The distribution of federal highway revenues to the states ended on Sunday night thanks to Congress’ failure to extend surface transportation funding. This means that transit agencies and highway departments may temporarily lack funds to pay their bills.
Democrats in Congress had proposed to extend funding through the end of the year as a part of a bill extending unemployment compensation. But Kentucky Republican Senator Jim Bunning objected to the unemployment bill, since there was no money to pay for it. So the House passed a bill extending transportation funding for four weeks, but Bunning objected to that as well. Bunning agreed yesterday to drop his objections, but the funds will remain frozen for a few more days.
As Antiplanner readers know, Congress authorizes federal funding for transportation in six-year increments. The last authorization passed in 2005 but was two years late, so it expired on September 30, 2009. Congress has extended it twice, and few think Congress will get around to a formal reauthorization before 2011. Gas taxes also must be reauthorized, but they are under different legislation, so motorists will not get to enjoy a temporary cessation of federal taxes.
Part of the problem is that the 2005 law authorized more spending than the federal government has been collecting in highway user fees. Late last year Congress had to supplement the fund with $8 billion out of general taxes. It is not as if it could simply cut spending, could it? Lawmakers predict that the fund will need another $20 billion infusion this year.
These supplements do not represent subsidies to highways. Congress diverts roughly 20 to 30 percent of highway user fees, or about $8 to $12 billion a year, to transit and other programs. Without those diversions, highways would be in better shape and no supplements from general funds would be needed.
These diversions began in 1982 and as they have increased, political leaders and transportation officials have lost the connection between users and transportation providers that should exist in a market economy. No longer do transportation officials think, “we should build this because users will pay for it.” Now most think, “if we subsidize this enough, someone will use it, and that makes it a success and deserving of even more subsidies.”
Supporters of more subsidies to transit, cycling, and other programs bristle when opponents use terms like “socialism” and “social engineering.” But it is pure socialism when government agencies can spend billions of dollars without any worries about whether user fees will cover those costs. And it is pure social engineering when those agencies justify such expenditures based on the supposed benefits from “coercing people out of their cars.”
So the shutdown of federal transportation funding is merely a symptom of much larger problems with the transportation portion of our economy. Really, why should transportation users have to pay a fee to the federal government that Congress then gets to redistribute to favored interest groups? Let’s just by-pass this and encourage transportation providers — whether highway, transit, airports, or whatever — to fund themselves exclusively out of fees collected from the users.