Pew: “Self-sustaining” highways are increasingly subsidized
December 11, 2009By Sean Barry
Critics of public transportation often cling to the canard that government should not subsidize a transportation option that cannot pay for itself. These naysayers reference “self-sustaining” roads and highways, which receive funding from user-fees – in this case, the federal gas tax.
A new study conducted by SubsidyScope, an initiative of the Pew Charitable Trusts, reveals that not only are roads and highways not self-sustaining, but the amount covered by gas taxes has been declining — leaving an increasing amount of their massive cost to be subsidized. Pew projections – using Federal Highway Administration numbers – show user fees contributing a slim majority of the revenue to the Highway Trust Fund, with the difference made up through bonds and General Fund dollars. Public transportation does, as the critics assert, operate “at a loss,” but so do roadways (see chart below, courtesy of Subsidyscope).
The researchers wrote: “In 2007, 51 percent of the nation’s $193 billion set aside for highway construction and maintenance was generated through user fees — down from 10 years earlier when user fees made up 61 percent of total spending on roads. The rest came from other sources, including revenue generated by income, sales and property taxes, as well as bond issues.” Forty-years ago, they noted, user-fees generated 71 percent of highway revenues.
Of the 18.4 cent federal gasoline tax, 2.86 cents – about 15 percent – is directed toward mass transit projects, and an additional 0.1 cent toward environmental clean-up, according to the report. That leaves more than 80 percent strictly for highways. Even if we spent 100 percent of gas tax revenues on highways, only 65 percent of their total cost would be covered. There would still be a need for significant outside revenue – in other words, subsidies. Does that mean highways are “government waste?” Or are transportation dollars an investment to provide access to jobs and movement of goods?
One reason for the decline of the user-fee’s contribution is that the gas tax has not kept pace with inflation. Today, there is limited political appetite for a gas tax increase. Americans are also driving cleaner cars than they used to, due in large part of federal action on fuel economy. Less gas purchased means lower gas tax revenues.
So, to the critics who seem to be against all subsidies — unless they’re going to cover highway projects: let’s drop the claim that highways “pay for themselves” and have a debate rooted in fact rather than myth.
California Supreme Court hands victory to local transit riders and providers
October 5, 2009By Sean Barry
A recent California Supreme Court decision could restore billions in funding for public transportation in the nation’s most populous state.
The Court’s ruling late last week upheld a lower court decision declaring the state’s $3.6 billion raid of public transit funds illegal and ordered that the money be returned to local transit providers.
Two months ago, Transportation for America released “Stranded at the Station: The Impact of the Financial Crisis in Public Transportation,” illustrating the painful cuts transit systems have sustained at the state and local level. The cuts plateaued as unemployment reached 10 percent and Americans were demanding more transportation options, not less.
It is no secret that California has fallen hard as a result of the recession, but the severity of the cuts to public transportation in California was vastly disproportionate to the rest of the country. The reason for this was no mystery: the State was raiding dedicated transit funds every year in order to alleviate other budgetary shortfalls since 2007.
More than two dozen transit providers throughout the state enacted some combination of fee hikes and service reductions, according to our map of transit cutbacks. BART in the San Francisco Bay Area increased its base fare by 17 percent, and many transit systems in Southern California raised fares as much as 20 percent. The County Connection in suburban Contra Costa reduced its bus lines by 23 percent, and rural areas were hit hard as well. The California Transit Association, or CTA, an affiliation of local transit providers, logged 38 agencies facing cuts of some kind in their own version of our transit cuts map.
Last week’s state Supreme Court’s decision helps explain how things got this bad.
Since 2007, Gov. Arnold Schwarzenegger has successfully diverted $3.6 billion from the state’s transit fund to deficit reduction, prompting a lawsuit from the CTA to get the money back. The CTA argued that the raided funds came from gas tax revenues specifically designated for public transit. By refusing to review a lower-court decision in favor of the association, the high court effectively ruled Schwarzenegger’s raid illegal, ending the seizure of desperately-needed transit funds.
This is a huge victory and vindication for local transit providers. Randy Rentschler, director of the Bay Area Metropolitan Transportation Commission, told the San Francisco Chronicle, “everyone knows that the state’s in a budget crisis, but that crisis also exists in local governments in part because the state has taken transit money away from local entities.”
The case has broader implications for public transportation as well.
In tough budget years, Governor Schwarzenegger and the legislature are constantly looking for places to trim and local governments are an easy target. But money saved is not money earned, as local cuts tend to bite the state later through increased demand for social services and counties being unable to meet the basic needs of their citizens. The decision will hopefully lead to more caution.
Most importantly, California can no longer rob Peter to pay Paul.
But at this point, it remains unclear how much of the original $3.6 billion will be returned to the transit fund, and ultimately, to local providers to preserve vital service for riders. That money is desperately needed, not only because of the millions of Californians who rely on public transportation for their day-to-day mobility, but also because many communities are on the cusp of becoming success stories. Transportation for America’s “Stranded” report profiles how efforts in Sacramento, Orange and Contra Counties have already improved quality of life and relieved congestion, highlighting the need to keep up the support.
Today’s Headlines — 06/29/09
June 29, 2009By Andrew Bielak
- AASHTO’s president says gas taxes need to go up. (Baltimore Sun)
- Protecting our climate and gaining more energy independence begins, and doesn’t end, with the climate bill making its way through Congress. (Reuters)
- The speed of spending federal stimulus dollars remains a contentious issue. (USA Today)
- Transportation and Infrastructure Committee Chairman James Oberstar looks to make his mark with the next transportation bill. (Congressional Quarterly)
Today’s Headlines — 06/04/09
June 4, 2009By Andrew Bielak
- Virginia’s next governor needs to be focused first and foremost on the state’s struggling transportation system. (Washington Post)
- Vice President Joe Biden says states need to forge ahead on building rail. (Reuters)
- The Christian Science Monitor argues for a gas tax increase.
