revenue standpoint?
The Highway Trust Fund has been around for 70 years now.
It was created in 1956 the same year as part of the same law that began funding the interstates, the program was funded through gas taxes and diesel taxes. the gas and diesel taxes had actually predated that, but that in 1956 we kind of created it into a trust fund and directed that funding to equal the amount of spending that was coming out for the construction of our interstates originally, and then we added a transit account into that. so today, there's the highway account and the transit account and they are funding the majority of our spending. almost all of the spending for highways, until at least until 2021, came from the highway trust fund, and all of the formula dollars for transit came from the highway trust fund.
However, we haven't increased the gas tax since 1993, and since 2008, it has been insolvent. We have been spending more than we've been taking in revenue since even longer than that, since SAFETEA-LU and 2005, and so that then it became it went insolvent in 2008 and we transferred the first $8 billion in to keep the programs going, and then continued transferring money in. in MAP-21 the reauthorization that passed in 2012 we transferred more money in. at this point, we still get a lot of money for our highway and transit projects from the gas and diesel tax, and there's also some truck taxes that are part of that spending as well.
But it's it's approaching, the highway user taxes are around $45 billion every year that we get in revenue, and we're spending closer to about $80 billion a year, so it's it's approaching like 50% unfunded. Yeah, and that's a that's a pretty significantly unfunded trust fund, which is problematic because Congress has to come in and provide new funding from the general fund, sometimes that's paid for, sometimes it's not.
You made the statement that we always we had a gas tax. I think the gas tax started in World War One. Was that when it was, or I can't remember? There was a federal gas tax at some point that was established.
I believe it was 1916.
But it but it went into the general fund,
Yeah.
The idea of the trust fund was what it was meant to create. Why not just have a gas tax that went into the general fund and then appropriate money for transportation? What was the idea behind having a trust fund itself?
The idea really was to tie the use of the roadways to the construction and the spending to construct those roadways, and so the people who were using the roadways were paying gas and diesel taxes, and all of that money was collected then to build and keep those interstates in good condition. Enough money was raised for the construction from those revenues that it was a solvent system, and in fact, it raised more money than we even needed for those programs. we kind of expanded spending. We also used some of the gas tax historically for revenue for deficit reduction, a few times, but that has ceased to be the case for a variety of reasons.
A lot of people immediately go to fuel efficiency and electric vehicles, and it I mean electric vehicles has had almost no impact on when you're talking in billions of dollars, very little impact from electric vehicles. Fuel efficiency has had some impact, but the biggest impact is really just that people aren't like increasing the amount that they drive every year the way that they did at one time in our history. So for a long time, every year, VMT where the vehicle miles traveled was increasing by 5% per year. Today, it's less than a percentage point increase. It's it's still increasing, but far less rapidly than it used to. so, one thing that I think is important for people to realize is that a lot of people think that there is a revenue problem?
It's really more of a spending problem. our revenues are just kind of continuing flat. They used to grow, and spending would grow. today, because the revenues are just sort of staying flat, we're just basically driving the same amount from year to year. Revenues are staying pretty flat, but spending has kept going up, and that has created that structural deficit in our in the trust fund.
I wonder if you have thoughts about why. I don't want to bait you at that question because I have strong thoughts and strong opinions. It feels like we created a system to build an interstate system. We created a funding mechanism to build an interstate system. We now have an interstate system that's mature, and we've not really figured out how to fund that or pay for it. I don't think thinking of government as a business is like a great way to think about government, but I think that it is. sometimes illuminating in the sense that government has a business model that they run.
If I'm running a company and like demand is going up, up, up, I can kind of be a little bit lazy about what I do because that increasing demand is going to give me more revenue and bail me out every year. But if the market's saturated in a sense and demand is flat, that's like a different business model, and you can look at. I always think of like Starbucks as the example. Starbucks was this company that their stock grew, grew, grew when they were adding more stores, but then they shifted, phase shifted into like we're just managing existing stores now, and their stock price took a big hit because there wasn't this like annual growth.
Obviously, the USDOT is not Starbucks, but I feel like there's a there's a parallel here, Like we're we're a mature system now. We have a funding mechanism that was designed for a growing system. Is this part of the mismatch, or is there something I'm I'm I'm missing here?
There is definitely a mismatch. I think “mismatch” may undersell what is going on, though.
