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Congress Finance Sustainability

A new federal transportation bill rejects the long-standing consensus on revenue but preserves the policy status quo

» The FAST Act is passed by the House and Senate, profoundly dismissing the claim that transportation is to be funded with user fees. Yet it reinforces decades-old policy about how money is to be spent and does nothing for the climate.

It’s a big achievement. At least, that’s what members of the U.S. House and Senate are telling themselves this week, now that they’ve passed a major long-term transportation reauthorization bill with overwhelming majorities from both sides of the aisle. President Obama will sign the bill in the coming days.

This legislation reinforces the trend that has been developing over the past seven years: Transportation funding at the federal level no longer has to be derived from user fees.

The Fixing America’s Surface Transportation Act (“FAST”) will not fix America’s surface transportation, but it will provide $305 billion in spending over the next five years for our highway, transit, and railroad networks, most of which will be distributed to state departments of transportation and local transit agencies.

From a policy standpoint, FAST is little different from 2012’s MAP-21, the federal transportation legislation that came before it, preserving the general principle, for example, of funding highways and transit at roughly a four-to-one ratio. Nationally, transit will get about $50 billion over five years. This is the status quo that U.S. transport funding has stuck to since the early 1980s.

The details of the legislation are worth examining, but the general policies that undergird the federal involvement in transportation remain stuck in place. States have wide authority to choose how they spend their money on highways, and most of that is distributed by population-weighted formula. Transit agencies are provided money to spend on capital investments—generally distributed based on ridership—and they’re mostly prevented from spending on operations. Tolling existing highways is virtually banned. Overall funding is adjusted up, but not by much.

The user fee no longer matters

But what is definitively different about this legislation is that it reinforces the trend that has been developing over the past seven years: Transportation funding at the federal level no longer has to be derived from user fees.

FAST derives 23 percent of its revenues from sources other than the federal gas tax, the “user fee” that has been the foundation of the U.S. transportation program since President Eisenhower signed the Interstate Highways Act in 1956. FAST, rather, takes in $70 billion from non-user fee revenues, notably including a transfer of $53.3 billion from the Federal Reserve’s surplus.

Since 2008, the Congress has transferred tens of billions of dollars from the general fund to the Highway Trust Fund, which supports the transportation program, and stuck to inflation-adjusted spending increases even though gas tax revenues have remained at roughly $40 billion a year since 2005.* State and local governments already derive a large share of their transportation dollars from non-user fees, contributing to a roads system that is largely supported by generalized sources, such as property and sales taxes.

Though this legislation may be understood as continuing the process of converting the federal transportation program away from user fees and toward general funds, it is the first long-term bill that explicitly commits to this policy. MAP-21 was designed to only last two years for a reason: There was something of a consensus in Congress that some other reliable source of funding, preferably a user fee such as a gas tax increase or a vehicle-miles traveled fee, would come up. Certainly, national transportation organizations have made advocating for an increase in user fees a basic goal.

FAST suggests that the amount of money collected via existing user fees is no longer relevant to the amount of money that should be spent. Despite the general hysteria in transportation circles in recent years over the fact that the U.S. gas tax has not been increased since 1993, Congress has not stopped filling the coffers; it has chosen instead to simply fill the gap through other means (the same cannot be said of every state, of course). This is not the outcome many would have predicted back in 2008.

The passage of FAST means that U.S. transportation policy is unlikely to change before its replacement is written in 2020 or 2021, and the revenue sources it commits to mean that there is no need for the Congress to expend the political capital to raise the gas tax until that time.

Indeed, whether the gas tax will ever be raised again should be questioned (I can hardly believe I’m raising this specter, given the transportation field’s insistence that user fees are the basis of all that is good). Certainly, even in five years increasing the gas tax, for example, would raise significant revenues. By the early 2020s, the number of electric vehicles will likely be increasing steadily, but at best they’ll still account for less than 10 percent of total vehicles sold in the U.S.; they accounted for less than 1 percent in 2014. While average fuel economy of new cars will increase from about 33 miles per gallon to 42, plenty of gas will still be purchased. And while per-capita driving may be rising less quickly than it once was, overall, driving will continue to increase.

These facts suggest that funding new transportation investments through user fees could be an appropriate mechanism five years from now, but Congress’ willingness to use general funds to fund FAST, practically with no dissent, suggest that support for sticking to user fees alone is minimal, at least among our federal representatives. What would make the situation in the early 2020s any different?

Several years ago I expressed hope that a shift toward using general funds rather than user fees was not only acceptable, but that it could also result in more funding for other modes like transit since there would no longer be a need to connect the revenue source—drivers paying at the pump—with the expenditures—primarily roadways. In theory, if we’re using general funds to pay for transportation improvements, roads don’t have to be the top focus for mobility investments.

Yet FAST indicates that eliminating, or at least reducing, the direct connection between funding source and expenditures has not particularly changed the environment about what modes are prioritized. At least given the makeup of today’s Congress, support for dramatically increasing support for transit, biking, and walking remains far off.

No interest in the planet’s future

In light of the United Nations Conference on Climate Change (COP-21) currently underway in Paris, the FAST legislation’s adherence to the federal policy of spending the large majority of transportation funding on highways is a disappointment, to say the least. Coming from a Congress whose members have openly expressed their contempt for any American responsibility for reducing carbon emissions, it is hardly a surprising move.

Nonetheless, in intentionally choosing to support transportation modes that are worse for the climate, the Congress has chosen to use its legislative powers to reinforce our country’s negative contribution to a darkening planetary nightmare. By holding a sheet over our collective heads, our Congress is perhaps hoping no one will notice the inconvenient truth that funding for more highways represents.

And they may be right: Few in the media have noted that the choice to invest so much in carbon-spewing vehicles comes at the same time as our world is supposedly working to stop the spewing.

Even so, this is a miscarriage of public spending, and at a grand scale. Transportation accounts for more than a fifth of world carbon emissions, and its share is likely to rise in the immediate term since electrification of the automobile fleet remains at least a decade off and the number of cars in circulation is rising rapidly globally. In the U.S., the big concern may be freight; indeed, trucks alone account for 12.5 percent of total U.S. carbon emissions, and with trade continuing to power the global economy, that share can only rise.

Though mechanisms to reduce freight emissions exist—shifting shipping to rail, for example, would significantly limit the rise in pollution—FAST will dig the hole deeper. The legislation includes a massive new freight program that is almost exclusively dedicated to the movement of traditional, highway-based, diesel-polluting trucks.

Democrats, whose track records indicate at least some interest in the fight against carbon emissions, didn’t protest and voted en masse for the bill. Our political representatives just don’t care about climate change.

* FAST commits Washington to expend an average of $61 billion a year.

Photo above: Into the ditch for our transportation policy. From Flickr user Closed 24/7 (cc).