Calculating Transportation Subsidies

Highway subsidies averaged 1.7 cents per passenger mile in 2016, an increase from 1.2 cents in 2015. The increase was due to a massive infusion of general funds into the federal Highway Trust Fund, which was necessary because Congress doesn’t know how to keep spending within its revenues.

This calculation was based on table HF-10 for the 2016 Highway Statistics, which the Federal Highway Administration finally released last week. (The table is dated August 2018, but I check regularly and it hadn’t appeared before last week.) This table shows where highway money comes from, and in 2016 $118 billion came from general fund appropriations and other taxes such as income or property taxes. To calculate subsidies, I deduct from this the diversions of gas taxes and other highway user fees to mass transit and other non-highway uses, which in 2016 totaled to $33 billion.

The result is a net subsidy of $85 billion, up from $59 billion in 2015. The 2015 table shows that 97 percent of the subsidy in that year was at the local level, which is typical of most years. But in 2016, more than half the subsidy was at the federal level. The states, meanwhile, actually diverted nearly $6 billion more from highway user fees than they spent out of general funds.

To calculate passenger miles, I started with table VM-1, which shows vehicle miles by type of vehicle. According to this table, cars, light trucks, and motorcycles traveled 2.85 trillion miles in 2016, and 2.78 trillion in 2015. Table VM-1 shows person-miles of travel, but it uses occupancy figures that are not supported by the National Household Travel Survey. That survey, which is done every five years, found that the average occupancy for cars, light trucks, and motorcycles was 1.67 in both 2012 and 2017, so it presumably was the same in 2016.

That means people traveled about 4.76 trillion passenger miles in light vehicles in 2016, and 4.64 trillion in 2015. To this should be added buses, which contributed about 345 billion passenger miles in each year, for a total of 5.1 trillion passenger miles in 2016 and just under 5.0 trillion in 2015. Dividing that into the subsidies results in 1.67 cents per passenger mile in 2016 and 1.19 cents in 2015.

This doesn’t account for the fact that highways also produced more than 2 trillion ton miles of freight shipments per year. While 2016 data aren’t available yet, highways supported 2.05 trillion ton miles in 2015 and it was probably more in 2016. While there is no way to equate passenger and freight movements, if we arbitrarily say that a ton-mile gets the same subsidy as a passenger mile, then the subsidies were about 1.2 cents per passenger/ton mile in 2016 and 0.8 cents in 2015.

But that’s quibbling. What it comes down to is that subsidies were somewhere between 1 and 2 cents a passenger mile. Anywhere within that range is far less than subsidies to transit or Amtrak. In 2016, transit agencies spend $50.5 billion in taxpayer funds carrying 56.5 billion passenger miles, for an average subsidy of 89 cents per passenger mile. That’s 54 times the subsidy to highways if all of the subsidies are counted against passenger miles.

Amtrak’s September, 2016 performance report (which includes year-end data for Amtrak’s fiscal year 2016) says that the company lost $1.128 billion in that year (see page A-4.1), which was made up for with federal subsidies. But that doesn’t include $227 million in subsidies from the states, so total subsidies were $1.355 billion. It carried 6.5 billion passenger miles that year, for a subsidy of nearly 21 cents per passenger mile.
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For some reason, the Bureau of Transportation Statistics stopped keeping track of airline subsidies in 2012. In that year, federal, state, and local governments collected $31.1 billion in revenue from the air travelers, mainly through ticket taxes, and spent $44.8 billion on airports, air traffic control, and related activities. That means there was a net subsidy of $13.7 billion. The data through 2012 showed that revenues were growing slowly but costs had been roughly constant since 2007, so it seems likely that the 2016 subsidy is not significantly greater than it was in 2012.

Americans traveled 670 billion passenger miles by domestic air carriers in 2016, for an average subsidy of about 2.0 cents per passenger mile. This is only about 10 percent of the subsidy to Amtrak. When international and non-commercial air travel is added, the subsidy per passenger mile would be even smaller.

In addition to subsidies, of course, people paid to use each of these modes. According to table 2.5.5 of the Bureau of Economic Analysis’ National Income and Product Accounts (unfortunately the table itself isn’t linkable), American families spent $412.1 billion purchasing motor vehicles (line 54), $605.0 billion operating, repairing, and maintaining those vehicles (line 57), and $71.6 billion insuring them (line 116) in 2016, for a total of $1.09 trillion.

Not all highway travel is personal travel; buses obviously are not, and according to Alan Pisarski, the best estimate is that about 9.3 percent of light vehicle travel is commercial or government service. I’m going to round up to 10 percent and say that 90 percent of light vehicle miles are personal vehicles. That represented about 4.3 trillion passenger miles in 2016, so the user cost per passenger mile was about 25.4 cents.

Transit fares in 2016 totaled $15.8 billion for an average of 28.0 cents a passenger mile. Amtrak ticket revenues totaled $2.136 billion for an average of 32.7 cents per passenger mile. Amtrak collected 2.0 cents per passenger mile in food and beverage revenue which I’m counting as fare revenue here to offset the costs of providing that service. Meanwhile, air fares in 2016 were down to 13.6 cents per passenger mile.

2016 Costs in Cents per Passenger Mile

As shown in the table, despite the increase in federal highway subsidies, the total cost to move someone a mile by transit is still more than four times as much as the total cost of driving, while the total cost per passenger mile of Amtrak is more than three-and-one-half times as much as the cost of flying. Even taking into account the fact that government-operated transportation tends to be highly inefficient, transit and intercity passenger trains are far more expensive than the alternatives.