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Infrastructure Funding
How do we pay to improve infrastructure ?
We know that substantial new investments are required in roads and bridges, transit systems, dams and levees, and both our drinking water and wastewater systems. The American Society of Civil Engineers latest update of its survey on the status America's infrastructure gave it an overall grade of C- or between poor and mediocre and in breaking that down by component (roads, water systems, airports, etc.) gave a grade of good to only the "rail" component of the nation's infrastructure.
So how do we pay to make the much needed improvements to infrastructure required for the safety, security and future prosperity of our country? The majority of funding for maintaining and improving our infrastructure comes from state and local governments. This makes sense as most of the roads, bridges, dams and other infrastructure belongs to state and local governments. The federal government is an important though lesser source of funding. The chart above based on a report from the Congressional Budget Office illustrates that about 78% of infrastructure spending is funded by state and local governments with the remaining 22% funded by the federal government. The proportion funded by the federal government has steadily decreased over time, largely due to the fact that the federal fuel taxes per gallon have not been increased since 1993. Federal fuel taxes are currently set at 18.4 cents per gallon for gasoline and 24.4 cents per gallon for diesel fuel. State taxes vary widely by state from no tax in Georgia, which recently suspended its tax on gasoline, to 57.6 cents per gallon in Pennsylvania. State taxes on diesel fuel range from 8.9 cents per gallon in Alaska to 74.1 cents per gallon in Pennsylvania as of January 2024 according to ComplyIQ.
Insights
There has been significant new funding for infrastructure put in place at the state and local levels over the past 5-10 years.
Similar dedicated federal funding has not been put in place and the proportion of federal funding has decreased as a result.