Federal Transportation Funding Dilemma Raises State Equity Questions

New Brookings report suggests that highway funding formulas are not fair if money comes from the general fund.

In the United States, highway funding is primarily distributed to states through set formulas based on a variety of (sometimes arbitrary) factors such as the mileage of existing roads and per capita crash rates. These formulas don’t always produce fair outcomes, however: some states pay far more into the Highway Trust Fund through gas taxes than they receive back in federal highway funds. As a result, over time, Congress has ramped up the Equity Bonus Program, which ensures that most states that fit a certain set of criteria receive at least 92% of their respective fuel tax revenues in highway funds.

Problem is, fuel tax receipts are dropping and Congress is incapable of finding a new funding source; this means that in order to maintain existing spending on transportation, the U.S. government is likely going to have to dip into the income tax-based general fund, something it did last year as well. In the past, I’ve advocated shifting the burden of the majority of the transportation funding program to the income tax on equity grounds.

Here’s the thing: gas tax receipts don’t line up with income tax receipts, meaning that the “fairness” principal cited above doesn’t make much sense if transportation funds are coming from income taxes — a $20 billion transfer is likely this year alone. The Equity Bonus Program, which has been forcefully defended by senators like Kay Bailey Hutchison (R-TX), is not equitable if applied to the general fund.

That, with a bit of background, is the conclusion of a new Brookings report by Robert Puentes and Adie Tomer, who compared gas tax receipts with income tax revenues. Their chart demonstrates that states like New York, California, and Massachusetts deserve a significantly higher share of transportation spending based on income taxes, and that states like Texas, Florida, and Georgia deserve much less than they currently receive based on fuel taxes. Though the federal government took $8 billion from the general fund to shore up the Highway Trust Fund last year, these problems were not raised, and Equity Bonus money was distributed as if all transportation funds had come from the gas tax.

Will the equity issue be raised this year, or will senators like Ms. Hutchison, who has worked so hard for “fairness” for her state in the past, attempt to drown out the discussion? A reliance on the general fund for revenues should mean an equivalent shifting of priorities on spending, state-by-state.

14 Comments | Leave a Reply »
  • Politics is not fair. It depends on who has the power and the extent of their ability to get what they want. Highway funding, should be broadened to transport funding so that there is an effective use of resources.

  • Tom Rubin

    At the present time, the vast majority of Federal transit funding comes from the highway trust fund; $.0286 of the $.184 per gallon of gasoline goes directly to the Federal Transit Administration grant programs. Significant other “highway trust fund” money goes to “flexible” highway grant programs — chiefly STP and CMAQ — that are frequently utilized for transit programs. Overall, the percentage of highway trust fund money that goes to transit is over 20%, with other transportation/transport uses ranging from everything from cycling (cyclists are, obviously, road users, at least in part, but they do not pay into the trust fund from riding bikes) to transportation museums to other activities that often have a not-real-clear direct tie to highways.

  • Very few bicycles were ridden directly from their factories to the stores where they were retailed. Additionally, very little of the fuel of bicyclists is grown in the back garden, again most of it is delivered by trucks. Given the very light footprint that bicycles occupy, this seems like enough of a tax to me.

  • Tom Rubin

    Dave, One of the problems with your approach is that a lot of users wind up paying not much.
    There are a variety of formuli for road wear and tear by vehicle characteristics. Most use apply various exponents to axle weight; I’ve seen everything from the second to the seventh power applied. Bikes, obviously, generally don’t account for a lot of wear and tear on the roads.
    For example, two types of vehicles that do the most damage to roads are fire trucks and transit buses.
    Pumpers generally carry about 1,000 gallons of water, which is over eight pounds per gallon, not to mention the weight of the water tank, plus the other special gear.
    Your basic 18-wheeler comes in at up to 80,000 pounds on five axles, with the rear four at about 17,000 each. These generally a lot of taxes ($.244 Federal per gallon for diesel, plus $.18 state in California, plus sales tax at 9% or higher on both, or about $.46/gallon total) — which, depending on who is doing the math, may or may not pay for the cost of repairs.
    In California, buses are limited to 20,500 pounds per axle, which already quite a bit more than the semi’s — if you do a simple square ratio, it is 402:289, or almost 40% more. However, in my experience, a fully loaded transit bus can easily exceed 25,000 pounds on the rear axle, which is 625:289, or about 116% more.
    In California, not only are transit buses exempt from the Federal per-gallon charge, they are also exempt from $.17 of the $.18 State tax, so they are paying $.0109 per gallon — or about 42 times as much.
    Now, re bikes, they may not do much wear and tear damage on roads, but there are costs. To take an extreme case (not frequent when compared to all road miles, but not totally rare), how about a place where an auto lane is converted to bike use, or a curb lane used for parking is converted to a bus lane? It isn’t free to construct those lanes?
    More commonly, how about paving a separate, dedicated bike lane?
    How about narrowing “auto” lanes to create a bike lane? Here, the cost works in a different way, namely, when you narrow a lane: (1) safety decreases, and (2) speed decreases — and you can attach costs to each.
    This is NOT an anti-bike rant; I totally respect the legal right of cyclists to use the roads in almost the same manner — and subject to almost the same laws — as motorized vehicles (someday, I would like to have a face-off to determine which group behaves more outrageously, certain motorists in the presence of cyclists or certain cyclists in the presence of motorists; the difference, as I sometimes tell my cyclists friends, is, I respect your right to be on the road and act accordingly; I suggest you respect the mass of my car and act accordingly). In fact, I frequently make common cause with cyclists when critiquing stupid long-range transportation plans.
    However, there ARE costs attributable to cyclists in urban transportation plans and it is pretty difficult to come up with much in the way of user fees coming from cyclists to pay for same.