Go ahead and elaborate.
Well, I mean, the interstate's been done since 1993, Like it's it's built. I think there was a time, there was a moment in the kind of lead up to the passage of ISTEA in 1991 when, obviously, I was not part of the transportation policy world at that time. But as I understand it, there was some discussion of like, what do we do now? What is the point of this program? but the trust fund was flush. The revenues were still good. They were greater than was even needed.
There was still willingness to increase gas taxes, even. So I think that there was sort of a there was just a buy-in to maintaining these programs, an enormous transfer that we make every year to states for the highway program, and to states and urbanized areas and transit providers for the transit programs. I think there is a like the path of least resistance to just continue them, even though there is probably not great consensus today on what the what is the goal for our federal transportation programs. Like we're not building an interstate.
When we were building the interstate, we had formulas that were based on what is the cost to construct that interstate, and it change. if you finish your interstate, then you're gonna get a little less money because it's done. That was the goal. We did it. Today, it's just the goal is to keep having a highway program. I
feel like that is the goal. That is the goal, Like we had one last year. We will have one this year. It's interesting to me because I feel like there is this kind of classic conservative. you said you weren't around in 9191 the year I graduated from high school. I remember this time of optimism. We had just fought the first Gulf War, which I don't know what version we're in now, but that was the Iraq invaded Kuwait, and then we had a global coalition that kicked them out.
Like you said, the economy was going great. The trust fund was flush, and I didn't start working as an engineer to like internships the following year. But I, I remember like the discussion being, we're investing in America. Like this is, let's just say, in a sense, it was a affirmation of saying yes. Like, throw your ideas on the table and let's go do them. Like nothing should be too small here.
In retrospect, that feels a little odd,
I think that is an important potential function for any federal program to play. I think that is still a lot of the justification and the benefit that we do see from our transportation spending. There is tremendous job creation that happens through these federal spending programs. The mobility benefits. Obviously, we have far too many locations in our country that are auto dependent, but that said there are tremendous mobility benefits from providing access, and we do have multimodal programs. We have transit spending that enables people to, get access to good quality transit.
So I don't want to undersell the benefits of the spending,
Yeah.
or the rationale of having a strong federal role in transportation. I think though that the programs could be better if there was consensus on what the goal is, rather than having the existence of the spending be the goal in and of itself, because it. It's very difficult to even see if we're being successful if we don't have a goal for the spending. So there are certain programs that I think have been more successful, and those are the ones that are more clearly tied to a goal.
It's a helpful way to describe it. I want to get into the alternatives or like where we're at today, and like what the what the paths are, where we could kick that can, or maybe stop kicking that can. But can we talk about the Infrastructure Jobs Act? I have called it like the blow off top, and I'm again I'm using like investment terms, but in any investment cycle, there's a period of time where everything becomes crazy, and then people are just in a frenzy, like buying, buying, buying, and then there's a crash. It felt to me like the Biden administration infrastructure and jobs act was that like crazy blow off top. It might not end up to be, but it felt like okay.
Let's just reach as big as we can. How would you describe it, and what do you think the implications of it were?
Yeah. Well, so full disclosure, I was working in the Senate when we passed the Infrastructure Investment and Jobs Act. Signed coffee on my wall. All right, there
we go. What was your role? What was your role?
So I was working on the Environment Public Works Committee, which has a jurisdiction for the highways title. So I wrote much of the highways title of which, like Division A of that law, and then it was a really interesting time. we had been working on our programs, which are the programs funded through the Highway Trust Fund, and then separately, the Biden administration was negotiating with the Gang of 10. The gang kind of had their own deal, and then we sort of like came together and kind of sandwiched it all into one. It was a wild time, and I think that it was it was really a wild time.
We were we if you remember we were like in the midst of COVID still oh yeah January of 2021 and there we had done several COVID relief bills like we were really concerned about the economy and wanting to make sure that there was enough economic stimulus to ensure the fiscal health of states. So I think that context is really important. We did come out of the COVID crisis pretty healthfully for states.
I mean, transit agencies are still struggling with the drop off in transit ridership, but there was a lot of success also that through the COVID relief and the infrastructure bill, that then the failures on the infrastructure bill kind of come into sharp relief, but in some ways, like I think I'd prefer to own that failure of like excess rather than see states facing really dire financial situations. So there are trade.
