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Do Gas Taxes Cover the Costs of Roads?


The Texas highway department says no.

I thought this was interesting.  The Texas highway department – Texas, no less! -- says that
roads simply don’t pay for themselves

… no road pays for itself in gas taxes and fees. For example, in Houston, the 15 miles of SH 99 from I-10 to US 290 will cost $1 billion to build and maintain over its lifetime, while only generating $162 million in gas taxes. That gives a tax gap ratio of .16, which means that the real gas tax rate people would need to pay on this segment of road to completely pay for it would be $2.22 per gallon. This is just one example, but there is not one road in Texas that pays for itself based on the tax system of today. Some roads pay for about half their true cost, but most roads we have analyzed pay for considerably less. To conclude, in the SH 99 example, since the traffic volume for that road doesn't generate enough fuel tax revenue to pay for it, revenues from other parts of the state must be used to build and maintain this corridor segment. The same is true across the state, meaning that, as revealed by the tax gap analysis, overall revenues are not sufficient to meet the state’s transportation needs.

There may be some political shenanigans at play here that, not being a Texan, I know nothing about. (Haven't I heard that Texas is trying to build a massive toll-road corridor?) Still, the idea that roads don't pay for themselves -- and instead, must sap money from other funding sources -- seems like quite an admission from a highway department. Perhaps there are lessons here for road construction projects all across North America, not just in Texas.

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Perhaps making these subsidies visible would make transit and compact building seem vastly cheaper by comparison?

Posted by: Daniel Haran on 23 Jul 08

I'm not familiar with all the sources of funding for roads. Are there other sources apart from the gas tax? I sometimes hear from drivers that they "pay for the road I'm cycling on"
What's the typical breakdown?

Posted by: Kelt on 23 Jul 08

See, they say that the section of highway doesn't generate enough usage to pay for itself through gas tax, but I'm sure there are many, many urban roads that see so much repeated traffic that they pay for themselves a thousand times over.

Posted by: Stephen Williamson on 23 Jul 08

This post is quite disingenuous.

Why would you expect a road to be 100% funded from gas taxes? They're not there solely for the drivers who drive on them, but also for the people who rely on the people and vehicles those roads carry for some pretty basic societal functions: delivery vans, fire trucks, ambulances, to name a few. Roads don't pay for themselves, but no-roads would cause a lot of other things to grind to a halt. Therefore, it's worthwhile to pay for roads out of other funds.

I look forward to your next exposé on freeloading library patrons and schoolchildren.

Posted by: Michal Migurski on 23 Jul 08

I would expect roads to be funded by gas taxes because for the most part they are. See:
For 06-07, about half of the Texas State Highway Fund came from federal funds, 31% came from state gas tax, 13% from motor vehicle registration fees and .5% from taxes on lubricants. Only slightly more than 5% came from other revenue, which is basically money from special vehicle registrations, special transportation fees and the like. The department of transportation is also allowed by Texas law to issue bonds to raise money for building roads. Also, the federal funds are refunds to Texas from the federal gas tax collected by Texas.

Other states might vary, but it looks like in Texas, pretty much all the money used to build and maintain roads comes from taxes directly related to transportation (i.e. gas taxes & registration fees).

Posted by: Brian on 24 Jul 08

After reading this article on the LA Streetsblog last week, I contacted the TX Department of Transportation, requesting the full report, showing all of the analysis they had done ("not one road in Texas" is a pretty strong statement). They were responsive, but unable to actually provide me with any details of their analysis. In fact, they said:

"The article you referenced discusses a methodology that TxDOT has developed to compare the costs and revenues associated with a particular segment of roadway. The attached report explains that methodology and provides a set of examples of its application. We have not performed this calculation for every roadway segment in Texas. And, we are not currently using the calculation at this time. However, we do believe that the methodology and the information produced from this calculation can be valuable in assessing roadway investments and needs."

I wrote a post about it here:

with a link to the PDF describing in detail their "equity gap" calculation methodology. It would really be nice to see the full dataset for Texas... if it actually exists.

Posted by: Zane Selvans on 24 Jul 08

Also, I certainly would like to live in a state where the fuel tax does completely pay for the roads - the delivery trucks and UPS vans and all of the other transportation from which I benefit, even though I don't own a car, will be more than happy to pass on to me the additional costs of the fuel, and I'll be happy to accept those increases, in exchange for not being forced to subsidize the roads in a broad, blanketing way, over which I have no control.

Posted by: Zane Selvans on 24 Jul 08

Zane, I have been wondring for years why asphalt is being used almost exclusivley, in highwax construction. 50 years ago the highways were concrete. It would save so much on the cost of construction and repair if we went back to concrete. Asphalt,being being petroleum based,can only raise in price now with oil prices. I would like to see a national effort to abandon asphalt highway construction.

Posted by: Jim Anthony on 29 Jul 08



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