This publication contains two reports on highway finance. The first report, "The Evolution of the Highway-User Charge Principle," examines the financing concept that, for the most part, pays for building our highways, their maintenance and other related highway costs. It examines the history of road and highway financing in the U.S. and the development of the "user-pays" concept. The user-nonuser debate is described, including who benefits from highways. The second report, "State Highway Finance Trends," examines the means of fiscal revival in State highway programs. It identifies and analyzes representative fiscal mechanisms of the several States which are responsible for the fiscal recovery. It also discusses implications such as the broadening of the scope of State transportation programs, including multimodal financing, highway-user subsidization of public transportation, and the nonuser revenue support of highway and transportation programs.

Pursuant to a congressional request, GAO reviewed whether highway user fees should be based on weight and distance travelled, focusing on the: (1) rationale for and arguments against assessing wear-based user fees; (2) recent state experiences in assessing wear-based fees; and (3) potential approaches that could be used to overcome the obstacles to implementing such fees. GAO found that: (1) proponents of wear-based fees contend that such fees would more accurately charge heavy trucks for the wear they cause and, in the long run, provide truck operators with an incentive to reduce pavement wear; (2) opponents of wear-based fees argue that they are unnecessary, costly to administer and enforce, and easy to evade; (3) since 1989, 5 states have rescinded their wear-based fees due to administrative costs, evasion, and legal challenges; (4) 6 states continue to use wear-based fees, emphasizing that they increase equity and efficiency; (5) high administrative costs and evasion rates can be minimized with the use of efficient new highway system technologies; and (6) Federal Highway Administration (FHwA) officials emphasize that the implementation of a national weight-distance user fee is currently feasible and would allow greater precision in charging trucks on a weight-per-axle basis.

This primer presents some promising and innovative mileage fee system designs and transition strategies. For states or localities that are considering a transition to mileage fees, awareness of these strategies can help determine whether shifting from fuel taxes to mileage fees merits further consideration. For jurisdictions already engaged in detailed assessments of mileage fees, these concepts can help reduce costs and build public support.