It's very difficult figuring out what is the correct policy intervention in the moment when things are very chaotic, the infrastructure law was trying to do a couple of really big things in addition to kind of maintaining status quo on some other things, and so trying to do some really big things on rail, which I think were actually fairly successful, even though it took a fair amount of time to ramp up that intercity passenger rail spending because it was new. I think that was one of the more significant benefits in the in all the IJ outcomes. It was trying to address some the legacy of poor condition bridges, which I think again fairly successful.
Trying to build out an EV charging infrastructure network, which was less successful, I think, because of some of the challenges in like getting states to take on a kind of operational role in a system that's like quite different from what they'd been doing previously, so and there were some of the language that the Biden administration put into place. I think is very cumbersome, so that made it more difficult. But I think it's like a mixed a mixed bag. But there was no question that the goal was to keep the programs funded at increased levels. We increased the funding level as much as we felt like we could from within the highway trust fund, and then that wasn't nearly enough.
The Biden administration then kind of came in and put an additional $47 billion into the highway overall highway activities. So there was a. Tremendous appetite for spending that did come from the administration, and then turning that congressional action to make that funding available, turning that into projects, it turned out to be much more difficult than the I think.
Let me say it this way, and have you react to this because I feel like there should be a pushback if this is an incorrect way of thinking about it. You said earlier that the program really its number one goal is just to continue to exist or something along those lines, and that's kind of my interpretation too. Is that we're not really very strategic about it.
We're just really about like funding the next cycle and kind of continuing on without really an underlying strategic objective, it did feel like the IIJA essentially started with the principle of we just need to fund more stuff, and then found ways to fund more stuff as opposed to here is a because we're going to get to your kind of recommendations here, or the things you want us to consider, and they're all about here's hard choices we can make. It felt like it was a like the opposite of hard, like the only hard choice was how big would we go. Am I oversimplifying? I'm sure inside the fringes it looks different, but
I don't think you're oversimplifying much. My boss was not a member of the gang negotiating with. We were the bill managers ultimately once it all came together. But like the all the advance appropriation that they kind of negotiated with the gang, it does seem to me that there was a willingness to fund each of those senators' kind of pet priorities. There was a real goal to just be the major infrastructure administration, which yeah, I think that they were. But I think it then became there was so much that it became difficult to prioritize, and because there wasn't a really clear, like specific goal that we were trying to achieve.
It's that makes it harder to prioritize the implementation. Then, the other thing I would mention about the goal of the programs is that these are federally assisted, state administered programs. Right, we have structures that are put in place at the federal level in statute that specify like what are the what are the program goals and what are the eligible activities and generally they line up between the activities and the goals. But states have tremendous discretion about what they're going to spend their money on. They're allowed to transfer money between programs.
They're the ones that own these assets and are responsible for maintaining them, and so I think that if you ask any individual state DOT, they may have really specific goals and a really clear connection between the spending that they do and achieving those goals. But at the federal level, it's much harder to say what is our goal of the overall federal program, other than just enabling the state DOTS to make those investments?
Yeah, yeah. If we want to, I mean, I even go to the place where like we're going to set goals, but we're going to let's just say we're going to actually run this as a trust fund again, and kind of be true to that. You've laid out different approaches that we could take, including maintaining our spending levels with the trust fund, closing the trust fund gap by adding some more changing. Anyway, I would like to go through each of these because I think they all have different implications for
us to talk through,
with an underlying notion of, in a sense, having this conversation should kind of prompt us or prompt policymakers to set some goals. Like when you actually have to have a discussion about trade-offs, it does start with the idea of like, what are we trying to accomplish? So, if we were to maintain current spending levels without adding additional gas tax or revenue or what have you, what would the implications of that be? What would we actually have to do?
I mean, that's what we've been doing for the last 14 or more years. It has been okay to date because we've been in an era of very low interest rates, and one of the things was like on my mind, my concern as I wrote this report is just the real potential that era may be ending, the U. S. bond rating, U. S. standing in the international world, the level of debt that we are taking on as a nation. Like I was not a deficit hawk during the years of the aughts and the teens when interest rates were like at historically low levels, but as.
