The House of Representatives voted yesterday to extend federal funding for highways and transit for two months. The Senate is expected to pass similar legislation later this week. While transportation bills normally last for six years, this short-term action, which followed a ten-month extension last fall and a two-year extension in 2012, has proven necessary because no one has been able to rustle up a majority agreement on the federal role in transportation.
For those who haven’t followed the issue, the federal government collects about $34 billion a year in gas taxes and related highway user fees. Once dedicated to highways, an increasing share has gone for transit and other uses since the early 1980s. Compounding this was a decision in 1998 to mandate that spending equal to the projected growth in fuel taxes. When fuel tax revenues stopped growing in 2007, spending did not, with the result that annual spending is now about $13 billion more than revenues.
Under Congressional rules, Congress must find a revenue source to cover that deficit. The Antiplanner’s colleague at the Cato Institute, Chris Edwards, thinks that the simple solution is for Congress to just reduce spending by $13 billion a year. That may be arithmetically simple, but politically it is not as too many powerful interest groups count on that spending who have persuaded many (falsely, in my opinion) that we need to spend more on supposedly crumbling highways.
Many Democrats, as well as some Republicans, propose another arithmetically simple but politically complex solution: raise gas taxes. Each penny of gas tax brings in slightly less than $2 billion, so an eight-cent increase should completely cover the deficit. However, tax watchdogs and tea-party groups vehemently oppose any tax increases, especially since they don’t trust Congress to spend fees collected from highway users on roads.
Then there are proposals to dedicate things like off-shore oil revenues for transportation. But any federal revenues spent on transportation will just mean less revenue for something else, and so won’t reduce the overall deficit.
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Dedicating gas taxes to roads at least insures that state highways are paid for by the people who use them. Yet for several reasons, the gas tax in an ineffective user fee: it isn’t indexed to inflation or increasingly fuel-efficient cars; most local governments don’t collect gas taxes and so must subsidize their roads with other funds; and fuel taxes do nothing to mitigate congestion. Raising the gas tax solves none of these problems in the long run; indexing them to inflation as Representative Jim Rinacci (R-OH) proposes solves only the first problem.
Mileage-based user fees, soon to be extensively tested in Oregon, can solve all of these problems. Such fees are supported by liberal Democrats such as Earl Blumenauer (D-OR) as well as tea-party Republicans such as Thomas Massie (R-KY). But they are also questioned by both liberals and conservatives worried about privacy and suspicious of new taxes. Since the technology needed to collect such fees without invading people’s privacy hasn’t been thoroughly tested, they are not going to solve the conundrum this year.
The real problem is that too many in Congress relish playing the role of Santa Claus, handing out federal funds to state and local governments and interest groups. The elimination of earmarks, which dominated transportation funding from about 1992 through 2010, has weakened but not eliminated this political factor.
Congress is thus divided into at least three factions: the Democrats who want to use transportation dollars as pork as well as social engineering by encouraging transit and discouraging driving; traditional Republicans who also like pork but who may not be as enthused about the social engineering; and fiscally conservative Republicans who want to end the pork and the social engineering. Before the tea parties emerged, pork barrel won out, but now neither side has a majority.
While the Antiplanner would like to see federal highway and transit programs devolved to the state and local level, there is no easy path to get there. It appears likely that we will be stuck with short-term extensions until one of these groups wins a majority or mileage-based user fee technology takes over highway funding. If the latter happens, the federal government could be shut out of transportation funding completely and transit agencies will need to beg state and local governments for continued support.
Say you have all the kinks worked out and can turn all highways and major arterials into user fee/toll roads. Financial performance of roadway segments is not uniform, not between states, and not within them. How do you convince people to support it if the road they drive on everyday will need a toll of $0.25/mile instead of $0.02 per mile, or whatever the gas tax they pay now works out to? Forget the privacy issue, convincing people to support the end of their free ride seems like a real uphill battle.
Then you have to figure out how you define users. If a minor road needs an expensive bridge to cross a highway, should the users of the minor road pay half a penny per mile it would have cost without the highway there, or the twenty cents a mile it costs to build and maintain the overpass? Are the highway users responsible for any of the impacts the highway has on the areas it runs through? A lot of land was taken off of property tax rolls in cities to run highways through them and nearby land was devalued. Maybe on net it increased the total value of land, but a lot of that value might be in a different municipality. Do you undo that by charging drivers on a highway a surcharge above the cost of building and maintaining the structure to cover reduced property taxes?
