House Rules Change, New Report on Highway User Fees Define the Debate Over Transportation Finance for 2011

As Congress and state legislatures convene this month, the debate over how to fund transportation in this country resumes. Stoking the fire this week is a U.S. House of Representatives rules change that could result in reduced federal transportation spending and a new report from the U.S. Public Interest Research Group that assesses the claim by highway advocates that roads “pay for themselves” with gas taxes and other charges to motorists.

House Rules Change Imperils Reliability of Highway Funding

In adopting new rules this week, Republican Congressional leaders sought to change a rule added in 1998 requiring that a certain level of highway trust fund money be spent each year. Although the new language still promises not to spend highway trust fund balances for non-transportation purposes, it would eliminate the part of the rule that promises to spend all highway trust fund balances based on the levels set forth in the federal transportation authorization bill and determined by the bill’s estimates of gas tax, diesel and other revenues that go into the highway trust fund each year. By keeping money in the fund and not paying it out, deficit hawks on Capitol Hill could say they’re making good on their promise to reduce the deficit.

But in a letter to House leaders last week, 21 organizations including the American Association of State Highway and Transportation Officials (AASHTO), the American Public Transportation Association and the U.S. Chamber of Commerce objected to the rules change saying it “would hurt investment in transportation infrastructure, reduce jobs and break faith with the American taxpayer.” The rules change, the organizations contend, would have a particularly detrimental impact on long-term, multi-year transportation planning and projects that rely on stable and predictable funding and “make annual federal highway and transit investments subject to the whims of the appropriations process.” That would add further uncertainty to a transportation construction marketplace already destabilized by the delay in adoption of a multi-year reauthorization and continuing budgetary challenges facing many state governments.

After the opposition emerged, incoming House Transportation and Infrastructure Committee Chairman John Mica, a Florida Republican, said he would challenge the rules change and seek changes. In stepped Ohio Congressman Steven LaTourette, who along with Mica offered a rules amendment Tuesday aimed at easing fears about a year-to-year approach to infrastructure spending. LaTourette’s amendment would have continued to allow authorization legislation to determine spending priorities but would have also allowed House members to propose spending cuts as amendments on the House floor.

But House Republicans Tuesday night rejected LaTourette’s compromise language clearing the way for the rules change to move forward and ensuring that highway and mass-transit programs will no longer be shielded from budget cuts.

Jack Basso of AASHTO told The Wall Street Journal this week that the net effect will be that states may be more reluctant to sign long-term construction contracts without the guarantee of federal funding.

You can read the opinions of a wide variety of experts and stakeholders about the House rules change on the National Journal Expert Blogs.

Highways Don’t Pay for Themselves

Also making a splash this week is a new report just out from the U.S. Public Interest Research Group (U.S. PIRG) entitled “Do Roads Pay for Themselves? Setting the Record Straight on Transportation Funding.”

Phineas Baxandall of the U.S. PIRG Education Fund and his co-authors Tony Dutzik and Benjamin Davis of the Frontier Group write that although highway advocates often claim that roads “pay for themselves” through gas taxes and other charges paid by motorists, they in fact do not and rarely ever have. Moreover, they write, gas taxes are not “user fees” and that designation is simply used by highway advocates to argue for more spending on roads and less on public transit and other forms of transportation.

The report argues that:

  • The amount of money a particular driver pays in gas taxes bears little relationship to his or her use of roads funded by gas taxes.
  • Federal gas taxes have typically not been devoted exclusively to highways.
  • Many states use gas tax revenue for a variety of purposes including not just highways but public transportation and non-transportation related governmental purposes.
  • Since 1947, the amount of money spent on roads has exceeded the amount raised through gas taxes and other so-called “user fees” by $600 billion. Huge transfers of general government funds have been used to make up the rest.
  • Gas taxes and other so-called “user fees” today pay only about half the cost of building and maintaining the nation’s highways and roads.

The report concludes that “to make the right choices for America’s transportation future, the nation should take a smart approach to transportation investments, one that weighs the full costs and benefits of those investments and then allocates the costs of those investments fairly across society.”

Earmarks Leave Billions in Transportation Dollars on the Table

There has been a great deal of talk in recent months on both sides of the aisle in Washington about getting rid of earmarks, those line items inserted into legislation to fund specific congressional pet projects. USA Today reports this week that their analysis of state and federal records turned up 7,374 congressionally approved highway projects in which at least some of the money set aside remains unspent and in nearly 50 percent of those earmarks, not a single dollar has gone toward its intended purpose. Moreover, the newspaper said, almost 1 in 3 highway dollars earmarked since 1991 (about $13 billion) remains unspent. During those 20 years, unspent earmarks reduced the amount of money that states would have received in federal highway funding by about $7.5 billion.

A state like Pennsylvania, which faces a transportation funding crisis, could have used the $392 million they missed out on because of unspent earmarks.

Outgoing Democratic Gov. Ed Rendell told the newspaper “It shows you what’s wrong with the earmark system.”