They get higher, and as the level of debt that the nation holds gets higher, and our credit rating declines, like I, I think that we are heading to a position where that may no longer be tenable, and particularly as we look at the other unfunded or underfunded trust funds that the Social Security and Medicare and Medicaid trust funds that are also going to be arriving at insolvency in the 30s that will be a difficult problem to navigate. Like if I was betting, I think probably the outcome for this reauthorization Congress will have to act sometime by September 30th or thereafter to reauthorize the transportation programs.
My guess is that they will just transfer more money from the from the general fund into the highway trust fund, spend that those dollars, and then kick the can one more time. Can
I explicitly tie something together too that you said that I think maybe our audience should hear when you say transfer money from the general fund, and then you're also talking about interest rates and bond, bond ratings and all that. We're just talking about spending debt money, like we're talking about borrowing money to fill up the amount of money we're bringing in is like you said, almost 50% That other 50% is got to come from borrowing money. Yeah,
yeah. There's a really important point I think that sometimes gets missed. Zoom back. The highway trust fund is created because it's user fees, The benefit goes to the users. Today we have a trust fund that's 50% not quite, but almost 50% unfunded, but it's still treated as user fees. Being in a trust fund is like a really special budgetary structure that means that the that it is counted as mandatory spending.
Rail money is not counted as mandatory spending. That has to compete with all the other spending purposes that Congress may have. it competes with housing spending and everything else. The highway and transit spending is mandatory. It just kind of goes out the door every year without a lot of discussion from really any discussion from the Appropriations Committee, and is kind of protected in this way because of being in the highway trust fund. That's fair when it's a user fee. I mean, that's sort of the philosophy of a of a user fee funded trust fund.
It's not necessarily as fair when it's just general fund, deficit spending going into the trust fund, and then being treated as user fees. So that's another point I think that is important to acknowledge. as we make choices about how to spend money, whether it's revenue based or deficit based, we are kind of taking away from ourselves one of these choices, like to spend money on rail or any other use as opposed to highways,
I felt like that idea of this spending actually having to ultimately compete with other trust funds in the future was a novel and interesting thing. I hadn't I hadn't seen anyone else tie into this. Basically, the notion that at some point in the future, this trust fund, which is having borrowed money come into it, is going to be competing with other trust funds that will have at that point borrowed money or some policies change that will be very painful when it comes to Medicare or Social Security.
One of the arguments for having a highway trust fund is it allows DOTs to make these kind of long term plans about their infrastructure investment because we know the money is going to be there and I think you're raising another red flag of like hey I don't think you can count on five years from now this money being there because it really is going to have to compete with other things that historically have been very sacred to
us. Yeah, I don't have a crystal ball to know what will happen to address the looming insolvency crisis in those trust funds, and obviously there are solutions for them as well, just as there are for the highway trust fund, but they will require hard choices. I guess my expectation is that it will be harder to justify transferring money into the highway trust fund if we are also making really hard choices about cutting benefits or increasing taxes for the Medicare and Medicaid and Social Security trust funds. It seems to me that kind of, if we approach an austerity mindset, that would also be applied to highways as well. So I think that could be a really difficult decade.
Ahead of us, and the sooner we address this, the better the transportation programs will be.
Right. Okay. Let's say, and this is kind of the second option that you laid out. Let's say we were going to close that trust fund gap by just sticking to current spending levels. So we've got a certain amount of revenue that comes in. It's a trust fund.
We're going to spend that trust fund, but we're not going to top it off with additional borrowed money. In a sense, states have to live within the revenue that we have. What are the implications of that? Like, what would that mean?
One important thing. I don't know if this is too much in the weeds, but we the way that we the way that we keep the trust fund solvent. We just transfer enough in to keep it solvent through the last year of the authorization, but the programs spend out over 10 years. So the money that we authorized for this year, for 2026, will be spent most of it, like maybe 10, 20% this year. Most of it will be spent next year, and then the remaining 30, 40% will be spent over the next six, seven years.
So the trust fund is going to be spending money that we authorized yesterday and 10 years ago, Like for the next several years, yeah. if we could zero out new authorized spending, the accounts would still go bankrupt, Like especially on the transit side, You could zero out spending today for transit, and the transit account, which is particularly overleveraged, it would continue to get more negative, even with the new gas tax revenues coming in. It would continue to get more negative for the next four years because we've already
We’ve already committed that money.
