Proposed fuel economy standards could cut future highway revenue

Gas tax revenues to the Highway Trust Fund could drop 21% by 2040

Funding News AASHTO May 07, 2012
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A Congressional Budget Office (CBO) report released earlier this week highlights what transportation industry experts have worried about for years. The federal surface transportation program could face even further transportation funding shortfalls if newly proposed fuel economy standards are adopted, according to the American Association of State Highway & Transportation Officials.

 

The report examines the rule proposed in 2011 by the National Highway Traffic Safety Administration and the Environmental Protection Agency to tighten corporate average fuel economy (CAFE) standards between 2017 and 2025 in order to reduce greenhouse gas emissions from vehicles. During that time, the average fuel economy is expected to jump to 49.6 miles per gallon (mpg) by 2025, up from 34.1 mpg, the expected average for 2016.

 

CBO estimates that the proposed CAFE standards would lower gas tax revenues over time until they fall by 21%, an effect that would not be felt until 2040.

 

CBO projects that Highway Trust Fund would lose $57 million more than currently expected in gas tax collection between 2012 and 2022. The full 21% reduction in gas tax revenues, however, would not happen for close to 30 years.

 

CBO's recommendations included reducing spending on transportation infrastructure, transferring more money from the general fund to the Highway Trust Fund and raising Highway Trust Fund revenue through gas tax increases or other funding sources.

 

The 10-page report, "How Would Proposed Fuel Economy Standards Affect the Highway Trust Fund?" is available online at 1.usa.gov/HTF-fuel-CBO.

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