Mileage based user fees to tie drivers to the roads the use rather than all roads, or all transportation project might allow for more efficient investments, but I think there’s more than just a technological hurdle to overcome.
“Financial performance of roadway segments is not uniform, not between states, and not within them. How do you convince people to support it if the road they drive on everyday will need a toll of $0.25/mile instead of $0.02 per mile”
Good question. This has the potential to be fiscally and environmental beneficial as less necessary roads could be eliminated or revert to a more primitive state.
Good question. This has the potential to be fiscally and environmental beneficial as less necessary roads could be eliminated or revert to a more primitive state.
Good point, Frank. The problem is that most roads have people and businesses along them, even the most remote rural road. “Eliminating” roads probably would mean one of two things: either reversion to gravel (much cheaper to repair, and would keep some users, particularly “roadie” bicyclists off them–OK with me where I live!), or turn over to adjacent land owners. In either case, this would be a very touchy political problem, particularly in rural counties.
Despite the constant conflation of Interstates, highways, roads and streets on this blog which drives me nuts (let’s not pretend highways are useful without some sort of way to access them), I am a big proponent of a mileage based system. I think the privacy concerns are laughable. Not that there wouldn’t be an invasion of privacy, but certainly not one above and beyond what is already happening. Between cellular networks and the Patriot Act the right to privacy and the 4th Amendment pretty much don’t exist anymore.
I also don’t understand why expensive technology is needed. Every car has an odometer. Damn near every state requires cars to be inspected yearly (the one’s that don’t can implement a check the odometer program at Jiffy Lube). All you need is a pencil and a piece of paper to right down the mileage.
“Between cellular networks and the Patriot Act the right to privacy and the 4th Amendment pretty much don’t exist anymore.”
Rand Paul is filibustering the renewal of the Patriot Act as I write this.
@bennet
http://ti.org/antiplanner/?p=1759
Cheaper to operate toll roads is the goal as I understand it, not to replace one politically controlled slush fund (gas tax) with another (odometer tax)
msetty, from what I’ve seen and heard around my grandmother’s place you are correct, the rural road thing can be touchy. Where she is it is sparsely populated. Regardless of how taxes are collected, the townships are struggling to find ways to reduce their road budgets.
It would make a lot of sense for them to be able to devolve some blocks – and if you look at the map, a block is one mile long, – so that the 1 – 4 property owners on that block have a common easement for access. It would make sense for the property owners to be responsible for the stretches that are needed.
One the barriers seems to be the idea of “but what if it’s a section that I drive through”. A lot of farmers have sections of land in a few unconnected places. They like being able to drive their combine through on road X.. They don’t want to drive 2 miles west to take the county road ( also a gravel road as it is today, btw ) the drive 6 miles south and 2 miles back east to the two quarters they farm down there.
Of course, from the township point of view they could save a lot of money by not having to maintain all those roads as through roads.
http://www.mapillary.com/map/im/bbox/48.37843051757303/48.40692723890953/-97.2721767425537/-97.17836380004883
“Rand Paul is filibustering the renewal of the Patriot Act as I write this.”
Glad to hear that he hasn’t completely sold his soul to appease the “base.” While I don’t agree with him on a lot of issues I always liked the fact that he stuck to his principles and bucked the party line when necessary. To see him waver from this has been disturbing.
I am of the belief that this country could use a great ideological showdown between Paul and Sanders. I’m hoping both Senators stick to their guns and not fall into the same traps that McCain and Kerry got stuck in when running their presidential campaigns.
“While I don’t agree with him on a lot of issues I always liked the fact that he stuck to his principles and bucked the party line when necessary. To see him waver from this has been disturbing.”
Agreed.
Won’t vote for him but will support him financially as he’s the most libertarian GOP candidate. Rand Paul has enough similarities to his father in terms of privacy, auditing the Fed, and foreign policy, but he has pandered too much to the base on some social issues. Guess that’s what you have to do to get elected.
Just wish all the “tolerant” liberals in theneighborhood would stop taking my Rand Paul yard signs. It just means I have to buy more, which means giving Rand Paul more money.