- Blogger Ryan Avent calls out noted anti-transit advocate Randal O’Toole. (Streetsblog)
Highway Trust Fund could need as much as $17 billion to stay in the black
June 3, 2009By Stephen Lee Davis
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| Flickr photo originally uploaded by Madison Guy |
In September last year, Congress had to provide an emergency infusion of $8 billion to the Highway Trust Fund for the first time in history to keep it from going broke. This transfer of cash from the general fund to an account that is supposed to be completely self-supporting showed us that our transportation system is in serious financial trouble.
Unfortunately, we’re expecting the Highway Trust Fund to run out of money even sooner this year.
News broke yesterday that the Obama administration is telling members of the U.S. Senate that the fund — which pays for projects approved in the transportation bill — will go broke by August if an emergency infusion of at least $7 billion isn’t approved. And it could need as much as $10 billion more to make it through the next fiscal year, which ends in September 2010.
With Congress talking about a transportation bill this year in the range of $450 billion and current gas tax revenues failing to cover the costs of the last $286 billion transportation bill, it’s clear that we need a new method of paying for our transportation infrastructure. We’re driving less and less, not just because of expensive gas, but also due to changing demographics and consumer preferences, and it’s unlikely that gas tax revenues will go up any time soon.
Predictably, many sensible voices are calling for the gas tax to be raised, which has been going down in real terms as inflation increases and the tax stays fixed at 18.4 cents per gallon. Both of the Congressionally-mandated transportation study commissions recommended an increase in the gas tax. But while we certainly more money from some somewhere to pay for the transportation investments we need, it’s imperative that we change the broken system before we pour new money into it.
The way things works now, states are esssentially encouraged have their residents drive more to increase gas tax revenues, which allows them to contribute more to the federal government and get more money back in return. We need a system that encourages states to improve mobility and safety, reduce congestion, and meet other performance measures, instead of building new roads to increase miles driven.
We need a federal transportation system that works, not the same broken thing at twice the price.
No new money without reforming the broken system.
Crafting a vision for the future — and then paying for it
February 26, 2009By Andrew Bielak
As Congress moves towards the reauthorization of our transportation program, we can expect that one of the biggest challenges the federal government will face will be figuring out just how to pay for our vast transportation needs. After all, as Americans continue to drive less, revenues from the gas tax — which hasn’t been raised since 1994 — continue to decline, and both federal and state governments are increasingly unable to find enough money to fund basic maintenance and repair work.
The National Surface Transportation Infrastructure Financing Commission took a shot across the bow today by releasing its report on the funding needs for our system — advocating, among other things, a 10-cent increase in the gas tax, a long-term transition to a mileage-based system that taxes people based on how much the drive, and an expansion of innovative funding mechanisms like congestion pricing and high-occupancy vehicle lanes.
While the report advocates some respectable principles including long-term sustainability and energy independence, we believe the authors missed a golden opportunity to provide a vision for the 21st century. Before figuring how to collect money from taxpayers, we need to decide what we should be building today and for the future, rather than merely spending money on yesterday’s priorities.
As the results on transit-related ballot measures across the country demonstrated on November 4, Americans are more than willing to pay for a green, modern transportation system, as long as they have a good idea of where their dollars are going. If we hope to find new ways to pay for that system, and are to expect present and future generations to foot the bill, the new administration and Congress needs to come out with a bold vision that breaks with the old ways of the status quo — and should show the American people just what a 21st century transportation network could look like .
Road funds may fall by $2.6 billion over 6 years
October 16, 2008By Andrew Bielak
An economic downturn and falling gas tax revenue puts Virginia’s transportation system in a tough spot. (Associated Press — Larry O’Dell)
U.S. Rep. Jim Oberstar and future transit funding
October 14, 2008By Andrew Bielak
U.S. Representative James Oberstar, the chairman of the House Transportation and Infrastructure Committee, answers questions from the Kansas City Star about the challenges facing our transportation system and the role of transit in reducing greenhouse gas emissions and oil dependence.
Raise state gas tax, reform funding, or lose federal cash
September 19, 2008By Andrew Bielak
Michigan is facing a $342 million shortfall in its transportation budget that could prevent the state from getting $2 billion in federal money over the next three years, and state leaders have few options — other than raising the gas tax — for increasing revenue. (Detroit Free-Press — Editorial)
Paying for Roads
September 15, 2008By Andrew Bielak
The Washington Post editorial board argues that the next administration must think deeply about the transportation challenges facing the nation and come up with new and sustainable methods for funding infrastructure.
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- Transit grants out the federal door, but what about the cuts?
March 8, 2010 - Transit riders in Atlanta face massive cuts, “wholesale restructuring” of service
March 5, 2010 - Opposition to Senate extension results in looming shutdown of federal transportation programs
February 26, 2010 - T4 jobs proposal would create nearly half a million jobs, according to Economic Policy Institute
February 17, 2010 - Obama’s 2011 budget gives a lift to livability and transportation
February 2, 2010
- Transit grants out the federal door, but what about the cuts?
The United States of Transit Cutbacks
Driving is down and transit ridership is at record highs. Yet transit agencies across the country are considering layoffs, service cuts and fare hikes. Find out more and learn what you can do to help at t4america.org/transitcuts
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