With only three real possible options to stave off the looming bankruptcy* of the nation’s transportation trust fund, a Senator has proposed choosing one of them: scale the nation’s transportation program down to the size of the revenues users pay into it.
*No, the trust fund can’t actually go bankrupt—“insolvent” is the technical term. But for everyday people who cannot spend more money than they have, understanding it as “bankruptcy” is more helpful.
As we noted a few months ago, the nation’s transportation trust fund is in existential trouble. And it has been since 2008, when Congress started bailing it out with your general tax dollars. They’ve now poured in somewhere around $275 billion to cover the huge gap between how much Congress keeps spending on transportation and the far lower amount the gas tax brings in each year. And here we are again, back at square one, with the trust fund needing a massive bailout to cover a gap that will soon reach $40 billion annually.
There are three main options for tackling this problem: 1) (Continue to) deficit spend and bail it out, with every single taxpayer picking up the tab on top of whatever they pay at the pump. 2) Increase the gas tax (or create another tax) to raise revenues. 3) Live within our means by cutting spending down to the amount of revenue brought in each year.
Spend what we have, nothing more
#3 is the path that Senator Mike Lee (R-UT) has attempted to forge with a simple new bill.
His Balance the Highway Trust Fund Act would prohibit USDOT’s annual obligations (i.e, spending) for federal-aid highway programs from ever exceeding gas tax receipts to the highway account in any given year. To put that in real terms, CBO figures show that 2025’s highway spending was about $58.5 billion, which exceeds the $38.9 billion in gas tax receipts that were brought into the highway account by about $19.7 billion. So this bill would reduce highway spending by $19.7 billion.
The bill would do the same thing for transit, limiting annual obligations from the Mass Transit Account to the net gas tax receipts for each fiscal year. CBO estimates that amount would average about $5.75 billion annually during the next five-year reauthorization.
It’s debatable whether or not Sen. Lee is serious about advancing this proposal, given that he introduced it with no co-sponsors and no apparent media push (he’s proposed similar bills before). But this is, in fact, the only formal proposal in Congress right now aiming to deal with the looming bankruptcy of the highway trust fund.
But that’s not the only way to categorize this proposal.
This is also technically the most ambitious climate bill in this Congress
As we’ve pointed out repeatedly over the last few years, the IIJA supercharged highway spending and massively increased overall transportation emissions, empowering state DOTs to commit to long-shelved or dormant expansion projects. Our Fueling the Crisis analysis showed that the IIJA could cumulatively increase emissions by nearly 190 million metric tonnes over baseline levels by 2040, largely due to all the added driving from the IIJA’s massive increase in unaccountable highway spending. That’s akin to nearly 50 coal-fired power plants running for a year. All this despite the hefty praise it received from the environmental world.
That analysis has likely only gotten worse, as many of the “good” programs for reducing emissions in the IIJA have been slashed or eliminated outright by the Trump administration, like electric vehicle charging infrastructure and grants for local projects focused on reducing driving or improving access.
Here’s where the implications of Sen. Lee’s proposal get interesting.
Assuming we scale down the size of the highway and transit programs to what the gas tax actually brings in, it would potentially reduce net emissions from the Highway Trust Fund’s programs by nearly 24 million tons. That’s a 22 percent reduction compared to simply extending the bill and getting the same outcomes.
To emphasize: right-sizing the federal program would deliver more progress on emissions from transportation than any other climate bill that’s been proposed in this Congress.
Sen. Mike Lee, accidental climate advocate?
Compare those reductions to the potentially enormous growth in emissions likely to result if groups like AASHTO get their way and see the next reauthorization start at the same level of funding as in the IIJA (plus inflation). Remember: their starting point is $400 billion over five years for the highway-only programs, which is somewhere around over $210 billion more than the gas tax will bring in over those five years! If Congress did roll over and decide to hand state DOTs another $210 billion of your money on top of what you pay at the gas pump, emissions would rise dramatically.
The elephant in the room: transit funding
Unlike other proposals to kick transit out of the trust fund to try and save money, it’s notable that Sen. Lee is proposing to scale down the highway and transit programs in the same way: lowering spending on each one to the level of what the gas tax brings in. Nearly 3 cents of the 18 cents per gallon gas tax goes directly into the Mass Transit Account, and this bill would not change that—he’s not arguing to end federal support for transit funding.
As with highways, it would mean a significant cut in federal transit spending (a 66 percent reduction in federal funds, causing pain and fiscal ruin for transit systems across the country—especially smaller ones.
But consider the position a proposal like this puts most transit advocates in: most will be loudly opposed to this proposal, even when it would massively reduce emissions from highway-related spending and finally end the runaway growth of the unaccountable highway program. We transit advocates get backed into a corner on proposals like Senator Lee’s because transit funding is inextricably tied to highway funding.
And so transit advocates will continue to have no choice but to be boosters for an enormous highway program, just to keep transit funding at the same paltry level that’s far less than what we need to truly invest in the rest and build a world-class system for all of our cities, big and small. The structure of this program requires transit advocates to essentially back AASHTO’s fever dream of deficit spending on historic funding for highways, more flexibility, and even less oversight.
That’s the high price of keeping transit funding at the same levels.
People who believe that we need more and better transit in this country should not have to hold their nose and swallow insane amounts of unaccountable highway funds that undermine our transit investments. They should not have to support bank-breaking reauthorizations paid for by their grandchildren just to prop up a system that delivers such terrible results on safety, maintenance, and access to other options for getting around.
Especially when there is growing evidence that the Trump administration is killing grants for transit-related projects or failing to advance transit capital projects with money set aside by Congress. (Some breaking news we hope to expand on in the coming weeks: Trump’s USDOT has advanced zero new transit capital investment grants in the last 13 months, a new record for slowness.)
All of this points to an uncomfortable reality that has been looming for years, and which transit advocates (including ourselves) need to eventually grapple with: The federal Highway Trust Fund is not a long-term, stable solution for funding transit in this country, and the time has come to have a conversation about other mechanisms for funding transit in the future. The future of transit needs to stop being tied to the fate of a supercharged highway program that is producing terrible results for taxpayers.
Sen. Lee’s proposal reduces the size of a program that produces bad outcomes. What we need instead is a smarter, virtuous funding mechanism that, for each dollar invested, supports good investments across all modes.
Because the damage being done by this federal transportation program—funded by immense deficit spending for 18 years now—is too great to ignore.
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