» Even as GAO reveals that nearly all states received more federal allocations than they contributed to the Highway Trust Fund, Congressional inaction continues. Supposed alternatives, like L.A.’s 30/10 plan, don’t address core issues.
Here’s how the Highway Trust Fund was supposed to work, back when it was created in 1956 to fund the Interstate Highway System: Congress would redistribute annual revenue from a series of fuel taxes on a proportional basis to states to cover the majority of construction costs of freeways from Maine to Montana. Over the past five decades, that system has worked well enough both to construct the United States’ massive roads system but also to keep it in relatively adequate condition — all by relying only on fees covered by direct users of the system. The understanding, theoretically shared by both drivers and politicians, was that the road system “paid for itself.”
Over the last few decades, however, that relationship has become increasingly tenuous. In 1983, the Mass Transit Account was created to fund public transportation with one out of every nine collected cents from drivers going to support rail and bus projects. In 1993, a 4.3¢ increase to the tax was allocated towards deficit reduction rather than transportation (though the money was eventually directed back towards roads in 1997). In the past two years, though, the user fee system has met its most challenging situation yet: Because of a refusal of the Congress to approve tax increases, a decrease in overall vehicle miles traveled, and an increase in the fuel efficiency of vehicles, the Highway Trust Fund is now paying out more than it collects for the first time — to virtually every state, according to the Government Accountability Office.
For proponents of the idea that federal transportation spending should be self-supporting, these facts come as a serious blow. They put in question both assumptions about the manner in which transport is funded in the United States and the long-term viability of that funding.
The biggest obstacle faced by the American transportation system is simply that we have run out of money to pay for it. The Congress has made little effort to advance any reauthorization of highway and transit allocations because of an unwillingness throughout the process to identify any tax increases that would be politically acceptable enough to pay for the system. The general fund has become the de facto financing source (leading to the aforementioned situation in which states contribute less in fuel taxes than they receive), but support for its continued use, despite its merits, remains unclear, leaving the whole transportation program in the lurch.
This situation has been exacerbated by the Obama Administration’s steadfast failure to support any tax increases during the recession: Transportation Secretary Ray LaHood declared late last month that not only is no fuel increase in the cards, but also neither is a vehicle miles traveled fee, the only realistic alternative. Mr. LaHood argued that tolls could fill the gap — but there are structural impediments blocking that idea; more significantly, the federal government has no direct control over road tolls, so any increase in funds would go to state governments, not the national government.
Though states have the potential to be strong supporters of public transportation, they currently have shown little interest in doing so, even in the most progressive states. Apart from municipal and metropolitan governments, the overwhelming contributor to the financing of transit capital projects has been Washington.
Recently, two new alternatives have been promoted. Ken Orski, an Associate Administrator of the Urban Mass Transportation Administration (now FTA) in the 1970s, commented last week in his Innovation Briefs that Los Angeles’ 30/10 transit plan was one significant option, since it promoted “fiscal independence” by allowing the federal government to “facilitate” but not be responsible for the financing of transit in ten years through low-interest loans that would eventually be paid back through thirty years of tax revenues. This argument has been repeated by several other sources.
This discussion, however, is disingenuous, since it does not reflect the fact that each of the public transportation projects being proposed for Los Angeles, from the Westside Subway extension to the Crenshaw Line, will require a financial commitment from Washington through the New Starts grant program. In other words, the federal government must still find the money to pay for these projects through direct funding — through 30/10, Los Angeles is just trying to speed the process up. This could potentially make the situation worse for the already cash-strapped U.S. Department of Transportation, since it would only increase the immediate demand for more national transportation funds!
Meanwhile, Orski points to the proposal of the libertarian Reason Foundation to simply direct all transportation funds raised through the fuel tax — including those currently used for transit projects — towards a “results-oriented” “Interstate 2.0” highway program. This proposal is a reflection of Reason’s sense that Americans “have lost trust in the Trust Fund,” a sense that only conservatives seem to share, based on the understanding that it is unreasonable to use driver user fees to pay for bike, pedestrian, and public transportation projects.
This is a dangerously anti-multimodal point of view that fails to reflect the fact that there are significant benefits to the nation as a whole to invest both in highway and transit projects, no matter the source of revenue used to pay for them. Moreover, it does not consider a political reality that lobbies for the roads and public transportation are mutually dependent; there must continue to be a role for both in any future federal transportation financial structure.
I do not have a miracle solution to these problems other than to suggest once again that if the government wants to support a well-maintained national infrastructure, there is no choice but to increase taxes to do so — most of the “alternatives” are either just as reliant on federal investment as is the current system or represent an overall reduction in spending, the exact opposite of what is necessary. While it may be politically inconvenient to force through a tax increase, whether that means on fuel or income taxes, the United States has no real choice but to do so if it continues to desire a functioning transportation network.
Image above: Highway and rail Seto Bridge, in Kagawa Japan, from Flickr user tataquax (cc)