This Just In: Highways Are Subsidized

The Pew Charitable Trusts looked at highway revenues and found that they fail to cover highway costs. Only 51 percent of the cost of highways came from user fees in 2007, says Pew.

According to a Pew data file, 2007 highway user fees totaled to $98 billion while “non-user revenues” spent on highways totaled to $70 billion and another $25 billion came from bond issues. I’ve checked Pew’s source data (table HF-10 from Highway Statistics) and the numbers are accurate.

However, the Antiplanner has a few quarrels with Pew’s interpretation of the data. Most important, Pew counts as “user revenue” a number that the federal government identifies as “highway user revenues used for highways,” which in 2007 was $97.9 billion. But users actually paid $124.5 billion. Just because federal and state officials diverted most of the different to mass transit and non-transportation related funds doesn’t mean they aren’t paid by users.

Not counting these diversions as user fees would be like the bank foreclosing on your house even though you had made all the payments because, they say, “We decided to divert 20 percent of your payments to limousines for our top officials, so you are behind in your payments.”

Another problem: among non-highway revenues, Pew counts bonds and interest on investments. But these will mostly be repaid out of or are paid on deposits of user fees, so it is inappropriate to group them with non-user fees.

The Antiplanner compares total user revenues — $124.5 billion in 2007 — with the non-user revenues — property taxes, general fund appropriations, and other taxes and fees, which added up to $55.6 billion in 2007. By this calculation, 69 percent of 2007 highway costs were paid out of user fees, down from 85 percent in the late 1960s.

While the Antiplanner opposes all subsidies, I also have to point out that these subsidies are pretty small on a per-passenger-mile basis. American highways carried 4.96 trillion passenger miles in 2007, which works out to a subsidy of 1.1 cents per passenger mile.

That compares with about 26 cents per passenger mile for Amtrak and more than 60 cents per passenger mile for transit. Airline subsidies work out to about a penny per passenger mile. See this paper for calculations and data sources.

The Pew release points out that federal gas taxes have not increased since 1997. But the feds have pretty much kept spending within revenues, while most of the subsidies come at the local level. In 2007, for example, the federal government collected $5.2 billion more in highway user fees than it spent on highways. Local governments provided $34.5 billion in subsidies to highways, while state governments provided only $3.8 billion. Any fix to subsidies must come at the local, not federal level.

For those of you who are data junkies, I’ve posted a spreadsheet that has all the HF-10 files from 1921 through 2007. Rows 1 through 45 have the years 1921 through 1956. Rows 50 through 90 have the year 1957 through 1998. The remaining years are in rows 95 through 137. Note that the format is slightly different in the 1921 through 1956 tables.

Happy Thanksgiving! Probably no more posts for the rest of the week. If you are in DC, don’t forget to register for and attend the debate next Thursday, December 3.

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38 thoughts on “This Just In: Highways Are Subsidized

  1. the highwayman

    Again gas taxes are not road user fees, they are sales taxes on gas.

    Roads are pretty much sacrosanct, thus are mostly paid for by property & income taxes.

  2. Dan

    If you are in DC, don’t forget to register for and attend the debate next Thursday, December 3.

    Ãœber-AGW denialist Michaels is the moderator. After all the SwiftHack/Climate Boat smoke and shouting, you’ll want to watch it on the web just for that fact.

    Happy Thanksgiving, Randal.

    DS

  3. craig

    If American highways are 1.1 cents per passenger mile and Amtrak is 26 cents per passenger mile and transit is more than 60 cents per passenger mile.

    We need to bring transit and Amtrak down to Highways and then abolish all subsidies for all the different modes.

    But then we would be treating all our choices the same and many on this blog don’t want fairness, they demand subsidies.

  4. Mike

    Multiple wrongs don’t make a right. For any highway not necessary for military or police purposes, there needs to be no subsidy, and user fees need to cover the cost of maintaining the roadway. It would be ideal if the road were privatized, because then a non-governmental entity would be driven by the profit motive to ensure that costs are covered without expropriating a subsidy from taxpayers.

    For necessary highways, user fees should at least recoup the wear-and-tear differential from the impact of public use versus the baseline necessary use, as much as can be estimated.

