Congress Finance

The Federal Role in Surface Transportation Funding

» Contesting Washington’s involvement in transport funding could be deeply problematic.

The issue of how or even whether Washington should be involved in the funding of American transportation programs has been of concern for decades. When most travel undertaken is of a local nature — people getting to and from home, work, and leisure — why should the federal government be involved with the financing of new or maintained roads and transit systems?

Like with most expenditures, one clear argument for federal involvement is that using funds derived from nationally produced revenues allows for a more progressive apportionment of overall spending power, since revenues can be redistributed among the population as a whole. This, after all, is how our national social programs work, in health and education, for example. The benefit is obvious: A more equal society in which people all over the country are blessed with the nation’s wealth. The U.S. provides similar benefits to people in Mississippi and Connecticut even though, of course, incomes in the former state are far lower than those in the latter.

I have argued that transportation, like other issues more commonly referred to as matters of public concern, is an essential matter of overall social welfare. We need a robust national mobility system to guarantee that all of our country’s residents have adequate access to jobs, goods, and people. For this reason, I have repeatedly endorsed the idea of using national income tax receipts to pay for transportation expenditures, moving away from the gas-tax model that is currently used. Using income tax receipts allows the creation of a more progressive model for funding, and, perhaps more importantly, disconnects how revenues for the transportation system are collected from how they are distributed. This latter insight is controversial, however, since most transportation economists can’t help but endorse the idea of a “user pays” model, since it aligns with their sense that supply should equal demand.

For the most part,* the federal government has endorsed this “user pays” approach, using a federal gas tax since 1956 to pay for the construction of the Interstate Highway System, and, in more recent years, its maintenance, as well as the construction and maintenance of many of the nation’s transit systems. The problem is that this approach is not progressive. In fact, states generally receive back from the federal government almost exactly what drivers have paid in taxes at gas stations in those states. As a result, the system does not move funding from the states with the most funding to the states that need funding most.

Indeed, rather than there being some sort of national plan that determines how federal transportation funding is spent, the money is generally passed back out by formula, with a few regulations but not much else attached. Because of differences in Congress about what policies the government should be encouraging, there are no prohibitions on new highways and few preferences for pedestrian or bike infrastructure, as there probably should be. It’s much like the revenue sharing policies that have been in place for the Department of Housing and Urban Development since the Nixon Administration.

Rohit Aggarwala wrote yesterday that the lack of consensus about the rationale for a federal transportation policy, combined with the inability of Congress to raise the gas tax to fund the system, suggests that there is an argument for simply eliminating the federal gas tax and allowing states to determine how to fund their transportation networks alone. This reasoning is appealing in that it would devolve revenue-production and funding decisions to a lower level, which ought to be good for small-d democracy. Aggarwala suggests that a devolution of transportation policies would force low-tax states (which often happen to be high-driving states) to make a clear decision about how many roads they should be building. I would agree that the idea of spending federal gas tax revenues on new highways around Sun Belt cities, which we do a bit too much currently, is anathema to the nation’s transportation needs.

Moreover, seeing as how the federal transportation funding system is not particularly progressive, as outlined above, keeping decision making in Washington no longer seems so reasonable. So let states decide for themselves, not only in terms of how much they want to raise, but also in terms of how much they want to build. In fact, states already raise the majority of their own transportation revenues.

The problem with this whole line of discussion is that it would likely be devastating for transit systems in major cities, particularly in conservative states with no history of state support for public transportation. One major advantage of the current federal finance system is that it devotes a fifth of all transportation funding to transit. The consequence is that cities are awarded funds for maintaining their bus and rail systems by formula at about $8 billion a year (and that’s not even including the $2 billion annually devoted to new transit construction). That funding plays an essential part in ensuring cities can keep their systems up to date.

