New Report Finds Drivers Pay Less Than Half the Cost of Roads

Media Contacts

Raising Gas Taxes Won’t Necessarily Solve Wisconsin’s Transportation Problems

WISPIRG Foundation


MADISON – As state lawmakers prepare to debate Wisconsin’s transportation budget and Congress struggles to renew the federal transportation law, a new report from WISPIRG Foundation and Frontier Group finds that drivers currently pay less than half the total cost of roads nationwide, and argues that while increasing gas taxes could temporarily fill the transportation funding shortfall, it would leave other, deeper problems unaddressed.

The new report, Who Pays for Roads? How the ‘Users Pays’ Myth Gets in the Way of Solutions to America’s Transportation Problems exposes the widening gap between how Wisconsinites think we pay for transportation – through gas taxes and other fees – and how we actually do. In light of the sharp and costly growth in questionable highway construction projects in recent years, the report also urges decision-makers to rethink Wisconsin’s transportation spending priorities rather than just treat current funding struggles as a revenue-problem.

“These findings confirm what more and more taxpayers might already suspect — that local property taxes are being used to bail out the state’s transportation fund,” said Peter Skopec, WISPIRG Foundation Director. “All of us are bearing the cost of transportation in our tax bills, regardless of how much gas we pump or how much we drive.”

And while local contributions to Wisconsin’s transportation fund from property and fuel taxes have grown in recent years, returns to communities to help pay for local infrastructure maintenance have not. The state has cut funding for the repair of local roads and bridges over the last decade, while simultaneously increasing funding for highway ‘megaprojects’. This has left over one-third of all local roads in the state in poor condition, costing drivers and businesses millions in repair and other additional expenses.

  • In Wisconsin, the share of transportation funds coming from local property tax and General Fund transfers has grown by an incredible 182 percent over the past 15 years, according to WISDOT budget trends; transportation revenue from bonding has increased by 84 percent during the same period. This leaves already constrained local budgets with less money for police and fire protection, schools, and other programs, and saddles future generations with greater debt to repay.
  • Revenue from “user fees,” such as the gas tax and registration fees, has grown by 18 percent in Wisconsin over the past decade and a half, also according to WISDOT budget trends.
  • Gas taxes and other fees paid by drivers now cover less than half of road construction and maintenance costs nationally – down from more than 70 percent in the 1960s – with the balance coming chiefly from income, sales and property taxes and other levies on general taxpayers.
  • General taxpayers at all levels of government now subsidize highway construction and maintenance to the tune of $69 billion per year nationwide – an amount exceeding the expenditure of general tax funds to support transit, bicycling, walking and passenger rail combined.
  • Regardless of how much they drive, the average American household bears an annual financial burden of more than $1,100 in taxes and indirect costs from driving – over and above any gas taxes or other fees they pay that are connected with driving.

At the state and federal levels, legislators are struggling to fund transportation priorities. Wisconsin’s proposed Executive Budget suggests raising bonding for transportation to $1.3 billion, in large part to pay for major highway construction projects like the Milwaukee Zoo Interchange reconstruction and expansion or the expansion of I-90 to the Illinois border. Meanwhile in Washington, the federal Highway Trust Fund is on the brink of insolvency, and Congress has only weeks left to pass a new federal transportation act. Federal revenues from gas taxes and other user fees this year are expected to come up $16 billion short of the level needed to maintain current federal transportation spending, leading to the need for urgent congressional action.

State and federal policies often give priority to spending on highways based on the assumption that drivers pay the cost of roads through gas taxes and user fees. The report argues that, with the nation’s transportation needs changing and general taxpayers bearing an ever-greater share of the cost of transportation, America should instead invest transportation dollars in projects that are likely to deliver the greatest benefits.

Ordinary Americans agree that policymakers should better balance transportation priorities. Recent opinion polls suggest that Americans believe that the nation should give greater priority to transit, bicycling and walking in transportation spending. Furthermore, nearly two-thirds of Americans believe it is appropriate to use gasoline tax revenue to support public transportation, according to a national study released last week by researchers at the Norman Mineta Transportation Institute.  
The report can be read here. 

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WISPIRG Foundation works to protect consumers and promote good government. We investigate problems, craft solutions, educate the public, and offer meaningful opportunities for civic participation.