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What Is the Highway Trust Fund? The Highway Trust Fund (HTF) was created by the Highway Revenue Act of 1956 (Pub. L. 84-627), primarily to ensure a dependable source of financing for the National System of Interstate and Defense Highways and also as the source of funding for the remainder of the Federal-aid Highway Program. Prior to the creation of the HTF, federal financial assistance to support highway programs came from the General Fund of the U.S. Treasury. While federal motor fuel and motor vehicle taxes did exist before the creation of the HTF, the receipts were directed to the General Fund, and there was no relationship between the receipts from these taxes and federal funding for highways. The Highway Revenue Act authorized that revenues from certain highway-user taxes could be credited to the HTF to finance a greatly expanded highway program enacted in the Federal-Aid Highway Act of 1956. In the original Highway Revenue Act of 1956, the crediting of user taxes to the HTF was set to expire at the end of fiscal year 1972, but since then, legislation has been passed to extend the imposition of the taxes and their transfer to the HTF through September 30, 2005. Like other federal trust funds, the HTF is a financing mechanism established by law to account for tax receipts that are collected by the federal government and are dedicated or "earmarked" for expenditure on special purposes. Originally, the HTF focused solely on highways, but later Congress determined that a portion of the revenues from highway-user taxes dedicated to the HTF should be used to fund transit needs, resulting in a 5 cent increase in the gas tax (to 9 cents), of which 1 cent would go towards transit, to help fund the new account. As a result, the Mass Transit Account was created within the HTF effective April 1, 1983. Although never formally described and named, the portion of the Highway Trust Fund outside the Mass Transit Account has come to be called the Highway Account and receives all HTF receipts not specifically designated for the Mass Transit Account. How is the HTF funded? Tax revenues directed to the HTF are derived from excise taxes on highway motor fuel and truck-related taxes on truck tires, sales of trucks and trailers, and heavy vehicle use. The Mass Transit Account receives a portion of the motor fuel taxes, usually 2.86 cents per gallon, as does the Leaking Underground Storage Tank Trust Fund, usually 0.1 cent per gallon. The General Fund receives 2.5 cents per gallon of the tax on gasohol and some other alcohol fuels plus an additional 0.6 cent per gallon for fuels that are at least 10 percent ethanol. The Highway Account receives the remaining portion of the fuel tax proceeds. How are the Taxes Collected? Most excise taxes credited to the trust fund are not collected directly by the federal government from the consumer. They are, instead, paid to the Internal Revenue Service by the producer or importer of the taxable product (except for the tax on trucks and trailers, which is paid by the retailer, and for the heavy vehicle use tax, which is paid by the heavy vehicle owner.). Hence, the 18.3-cent federal gasoline tax and the 24.3-cent diesel tax included in the price at the pump are, in effect, a reimbursement to the producers and distributors for taxes they have already paid. What is ISTEA? The Intermodal Surface Transportation Efficiency Act (ISTEA) created a post-interstate highway framework for federal surface transportation programs. ISTEA provided a six-year program authorization of approximately $155 billion in federal assistance. Of this total, $120.8 billion was attributable to the act’s highway title. This act, first approved in 1991, was unique in comparison to other federal surface transportation authorizing legislation in several ways. It was the first time that completion of the interstate highway system was not a focus of the legislation. In addition, ISTEA attempted to create an intermodal framework for transportation policy. ISTEA also emphasized an increased state and local role in transportation planning, representing a major devolution in decision making from the existing federal/state-dominated process. Further, ISTEA proved a significant increase in transferability of funds among programs. Finally, the legislation placed a heightened emphasis on new technology solutions to transportation problems. What is TEA-21? The Transportation Equity Act for the 21st Century authorized highway, highway safety, transit, and other surface transportation programs over six years. TEA-21 maintained the basic framework of ISTEA, but sought to improve upon it in certain ways, most notably with regards to funding equity between the states. Descriptions of TEA-21 are available at: New
York State Department of Transportation TEA-21 Page What is intermodalism? Both the Intermodal Surface Transportation Efficiency Act of 1991 and the Transportation Equity Act for the 21st Century were passed largely because of increased public and private awareness of the need for better integrated intermodal transportation systems in the United States. The acts were designed to strengthen the country’s intermodal network by requiring state governments to develop intermodal plans to improve the connectivity of the various modal systems (e.g., rail, highways, barges, etc.). Among other provisions, the ISTEA legislation instructed the secretary of transportation to establish an Office of Intermodalism. The office’s general mission is to promote and coordinate efficient intermodal transportation policies between the modes. An office to coordinate and collect data on intermodalism, something needed in order to systematize the data collection and dissemination process, also was established. Globally, the growing importance of intermodalism has forced national governments and economic blocs, like the EU’s Ministry of Transport, to facilitate, if not invest in, more rational systems of intermodality. In the United States, Europe, and other parts of the world where these government-related activities are starting to gain momentum, the process of change has not been easy, but progress continues to be made.
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