    There’s more to it than this, of course, but one must start with the known knowns.

  5. bennett

    One thing I like about you Mike, is that you have the balls to just say it, while O’Toole tip-toes around the whole “I’m against ALL subsidies” thing.

    O’Toole, how many times can you state that your against subsidies and then run to the defense of highway subsidies stating that they’re really not that bad? Own your claims like Mike and Dan.

  6. ws

    ROT:“While the Antiplanner opposes all subsidies, I also have to point out that these subsidies are pretty small on a per-passenger-mile basis. American highways carried 4.96 trillion passenger miles in 2007, which works out to a subsidy of 1.1 cents per passenger mile.

    That compares with about 26 cents per passenger mile for Amtrak and more than 60 cents per passenger mile for transit. Airline subsidies work out to about a penny per passenger mile. See this paper for calculations and data sources.”

    ws:Ah, the old let’s use passenger miles trick to assess every statistics. It doesn’t matter what cars cost per passenger mile; the fact remains that highways (not including local traffic engineers’ highway sized arterial streets that cut through neighborhoods) do not even come close to covering internal costs (or negative external costs, but you’d never address that aspect of cars).

    Here’s a stat that people understand: Citizens’ gas tax would need to be increased about 30 cents a gallon (a rough estimate).

    ROT:“However, the Antiplanner a few quarrels with Pew’s interpretation of the data. Most important, Pew counts as “user revenue” a number that the federal government identifies as “highway user revenues used for highways,” which in 2007 was $97.9 billion. But users actually paid $124.5 billion. Just because federal and state officials diverted most of the different to mass transit and non-transportation related funds doesn’t mean they aren’t paid by users.”

    ws:I’m pretty sure they addressed this point quite clearly. You can’t just pretend that collection expenses and environmental cost for underground storage does not exist. They do and need to be covered:

    “Not all user fees collected are made available for highway purposes. Of the 18.4 cent per gallon federal tax on gasoline, 2.86 cents are allocated specifically for mass transit projects. Another 0.1 cent per gallon is used to pay for environmental cleanup resulting from leaking fuel storage tanks. From 1990 to 1997, the federal government also set aside a portion of taxes on gasoline, diesel and other fuels to reduce budget deficits…However, even if those funds were fully devoted to highways, total user fee revenue accounted for only 65 percent of all funds set aside for highways in 2007, according to Subsidyscope calculations.”

    ROT:“Any fix to subsidies must come at the local, not federal level.”

    ws:Minus the fact that the feds injected 15 billion dollars into the fund over the last two years. But yes, most are at local levels, but let’s cut the local funding down and you’ll probably see the feds come in to fill the gaps.

  7. Mike

    bennett,

    Thanks for the props.

    To be fair to Dan, his position (which is diametrically opposite mine, to the extent that I have seen him develop it here) is an accurate representation of the endpoint of his line of reasoning that is based on the pragmatic argument that what is necessary must be accomplished at whatever cost citizens will bear. In this respect, Dan is internally consistent.

    My argument is that it is never acceptable, not ever, for an individual to (directly or by proxy of government) pay for things he or she personally wants by expropriating money from another individual. In this respect, my position is internally consistent. By way of analogy, a slap to the face and a kick to the nuts are morally equivalent: both are assault. I contend that progressively less harmful assaults do not change their moral dimension simply by virtue of being less damaging. The common law and Model Penal Code tend to agree: a mere touch, when unwelcome, is assault.

    Because of the nature of the pragmatic argument, which develops a position that is assailable by the outstretched hand of need from any entity with enough social “pull” to assert such a claim, any attempt to compromise between Dan’s position and mine will inevitably lose a consistency comparison to Dan’s position. The principled position does not consider need a claim on life; the pragmatic position does. To tie this in to my assault analogy, once you have decided that some forms of unwelcome physical contact are not assault and are therefore morally acceptable, you’re stuck redrawing the line on a case-by-case basis according to who is in political favor and how much face-slapping or nut-kicking they would like to “protect” in order to secure the voting support of the Bully lobby and/or the Domestic Abuser lobby.

