Federal Dollars for Federal Roads

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America’s highway system is not delivering the high-quality transportation a competitive economy needs. Congestion gridlocks our urban expressways, costing Americans $76 billion per year in wasted time and fuel. The interstate highways, begun 50 years ago, are wearing out and will need repairs and reconstruction costing many hundreds of billions of dollars. Two national commissions have estimated that the shortfall in productive highway investment (federal, state and local) is in the vicinity of $60 billion to $90 billion per year.

We invented the federal Highway Trust Fund in 1956, promising motorists and truckers that all proceeds from a new federal gas tax would be spent on building the interstate system. They aren’t. Congress has expanded federal highway spending beyond interstates to all types of roadways. And ever since 1982, a portion of those “highway user taxes” have been diverted to urban transit. Today, the federal role in transportation includes mandating sidewalks, funding bike paths and creating scenic trails.


As a result, spending exceeds gas-tax revenues and the Highway Trust Fund is broke. Some claim this is because the 18.3-cents-per-gallon federal gas tax needs to be raised. But drivers can fairly put the blame on the fact that 25 percent of gas-tax funds are diverted to non-highway uses.

A key to fixing the problem is to identify what should be federal and what should be state and local responsibilities. In principle, only the interstate highways – our key arteries for interstate commerce – should rise to the level of the federal government. Other highways, streets, sidewalks, bike paths, local transit lines, etc., are more properly state and local concerns.

Reserving the federal Highway Trust Fund just for highway improvements would mean a 25 percent boost in federal highway investment – about $11 billion per year, a good start toward repairing our aging infrastructure.

But what would happen to urban transit if gas taxes went back to being spent solely on highways? Proper federalist principles would make transit a matter for metro areas and local governments to fund themselves, but realistically, that’s not going to happen anytime soon – this Congress will continue to fund local transit projects. But a good case can be made that if the federal government is going to support transit, bikeways and sidewalks, it should do so out of general revenues, not highway-user gas taxes.

Under the Obama administration, the Federal Transit Administration is increasingly partnering with the Department of Housing and Urban Development (HUD) and Environmental Protection Agency to promote “livable and sustainable communities.” In fact, they are evaluating transit and streetcar proposals on this “livable” basis rather than on their transportation cost-effectiveness. If transit is primarily for community development and not for moving large numbers of people from point to point, Congress should fund it like community development. After all, today’s Federal Transit Administration started as the Urban Mass Transit Administration and was located within HUD.

With the Highway Trust Fund drowning in red ink, taxpayers have twice bailed it out using general-fund monies – $8 billion in 2008 and $7 billion in 2009. Congress is likely to shore up the deficit in the same way this year. Those sums are roughly equal to what the transit administration gets from the Highway Trust Fund each year, so it would be more straightforward simply to shift them to general-fund support. Highway money then goes to highways. Congress sends money to its preferred “livable” transit projects from the general fund.

The bottom line is that our interstate system is deteriorating, which could be devastating to our economy. Trucks haul 66 percent, by value, of all goods moved in America on these highways, and projections show that this volume will increase 2.5-fold by 2035. We can’t continue to siphon money away from them.

President Obama frequently talks about how government needs to regain the trust of taxpayers. Congress can reclaim some trust by spending highway taxes on what they said they would: highways.

‘Robert W. Poole Jr., an MIT-trained engineer, is director of transportation studies at Reason Foundation.’

‘Originally published March 1, 2010, in the Washington Times’