Is our highway funding system working?
Advocates, including construction organizations, say the system approaches needs realistically, and is underfunded, not overfunded, in terms of reaching transportation goals.
Critics say the system is overspending on everything from bicycle trails to pet “pork” projects designed to win reelection for legislators.
“It’s no longer a transportation program; it’s a spending program,” said Ronald D. Utt, a senior research fellow at the Heritage Foundation, a conservative “think tank” in Washington, D.C. “Only incidentally is it targeted toward making travel easier.” Utt contends that, since all the money in the Highway Trust Fund is paid by user fees from motorists or truckers, this funding should only benefit them.
“You now have a lot of leakage from that system to do things which have very little benefit for the motorist,” he told Construction Equipment Guide (CEG). “I’m not making any judgment on whether there’s value to museums or hiking and bicycle trails, but they should come from the proper budget.
“The budget for the National Park Service, for instance, should include their roads. The average motorist doesn’t use them unless he or she pays a fee to get into the park.
“Another example is the Appalachian Regional Commission. Everyone was afraid it would be viewed as a wasteful program which hasn’t accomplished anything in 30 years, so they protected it by melding it into the Highway Trust Fund instead of it being a standalone program.”
Utt proposed that President Bush extend current transportation funding until Sept. 30, 2006, and “develop a plan to fundamentally overhaul the current [funding] program.”
He said the plan should focus on a new management system that would impose specific performance standards on federal and state transportation officials, redirect money from special interests, gradually give direction of highway programs to states instead of the federal government, and widely utilize tolls and bonds for financing.
Utt contends that the reason there’s not enough money to maintain roads is that “we’re not spending the money we should be spending on them from the trust fund; we’re spending it on other things; these kinds of leakages are the reason why the deterioration of roads has been fairly significant over the past few years. If we did the same thing with Social Security, using some of it to buy aircraft carriers, everybody would go berserk.”
Utt uses much stronger language in a Feb. 13, 2004, paper (“Yes, Mr. President, Veto the Highway Bill”) listed on Heritage’s Web site (heritage.org/research/smartgrowth) in which he called the highway bill “a poster child for profligate spending” and labels the federal highway program “the country’s largest spoils system” with about one-third of its spending directed to programs which don’t benefit motorists.
He charges that the fact that new road miles have increased by only 6 percent since 1970, while licensed drivers have increased 71 percent and miles-driven have increased 148 percent, is “an astounding indictment of a federal program that has spent [in inflation-adjusted dollars] a staggering $700 billion in taxpayer money since 1970 on top of an even larger amount spent by the 50 transportation departments over the same period.”
He charges in a March 5, 2004, paper, “Putting an End to Drive-By Lootings: An Open Letter to the President on the Highway Bill” (Memo 439 on the Heritage site) that the United States is “hobbled with a grotesquely inefficient federal transportation program that spends enormous sums of money to achieve pathetically meager results.”
“Where once it [the transportation program] had the goal of providing America with the best transportation system in the world, today its purpose is little more than to accommodate a growing list of influential constituencies lucky enough to have their hands in the piggy bank,” he declared.
Road Builders Respond
Matt Jeanneret, a spokesman of the American Road & Transportation Builders Association (ARTBA) in Washington, D.C., responded, “This [criticism] is nothing new. It’s the same old stuff. If you go back to 1998 [before the most recent transportation bill], they were making the same arguments back then.”
Said Rich Kirkpatrick, press secretary of the Pennsylvania Department of Transportation (PennDOT) in Harrisburg, PA, “Beginning in 1991, when Congress passed a six-year highway bill [ISTEA], they decided to take a broader approach, that it wasn’t just going to be highways. Since that time, some transportation money has been used for what are called enhancements. They have enhanced quality of life all across the nation.
“Here in Pennsylvania, we’re going to use that enhancement money for a program called Hometown Streets, helping communities take steps to begin to rejuvenate their core areas. Our governor [Edward Rendell] feels that’s very important to put us on a more firm footing. A study by the Brookings Institution noted that Pennsylvania has this very destructive trend of hollowing-out. A migration pattern is under way from established communities, including cities, boroughs and older townships, and this doesn’t bode well for these core areas.”
So Kirkpatrick wouldn’t consider this to be unsound spending? “Absolutely not,” he declared.
Jennifer Gavin, deputy director of communications of the American Association of State Highway and Transportation Officials (AASHTO) in Washington, D.C., said, “Those enhancement projects have been part of the transportation bill at least since the last bill came out. They are community-enhancing. They help interconnect fully intermodal systems so that highways speak to transit, speak to communities and don’t miss bicyclists and pedestrians who are a significant number of people. More to the point, those projects are incredibly popular with the public. If Mr. Utt were to go out and do a poll, he would find out that people don’t want that taken away from them.
