Congress uses surface transportation authorization to deliver transportation and related infrastructure funding to the states through legislation such as the FAST Act and MAP-21, which it considers on a multiyear cadence.
This long-term funding cycle allows states to plan for big infrastructure projects and investments. The most recent round of surface transportation funding was folded into the larger Infrastructure Investment and Jobs Act, also known as the IIJA or the Bipartisan Infrastructure Law. The 2021 law authorized $1.2 trillion in funding and expires at the end of the 2026 federal fiscal year. Reauthorization discussions are expected to begin in earnest in early 2025 with the new 119th Congress.
According to the Congressional Research Service, Congress began investing in road construction in 1916. While methods for funding states have changed over the years, the IIJA was the first to introduce competitive discretionary funding. The legislation also uses federal loan programs while establishing new formula funding and retaining existing funding for states. The IIJA is itself funded by four main federal funding streams:
Motor fuel taxes fund the Highway Trust Fund, traditionally used to pay for highway and mass transit programs. However, the fund’s revenues have declined in recent decades due to higher fuel efficiency standards and drivers’ increasing use of electric vehicles. The IIJA authorized the transfer of $118 billion in general funds to supplement the Highway Trust Fund, which Congress has repeatedly done since 2008 to maintain the trust’s solvency. This new money, as well as other authorizations subject to future appropriations, provide supplemental funding for IIJA programs.
As the 119th Congress begins deliberation over the next surface transportation bill, several funding options likely will be considered. One of the most important is the exact mix of funding sources for the new reauthorization. Congress could choose to pursue a similar structure for the next reauthorization or revert to a more piecemeal traditional funding structure that largely relies on formula funding. The size and scope of the legislation likely will determine the mix of funding sources.
Congress also must consider how to maintain the solvency of the Highway Trust Fund. Economic analysts have identified a significant and persistent gap between the revenues and expenditures of the trust fund, expected to average $40 billion annually starting in fiscal year 2027. Congress has three likely options for addressing this problem:
- Continue to supplement the Highway Trust Fund with general funds without addressing the root cause of the revenue gap.
- Create new taxes or increase existing ones to help bridge the revenue gap.
- Dissolve the Highway Trust Fund and divert its revenue to the general fund.
Other funding considerations could include:
No matter the exact funding structure of the next reauthorization bill, Congress needs to pass the legislation before the IIJA expires to ensure the long-term stability of federal transportation funding. Congress also could choose to pass a continuing resolution extending the IIJA by one year, though this is not currently anticipated.
As 2025 discussions begin with a new Congress and a new administration, NCSL remains committed to furthering the surface transportation federalism priorities of states through congressional advocacy.
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Megan Bland is a legislative specialist in NCSL’s State-Federal Affairs Division.