CRSReport
Funding and Financing Highways and Public Transportation Under the Infrastructure Investment and Jobs Act (IIJA)
- Congress
- Not available yet...
- Report Number
- R47573
- Report Type
- Reports
- Report Version
- 2
- Date
- Apr 14, 2026
- Update Date
- Apr 17, 2026
- Title
- Funding and Financing Highways and Public Transportation Under the Infrastructure Investment and Jobs Act (IIJA)
- Summary
- Congress has long considered how to pay for investment in highway and public transportation infrastructure. Since 1956, federal surface transportation programs have been largely funded by taxes on motor fuels that flow into the Highway Trust Fund (HTF). In 2001, however, trust fund revenues stopped growing faster than spending. In 2008, Congress began using transfers from the Treasury general fund to keep the HTF solvent. Projections indicate that by the end of the current decade, the gap between dedicated surface transportation revenues and spending will average roughly $33 billion annually. Over the years, Congress has also supported financing infrastructure investment via a tax preference for state and local government borrowing, federal loans—such as the Transportation Infrastructure Finance and Innovation Act (TIFIA) program—and the encouragement of private investment via public-private partnerships (P3s). The most recent surface transportation reauthorization act, the Infrastructure Investment and Jobs Act (IIJA; P.L. 117-58), authorized spending on federal highway and public transportation programs through September 30, 2026. The IIJA provided $118 billion in general fund transfers to the HTF to keep the fund solvent over the life of the act. This use of general fund transfers is to have been the de facto funding policy for 18 years when the IIJA expires. Congressional Budget Office (CBO) projections indicate a shortfall of $166 billion over the five fiscal years following the expiration of the IIJA. Congress may consider how to deal with this future shortfall. The IIJA made further changes to the funding structure of highway and public transportation programs by providing additional non-trust fund sums via advance multiyear supplemental appropriations. Advance funds are effectively guaranteed because they are not subject to subsequent annual appropriations acts. The IIJA provided advance appropriations totaling an additional $47 billion for highways and $21 billion for public transportation over FY2022-FY2026. In addition, the IIJA expanded the use of authorizations subject to future appropriations acts. Such use of large general fund amounts, in addition to HTF monies, is likely to be a point of discussion during the IIJA reauthorization debate. Possible topics for congressional consideration could include the following: Raising motor fuel taxes to provide the HTF with sufficient revenue to fully fund the program in the near term, but the increase would have to be large and may not be viable long-term due to expected declines in fuel consumption related to increasing adoption of electric or fuel efficient vehicles. Replacing or supplementing motor fuel taxes with a vehicle miles traveled (VMT) charge, a carbon tax, or an electric vehicle fee or other alternative revenue sources. Continuing to use Treasury general fund transfers to make up for the HTF’s projected shortfalls; doing so might require budget offsets of an equal amount. Continuing the use of a combination of authorized trust-funded budget authority and multiyear appropriations, as was introduced in the IIJA, or eliminating the HTF and relying solely on appropriations. Monitoring the impact of inflation on the purchasing power of IIJA authorizations. Tolling may be an effective way to finance specific roads, bridges, or tunnels that are heavily used and are located such that the tolls are difficult to avoid. Although tolls are collected only at the state or local level, a major expansion of tolling might reduce the need for federal expenditures on roads; however, it is unlikely to provide broad support for surface transportation. To promote greater financing of surface transportation infrastructure, Congress could consider whether to change existing tax incentives and programs that would increase public- and private-sector borrowing and private equity investment. For example, greater federal support of the credit risk premium in the Railroad Rehabilitation and Improvement Financing Program could make the program’s loans more attractive to public transportation agencies. Congressional options could also include enacting other financing mechanisms for these purposes, such as a national infrastructure bank and an asset-recycling program, and encouraging greater use of value capture tools, such as tax increment financing and special assessments.