When Congress created the Highway Trust Fund in 1956, it modeled it after a fiduciary trust. A fiduciary trust has a settlor who creates the trust; a trustee or trustees who manage the trust; a beneficiary or beneficiaries who benefit from the trust; and a corpus that provides the value of or revenues to the trust. In this case, Congress was the settlor, the state highway departments were the trustees, highway users were the beneficiaries, and highway user fees were the corpus.
Congress was wise to make user fees the corpus and highway users the beneficiaries as user fees have numerous advantages over tax dollars when funding transportation.
- User fees provide valuable signals to both users and providers about the costs and values of various routes and types of highways.
- Limiting the corpus to user fees gives the trustees incentives to be efficient and disincentives to plan grandiose projects that have little value.
- Infrastructure that is funded by user fees is better maintained than infrastructure funded out of tax dollars because the trustees know that their revenue streams depend on providing a sound user experience. Most of our “crumbling infrastructure” is infrastructure funded out of tax dollars rather than user fees.
- User fees are more equitable and socially just because users only have to pay for what they use and not for what someone else uses.
Gasoline taxes have historically been the predominant user fee because in the pre‐electronic age they were less expensive to collect than tolls. The advent of electronic collection methods has highlighted several drawbacks to using gasoline excise taxes as a user fee.
- Unlike most other taxes, excise taxes do not automatically adjust for inflation.
- Fuel taxes also fail to adjust for the increasing fuel‐efficiency of the nation’s motor vehicle fleet.
- Fuel taxes are mostly collected by the federal and state governments, yet cities and counties own 75 percent of the roads in this country and rely on property taxes or other general funds to maintain those roads.
- Finally, fuel taxes do nothing to relieve traffic congestion.