TRANSPORTATION USER FEES IN THE UNITED STATES

Abstract

Federal, state, and local governments in the United States spend about $124 billion to provide rights-of-way, terminals, and other facilities. Much of this is financed through user fees - charges governments make to recoup the cost of goods or services provided. Highway user fees are particularly important and long-standing. The earliest road user fees were turnpike tolls, which were a response to the unprecedented long-distance through-traffic that accompanied the industrial revolution. Similarly, but much later, with the introduction of motorized traffic, counties and towns struggled to maintain roads in the face of the new traffic, much of which was from outside their immediate jurisdiction. User fees in the form of dedicated motor-fuel taxes became a popular solution. User fees offer a practical, simple way to finance transportation investment, and they can help boost efficiency. They are seen as fair, and they have produced the money needed to make necessary transportation investments. Transportation user fees are an imperfect solution to economists, budgetary interests, and transportation concerns, but they are a valuable, working compromise acceptable to many. They have been, and will likely remain, the cornerstone of U.S. transportation finance. Proposals have been made to extend user fees to impose marginal social cost pricing. In spite of its potential economic benefits, this approach involves such drastic change that it is not likely to win acceptance as national policy in the United States. Future user fees may go beyond cost recovery and contribute more directly to efficiency. The emergence of communities may increasingly consider new applications, including value pricing and weight-distance taxes, in which traditional user fees might be made more efficient or otherwise better matched to community objectives.

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