That money has been obligated. It is just being spent. It's a reimbursable program, so the states spend the money and then they get reimbursements and that's going to happen years from now so it's a tricky problem to solve just through spending cuts to be to be honest but what our calculations were that you could do it technically you couldn't do it for the transit account alone the transit account only gets like around maybe 16% of the total spending is in the transit account and or of the total revenue is in the transit account. That and more of the spending comes from the transit account.
So you'd have to rebalance across highways and transit as a first step, and you'd have to cut by about 50% so then you would be able to you could cut them cut all of highways and spending transit spending by 50% and you'd have the roughly $45 billion coming in each year because of the gas and diesel taxes and truck taxes, and you'd have all of the spending from the past years going out, and then the new spending cut by half, and that would do it. you, that would be some pretty significant hard choices that Congress would have to make.
I think it would involve really rethinking what are what is the federal role, like what is the critical pieces that really only the federal government can do, and what are the pieces that states will just be left in charge of to raise their own revenues or figure out how to address, and I think that in rethinking that federal role, maybe there would be more willingness to embrace things like tolling and other revenue sources, which right now are broadly prohibited. So, I think it would really require a rethink, but could be done.
All right, if we were going to try to raise the revenue at the federal level to close this gap, if we said, all right, we're running a trust fund. The trust fund needs more money. We're not just going to borrow it. We're actually going to raise it in a responsible way as a government. What would that What would that look like?
The choices for revenues at the federal level are honestly they're actually a little bit narrower at the federal level than they are at the state level. I think that the states have, because states do registrations for vehicles, and the federal government really doesn't. It's maybe there's made more choices and more tools available to state governments. But that said, there are discussions about a federal registration fee for all vehicles. We estimated that would have to be about $120 per year for each vehicle to fill the highway trust fund shortfall. You could leave the gas and diesel taxes in place, add on to the.
Add $120 registration fee, and that would bring the level of revenue up to spending level, so that you would not have to have any cuts. It's a little tricky because of the lack of any federal registration, so we'd have to have to work with states in order to
you've got constitutionality issues and stuff that would unconstitutionality
issues. Yeah,
I mean the gas tax has been like authorized in a way, but yeah, states have a lot more flexibility to tax than the federal government does. Yeah,
yeah, yeah, and the federal government can't require a state agency to collect a fee, so it would have to be a voluntary fee. Sure, you could also increase the gas tax. I think that we had said about 17 cents increase above current. it's currently 18.4 cents. So if you added an additional 17.8 cents per gallon for gasoline,
and almost doubling of the gas tax. Right.
Yep. the EV fee has been discussed. There just aren't that many EVs on the roads today to be able to solve the trust fund on its own. That's a tricky one. it's it's difficult to raise anything more than in the millions level from EVs, and we need billions level.
Yeah. So.
so that's pretty, it may be fine to include for posterity as that number of vehicles grows. But in the meantime, not going to fix this out the issue. then VMT fee has also been discussed. It's always kind of discussed as like something that maybe in the future. I mean, we do drive trillions of miles in this country, so that you don't have to have it be a very large number of cents per mile because we really do drive so many miles that it very quickly raises a lot of money. The administrative costs are the biggest problem for like how do you how do you track that?
New Zealand has a road usage charge that has been put in place, and because they want to offer a lot of options, they want to give you a paper-based option or a odometer reading option or like a little dongle that you add to your car option, and that makes it more expensive. So it's you lose about 10 to 15% on just the administratively, yeah, yeah. So that's a tricky thing. So none of these are perfect solutions, but I think the point is there are options. Certainly, the gas tax is the easiest and fastest one, but there are options.
You are in Washington D. C. and you've been in corridors where people debate these things and make decisions, I feel like in like a grad school lounge, the idea of like doubling the gas tax makes a lot of sense. My gut impression is that this is never going to happen, and the likelihood of any of our major parties or major politicians standing up and being willing to, in a in a period of time where you have the K shape recovery, you've got inflation, you've got what have you. It seems not likely to me that any of these things would really be on the table. Am I missing something? Is there going to be a push to do this?
Do you think that it's it is possible?
I don't know. I mean, it hasn't been so far in my career, and it's not for not for lack of trying from several of the members of Congress that I've worked for who really did try valiantly to get gas tax increases passed, and yeah, it certainly doesn't align with the today's focus on affordability either. It's frustrating to me because 17 cents out of like the total $4 a gallon is a pretty small percentage of increase, but I recognize that I'm probably in the minority when it comes to my eager support for gas tax increase.