    In any compromise between food and poison, poison will win. The Antiplanner is attempting to compromise between food and poison any time he suggests that subsidies are justified on any grounds.

  8. prk166

    A gas tax is technically not user fee. But it’s a tax collected with the purpose of paying for the roads being used &, these days, transit. It may not be the dictionary definition of “user fee” but it serves the same purpose.

  9. ws

    Mike:“My argument is that it is never acceptable, not ever, for an individual to (directly or by proxy of government) pay for things he or she personally wants by expropriating money from another individual. In this respect, my position is internally consistent. By way of analogy, a slap to the face and a kick to the nuts are morally equivalent: both are assault. I contend that progressively less harmful assaults do not change their moral dimension simply by virtue of being less damaging. The common law and Model Penal Code tend to agree: a mere touch, when unwelcome, is assault.”

    ws:I’m not trying to get too OT here, but the law does not agree 100% with this statement because there are different degrees of crimes. 1st degree assault is a *million* times different than 4th degree assault.

  10. MJ

    Ah, the old let’s use passenger miles trick to assess every statistics. It doesn’t matter what cars cost per passenger mile; the fact remains that highways (not including local traffic engineers’ highway sized arterial streets that cut through neighborhoods) do not even come close to covering internal costs (or negative external costs, but you’d never address that aspect of cars).

    Here’s a stat that people understand: Citizens’ gas tax would need to be increased about 30 cents a gallon (a rough estimate).

    It’s not a trick. You have to normalize the cost by the amount of travel in order to arrive at an estimate of average cost. Simply offering aggregate estimates without providing this critical piece of information is unhelpful, if not misleading.

    30 cents a gallon? Not too hard to right the balance sheet. Let’s put something else in context: we would have to quadruple transit fares in order to recover internal (not external) costs. Actually, the value would probably be larger, due to the demand destruction effect of higher prices.

    In reality, I think we should do both. Raising the price of transportation is the only way to move toward a more efficient system. Too bad the political class is tone deaf to these kinds of ideas.

  11. MJ

    Again gas taxes are not road user fees, they are sales taxes on gas.

    Sales taxes that just happen to be highly correlated with the demand for road services and happen to be much less costly to collect than direct charges. Works nicely.

    Enjoy the holiday weekend, everyone!

  12. Mike

    ws:

    You are absolutely correct in that the damage inflicted DOES matter in terms of determining a suitable punishment, and that this has given rise to the “degrees” of crime classification. My point was that there is a binary threshold issue of whether assault has occurred at all; i.e. whether there has been a crime. Degree is a subordinate issue.

    Now, if the threshold issue were based on degree, then you’d have the confusing scenario I explained in the later part of my post.

  13. ws

    MJ:“It’s not a trick. You have to normalize the cost by the amount of travel in order to arrive at an estimate of average cost. Simply offering aggregate estimates without providing this critical piece of information is unhelpful, if not misleading.

    30 cents a gallon? Not too hard to right the balance sheet. Let’s put something else in context: we would have to quadruple transit fares in order to recover internal (not external) costs. Actually, the value would probably be larger, due to the demand destruction effect of higher prices.

    In reality, I think we should do both. Raising the price of transportation is the only way to move toward a more efficient system. Too bad the political class is tone deaf to these kinds of ideas.”

    ws: I’m drawing the accuracy of this into question, not to mention the use of passenger miles for every statistic is misleading. Randall’s assessment of mobility seems to conclude that more passenger miles = better. Air constitutes ~12% mode-split of all passenger miles, does that mean that one should take a car instead of flying because autos account for the most pass-miles for mode-split? Certainly that’s not a very telling statistic. Now compare the normalizing effect of pass-miles for safety, which is an obvious choice even over the normalizer of vehicle miles (because more passengers can lead to higher deaths/injuries vs. vehicle miles).

    Yes, pass-miles is a good normalizer, but my main issue is that passenger miles (calculated for autos) is a best-guess statistics. All it does is multiply average occupancy per vehicle type by vehicle miles. Whereas passenger miles for transit I *believe* is reasonably accurate. In the context of cars travelling 3 trillion vehicle miles a year, a simply under or over calculation of occupancy per vehicle can have a profound effect on the total passenger miles.

