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John Hennessy III,

A Funding Compromise Can Set Transportation on Path Toward Sustainability

Posted by Content Coordinator on Friday, July 24th, 2015


Executive Summary

President Dwight D. Eisenhower envisioned building a debt-free Interstate Highway System that would provide infrastructure to support the national interests. In recent years, federal transportation funding has both incurred substantial debt and expanded its reach far beyond supporting infrastructure of national significance.

Against the backdrop of continuing uncertainty around Congressional passage of a new federal transportation bill, a number of proposals have been circulated in the past year to address aspects of securing or reforming state and federal transportation funding. This white paper assembles the most prominent of these proposals and reviews them in the context of sustainable transportation, in particular, these three dimensions: funding sustainability, environmental sustainability, and social justice.

The result of this review is a set of funding recommendations that borrow individual features from many of the publicly disseminated proposals. The combination represents a compromise across the political spectrum, and will help to create a sustainable federal transportation funding system.

The funding recommendations include a one-time use of corporate taxes to allow states to reduce the backlog of maintenance needs. The federal gas tax would be continued and indexed to inflation. Greenhouse gas (GHG) reduction targets would be set for each state and states would be allowed to ‘buy down’ their gas tax as they reduce their GHG emissions. States would be given pricing and tolling authority and have the authority to implement a vehicle miles traveled (VMT) tax. States would also assume responsibility for all roads. Taken together, these strategies would set transportation on the path toward sustainability.

A Federal Funding Plan for Sustainable Transportation

  • One-time corporate taxation of offshore assets to address pressing maintenance needs
  • Continuation of the current gas tax with one-third of generated revenue directed toward nationally strategic transportation infrastructure and the remaining approximately $25 billion directed to states for use in reducing greenhouse gas (GHG) emissions
  • State targets for GHG reductions with an opt-out option for the gas tax when and if GHG reductions are achieved
  • State initiated, operated, and directed vehicle miles traveled (VMT) tax for transportation improvements and maintenance with no federal intervention
  • State operated pricing approved for all roadways
  • An earned income transportation tax credit for low-income families


The Highway Trust Fund (HTF), which is used to fund transportation in the United States, has been in the red since 2001.1 There is no lack of ideas for new, revised, and enhanced funding streams to address the HTF shortfall and meet future transportation needs. Commissions have been formed, reports solicited, and publicity battles waged. While there are sometimes significant points of disagreement about the viability and feasibility of individual funding mechanisms, there is virtually no disagreement that the current funding arrangement is inadequate to tackle the infrastructure challenges we now face. Some would also argue that if the aim is sustainability, our current system of funding is simply broken.

Scope of the Paper

This white paper assembles a wide range of proposals that have been proffered as a means of addressing the various aspects of securing or reforming transportation funding. The proposals share many common principles and concepts and have a few key differences. Here, we will consider the various proposals across three dimensions of sustainability: funding sustainability, environmental sustainability, and social equity. With respect to environmental sustainability, we pay particularly close attention to the implications of funding strategies for reducing greenhouse gas (GHG) emissions, which contribute to climate change. The current funding discussions present an important opportunity for transitioning to a low- to zero-carbon transportation system. Finally, it is important to note that certain issues associated with financing (e.g., the advantages and disadvantages of public-private partnerships) are not discussed in this paper.

Download full version (PDF): A Funding Compromise Can Set Transportation on Path Toward Sustainability

About the National Center for Sustainable Transportation
The National Center for Sustainable Transportation will help federal, state, regional, and local agencies reduce the greenhouse-gas emissions from passenger and freight travel that contribute to climate change. The goal of the National Center is to enhance the environmental sustainability of the United States’ transportation system through reduction in fossil fuel consumption and greenhouse gas emissions. The National Center is addressing the U.S. Department of Transportation’s strategic goal to advance environmentally sustainable policies and investments by asserting national leadership in reducing carbon emissions from transportation systems while supporting climate adaptation activities and continued mitigation of air pollution and other environmental impacts.


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