» A new PIRG study notes the failure of user fees to fully fund the nation’s roads network. The report’s conclusions, though, do little to calm what is becoming an increasingly ideological debate over how to determine funding limits for transportation.
The federal government does not fully cover the cost of its transportation investments through the collection of user fees. The same can be said for many local and state governments. Each has come to increasingly rely not only on fuel taxes to build highways and streets, but also general revenues derived from income and sales taxes.
If this fact has been noted again and again on this site, the idea that America’s roads system has been constructed and maintained by its users remains a popular myth, especially according to those who would suggest limiting public transportation investment to the highway network. A new U.S. Public Interest Research Group (PIRG) report by Tony Dutzik, Benjamin Davis, and Phineas Baxandall demonstrates conclusively that over the course of the past 60 years, total roads spending has exceeded by $600 billion the amount collected by user fees. Notably, the U.S. Congress has over the past two years transferred tens of billions of dollars of general funds to pay for highway and transit programs, despite the fact that they are “supposed” to be financed solely by fuel tax revenues.
Even without accounting for the large number of externalities associated with driving — including environmental degradation, sprawl, and accident-related insecurity — user fees now only pay for about half the total costs of building and maintaining roads.
Moreover, the assumption that fuel tax revenues are spent on transportation is fallacious. In 1990 and 1993, increases in the federal fuel tax went towards deficit reduction rather than roads expenditures.
In the larger debate over what kinds of transportation to fund, making these facts known is essential. Proponents of public transit, biking, and pedestrian infrastructure are frequently caught flailing defensively because their favored expenditures require subsidies that extend beyond user fees. But if one of the primary arguments made by proponents of highway investment — that they “pay for themselves” — is undercut, the reasons propping up public support for roads spending over transit no longer seem so reasonable. And it suggests that the currently stalled efforts to expand national financing for infrastructure could be set into motion if political leaders were to realize that using funding sources not based on user fees is also a legitimate option.
Whether expenditures on transportation should be directly informed by the revenues collected from transportation is an essential question that largely divides the transportation policy community. Should funding levels dictate investment, or should investment needs dictate funding levels?
Congressional Republicans, who will take control of the House of Representatives tomorrow, have proposed a rule change for transportation spending that would limit expenditures to revenues collected through fuel taxes. In effect, this would reduce government expenditures on highways and transit substantially, pulling $7 to $8 billion out of the typical annual pot of around $50 billion, despite “guarantees” made in previous years to fund transportation at the higher level. (The Senate remains in Democratic hands and thus is unlikely to approve a similar rule change.) Conservatives have argued that this is the fiscally sound approach, as it would ensure that federal spending is limited by fuel tax revenues, rather than expanded into the general fund as has been the rule recently.
As Steve Heminger, Chair of the San Francisco Bay Area Metropolitan Transportation Commission, has written, “The simple fact is the transportation community can’t have it both ways. We can’t insist on continued protection from general fund diversion if we’re not willing to offer the general fund similar protection from continued bailouts for the beleagured [sic] transportation program.” In other words, if transportation advocacy groups want to maintain the devout connection between the fuel tax and transportation funding, they cannot in turn demand what are effectively bailouts from the general fund. Mr. Heminger wants a fuel tax increase to transportation funding woes, a solution that has little to no support from Republican leaders.
Yet this line of thought generally follows the same argument that is propelling the House GOP to promote a rule change, that spending on transportation should be limited to user fees. It’s just that Mr. Heminger is willing to ask motorists to contribute more than his Republican colleagues are.
But if, as the PIRG report illustrates, the connection between road construction and user fees collected is questionable at best, both in the present and throughout U.S. history, why must questions of transportation expenditure continue to be constrained by fuel tax returns? If financing from other revenue sources has always played a role in the debate, is it essential to continue perpetrating the myth that it is necessary to raise user fees, so as to increase spending on transportation?
Indeed, the progressive stance on this issue is frankly not to constrain expenditures on transportation to the revenue currently provided, but rather to identify actual national mobility needs and then work to identify the revenue sources — user fee or anything else — to finance them. This was something of the approach of Representative Jim Oberstar (D-MN), who chaired the House Committee on Transportation and Infrastructure until today, but his efforts for a $450 billion transportation reauthorization bill, which would have represented a large and unfunded expansion of federal investment, went down in flames.
Nonetheless, there is reason to think that a well-measured and honest campaign in favor of spending on roads and transit could attract significant popular support, even if it required increasing someone’s taxes. If it has worked over and over at the local level in referendums over local sales tax increases, why couldn’t it work in Washington?
In some ways, this is a highly unrealistic approach to the problem of transportation finance since, after all, there is a large backlog on transportation maintenance and expansion needs and simultaneously significant political opposition to the idea of raising any taxes at all. To some, this situation would be best countered with a stimulus of sorts, using debt financing to update the nation’s infrastructure to workable condition. Yet agreement can apparently only be reached on reducing taxes, not on investing in the nation’s future.