The Marine Transportation System and the Federal Role: Measuring Performance, Targeting Improvement -- Special Report 279 (2004)

The Highway Trust Fund has remained largely unchanged in function over the course of nearly five decades. Fuel tax rates have been raised and some other taxes have been added. Congress has changed the definition of eligible expenditures—for instance, to include public transit and bicycle and pedestrian facilities. Various groups of highway users (e.g., heavy trucks, urban motorists, rural motorists) account for different proportions of revenues, which are not necessarily directly related to a group’s level of system usage or to the benefits conferred on it. In general, however, the revenues generated from highway users have been devoted to the trust fund and spent on the federal highway and transit programs.

The Highway Trust Fund, which was modeled after the Social Security Trust Fund, was the forerunner of trust funds for financing other federal transportation programs, including the federal aviation program. The Airports and Airways Trust Fund (commonly known as the Aviation Trust Fund) was established by Congress to credit the federal tax revenues generated from users of the aviation system. The principal tax on aviation users is the passenger ticket tax, which was first imposed during the early 1940s to help finance the war effort. A similar tax was imposed on intercity rail and bus tickets, and the revenues in all cases were credited to the general fund. The Aviation Trust Fund was created in 1970 for essentially the same reason that Congress created the Highway Trust Fund: to provide more predictable funding for the air traffic control and airport capital programs and to guard against diversion of revenues to nonaviation purposes. All passenger ticket tax revenues were credited to the account, along with the revenues generated from other aviation-related taxes, such as aircraft tire and tube taxes and impositions on aviation fuel.

While Congress originally intended the Aviation Trust Fund to be used exclusively for funding capital improvements for the nation’s airports and air traffic control system, it gradually expanded its coverage to include most of FAA’s budget. Today, the trust fund covers more than 90 percent of the agency’s budget and provides more than $3.5 billion per year in aid to public airports for capital improvements.