I would, I'm, I mean, from a technical standpoint, the question that I would ask about 17 cents. I have seen other studies and other people, and the numbers are higher than that. I'm not questioning your number, but I do wonder if it is a static or a dynamic. In other words, if you've got a per mile charge, people drive less. If you raise the gas tax, people theoretically consume less gas. I've I've actually seen some crazy ones where I want to say I saw this one out of Wisconsin where they said that if the state of Wisconsin was going to close their shortfall, you would need an infinite gas tax with nobody driving because it just kept like it.
It fed on itself in a in a weird way. The numbers dynamically didn't work because you had to have the gas tax as you would raise it. People would drive less, and then you'd have to raise it more, and then. People would drive less, and you wound up like in this weird situation. I don't know.
I mean, I think gasoline consumption historically has been considered pretty inelastic to price changes. I mean, and even as the gas prices have really shot up, people are still driving pretty much at similar levels, concern being expressed about the costs to families, but unfortunately, the effect of having many very auto-dependent locations is like there are, and a lot of choices. Those choices certainly take a long time to execute. If you want to move closer to work or to a different location that where you'd have more transportation options, but buy it, buy a more fuel efficient vehicle. But that
that's a quicker choice. Yeah,
right. The answer to your question is that these are static. The estimates maybe you would certainly want to be indexing for inflation going forward, and it's not assuming that consumption of gasoline goes down. There's also we're we're at this weird moment right now on gasoline consumption, also because of the estimates for gasoline consumption in the future are sort of based on pre-Trump era vehicle fuel economy standards. So then gasoline is some of the estimates use the current consumption rates with changes to the fuel economy, so that gasoline consumption is going up as a result of those changes to get rid of the fuel economy requirements. So it's a very odd moment for modeling gas consumption.
Yeah, yeah. All right. The last option you put on the table here is one that you actually call devolution, and this is one that at Strong Towns we wrote a whole report about this, and kind of it's one of those like Sherlock Holmes things when you remove all the possibilities that can happen, you're left with like the one that is left, and to me, this seems like the more likely one. Ultimately, even though it seems like fanciful, almost in a way to talk about, what is your take on the idea of devolving this system to the states?
Like I said, there are certain responsibilities that are inherently federal. We do have roads on federal lands. We have the tribal transportation programs. There's research activities that I think the federal government is uniquely positioned to support. There's also regulatory activities that will need to continue. So I think that even in a devolution era, you would still have some functions.
I think theoretically, you could also have additional programs that could sort of rise and fall on a kind of Keynesian economic stimulus basis, like in it's countercyclical to provide jobs when the economy is in bust times. But I think that the by and large, though the programs would be devolved and states would be expected to maintain the assets that they have, build new assets as they see fit, and there would be a much smaller federal role in that program.
There are certain requirements that would still apply. we still have Endangered Species Act, and like I think that some of the idea that some people get excited about devolution be like, oh, there's no federal requirements anymore, and like that's not quite true, There are still if you want to build a road, whether you're using federal money or not, you can't take endangered species. So there are some requirements that there would still be compliance. I think that there would be a lot of discussion about how exactly this would work.
What would be left at USDOT because there would be pieces, and are there major projects that still deserve to be federalized because they are intercity or interstate, or for other reasons, but considering where we are with the interstate largely built out and the trust fund underfunded, I think it certainly bears considering whether that is the rational next step. I think that there would be some benefits also in terms of flexibility and potentially design standards that states could have a little bit more freedom to build in a way that their unique circumstances maybe there would be more flexibility for tolling. I think that would be appropriate and potentially would help the build out of EV charging networks, commercializing rest areas, etc.
So, I think there's definitely some positives, and it does feel like it avoids the hard choices of raising revenues or cutting spending in a way. Although obviously it would involve cutting spending, I think that in some ways it is the most likely. outcome. It
does seem kind of crazy, but it does. Yeah, exactly. I think it's important. Your report does not like recommend like here's the approach you should take. I feel like you've done a very good job of outlining. Here's the mix and the impact of each one, but you do have in the conclusion. this insight that I know we're talking metaphorically about roads, but you've you've got a can you're kicking down the road, and like these decisions will have to be made at some point.
