Since Congress established the Highway Trust Fund in 1956 to fund the construction of the Interstate Highway System, the federal government has financed transportation projects primarily with revenues collected through federal fuel taxes. These taxes were established to make the federal-aid highway program self-financing—that is, paid for by the highway users who directly benefit from the program. From 1956 to 1993, Congress increased the federal gasoline tax from 3 cents per gallon to its current rate of 18.4 cents per gallon. The federal diesel tax rate was also last increased in 1993 and is currently set at 24.4 cents per gallon. In fiscal year 2010, 92.5 percent of almost $37 billion in user fee revenues deposited into the Highway Trust Fund were generated through federal fuel taxes. The remaining revenues were collected through several taxes on heavy commercial trucks. (See fig. 1.) Over the past two decades, revenues from federal gasoline and diesel fuel taxes have steadily declined in purchasing power. These rates are not set to be adjusted for inflation on an annual basis, meaning that the 18.4 cents per-gallon tax on gasoline enacted in 1993 is effectively worth about 11.5 cents today. If federal gasoline taxes had been indexed to inflation since they were last increased, they would have risen from 18.4 cents per gallon in 1993 to approximately 29 cents per gallon in 2011; diesel taxes would have risen from 24.4 cents per gallon to 38 cents per gallon. In addition, as shown in figure 2, the amount of federal gasoline tax relative to the average retail price of gasoline decreased from 17 percent in 1993 to 5 percent in 2011. Surface transportation programs face increasing shortfalls in year-to-year revenues over the next decade. CBO estimated in August 2012 that, to maintain current spending levels from 2012 to 2022, the Highway Trust Fund would require an additional $110 billion over what it is expected to take in during that period (see fig. 3). These shortfalls are expected to increase as passenger vehicle fuel economy improves and the amount of revenue generated per mile traveled decreases. When federal fuel taxes were last increased in 1993, the National Highway Traffic Safety Administration’s Corporate Average Fuel Economy (CAFE) standards required newly manufactured passenger cars and light trucks to meet estimated average fuel economy levels of 27.5 miles per gallon (mpg) and 20.4 mpg, respectively. Current CAFE standards will require manufacturers’ new passenger cars and light trucks to have an estimated combined average fuel economy of 34.1 mpg by model year 2016, and as high as 54.5 mpg by 2025. We have previously reported that, over the long term, vehicles will become more fuel efficient and increasingly run on alternative fuels. Consequently, fuel taxes may not be a long-term source of transportation funding. The amount of federal fuel taxes paid by drivers of passenger vehicles comprises only a small portion of these users’ overall fuel expenditures and varies based on fuel economy. More fuel-efficient passenger vehicles pay less in fuel taxes per mile because they require less fuel to travel the same distance as less efficient vehicles. The 2009 National Household Transportation Survey found that the average one-vehicle household Drivers of sedans with spends more than $1,400 annually on gasoline.average fuel efficiency (22 mpg) pay about $100 per year in federal fuel taxes. The driver of a sport utility vehicle (SUV) with a fuel efficiency of 16 mpg pays about $132 a year in federal fuel taxes (see fig. 4). A single commercial truck contributes more to the Highway Trust Fund, on average, than a single passenger vehicle for several reasons. The federal diesel fuel tax is higher than the gasoline tax, and commercial trucks tend to travel more miles annually and are considerably less fuel efficient than passenger vehicles. According to FHWA highway statistics, the average commercial truck and trailer combination (combination truck) traveled nearly 70,000 miles in 2010 while the average passenger vehicle traveled about 11,000 miles. Also, while the average combination truck traveled about 6 miles per gallon of diesel fuel in 2010, the average passenger vehicle traveled about 22 miles per gallon of gasoline. There is also a great deal of variation in the amount of fuel taxes paid among different configurations of commercial trucks. As shown in figure 5, a combination truck with a fuel efficiency of 5 mpg would have paid more than 8 times as much in federal diesel fuel tax as a single-unit truck with a fuel efficiency of 8 mpg, a difference due primarily to combination trucks driving substantially more miles than smaller, single-unit trucks. Although a single commercial truck generally contributes larger amounts to the Highway Trust Fund through federal diesel fuel and other taxes, FHWA has estimated that commercial trucks pay less than their share for their use of our nation’s roadways in relation to the road damage they impose. According to research conducted by the American Association of State Highway Transportation Officials (AASHTO), highway wear increases exponentially with the weight of a vehicle’s axle load. To evaluate the equity and efficiency