  • Sean

    Let the gas tax pay for highway improvements and develop a separate dedicated tax for mass transit- or just fund it out of general revenues.

  • @Tom: I deny that narrowing vehicular lanes “decreases safety”. AFAIK the tests that show its safer don’t account for the full spectrum of human behavior, e.g. driving more slowly because the lanes are harder to stay inside.

    “Bike lanes” are help for motorists, not cyclists. Cyclists have a legal right to the road with or without bike lanes. Adding the bike lane only allows the motorists more passing options, it does nothing to increase mobility or safety for cyclists. Bike lanes are motorist infrastructure, pure and simple.

  • Tom Rubin

    Here’s a few studies re lane width and safety:
    http://www.tfhrc.gov/safety/pubs/09031/09031.pdf
    http://www.irap.net/toolkit/default.asp?p=treatment&i=71
    http://books.google.com/books?id=U2bFjXd6rj4C&pg=PA51&lpg=PA51&dq=lane+width+road+safety&source=bl&ots=c4TUgcRGrh&sig=DowDANW66IKgC-cQOZG7_roSZm8&hl=en&ei=80dwSsftJo7-tQPY5ODMCA&sa=X&oi=book_result&ct=result&resnum=10 (page 51)
    First, this is a complex subject and there are more things at work in roadway design than lane width alone.
    As a general rule, I believe you will find that most experienced transportation engineers will agree that, all else equal, wider lanes are safer than narrower ones, within reason.
    However, there is no shortage of papers that will say that there is little or no safety connection and even some that say that narrower lanes are safer. The latter, I believe, tend to be centered on “total road” analysis — which is the entirely proper belief that, if we are talking about roadways where there is pedestrian and cyclist users, well, gee, golly, do you think we should actually plan and operate the road like there may be “that kind” of people using it? A short verion of this could be, if you have inadequate design for non-motorized use of a road, the default safety mechanism may be to slow down motorized traffic, and narrower lanes will tend to do that.
    I have a good friend, a transportation engineer who has specialized in bicycle use for decades, who is absolutely, totally against the concept of bike lanes on roads — however, I think it is fair to say that his opinions are at variance with common American practice in this area, such as it is.
    Never-the-less, I find your argument that bike lanes exist for motorists, not for cyclists, interesting — however, even if we grant it for purposes of discussion, if there were no cyclists on the road, there would be no need for bicycle lanes, so, therefore, we are still back with the proposition that the existance of cyclists requires additional expense in the construction and maintenance of roads.

  • At the start of the paved road era, there were no bike lanes. Riders on horseback, Wagons, Streetcars, Bicycles, – all just ‘shared the road’. The late 1890s in America is refered to as ‘the golden age of bicycling’, presumably it had features that made it desirable to ride then – and yet no bike lanes!

    It was only after motor vehicle operators became a political ultra-majority that bike lanes came into fashion. Bike lanes are motorist infrastructure, designed by motorists, for motorists, to keep the bikes ‘out of the roads’.

    The situation is analogous to racial segregation in America in the first half of the 20th century. You’re arguing that blacks should have to pay for the back half of the bus, because the white folks don’t want to share seats with them up front. The black folks, by and large, didn’t care who they sat with, they just wanted a seat. I’m arguing that if the white folks don’t want to sit with the back folks, they are honor-bound to pay for both halves of the bus to make that happen.