“We support continuing transportation enhancements because it’s important to look at the system as a whole and make it all talk to itself and work together. We think eliminating enhancements would be cutting the arms off the body. Keep in mind that there will never be enough money for everyone to get everything that they want even if we all live to be 100 years old.
“We need to make sure that all the players and all the people get at least some of their needs met. There is no reason not to make the legislation physically attractive and acceptable to communities. When we do that, we find the communities are more accepting of all the things we do, including the straight-out plain-vanilla infrastructure.”
Too Much Pork?
Utt declares that the 880-page transportation bill proposed by the House of Representatives includes a section for “about 3,000 earmarked ’high priority projects,’ which tend to be in states or districts of influential members of Congress. Go down the list and you’ll see this interchange and that road, but also hiking trails, bicycle trails, beautification projects and museums.”
Responding to this criticism, Kirkpatrick said, “The media, particularly in Washington, likes to describe transportation as pork, but, in fact, transportation is a very sound investment. One person’s pork is another person’s transportation lifeline or quality-of-life enhancement. It’s a big nation, and there are a lot of transportation needs out there. An important part of the role of Congress is helping bring improvements back home.”
AASHTO’s Gavin likewise disagrees, “We haven’t seen the details of Mr. Utt’s report, but every time a reauthorization bill is pending before Congress, some folks will complain about ’pork.’ Let’s face it. We have a political process; that’s how it’s been done so far in this country to deliver federal funds to these projects. So people up for reelection will be involved to one degree or another in that process to call attention to their campaign. That said, the amounts of money now being discussed, even at the high end of what may be possible this year, will not begin to touch the need, which has been identified through fact-based processes.
“We generated our bottom-line report on transportation needs about two years ago as we entered the reauthorization cycle. It’s a data-driven report based on federal and academically derived information. We determined that to maintain our current system of highways and bridges, an annual investment of $92 billion was needed. To improve the system would require $125.6 billion per year at all levels of government, the lion’s share at the federal level. Over six years, both those amounts total a lot higher than the highest appropriations that have been argued. There will be some political activity in the reauthorization, but we think it is probably misguided to suggest that as much as a third of it is so-called pork.”
Overhaul Entire System?
Congress hopes to reach a conference committee compromise between the House’s $375-billion six-year transportation plan, which would require increasing the federal fuel tax, the Senate’s $318-billion plan and the Administration’s proposal for spending $256 billion.
Utt has harsh words for all three approaches, even the President’s. In his paper, he asserts, “Because the Administration’s highway plan, like its congressional counterparts, fails to address this pervasive waste, the only meaningful difference among them is that the President’s plan, ’the Safe, Accountable, Flexible and Efficient Transportation Equity Act [SAFETEA],’ proposes to misallocate only a quarter of a trillion dollars over the next six years, while the [Senate] plan proposed by Sen. James Inhofe [R-OK], would misallocate nearly a third of a trillion dollars."
Utt therefore wants the Administration and Congress to extend the present transportation bill through Sept. 30, 2006, and rewrite all proposals to establish “explicit and measurable goals” with performance-based incentives similar to the Administration’s education program.
“While this sort of accountability will certainly leave tens of thousands of road builders, state and federal bureaucrats, and public transit system officials less than happy, the tens of millions of motorists who pay their salaries and contracts will be overjoyed,” he wrote.
Let States Handle Their Own Highways?
Utt wants to let states handle their own transportation systems. He would thus decentralize decision-making and allocation of resources, stripping the federal government of many of its present prerogatives.
“I am very much in favor of letting states collect their own gas tax and spend it on their own transportation priorities,” he told CEG. “I argue that the present program was created to build the interstate highway system. That was completed in the early 1980s so it has been sort of floundering around looking for a sense of purpose. One way to look at that is to simply declare victory and shift it back incrementally to where it has historically been, and that’s the states.”
(The federal tax on gasoline is 18.4 cents per gallon. State gas taxes vary from seven cents in Georgia to almost 30 cents in the state of Washington.)
Utt envisages that states with mostly rural populations might concentrate on highways, or even cut the gas tax because its roads are good, “It’s up to them, rather than Washington saying, ’We know what’s best for you.’ More sparsely populated states with large land masses like Montana would probably want to subsidize some highways.”
Utt also criticizes “flaws in the formulas used to allocate trust fund revenues among the states,” saying they have created a nearly permanent class of donor states (largely concentrated in the South and Great Lakes region) that pay a greater share of fuel taxes into the fund than they receive back in grants, and recipient states (mostly in the Northeast) that receive more than they pay.