Were the federal funding system devolved, some progressive states such as New York and California could increase the share of funding aimed towards transit. Yet the evidence suggests that when most states are given the option by the federal government to determine how funding is spent, they direct the large majority of financing to roads. States that have established state infrastructure banks have similarly shown themselves clearly oriented towards highway construction. This is a serious problem if we are to believe that leaving all transportation funding in state hands is a good idea.

There is some argument to be made that cities that want to invest in public transportation should simply pay for it themselves, yet that approach has a number of serious flaws. First, it would be a serious impediment for poorer cities to continue the funding of their transit systems, since they lack adequate local funds; there is a very strong correlation between metropolitan-area income and the amount of money cities spend on transit operations, producing highly inequitable results. Second, cities in low-tax states may find their ability to actually raise taxes locally stymied by state legislatures that believe that any tax increase should be prevented. Finally, there is little evidence that locally funded transit projects are “better” or “more efficient” than federally funded ones, since most projects already require a significant local contribution.

This discussion does not answer the question of whether or not the federal government should be directly involved in the funding of the nation’s transportation systems. But we certainly should raise the question of whether simply diverting all power and decision-making authority to the states would really be of much benefit to the nation’s cities.

* Over the past ten years, Congress has had to shore up its transportation funding repeatedly with infusions from the general fund (income tax- or debt-derived) to supplement the declining revenues from the gas tax.

Finance Infrastructure

Openings and Construction Starts Planned for 2013

2013 Transit Openings

» Construction continues on rapid transit expansion projects around the country.

This year, more than $64.3 billion worth of transit expansion projects will begin construction, continue construction, or enter into service in the United States. It’s a huge investment, much of it the product of extensive state and local spending.

What is evident is that certain cities are investing far more than others. Among American cities, Denver, Honolulu, Houston, Los Angeles, New York, San Francisco, Seattle, and Washington stand out as regions that are currently investing particularly dramatically. Toronto has the biggest investments under way in Canada. These metropolitan areas have invested billions of local dollars in interconnected transit projects that will aid in the creation of more livable, multimodal environments. Dynamic, growing cities require continuous investment in their transit systems.

Yet the federal government also continues to sponsor a number of these investments, contributing half and sometimes more of many of the projects’ costs. Washington’s involvement should not be downplayed.

Under the just-inked bipartisan compromise to head off the fiscal cliff, transportation funding will not be affected in the short term.* But an 8% reduction in federal discretionary spending (the “sequester”) — a threat that has yet to be neutralized — remains official policy and will be enforced on March 1st if no compromise is reached. That 8% cutback would reduce funding for the New Starts program, which funds most major new transit expansion projects, by $156 million in 2013 alone. Payments to the Transportation Trust Fund, which provides funding for transit maintenance programs and the purchase of new buses and trains (as well as money for highway projects), will decline by $471 million in the same period.

This is no phantom menace. Congressional Republicans in the U.S. House have demonstrated a deep-seeded desire to cut federal spending. The Obama Administration and Democrats in the Senate have shown themselves willing to compromise to a significant extent, and transportation is unlikely to be spared. The result could be significant cutbacks in funding — cutbacks that states and cities are unlikely to make up with their own revenues. Investments from Washington make transit expansion possible.

For now, though, the construction goes on. See below for the list of transit lines expected to open this year; projects beginning construction this year; and projects already under construction that will open after 2013, in that order. Not included are line renovations or intercity rail projects.

* Fortunately, the deal did expand the transit commuter tax benefit to make it equal to the parking benefit.