    While I grant that completely eliminating bicycles obviates the stated purpose of bike lanes, completely eliminating motor vehicles ALSO obviates the stated purpose of bike lanes. The situation is entirely symmetric. Thus bike lanes should not be ‘charged’ to bicyclists on this basis.

  • EngineerScotty

    I’m not sure I’d compare bike lanes to Jim Crow… at any rate, bicycles (like autos) have changed greatly in the past century. One result of the widespread availability of paved roads are bicycles optimized for riding on them–many modern street bikes would not last long if regularly ridden off-road. (Likewise, we also have various types of bikes which are designed for off-road use).

    Certainly, motorists and bicyclists benefit from a well-designed bike lane. Some bike lanes I can think of were created not by widening the road or restriping the shoulder, but by reducing the number of auto lanes. To those who think that autos are the primary users of the road, and bikes should only permitted to ride on the streets to the extent they don’t interfere with vehicle traffic, such bike lanes are an affront. And in some communities, auto-hostile planners are transparent in their intent when they convert general-purpose lanes to reserved lanes for HOV, transit, or bicycles.

    In most cases, though, they are probably the result of good engineering practice. And except on certain freeways, which are reserved for high-speed vehicles, the point remains: Bikes have a right to be on the road, and the right to consume a lane if safety requries it. To the extent that bike lanes reduce the need for bicycles to travel in auto lanes, they are generally good for motorists.

  • Tom Rubin

    You are completing mischaractorizing my argument which is, those that use the road system should pay for the use of the road system they use.

    I also do not appreciate your racial reference — which appears to contain logic that I am having a very difficult time attempting to follow.

    In the days before the car became king, roads were either toll roads, often private-sector, or they were built and maintained by governments out of “general funds” — there were no road use fees. Starting with Oregon in the 1920’s, and later the Federal government and every other state, cents-per-gallon road use charges became the norm and, since the Interstate Highway Act of the 1950’s, dedicated fuel charges for roads have been the norm, both nationally and in every state. Beginning in 1982, the Federal government started charging road users one cent per gallon for transit, which is now up to $.0286 dedicated transit tax, plus additional costs for “flexible” highway programs that are commonly ustilized for non-road purposes. Depending on which estmate from which person you care to listen to, between somewhere in the low 20% to over half of Federal per-gallon fuel charges go to modes other than roads (if my life depended on it, I’d be towards the lower end of that range — but the high end estimate came for the then-Secretary of Transportation).

    Motorized users are the majority — vast majority — of the users of the road, and, therefore, should pay the vast majority of the cost of the road system; I have absolutely no problem with that. However, it would be nice if what the motorists are paying for road use was being utilized for roads and directly related activities for motorists.

    I also have no problem with the rights of other users, be it cyclists, pedestrians, horseback riders, and others to use the road system, as long as it is safe to do so (let’s keep the pedestrians off the Interstates, thank you — although, under some conditions, cyclists CAN legally use Interstates) and they follow the rules.

    But for someone to say that there is no cost for cyclists to use the road system, or that they should not have to pay any cost for road use, that is where I have a bit of a problem.

  • Cyclists already are paying more than enough. From the conclusion of “Whose Roads? Defining Bicyclists’ and Pedestrians’ Right to Use Public Roadways” by Todd Litman, Victoria Transport Policy Institute:

    “Pedestrians and cyclists pay more than their fair share of roadway costs. Although most highway expenses are funded through motor vehicle user fees, local roads and traffic services are funded primarily through general taxes that residents pay regardless of their travel habits. Motor vehicle use also imposes a variety of external costs, including parking subsidies, congestion, uncompensated crash damages, and environmental impacts. Pedestrians and cyclists impose much less external costs, due to lower costs per mile, and because they tend to travel fewer miles per year. In general, people who drive less than average overpay their true share of transportation costs, while those who drive more than average underpay. As a result, pedestrians and bicyclists tend to subsidize motorists.”

