An Exit Ramp for States: A Proposal to Let States Opt Out of the Federal Fuel Tax

Capitol Hill Briefing

July 27, 2005 12:00 PM to 1:30 PM EDT

Please note room change to B-369 Rayburn House Office Building

Featuring Rep. Scott Garrett,(R‑NJ), Sponsor of the Surface Transportation and Taxation Equity (STATE) Act; and Gabriel Roth, Transportation Economist, Author of Roads in a Market Economy (1996) and “Liberating the Roads,” Cato Policy Analysis no. 538, March 17, 2005; moderated by Stephen Slivinski, Director of Budget Studies, Cato Institute.

The federal fuel tax turns 50 years old next year. Although it was supposed to eventually disappear, the tax still exists 20 years after the Interstate Highway System was completed. Congress divides the spoils of the tax — sometimes earmarking the money for programs that have nothing to do with building highways — before sending the money back to the states. Consequently, some states receive more federal money than they pay in fuel taxes, and some receive less. Every penny of fuel tax money returned comes with various federal regulations and mandates attached. The STATE Act, sponsored by Rep. Scott Garrett, would provide an exit ramp for states unhappy with how Washington presides over highway policy. It would allow state governments to opt out of the federal fuel tax and to assume full responsibility for financing and maintaining their roads. It would also free states from federal highway mandates and regulations. Please join us for a discussion of an idea that could fundamentally reform U.S. highway policy.