New Transit Capital Projects Opening in 2013

  • Atlanta Downtown Streetcar (2.6-mile streetcar), opening in late 2013 from Martin Luther King, Jr. National Historic Site to Centennial Olympic Park
  • Austin Capital MetroRapid (BRT), running along Lamar, South Congress, and Burnet.
  • Boston Fairmount Line Improvements, adding Four Corners and Newmarket stations to Fairmount Commuter Rail Line.
  • Denver West Line (12-mile light rail), part of Denver’s FasTracks program, from Union Station to Jefferson County Government Center/Golden.
  • Miami Central Station, new interchange between commuter rail, metro, and AirportLink.
  • New Orleans UPT/Loyola Avenue Corridor (1-mile streetcar), opening in January from Union Passenger Terminal to Canal Street.
  • New York Nostrand/Rogers Avenues BRT (9.3-mile BRT), opening in late 2013 from Williamsburg Bridge to Sheepshead Bay.
  • Roaring Fork Valley VelociRFTA (BRT), from Aspen to South Glenwood.
  • Salt Lake City Sugar House Streetcar (2-mile streetcar), opening in December 2013.
  • Salt Lake City Airport TRAX (6 mile light rail), from Downtown Salt Lake City to Salt Lake International Airport, part of Salt Lake FrontLines 2015 program.
  • Seattle RapidRide E Line (BRT), opening in September from downtown to Shoreline.
  • Seattle RapidRide F Line (BRT), opening in September from Burien to Renton via Tukwila.
  • Tampa MetroRapid North-South (17.5-mile BRT), from downtown to Temple Terrace Park and Ride, via Nebraska and Fletcher Avenues.
  • Tucson Modern Streetcar (3.9-mile streetcar), from University of Arizona to Downtown Tucson.
  • Twin Cities Cedar Avenue BRT (16-mile BRT), opening in the Spring from 28th Avenue Station and Mall of America in Bloomington to 215th Street in Lakeville, via Eagan and Apple Valley.
  • Washington, DC Dulles (Silver Line) Metrorail Extension Phase 1 (11.6-mile metro rail), from East Falls Church to Wiehle Avenue.
  • Washington, DC H Street/Benning Road Streetcar (streetcar), from Union Station to Oklahoma Avenue.

New Construction Starts in 2013

  • Charlotte Blue Line Extension (9.3-mile light rail), opening in 2017 from Center City Charlotte to UNC Charlotte.
  • Cincinnati Downtown Streetcar (2-mile streetcar), opening in 2015 from Over-the-Rhine to Riverfront.
  • Dallas Oak Cliff Streetcar (1.5-mile streetcar), opening in 2014 from downtown Dallas to Oak Cliff.
  • Detroit M1 Rail (3.4-mile streetcar), opening in 2015 from downtown Detroit to New Center.
  • Kansas City Streetcar (2-mile streetcar), opening in 2015 on Main Street Downtown.
  • Los Angeles Downtown Streetcar (streetcar), opening in 2015 in a loop from Civic Center to Fashion District and Staples Center, via Financial District.
  • New Orleans French Quarter Expansion Project (2.5-mile streetcar), opening in 2015 from Canal Street to Esplanade Avenue.
  • Ottawa Confederation Line (light rail), opening in May 2018 from Tunney’s Pasture to Blair, via downtown Ottawa.
  • Phoenix Northwest Extension Phase 1 (3.2-mile light rail), opening in 2016 from Montebello Avenue to Dunlap Avenue. Phase 2 will extend line to Metrocenter Mall.
  • St. Louis Loop Trolley (streetcar), opening in 2014 from Missouri History Museum to University Gate.
  • Seattle North Link (4.3-mile light rail), opening in 2021 from Brooklyn to Northgate.
  • Seattle South Link (1.6-mile light rail), opening in 2016 from SeaTac Airport to South 200th Street.