“In Fiscal 2001, there were 22 donor states and 28 recipient states,” he said in his February paper, adding, “Since the beginning of the trust fund, Texas and Oklahoma have had share return ratios below 80 percent, while Florida and South Carolina are two of the several donors whose shares have been below 90 percent. By contrast, West Virginia, New York, Massachusetts, Connecticut and Vermont are five of the many states that have received at least 10 percent more than they paid. Alaska has received 500 percent more.”
Is he proposing revolutionary changes? “Yes, but they’re getting less and less revolutionary. Even road builders are saying, ’This doesn’t work for me anymore.’ ”
More Toll Roads?
Utt told CEG, “The issue isn’t so much the money but how the money is spent. The President is fairly timid in a number of areas. Innovations that have worked in a number of states and that are common in other countries are treated as risky experiments. I’m referring to things like toll roads and more involvement by the private sector. I would have wanted something much bolder than the Administration’s proposal.
“The first roads that were built in this country, like the Lancaster [Pennsylvania] Turnpike, were paid for by tolls. If you don’t want to raise the gas tax, you need another source of money. Tolls make a great deal of sense because they concentrate resources where the need is greatest. I would let the states figure out which ones, like metropolitan areas with a lot of congestion, should be toll roads. However, we still have a very centralized system so that they can only toll a brand-new road that has no federal money.”
Utt points out that some states, including Delaware and Maryland, already fund sections of interstate highways with tolls, using federal money for other parts of interstates, which are important but don’t generate as much traffic.
He pointed out that a consortium of three companies, for instance, has proposed extending HOV lanes on I-95 in Virginia by 20 mi. and financing the expected cost of $500 million through tolls. Utt would change many high-occupancy vehicle (HOV) lanes to high-occupancy toll (HOT) lanes.
Utt also envisages financing many road projects through public-private partnerships, which would issue tax-exempt private-activity bonds.
“New legislation to reauthorize the highway program should allow partnerships to issue at least $15 billion in each of the six years of the bill,” he said in his February paper. “At $90 billion in bonds over the life of the next bill, this could bring the President’s proposed total up to $346 billion in new money for roads and transit — without a tax increase.”
A Rebuttal From TRIP
Frank Moretti, director of policy and research of The Road Information Program (TRIP) in Washington, D.C., disagrees strongly with Utt on many points.
“A critical issue is that, while tolling certainly may be viable for some key urban capacity-expansion projects, it really only offers very limited potential on projects that are carrying high volumes of traffic in urban corridors. For most projects, the traditional and most equitable form of funding is highway user fees for meeting the tremendous needs for highway reconstruction and maintenance. We would regard tolling as an addition to put key projects over the top, but not as a substitute for traditional sources of funding.
“The other factor is that the public has shown a willingness to pay additional fees for new services and new capacities. It clearly will not accept existing highways becoming toll facilities. If you look at the cost of reconstructing the interstate system and critical urban highways, you can’t slap tolls on them. That is proving a very unpopular approach.”
Moretti said this about giving control of highway projects to states: “A federal highway program has helped ensure a basic level of highway access across the country. If the federal gas tax were removed, it would leave in question whether all states would continue the level of highway improvements and repairs that are critical. Obviously, a highway or bridge in one state benefits more than just the people in that state. The federal program does provide a benchmark, and a certain level, of highway access across the country and has proven to be a tremendous strength economically. Removing that system would be a significant risk.”
Money for Nothing?
Utt doesn’t like the way transit projects are funded, either.
He said the federal transit program absorbs 20 percent of federal transportation spending while serving less than 20 percent of the nation’s travelers, declaring that the 2000 census revealed that transit’s share of the journey-to-work market “has consistently fallen since 1970, from 8.9 percent in 1970 to 4.7 percent in 2000 despite the federal expenditure of $130 billion (inflation-adjusted) over that same period.
“Of the many diversions, transit is the largest and most serious loss,” he charged. “Light rail costs nearly four times more per passenger-mile than automobiles, while buses are two times more expensive.”
Utt said transit projects are also “concentrated in a handful of cities, despite being funded from fuel taxes collected throughout the country.”
Highways and Jobs
In his latest (April 15, 2004) assault, “Highways and Jobs: The Uneven Record of Federal Spending and Job Creation” (Web Backgrounder 1747 on the Heritage Site), Utt also takes issue with the U.S. Department of Transportation calculation that each billion dollars of highway spending by the federal government creates the equivalent of 47,576 jobs for one year.
“In the real world, the additional federal borrowing or taxing needed to provide this additional billion dollars means that a billion dollars less is spent or invested elsewhere and that the jobs and products previously employed by that billion dollars thus disappear,” Utt said.