Surface Transportation Reauthorization: Federal Highway Programs

Federal funding for public roads is provided primarily through highway programs administered by the Department of Transportation’s (DOT’s) Federal Highway Administration (FHWA). Congress most recently authorized the federal highway programs for FY2022-FY2026 as part of the Infrastructure Investment and Jobs Act (IIJA; P.L. 117-58), a five-year surface transportation authorization act. Congress may consider future surface transportation authorization legislation, including issues and policy options related to highways. Three potential considerations are (1) the level of federal highway funding, (2) the potential insolvency of the Highway Trust Fund, and (3) the composition of the federal highway programs. The level of funding for the federal highway programs is typically a major issue in surface transportation authorization. In the IIJA, Congress authorized a total of $365 billion for the highway programs: $304 billion in contract authority from the Highway Trust Fund, $47 billion in multiyear advance appropriations from the Treasury General Fund (general fund), and $15 billion in budget authority from the general fund subject to future appropriations. In nominal dollars, average annual authorizations increased by approximately 62% from the previous surface transportation authorization act to the IIJA. However, when adjusted for inflation, the purchasing power of the annual authorizations in FY2025 is less than the purchasing power of authorizations in FY2005, the first year of the Safe, Accountable, Flexible, Efficient Transportation Equity Act (SAFETEA; P.L. 109-59). As Congress faces reauthorization of surface transportation law, it may choose to consider reducing funding, maintaining the same level of funding, or increasing funding for the highway programs. The source of funding for the federal highway programs is also likely to be a major issue in reauthorization. Historically, the majority of funding for the highway programs has come from the Highway Trust Fund’s highway account. If the current revenue and expenditure trends continue, then the highway account’s balance is set to approach zero in FY2028. Congress has multiple options for addressing the growing gap between highway account revenue and expenditures. For example, Congress could increase reliance on the general fund by continuing to transfer money from the general fund to the Highway Trust Fund or by funding a greater portion of the highway programs through multiyear advance appropriations. Congress could increase Highway Trust Fund revenues by increasing existing taxes or establishing alternative revenue sources, such as taxes on electric vehicles, a vehicle miles traveled tax, or increased tolling. Congress could reduce expenditures by discontinuing certain programs, decreasing funding to some or all highway programs, or shifting the responsibility for funding highway projects to state and local governments. These options might lead to an overall reduction in investment in highway infrastructure. Congress may also consider whether to discontinue or maintain existing highway programs and/or create new programs. In the Moving Ahead for Progress in the 21st Century Act (P.L. 112-141), enacted in FY2012, Congress reduced the number of highway programs by roughly two-thirds, which resulted in six core formula programs and some competitive discretionary grant programs. Under the Fixing America’s Surface Transportation Act (P.L. 114-94 ), Congress created one new formula program and a few new competitive discretionary grant programs. Under the IIJA, Congress created four new formula programs and many new competitive discretionary grant programs. The feasibility of maintaining the existing highway programs or creating new programs may depend on the sources and levels of funding Congress may choose.