Already Under Construction, Opening After 2013

Opening in 2014

  • Anaheim ARTIC Station, opening late 2014 as a multimodal transit station.
  • Boston Assembly Square Station, opening in fall 2014 as an infill station to Orange Line.
  • Dallas Orange Line Phase 2 (4.7-mile light rail), from Belt Line to Dallas-Fort Worth International Airport.
  • Denver Union Station, redevelopment of city’s major transit hub, part of Denver’s FasTracks program.
  • Edmonton North to NAIT (2-mile light rail), opening in April 2014 from Churchill Station to the Northern Alberta Institute of Technology.
  • Fort Collins Mason Corridor (BRT), from South Transit Center to Downtown Transit Center.
  • Hartford CTfastrak (9.4-mile dedicated-guideway BRT), from downtown Hartford to New Britain.
  • Houston East End Line (3-mile light rail), opening mid-2014 from downtown to Altic/Howard Hughes. Later extension to Magnolia Park Transit Center.
  • Houston North Line (5.2-mile light rail), opening mid-2014 from downtown to Northline Transit Center.
  • Houston Southeast Line (6.1-mile light rail), opening mid-2014 from downtown to Palm Center, via University of Houston.
  • Montréal Train de l’Est (32-mile commuter rail), from Downtown Montréal to Mascouche.
  • New York City 7 Line Extension (1.3-mile metro rail), from Times Square to 34th Street.
  • New York City Fulton Street Transit Center, redevelopment of downtown’s largest subway interchange, opening in June 2014.
  • New York City WTC/PATH Transportation Hub, redevelopment of downtown’s station for subway service to New Jersey.
  • Orlando SunRail (31-mile commuter rail), opening in May 2014 from DeLand to DeBary. Phase II will extend project by an additional 30 miles.
  • Salt Lake City Draper Transit Corridor (3.8-mile light rail), from Sandy Civic Center to Pioneer Road, part of Salt Lake FrontLines 2015 program.
  • San Bernardino sbX (15.7-mile BRT), opening in 2014 from downtown to Cal State San Bernardino on E Street.
  • San Francisco Bay Area Santa Clara-Alum Rock (7.4-mile BRT), from Eastridge Transit Center to HP Pavilion.
  • San Francisco Bay Area Oakland Airport Connector (3.2-mile metro rail), from BART Coliseum Station to Oakland Airport.
  • Seattle First Hill Streetcar (2.2-mile streetcar), from Capitol Hill to King Street Station, via Broadway.
  • Twin Cities Central Corridor (11-mile light rail), from Target Field in downtown Minneapolis to Union Depot in downtown St. Paul.

Opening in 2015

Opening in 2016

  • Denver Northwest Rail Segment (2-mile electric commuter rail), from Pecos St Station to South Westminster, part of Denver’s FasTracks program.
  • Denver East Corridor (22.8-mile electric commuter rail), from Denver Union Station to Denver International Airport, part of Denver’s FasTracks program.
  • Denver Gold Line (11.2-mile electric commuter rail), from Denver Union Station to Ward Road, part of Denver’s FasTracks program.
  • Denver I-225 Line (10.5-mile light rail), from Nine Mile to Peoria/Smith.
  • New York City Second Avenue Subway Phase 1 (2-mile metro rail), opening December 2016 from 63rd Street to 96th Street.
  • San Francisco Bay Area eBART (10-mile commuter rail), from Pittsburgh/Bay Point to Hillcrest Avenue.
  • Seattle University Link (3.2-mile light rail), from Capitol Hill to University of Washington.
  • Toronto Spadina Extension (5.6-mile metro rail), from Downsview to Vaughan Corporate Center.
  • Vancouver Evergreen Line (7-mile metro rail), from Lougheed Town Centre to Douglas College.

Opening in 2017

Opening in 2018

Opening in 2019

  • Boston Green Line Extension Phase 2 (light rail), from Washington Street Station to College Avenue Station.
  • Honolulu Rail Transit Phase 2 (metro rail), from Ala Moana Center to Aloha Stadium, via Airport.
  • Los Angeles Regional Connector (2-mile light rail), from Union Station to 7th Street/Metro Center and unifying the Gold Line with the Expo and Blue Lines.
  • New York City Long Island Railroad Eastside Access (4-mile commuter rail), connecting Long Island rail lines to Grand Central.
  • San Francisco Central Subway (1.7-mile light rail subway), from 4th and Brennan Station to Chinatown.

Opening in 2020

  • Toronto Eglinton Crosstown (15.5-mile metro rail), from Keele Street to Scarborough Town Centre.