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House Republicans and Senate Democrats remain at loggerheads over the
future of federal highway and transit funding. Although House
Transportation & Infrastructure Committee Chair John Mica introduced a compromise transportation bill this week, few are pleased with his proposal. Secretary of Transportation Ray LaHood, for example, calls it “the worst transportation bill” he has ever seen.
Congress passes legislation defining how federal gasoline taxes and
other highway user fees will be spent every six years, and the most
recent bill lapsed in 2009. Although the revenues all come from highway
users, public transit agencies and other interests have captured
increasing shares of the funds in successive bills passed since 1982. To
please the wide range of interest groups who benefitted from this
spending, the 2005 bill (which itself was two years late) made spending
mandatory, meaning annual appropriations bills could not refuse to spend
the money even if gas taxes failed to cover the costs—which they did
after 2008, forcing Congress to transfer general funds to the Highway
Trust Fund. In addition, Congress added more and more earmarks to the
bills, increasing from 10 earmarks in 1982 to more than 6,000 in the
2005 bill.
The struggle today is between the Democrats (and others) who want to
keep spending like there is no tomorrow and the Tea Party Republicans
who want to reduce spending to be no more than actual revenues and
eliminate earmarks and other pork.
One major source of pork is so-called competitive grants, which are
mainly for transit. Although most highway funds have been distributed to
the states using formulas based on such things as population, land
area, and road miles, competitive transit grants are handed out on a
project-by-project basis. Though the money was supposed to be used for
the best projects, in fact most of it was distributed based on political
power.
Mica’s compromise would keep spending at current levels—which are as
much as $10 billion a year more than revenues—but include no earmarks
and replace all competitive grants with formula funds. Instead of
pleasing everyone, the compromise has simply ticked everyone off.
LaHood and various transit advocates are upset because they lose their funds dedicated to light-rail, streetcar, and other rail transit construction. Conservative groups hate the bill because it almost certainly will require deficit spending.
Mica could have compromised in the other direction: reducing spending
to be no more than revenues, but maintaining competitive grants,
earmarks, and other pork-barrel programs. This might have been more
successful, as fiscal conservatives couldn’t complain about deficit
spending while pork-barrelers could point with pride to the earmarks
they were funding.
The negative response to Mica’s proposal makes it unlikely that
Congress will pass a bill this year. Instead, it will have to once more
extend the 2005 bill (which it has already done eight times), as the
current extension expires on March 31, 2012. But the extensions maintain
spending at current levels, which means the Highway Trust Fund is
quickly running out of money.
Advocates of increased spending claim funds are needed to repair
crumbling infrastructure. But America’s highways and bridges are
actually in pretty good shape,
partly because they are largely paid for out of user fees. The
infrastructure that is crumbling is mainly those things paid for out of
taxes, such as urban transit systems, which have at least a $78 billion maintenance backlog. Even President Obama’s head of the Federal Transit Administration complains
that transit agencies are too eager to get federal funds to build new
rail lines when they can’t afford to maintain the ones they have.
The real question is why the federal government should be involved at
all in highways, urban transit, bike paths, and other surface
transportation projects. State and local governments, not to mention
private transportation companies, are more likely to make wise
transportation investments and less likely to be swayed by pork barrel.
Congress should simply eliminate the federal gas tax or, as some have proposed, allow states to opt out of federal programs by raising their gas taxes by the amount of the federal 18.3-cent-per-gallon tax.
Such alternatives will be taken more seriously if Tea Party
candidates win more Senate and House seats in the 2012 election. If they
lose seats, however, Congress is more likely to raise gas taxes so the
transit industry and other interests can continue to get their largely
undeserved shares of highway user fees.
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