of highway user fees, FHWA has compared the Highway Trust Fund contributions of different vehicle classes with the costs attributable to each class as part of its Highway Cost Allocation Study. FHWA completed its most recent cost allocation study in 1997 in response to a GAO recommendation and provided an updated addendum in 2000. This study found that in general, lighter vehicles pay more than their share of highway costs while heavier vehicles pay less than their share. For example, according to FHWA’s 2000 study, the heaviest combination trucks—those that weigh more than the federal interstate gross vehicle weight limit of 80,000 pounds—paid 50 cents for every dollar’s worth of damage they caused. According to the AASHTO study that is used as the basis for the organization’s pavement design guides, a commercial truck with five axles weighing 80,000 pounds imposes roadway damage equivalent to the damage imposed by 24,000 passenger cars. In recent years, the federal government and several states have taken steps to evaluate mileage fee systems, although none of these U.S.- based pilot projects has collected fees from drivers based on their road use: In 2005, Congress authorized $16.5 million for a field test for assessing highway use fees to vehicles based on their mileage driven and using satellite-enabled, on-board units. Led by researchers at the University of Iowa, the National Evaluation of Mileage-based Road User Charges (referred to as the “Iowa study” in this report) tested mileage fee systems in the vehicles of 2,600 volunteer study participants in 12 states. In 2005 and 2006, respectively, the Puget Sound Regional Council— the metropolitan planning organization for the Seattle, Washington region—and the Oregon DOT each conducted pilot programs that were funded in part by FHWA’s Value Pricing Pilot Program. Similar to the Iowa study, both pilots tested GPS-based systems installed into the vehicles of paid volunteers to gather mileage data and calculate hypothetical user fees. At the time of our review, the Minnesota and Nevada DOTs were testing different approaches to calculating mileage fees for passenger vehicles, discussed later in this report. The Oregon DOT also conducted field tests of a system to collect mileage fees from commercial trucks and has planned a new pilot project to examine mileage fees for electric passenger vehicles. For a summary of U.S.-based pilot projects, see appendix II. Internationally, several countries have implemented distance-based user fee programs for commercial trucks, including Germany, New Zealand, Switzerland, Austria, the Czech Republic, and Slovakia. These programs were designed to address a variety of policy goals, including raising revenues and reducing harmful emissions. The New Zealand system also charges diesel-fueled passenger vehicles for distances traveled. The Netherlands attempted to implement a nationwide commercial truck and passenger vehicle mileage fee system scheduled to begin in 2012, but the program was suspended before it was implemented because of privacy concerns discussed later in this report. Prior GAO work has found that the design of user fee programs can be evaluated based on several related criteria: efficiency, equity, revenue adequacy, and administrative burden, as discussed in appendix III. These criteria interact and are often in conflict with each other; as such, there are trade-offs to consider among the criteria when designing a fee. For example, the current method of collecting federal fuel taxes presents little administrative burden because these taxes are collected from a small number of companies that store or distribute fuel at the wholesale level. However, according to CBO, fuel taxes also raise efficiency and equity concerns in that they: (1) do little to promote the efficient use of the nation’s roadways because they provide minimal incentive for users to drive less and (2) tend to be regressive, in that they impose a larger relative burden on low-income than on high-income households. Consequently, every user fee design will have pluses and minuses, and no design will satisfy everyone on all dimensions. See app. IV for information on the Fair Information Practices. of privacy laws and related policies in the United States, the European Union, Australia, and New Zealand. Mileage fee initiatives in the United States and abroad show that several approaches are available to gather mileage data and charge fees. Some approaches could lead to more equitable and efficient use of roadways; however, significant privacy-related concerns from the public and cost challenges have been raised in applying mileage fees to passenger vehicles. Reliable cost estimates for mileage fee systems are not available; but launching and operating a system to collect fees from 230 million U.S. passenger vehicles is expected to greatly exceed the current costs of collecting federal fuel taxes. Commercial truck user fee systems in Germany and New Zealand show that considerable revenues and other benefits can be achieved by charging these vehicles, but enforcing compliance in a cost-effective manner presents trade-offs. Only limited research has been done to evaluate commercial truck mileage fees in the United States.