    Take the case of 1.6 occupancy and 1.64 occupancy. The difference in passenger miles is more than 100 billion.

    30 cents a gallon is would mean the average person would be paying close to 250 dollars more a year just to cover the construction + maintenance cost of highways alone. This does not include externalized costs, which would be much higher. I do agree that costs for transit need to reflect reality. You also have to realize that any increase in the cost of driving will result in a reduction in user-fee collection which will also mean that even more money needs to be assessed per person to cover the cost of maintenance. We are experiencing what happens to the HTF right now when people start to drive a little less. That just means less money for the fund to recharge itself and rebuild backlogged infrastructure that needs to be done. Less funds = even more being assessed at the pump to cover the gaps.

  14. the highwayman

    Mike said: For any highway not necessary for military or police purposes…

    THWM: If the military/police needs to use a road, they could just pay tolls.

  15. Mike

    THWM,

    See, you just throw words out there without any concept of what they mean. There is a reason why the military and police should have roads and not have to pay tolls. I’ve actually explained it here many times. If you’re interested to know it, go find it for yourself. I’m not repeating myself for your benefit, Donny. You’re out of your element.

  16. Spokker

    I wonder what would happen if you really raised transit fares to cover the full costs of providing the service.

    Do we get outcome A, where people just deal with it and nothing much changes, or do we get outcome B where transit dependent workers find it difficult to pay for their bus pass, lose their job because they can’t get to work, start stealing because they can’t find a job within walking distance and then God knows what? If there were transit riots what would be the long-term solution? I was reading about Argentina and how people started torching buildings because the train service was so poor.

    I say we try it and find out.

  17. C. P. Zilliacus

    Spokker posts:

    > I wonder what would happen if you really raised transit fares to cover the full costs of providing the service.

    How about reducing the cost of providing the service by letting the private sector (and not tenured public employees working for transit authority boards), as is the normal model of transit operation in the United States?

    > Do we get outcome A, where people just deal with it and nothing much changes, or do we get outcome B where transit
    > dependent workers find it difficult to pay for their bus pass, lose their job because they can’t get to work, start
    > stealing because they can’t find a job within walking distance and then God knows what?

    I personally see nothing wrong with providing means-tested discounted transit passes (or inexpensive and safe used motor vehicles with insurance) for the truly transit dependent.

    > If there were transit riots what would be the long-term solution? I was reading about Argentina and how people started
    > torching buildings because the train service was so poor.

    Why were they forced to take the train?

    > I say we try it and find out.

    Subject to my conditions above, I agree.

  18. Mike

    THWM,

    Yes, there is a valid reason. I have eludicated upon it many times. The fact that you are too stupid to remember it or understand it does not erase it from having been stated. Plus, you have no idea what my “socio-economic mind set” is. You just make up straw men and run based on that assumption. Go away. You contribute nothing to the discussion.

  19. Mike

    For the mythical new reader who is perhaps seeing this for the first time:

    There are two types of roads that are legitimately subsidized or, more to the point, paid for outright by public funds: interstate highways and municipal arterial streets. These are legitimate because military, police, and a court system are the three elements of a government that must exist in order to protect the individual rights of citizens from force and fraud. (This is a departure from and rejection of the libertarian concept of competing governments.)

    For a military whose primary unit is the soldier and whose primary mechanized elements are ground-based vehicles, highways spanning the country’s territory are required for effective deployment and operation of that military force.

    For a police department whose primary unit is the patrol officer and whose primary mechanized element is the patrol car, municipal arterial streets spanning the department’s jurisdiction are required for effective deployment and operation of that police force.

    Because these roads are morally AND practically justifiable, they’re going to get built at taxpayers’ expense anywhere there is a government performing its proper role of defending the individual rights of citizens. If those roads are opened (on a secondary basis) to public users who pay user fees, so much the better. Opening the roads to users with no fees is morally wrong because the users enjoy an individual welfare at the expense of all taxpayers above and beyond the general welfare rightfully funded to ensure operation of the police and military. If there was no incremental cost, it might not be an issue, but there are always costs seen or unseen. TINSTAAFL.