They're going to be made for us or forced upon us. I mean, I'm I agree with you that I think we're going to get through the next authorization in unspectacular fashion, but will there be another one after that without hard choices? I don't know. Do you have a? I know you can't predict the future, but like this does get harder with each iteration, It
does. The hole gets larger because we do keep increasing spending while the revenues stay flat or start to decline, yeah. So there's no question it gets harder. But I will also say, my recollection is that in 2015, when we passed the FAST Act, there was a lot of discussion about unpaid for spending, the transfers, and then when we passed the IIJA in 2021, there was almost no discussion about it. It just became a matter of course. So I can't say with certainty whether it gets harder to pass the law to transfer the money in, but I do think it's likely that it gets harder to accept the level of interest that we are spending on that deficit, and so I think that the future will require some hard choices.
The sooner that we start raising revenues, the better off we'll be, especially if they can be indexed to inflation, because the hole just keeps getting bigger. So the earlier we start filling it, the better. But given that the appetite for a broader suite of types of modes, that appetite has grown. We have more interest in intercity passenger rail and transit and spending, and we don't have the need to just build the interstates. So maybe the era for transportation does need to move on past the interstate era to kind of a more flexible future that is less constrained by kind of user fees to user benefits.
I feel like that would be a good place to end. Except I want to ask you one more question. We have danced around the idea of like the federal role, and I know it's not like a quick answer kind of question, but I wonder if you have given thought to here is like the ideal federal role. Here's what the federal. Let me put it this way. Here's what the federal government is really good at and irreplaceable in our system, because I do think if we can answer that question, a lot of other things become maybe easier.
It's a tricky question to answer. The Constitution sets out kind of some limited federal role, Like we have a role for post roads, and that's kind of the original federal spending on roadways was largely justified by the fact that, like, the Constitution refers to post roads, and it's there's clearly authority to give money to states, So we can write checks, we can build post roads, we can regulate interstate commerce. Those are kind of the main pieces that we have authority for per the Constitution, and interstate commerce has sort of expanded in what that can cover, and has been used to justify a lot. But so that's sort of like the narrow, like what does the Constitution say?
I think that the question of what is the federal government good at is quite different. I mean, I think that the federal government is good at theoretically. The federal government should be good at making the large plans, So, like designing the interstate system that crossed the entire nation and connected major urbanized areas. That there was buy-in and feedback from the states, but it was still like a central body to make that plan. I think that it's very difficult for states to have a wide view coordination for all of the nation, They have their own boundaries that they are focused on, their own assets. So I think that if we're going to ship stuff, if
we're going to ship stuff from Montana to Minnesota, it's got to go through North Dakota, and we got to coordinate that somehow. Yeah,
right. Yeah, so that feels like a space where you really benefit from having the federal government providing large data sets, providing transparency about needs and identifying priorities across the nation, even if that even if that road is not necessarily Montana's best priority, it still may be a national priority. That I think is an important role for the federal government. But in fact, that's what the federal government does the least of today, because that's not really the role that's provided for in the Constitution, Like the states do the planning, and they receive the money and build the assets.
So there's sort of a mismatch between what the federal role can or not can, but maybe should be, and then what it actually is, which is like a largely a pass-through entity that sets broad parameters for plans and requirements, but doesn't control actual investment decisions.
Yeah, it's very strange to me because you look and like, should we fund a fifth and sixth lane on the second beltway around Memphis, or should we be worried about how states connect to each other? like you say, we spent a lot of time on the first question and a lot of resources on the first question in every market, and hardly any time on the second one, which seems like it's really consequential.
Yeah,
Rebecca Higgins, vice president of Policy for the Eno Center for Transportation, the website enotrans.org If you go there right now, you can get the report. There's a lot of other great stuff on the website. If people want to follow you and your work, what's the best place to do that? The website? Are there other places we can plug in?
We do. We have all of our reports are posted on our website. We try to put them on LinkedIn. We also have a weekly newsletter that Transportation Weekly, for that people can subscribe to. There's some articles that are free, so certainly encourage you guys to sign up for that as well.
Rebecca Higgins, thanks for taking the time to chat with us.
Thank you so much for having me.
Thanks everybody for listening. Keep doing what you can to build a strong town. Take care.
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