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Local Highway Funding Explained

The Highway Trust Fund was created in 1956 as the primary way to fund national, local, and state highway projects throughout the country. For many Americans, adequate transportation is an essential part of their everyday lives. With proper local highway funding, communities will be able to bring in more construction jobs and encourage business growth in their areas.

Over 97% of highways and roads in the US are owned by local and state governments. In addition, the majority of transit systems are operated and owned by public local and state agencies. Federal support for local projects is designated from the Highway Trust Fund, which allocates money annually to each state and local area, depending on their population.

Revenue Sources
Federal highway funding comes from two main revenue sources. The first is federal taxing on gasoline/diesel fuels, also known as the gas tax. Americans pay a tax for the amount of fuel that they purchase. The second source comes from truck-related taxes, which includes trailers, trucks, and other heavy-duty vehicles. These taxes are primarily paid by tire retailers and truck manufacturers. When combined, these two revenues comprise of 84 percent of the national funding to highways.

Current Problems
As the price of gas continues to increase, people are buying less fuel. As a result, less tax money is sent to the Highway Fund. Many local roads are now falling into a state of disrepair since the federal funding does not have enough money to allocate to each state and local area the required funding for proper maintenance. This situation is expected to continue to deteriorate, with a shortfall that could reach up to 34%, or a $14 billion reduction in highway investment funds.

At the moment, there are numerous political debates concerning whether funding should be given to the private sector. Instead of the government having the responsibility for maintenance costs for local roads, private organizations will be called upon to handle the repairs and maintenance. However, many people are still opposed to this idea.