    By contrast, commuter highways and neighborhood streets are two examples of roads that should always be privately built, maintained, and administered, with no subsidies whatsoever. Because so many already exist that were built with tax dollars, a period of transition would necessarily occur if the ground transportation system were to undergo reorientation to an objective, free-market implementation.

    the highwayman Reply:

    You still want a loaded deck, you’re not subjecting the the existence of the street in front of your house to a profit or loss basis.

    When you say “free market”, you actually mean “theft”!

  20. Spokker

    You could put howitzers on railroad tracks and roll them into position if there was a ground invasion. http://en.wikipedia.org/wiki/Railway_gun

    Unfortunately we lack the trackage required for full implementation of railway defense systems should our good roads succumb to attack. That’s why I am proposing the Interstate High Speed Passenger and Defense Rail System to be constructed with public funds for effective deployment and operation of the military. During peacetime private operators could run passenger trains but during wartime the tracks could be used to deploy troops and weapons, including the rolling howitzers. Not only would it have a practical passenger and military use, but it would add to the country’s prestige and military might in order to fend off the Chinese threat.

  21. ws

    Mike:“There are two types of roads that are legitimately subsidized or, more to the point, paid for outright by public funds: interstate highways and municipal arterial streets. These are legitimate because military, police, and a court system are the three elements of a government that must exist in order to protect the individual rights of citizens from force and fraud. (This is a departure from and rejection of the libertarian concept of competing governments.)”

    ws: Not all roads are created equal. Your argument is overly basic. Simply stating they should be paid for by all w/o assessing the design of the road is not a thorough assessment of the situation.

    Example: 10 lane arterial

    The public cost of this insanely, mind-boggling wide arterial (loosely named Virginia Beach Boulevard but lacking in the characteristics that truly make it so a boulevard) is quite a bit different than a parkway or basic 4 lane arterial street. Is this arterial really going to move that many more troops and materiel any quicker? Probably not considering the road ultimately has to narrow or terminate at some point along its stretch to get anywhere meaningful in a time of war.

    I am actually in the exact opposite of your position; private roads for highways, but local streets should remain public due to their very public, gathering nature as they always have been in the course of history — including the US’.

  22. Spokker

    “Sales taxes that just happen to be highly correlated with the demand for road services and happen to be much less costly to collect than direct charges. Works nicely.”

    “Whoever said that motorists were to contribute nothing for all time to the general revenue of the country, or that, however great their luxury and wealth, or the inroads they make on the convenience of pedestrians, they were to be exempt for all time through their character of motorists from the smallest contribution to our revenue? Entertainments may be taxed; public houses may be taxed; racehorses may be taxed; the possession of armorial bearing and manservants may be taxed-and the yield devoted to the general revenue. But motorists are to be privileged for all time to have the whole yield of the tax on motors devoted to roads. Obviously this is all nonsense. Whoever said that, whatever the yield of those taxes, and whatever the poverty of the country, we were to build roads, and nothing but roads, from this yield? We might have to crippled our trade by increased taxation of income, we might even be unable to pay for the upkeep of our Fleet. But never mind, whatever happens, the whole yield of the taxes on motors must be spent on roads!” -Winston Churchill

  23. Mike

    ws:
    My argument is not “overly basic”: it is one of principle, and the principle is “simple” (in the scientific sense). You’re arguing implementation; in other words, pragmatic concerns. If you get the principle correct, the implementation details are manageable. If you get the principle wrong, the most ingenius implementation imaginable will still utterly fail.

    Also, I don’t think we are in accord on definitions of what term describes what kind of road. And clearly, a 10-lane arterial is an outlier… that’s Las Vegas Boulevard right there, and is not a common thing. In most metropolita, an arterial street is four lanes (plus, predominantly in the West, a suicide lane for left turns). In most places, arterial streets are fed from controlled exits from nearby highways, and the topography goes in the other direction to neighborhood streets that are typically narrow and not lane-divided.

  24. Mike

    Spokker:

    Not sure whether you were being satiric or not. Like it or loathe it, current military technology is not rail-based. Most ground vehicles do better on roads (if they require roads at all). Of course, the *dominant* military vehicle of the present day travels on water, and projects power by way of vehicles that travel on air… but the latter is only a prevalent ordnance delivery vector for as long as open, full-scale war does not occur.

