Photo: Emily Metcalf
Photo: Emily Metcalf



On May 8, members of the House and Senate conference committee started meeting to debate the surface transportation reauthorization bills. Normally, conference committees meet when the two houses of Congress pass different bills, but the 884-page House bill (H.R. 7) never made it to the House floor due to objections from fiscal conservatives who claimed it had too much pork in it (as well as objections from Republicans in transit-heavy cities such as New York and Chicago). But the real pork can be found in the 1,674-page Senate bill, known as MAP-21 (S. 1813).

Among other things, the Senate bill includes:
* A continuation of payments to national forest counties to make up for lost revenues due to reduced timber sales;
* A seven-year extension of the Land & Water Conservation Fund to buy more lands for the Forest Service and Department of the Interior;
* A brand-new National Endowment for the Oceans, Coasts and Great Lakes.

Of course, these have nothing to do with transportation and everything to do with politicians trying to tack their favorite projects onto a bill that Congress has to eventually pass.

In the area of transportation, the House bill is actually the most fiscally conservative transportation reauthorization bill passed out of any committee in 35 years. The bill includes no earmarks (a feature of transportation bills since 1982) and minimal deficit spending. While it does spend about $5 billion more per year than gas tax revenues, this is a huge reduction from the existing law, which as of 2009 was spending $10 billion to $15 billion more than revenues. The Senate bill continues spending at 2009 levels, which means about $15 billion in annual deficits.

From a transportation view, there are many differences between the two. The House bill continues the Small Starts program (transit capital grants of up to $75 million) that the administration wants to use to fund streetcars all over the place (see below). The Senate bill never mentions Small Starts. The Senate bill also allows “New Starts” money (which the bill calls “fixed guideway capital investment grants”) to be used to maintain existing rail lines as well as build new ones. Since the nation’s rail transit systems suffer from about a $60 billion maintenance backlog, it is better to spend on maintenance than build new lines we can’t afford to maintain.

The Senate bill also includes three amendments raised by New Mexico Senator Jeff Bingaman designed to kill public-private partnerships. One would prevent private road partners from using the same depreciation schedules used by all other industries; a second would prevent the from using tax-exempt private activity bonds that other infrastructure companies can use; the third excludes public-private roads from a state’s total road mileage when calculating a state’s share of federal highway funds. All of these demonstrate the hostility of Senate Democrats to market-based transportation.

The good news is that the conferees have said they will treat the House bill equal with the Senate one even though the House bill never actually passed the House. The bad news is that many if not most of the conferees are more attracted to pork than to fiscal conservatism. On the House side, Republicans include House Transportation Committee chair John Mica (who often said he would have passed a more fiscally liberal bill were it not for the tea party members of Congress), former chair Don Young (who wrote the 2005 bill that included more than 7,000 earmarks), and likely future chair Bill Shuster (whose father was one of the biggest pork barrelers in Congress). Democrats include Oregon representatives Earl Blumenauer (who wrote the Small Starts law) and Peter DeFazio (who objects to any new roads, especially if they are privately funded).

Even if the Senate bill passes, it will expire in less than 18 months, so the next session of Congress can begin the debate all over again. But it would be better if it did not pass because it will start several new programs and expand other programs that will be harder to kill in the next bill. It seems like the best fiscal conservatives can hope for is more gridlock.

List of Senate conferees:
List of House conferees:
House bill:
Senate bill:
Bill Shuster likely next chair:


Streetcars are a completely obsolete technology that do nothing to enhance urban mobility. Advocates want to build them because, they claim, streetcars lead to economic development. If that were true, they should be funded out of economic development funds, not out of transportation dollars.

Yet the Obama administration is eager to hand out transportation grants for streetcars in cities all over the country. It has already given transportation stimulus funds for streetcars to Atlanta, Cincinnati, Dallas, Salt Lake City, and Tucson. It gave $75 million in Small Starts transit funds to Portland. But Small Starts rules written during the Bush administration require that cities prove that streetcars are more cost-effective than buses at saving people time, something that is impossible to do. (Portland got around the rules by using the political muscle of Oregon’s Congressional delegation.)

