ISTEA: A Poisonous Brew for American Cities

Instead, says a new paper published by the Cato Institute, Congress should eliminate most of the federal gas tax and let states and cities make their own transportation plans. While this is unlikely to happen, Representative John Kasich has a proposal to let states "opt out" of federal transportation funding. States that opt out will get no federal highway or transit dollars, but their citizens will also no longer have to pay 15 cents of federal gas taxes for every gallon of gasoline they buy.

Nearly every state will benefit from opting out. Thirty-eight states already pay more into the gas tax fund than they get back. The other twelve states will benefit, even if they lose total dollars, because they will be able to plan their own transportation destinies free of federal red tape and ideologies.

Oregon, for example, is one of the twelve states that get more than they pay into the gas tax fund. That is because Oregon has been spending hundreds of millions of dollars on a wasteful light-rail system that almost no one will ride. If Oregon had to fund its own transportation, it would be more likely to put its money into activities that really reduced congestion and kept its residents mobile.

Originally passed in 1991 at the urging of transit advocates, ISTEA has several serious flaws.

• First, it imposes a planning process on cities getting federal funds. This process is easily captured by special interest groups hostile to auto traffic and mobility in general.
• Second, it promotes pork barrel projects such as rail even though rail has been proven to be far more expensive per rider than high-occupancy vehicle lanes or other auto-oriented solutions to congestion.
• Third, the law forbids cities with serious air pollution problems from using funds to add highway capacity even though pollution is a function of congestion, and highway capacity is one solution to congestion.
• Fourth, the law rewards cities whose air pollution problems become worse (because of worsening congestion) with special funds designed to "relieve" congestion--but in fact, many of the funded activities will actually increase congestion.