  25. ws

    Mike:“My argument is not “overly basic”: it is one of principle, and the principle is “simple” (in the scientific sense). You’re arguing implementation; in other words, pragmatic concerns. If you get the principle correct, the implementation details are manageable. If you get the principle wrong, the most ingenius implementation imaginable will still utterly fail.

    Also, I don’t think we are in accord on definitions of what term describes what kind of road. And clearly, a 10-lane arterial is an outlier… that’s Las Vegas Boulevard right there, and is not a common thing. In most metropolita, an arterial street is four lanes (plus, predominantly in the West, a suicide lane for left turns). In most places, arterial streets are fed from controlled exits from nearby highways, and the topography goes in the other direction to neighborhood streets that are typically narrow and not lane-divided.”

    ws: Every city in the nation has an overly wide “outlier” arterial street. It may not be in the form of # of lanes, but in total width, too. Also, some cities may not have many very wide arterials in the case of Virginia Beach, Florida, San Diego, etc., but they may have so many in number to the point of over-saturation. My point is that our roadway system is overly large and could support any military purpose at its given size at this very given time and moment — not to mention that it could have facilitated easy military deployment some years ago, too.

    We can’t just justify any road project as being for the military without actually assessing what our military needs, not to mention deployment of troops is not always most effective at the ground level. But I’m no General.

  26. Spokker

    “Not sure whether you were being satiric or not.”

    Not at all. The Chinese know we have good roads and they will be the first strategic strikes on their homeland assault of the United States. Not having good rail links for troop and equipment transport as a backup is foolish, that is, unless you want to eat your Big Mac with chopsticks.

  27. Mike

    ws,

    “We can’t just justify any road project as being for the military without actually assessing what our military needs, not to mention deployment of troops is not always most effective at the ground level. But I’m no General.”

    Eisenhower, the general who was the progenitor of the interstate highway system, already did this analysis, and I trust his conclusions based on his credentials and track record. But even if I didn’t, it would not take long to reach those same conclusions oneself with a cursory study of military deployment. In fact, if memory serves, wasn’t one of the key limiting factors of troop movement in WWI a difference in train track gauge?

    Spokker,

    I have no objection to redundancy — I had interpreted your earlier comment to suggest that a rail network is appropriate INSTEAD of a road network for military purposes. My mistake.

  28. Scott

    Have some people forgot that the military is a public good (non-exlcudable is one element of that), the main purpose of government (protection) and paid for by taxes?

  29. Mike

    Scott,

    I hope you haven’t misattributed that to me, because I’ve maintained all along that the military is one of the few legitimate purposes of government in that it protects the individual rights of all citizens and is enjoyed by all citizens in its totality — and thus is one of the governmental organs justifiably funded by taxation. The other two are police and court system. There are a few elements of government that fall under the umbrella of those departments in principle (even if not currently in practice) because they span borders or are similarly effectively enjoyed by all in totality, such as disaster management, land title recording, epidemiology, and vital records.

  30. the highwayman

    Mike said: In fact, if memory serves, wasn’t one of the key limiting factors of troop movement in WWI a difference in train track gauge?

    THWM: No.

  31. the highwayman

    Scott said: Have some people forgot that the military is a public good (non-exlcudable is one element of that), the main purpose of government (protection) and paid for by taxes?

    THWM: Though are using the military as a guise to push a political agenda.

  32. Scott

    Yeah, the military has often stopped me from my ideology towards freedom & the Constitution.

    Just look at all the Tea Party (No taxation w/out representation) demonstrations that had to be broken up. Compare that to the leftist demonstrations that were violent.

    I just wish that perps could be prosecuted (& maybe terminated) w/out Miranda disclosure.

    More rights for law-violators than victims?
    That’s how it’s been.
    Look at the WTC trial.
    High-man, get the hell out of this country!!!
    Enjoy your nonsense elsewhere.
    Or not.
    As long as you don’t use force.

    the highwayman Reply:

    The Tea Party is construct of big business that practically owns the government!

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