The Obama administration wants to change the rules, and cities are lining up to hand in their grant proposals as soon as the final rules go into effect: Albuquerque, Austin, Detroit, Kansas City, Milwaukee, and San Antonio are just a few of the cities that have completed or are currently doing the required environmental analyses to build federally funded streetcars.

These cities have been scammed by consulting firms that claim huge economic development benefits from streetcars. In fact, no city that has built streetcars have generated any economic development unless the city accompanied that streetcar with hundreds of millions of dollars worth of other subsidies and the neighborhood in which the streetcar was located was already growing.

For example, Portland’s streetcar, which opened in 2001, went through two neighborhoods in Northwest Portland, and city officials brag that after it was built, developers invested nearly $1.4 billion into these neighborhoods. Developers in one of the neighborhoods, known as the Pearl District, received about $450 million in subsidies, and here they invested more than $1.3 billion in more than 50 projects. A similarly sized neighborhood in Northwest Portland received no subsidies, and developers invested only $17.6 million in seven projects. Clearly, developers followed the subsidies, not the streetcar.

On or about June 14, the Cato Institute will publish my detailed analysis of the streetcar fad. In the meantime, this is one good reason why Congress should take all competitive grant programs out of the transportation bill and allocate funds exclusively using formulas.

My comments on proposed rules:
Pro-streetcar group:


Everyone knows the gas tax is on its way out. Due to inflation and more fuel-efficient cars, we only pay one-third as much for every mile we drive as people paid in 1956, when Congress created the Interstate Highway System. Cars are getting more fuel-efficient all the time and electric cars, if they ever become significant, will only make the problem worse.

Raising the gas tax could solve part of this problem, but not all of it. For one thing, gas taxes are collected by the federal and state governments, but few local governments collect gas taxes. Though most states share their gas tax revenues with cities and counties, it isn’t enough, so local governments must find about $30 billion a year in general funds to support roads.

A second, even bigger, problem is that gas taxes don’t properly price roads, and the $100-billion-plus annual congestion cost is the result. While economists have long advocated congestion pricing of roads, people don’t like to “pay twice” for roads. So many fiscal conservatives have promoted the idea of building new HOT (high-occupancy/toll) lanes parallel to existing congested roads, both to give people a congestion-free option and to demonstrate the benefits of congestion pricing.

The problem with HOT lanes is they only solve part of the problem with congestion. Congestion begins when too many vehicles try to drive on a road, exceeding the road’s maximum capacity. But congestion continues long after the number of vehicles fall below the maximum capacity because, at slow speeds, the capacity of the road actually declines. Preventing the decline in capacity through congestion pricing of all lanes would save Americans billions of hours and billions of gallons of fuel a year.

In a new paper published by the Cato Institute last week, I propose to solve all of these problems at once by replacing gas taxes with vehicle-mile fees. Since the gas taxes are eliminated, no one will be paying twice. Eliminating the congestion will save drivers and businesses tens or hundreds of billions of dollars. Replacing gas taxes with vehicle-mile fees will also effectively devolve transportation decisions to the state and local level. This can be done on a state-by-state basis, though the states should coordinate with one another so they use compatible technologies.

The paper also urges that states and counties create quasi-governmental toll road authorities that collect the fees and spend them exclusively on roads. Such toll road authorities in Texas, Florida, and other states have proven to be well-insulated from politics, and they act almost as efficiently as private road providers. Replacing gas taxes with mileage fees would effectively devolve transportation to the local level.

Oregon has demonstrated that vehicle-mile fees can be collected without invading traveler’s privacy. The system tested by Oregon had people pay fees when they purchased gas. A GPS unit on their car told the gas pump how much drivers owed for the roads they used, but not exactly when or what roads they used. Minnesota is doing a similar test, and similar systems could be designed using cell phones or other wireless devices.

Congestion is a terrible burden on society, while local subsidies to highways politicize transportation and lend support to inane projects such as streetcars. Replacing gas taxes with vehicle-mile fees in a way that will protect traveler privacy should be the top priority for those who want to improve our transportation systems and devolve decisions to the local level.

My Cato paper:
Mileage Based User Fee Alliance:
Oregon’s experiment:
Minnesota’s experiment:

Randal O’Toole produces The Antiplanner. See more at – You can view previous issues of this newsletter at