The Myth of Users Pay Highways and Roads

Faced with a difficult situation, we humans, individually or collectively as a society, have an innate tendency to deny that such problems exist or, better yet, choose to defer dealing with them until a later date and, hopefully, the problems will magically go away in the meantime. Depending on one’s time horizon and how long before the inevitable reality catches up, this ‘kicking the can down the road’ strategy might be a rational strategy. When there is no more ‘further down the road’ to kick the can, then and only then, society will collectively move beyond the denial phase into a crisis phase during which a difficult choice will have to be made.

One such problem which is edging ever closer to that proverbial end of the road has to do with our transportation system. The US Highway Trust Fund, which collects federal fuel tax and uses the proceeds for highway construction and maintenance, has just been officially declared insolvent (US DoT). Faced with perpetual deficits, the depletion of the Highway Trust Fund to eventually zero, was, sadly, a mathematical certainty and completely predictable. True to form, Congress chose to ‘defer’ dealing with the problem for another few months.

A silver lining to this otherwise grim situation is the fact that the math is becoming harder and harder for everyone to ignore. Regardless of the ultimate combination of measures to address the shortfall – raising drastically the gas tax, using other general funds which the government does not have to plug the gap or letting the infrastructure slide into despair – at least the collective mind is moving beyond the denial phase and recognizing that the problem cannot be addressed by throwing at it whatever money our increasingly constrained fiscal reality can afford.

And part of transitioning into the acceptance phase during which difficult choices can be rationally debated involves the removal of any misconception which has contributed to the problem. For our transportation system, the single biggest myth is that when it comes to highways and roads, drivers pay for what they get through gas taxes and other driving related fees, and such fees cover the full cost of road construction, operation and maintenance.

A recent report from the U.S. Public Interest Research Group Education Fund (PIRG Education Fund) and Frontier Group provides further quantitative evidence that gas taxes and user fees do not even come close to covering the full cost of our road infrastructure, and calls for a re-thinking of our transportation strategy.

Here are the highlights. The full report can be found here.

  • Although user fees covered up to 70% of the total cost of highway spending in the 1960s, the gap has been getting wider over the decades. User fees now cover less than half the total cost. The rest is covered by general funds.

 percentage of highway spending from various sourcesPercentage of highway spending from user fees, general revenue and bond revenue


  • The country collectively spent one trillion more than collected from user fees since 2000. This does not even cover un-priced external costs such as vehicle crash costs not covered by insurance, victims and third parties, as well as health costs from air pollution.
  • Governments spend more money subsidizing roads and highways than public transit, cycling and walking combined, and by a wide margin.

government subsidies to different transportation modesNon-user government spending (subsidies) by transportation mode


  • Cyclists and pedestrians use almost exclusively local roads and streets which are maintained by municipalities. Since they not only pay through general taxes to use municipal roads and streets but also pay through general taxes to subsidize highways which they do not use, cyclists and pedestrians overpaid to subsidize drivers.
  • Transportation is increasingly multi-modal. Streets and highways should be managed in ways that maximize the benefits for all segments of the public: those who drive a lot, a little, or not at all. Currently there is a dis-proportionally minuscule amount of road space dedicated to modes other than private automobiles. This is illustrated in a 2014 study of San Francisco, a city where automobiles account for less than half of all trips, which found merely 2.4% of street space was devoted to transit-only or bike-only lanes.



percentage of road space dedicated to different modes San Fran

 Allocation of paved road space in San Francisco


One further sign that we are collectively moving past the denial stage is the acknowledgement of the situation by governments and public officials. We leave you with a couple of quotes from officialdom.

“We need to dispel the myth that user fees are paying for the building and maintenance of our road network. The reality is that these funds are barely covering a fraction of the cost,” said Gabe Klein, SVP of Fontinalis Partners, and former Commissioner of Transportation for Chicago and Washington, D.C. “The highest return on investment is on bike, pedestrian and transit projects,” he said.

And this one from the director of the Iowa Department of Transportation who had this to say about the state’s highway predicament during a Q&A period (full article)

I said the numbers before. 114,000 lane miles, 25,000 bridges, 4,000 miles of rail. I said this a lot in my conversation when we were talking about fuel tax increases. It’s not affordable. Nobody’s going to pay.

We are. We’re the ones. Look in the mirror. We’re not going to pay to rebuild that entire system.

And my personal belief is that the entire system is unneeded. And so the reality is, the system is going to shrink.

There’s nothing I have to do. Bridges close themselves. Roads deteriorate and go away. That’s what happens.

And reality is, for us, let’s not let the system degrade and then we’re left with sorta whatever’s left. Let’s try to make a conscious choice – it’s not going to be perfect, I would agree it’s going to be complex and messy – but let’s figure out which ones we really want to keep.


(Image credits: US PRIG Education Fund)

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