  • Tom Rubin

    Todd does some good work, but we are at odds on this one.
    Yes, there are local taxes, primarily city and county property taxes, that go primarily for lesser used residential and rural roads. However, if one factors in the Federal and state road use fees, and the sales taxes on auto user costs (such as gasoline, auto’s, parts, etc.), the allocation of road use payments to non-road purposes — such as transit, and including road use costs such as where cycles travel — more than offsets the “general fund” taxes allocated to roads.
    “Parking subsidies” is a bit of a strange term and has to be subdivided. If we are talking about “free” parking at a retail store, the costs of parking are part of what the consumer pays for the goods.
    If there is “free” parking at places of employment, that is a fringe benefit that the empoyer pays, instead of salary/wage, pension, whatever — and is a very good deal for all concerned because it allows the employer to draw from a much larger candidate area and for the employees to get to work far faster.
    If we are talking about “free” residential parking, or in business districts, this was generally part of the cost of construction — see comments above, the costs are rolled in already.
    If we are talking about underpriced meters and municipal parking lots, this one, I agree — raise the prices and shoot for Shoup’s 85% target occupancy, charge enough so that there will always be some vacancies so those that need/want to park close can find a space quickly and those that don’t want to pay that much will quickly move on by and find a place to park at a price they are willing to pay — or another place they want to go instead.
    Congestion costs are hooey — most people move faster by auto than any other mode, it generally takes twice as long to get anywhere by transit than by driving (there are exceptions, of course — but these apply to a tiny fraction of 1% of the public). Gee, I’m sorry your drive took longer than you would have preferred, but the fact that you keep doing that day after day tells me that you are willing to put up with it, or you would have made one of very many possible changes, such as doing the trip earlier or later, moving closer to your job or other destination, finding a job closer to your home, or moving to some place with less — congestion.
    Yes, uncompensated crash damage is a problem. So, let’s go to REAL no-fault, so I don’t have to carry an obscene amount of coverage in case I am found 2% responsible in an incident involving an uninsured motorist, but I am very limited in the uninsured motorist coverage I can get for MY damages in the same incident. Tell you what, I’ll get the coverage for my own losses, you take care of your losses, and we’ll both control our own destinies (yes, there have to be other provisions, such as an auto-vs.-pedestrian incident where the driver is at fault, but the savings on litigation alone will take care of a major share of that.) The above is obviously politically impossible, and will never happen, given the various special interest (such as the tort bar) but, given that I’m seeing what appears to be calls for huge shifts to walking, cycling, and transit as means to travel, and “smart growth” as, supposedly, a means to limit the need to travel (not necesarily all by you in this series of exchanges), I have no problem as forwarding this as, at least, the limitations are NOT that it just won’t work that way.
    Yes, there are environmental impacts of road use — and they have been reduced markedly since the 1950’s and are still going down, and the air, water, and ground are getting cleaner every year. By the way, do you have any idea of the incredible filth of the pre-auto American city, where horse/ mule/oxen was the primarily means of intra-city travel? The various “emissions” were bad enough, but when these overworked “engines” died, the common practice was fob.street.
    Well, obviously, from the preceeding, I believe that you can see that I do not entirely concur with Todd’s conclusion.

  • Pete

    Going back to the original post. The federal solution to transportation funding is actually local. The goal would be to provide regional transportion authorities sufficient performing assets (in the the finance sense) so they could be converted into publicly traded utilities (and, therefore, self-sufficent). How we got there would be multi-step process, starting with bundling highway & transit together; creating a self-suffient authority similar to the Port Authority & then creating a tiered asset classes, similar to what happened when LIPA bailed out LILCO.

  • most people move faster by auto than any other mode, it generally takes twice as long to get anywhere by transit than by driving

    This is not true. The correct formulation of the principle is that in the US average commutes by transit are twice as long as commutes by auto. This isn’t due to cars’ being inherently faster – commutes by foot are even shorter than commutes by car. The history of transportation infrastructure in the last 150 years is that every improvement in speed translates to people moving further out into the suburbs, keeping average commute time constant. Instead, what’s going on is that people budget a certain amount of time for travel, which rises with the convenience of their mode of transportation (and which tends to average out to 60-90 minutes per day).

    Walking is the most physically exerting, so few people in developed countries do it for longer than 10-15 minutes each way. Cars, which require one to drive and sit in traffic, allow longer commutes. Transit, especially commuter rail, is more leisurely, so it allows the longest commutes (commuter rail is both the fastest mode of transportation used by everyday commuters and the one with the longest average travel time).

    By the way, do you have any idea of the incredible filth of the pre-auto American city, where horse/ mule/oxen was the primarily means of intra-city travel?

    Yes. As Jane Jacobs noted, the problem with the car isn’t that it exists; it’s that instead of one car replacing six horses, cities got six cars replacing each horse. And that’s in the US, which is unusually auto-oriented. Don’t compare Atlanta and Houston today to New York and London in 1900; compare them to Hong Kong and Singapore today.

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