Tighter Vehicle Efficiency Rules Would Cut $57 Billion From HTF

Proposed federal rules that would tighten fuel economy standards for cars, trucks and SUVs would strip the Highway Trust Fund of $57 billion, or 13 percent, by 2022, according to a recent Congressional Budget Office report.

The proposed rules would raise the average fuel economy for new vehicles from 34.1 miles per gallon to 49.6 mpg between 2017 and 2025. Gasoline tax revenue would fall 21 percent as a result, but the brunt of the impact wouldn’t hit until 2040 because standards would tighten gradually.

The report further highlights challenges to maintaining and improving the U.S. infrastructure without raising the fuel tax or finding alternative revenue sources. More fuel-efficient vehicles have contributed to the fuel tax revenue coming up short for planned transportation spending. Congress has had to inject nearly $35 billion from the Treasury general fund to the Highway Trust Fund in recent years to make up for the shortfall.

Congress could offset the shortfall in the HTF by cutting spending on highway and mass transit projects, transferring money from the Treasury’s general fund, and increasing the gasoline tax or finding other revenue sources, according to the CBO. Congress and President Obama have balked at raising the fuel tax, and Congress has struggled to find alternative revenue sources while crafting the latest surface transportation bill.

The HTF, created in 1956, receives about 60 percent of its revenue from the gasoline, and revenue from diesel sales kicks in 30 percent. The 18.4 cents-per-gallon gas tax hasn’t been increased since 1993, and inflation has cut about 7 cents from the tax’s buying power.

Source: Journal of Commerce