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.
What’s the impact of the Highway Trust Fund patch or an extension of the current bill?
July 30, 2009By Lilly Shoup
UPDATED 7/30: The Senate passed the $7 billion patch late this afternoon by a 79-17 vote. All 4 amendments failed, so the identical bill has been approved by both chambers and now heads to President Obama’s desk for signature.
With the House passing a $7 billion patch for the Highway Trust Fund yesterday afternoon to keep it from running out of money before September, we thought it might be useful to post a brief Q&A about the trust fund patch and how the full six-year transportation authorization bill could be affected. The $7 billion patch now moves to the Senate for a vote, probably this afternoon, before reaching President Obama’s desk. The Highway Trust Fund (HTF) provides funds for the federal portion of transportation projects.
If the patch is approved by the Senate, Congress will then be is now facing a much bigger decision before the current transportation bill expires on September 30th: pass a new six-year transportation bill, or pass a short- or long-term extension of SAFETEA-LU, the existing transportation bill.
What is the short-term patch and who supports it?
The short-term patch would repair the trust fund insolvency through a $7 billion cash infusion into the HTF. The funds would be transferred from the General Fund before Congress goes on recess in August and would ensure that states can continue to obligate transportation funds through September 30th, 2009. The patch would address the funding shortfall due to declining gas tax revenues that are no longer sufficient to cover the federal portion of transportation projects.
House Transportation and Infrastructure Committee Chairman Jim Oberstar supported this option and testified before the House Ways and Means Subcommittee on July 23rd asking for the $3 billion patch. (That patch has since been increased to $7 billion to match the Senate’s preferred amount.)
How does this relate to the upcoming expiration of SAFETEA-LU on September 30th?
With this cash infusion Congress could continue to focus on pushing the authorization of a new 6-year surface transportation bill this September. The original $3 billion figure was based on recent estimates made by DOT but both the White House and DOT officials have expressed concern that $5-7 billion is a more accurate figure needed to keep the HTF solvent through September. (The House passed a $7 billion patch.)
What is the extension and who supports it?
An extension would continue SAFETEA-LU policies and funding guarantees for a specified amount of time to allow Congress and the Administration to continue working on a full 6-year comprehensive bill. A proposed 18-month extension would extend SAFETEA-LU to March 2011. Numerous Senators have stated their preference for an 18-month extension, which is also currently supported by the White House. On July 23rd the Senate Banking Committee became the third Senate committee to approve an 18-month extension bill. Congress is also considering the possibility of a short-term extension of 3, 6, or 12 months in lieu of a longer-term extension.
How would the extension be funded and how does it address the near-term shortfall in HTF funds?
An extension of SAFETEA-LU for any length of time would be paid through gas taxes and a possible General Fund infusion. (More funding from some source would certainly be required, as gas taxes do not cover the current funding levels.)
The Senate Financing Committee Chairman Max Baucus released a funding proposal (S. 1474) on July 21st that would maintain the HTF’s solvency throughout an 18-month extension. This provision will transfer $26.8 billion from the General Fund to transportation ($22 billion to HTF, $4.8 billion to the mass transit account). The fund transfer will begin in time to provide near-term funding (through August) before HTF reaches insolvency.
Any questions? Ask away in the comments and we’ll try to answer.
Sec. LaHood proposes 18-month extension of current transportation bill
June 17, 2009By Stephen Lee Davis
This morning on Capitol Hill, DOT Secretary Ray LaHood proposed an 18-month extension of the current SAFETEA-LU transportation authorization bill. Beyond simply extending the current bill, LaHood indicated that he wants to include some reforms in the 18-month extension — including a focus on metro areas, extensive cost-benefit analysis, and a commitment to “livable communities” — but was short on other specifics.
No word yet on how this will affect the proposed transportation bill outline to be released by Rep. James Oberstar tomorrow morning. Be sure to check back over the next few days for the latest.
“This morning, I went to Capitol Hill to brief members of Congress on the situation with the Highway Trust Fund. I am proposing an immediate 18-month highway reauthorization that will replenish the Highway Trust Fund. If this step is not taken the trust fund will run out of money as soon as late August and states will be in danger of losing the vital transportation funding they need and expect.
“As part of this, I am proposing that we enact critical reforms to help us make better investment decisions with cost-benefit analysis, focus on more investments in metropolitan areas and promote the concept of livability to more closely link home and work. The Administration opposes a gas tax increase during this challenging, recessionary period, which has hit consumers and businesses hard across our country.
“I recognize that there will be concerns raised about this approach. However, with the reality of our fiscal environment and the critical demand to address our infrastructure investments in a smarter, more focused approach, we should not rush legislation. We should work together on a full reauthorization that best meets the demands of the country. The first step is making sure that the Highway Trust Fund is solvent. The next step is addressing our transportation priorities over the long term.”
UPDATE: The Wall Street Journal has a story up covering LaHood’s proposal, and includes a quote from Rep. Oberstar, responding to the idea of an extension:
In a meeting with reporters Wednesday, Mr. Oberstar was adamant that Congress must pass a new law before the current one expires.
“Extension of current law is unacceptable,” Mr. Oberstar said. “Now is the time to move.”
UPDATE 2: Michael Cooper of the New York Times covers the proposed extension, and gets a statement from Jim Berard, spokesman for Rep. Oberstar. “The chairman is not too pleased with the administration’s proposal,” he said.
Sec. LaHood: Any new money will come with reform
June 4, 2009By Andrew Bielak
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| National Bike Summit – Day two-5 Originally uploaded by BikePortland.org |
| Sec. LaHood at the National Bike Summit this year in Washington, DC. |
Just yesterday, we noted that our transportation system is facing a severe financial crisis. The main source of funding for our federal transportation investments, the Highway Trust Fund, is desperately short on cash, and will need as much as $7 billion from the general fund by September to continue paying for our infrastructure.
While we recognize the need to find new sources of revenue to pay for our roads, bridges, public transportation systems, and walking and biking paths, we believe strongly that we can’t afford to just pour more money into a broken system and must tie any increased funding to strong, measurable reforms.
Or as we said yesterday, we need a federal transportation system that works, not the same broken thing at twice the price.
It appears that the U.S. Department of Transportation Secretary Ray LaHood and the administration agrees pretty strongly with that sentiment. During a hearing today in front of the transportation panel of U.S. House Appropriations Committee, LaHood made a clear, concise point on linking more funding to accountability and performance measures.
“We believe very strongly that any trust fund fix must be paid for. We also believe that any trust fund fix must be tied to reform of the current highway program to make it more performance-based and accountable, such as improving safety or improving the livability of our communities — two priorities for me.”
Check out this post from Elana Schor and our friends at Streetsblog for the whole scoop.
There’s still the sizable challenge of figuring out how to pay for the transportation infrastructure that will keep our country economically competitive and give Americans better options. But it’s incredibly encouraging to see that Sec. LaHood is broadcasting our message on Capitol Hill loud and clear — no new money without reforming the broken system.
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.
Today’s Headlines — 06/03/09
June 3, 2009By Andrew Bielak
- The Highway Trust Fund, which funds surface transportation projects nationwide, will need as much $7 billion to counter a shortfall in revenue. (Wall Street Journal)
- Alex Marshall stresses the importance of anticipating demand in transportation planning. (Governing)
- Gas prices near $3 a gallon leave some feeling stressed out. (Detroit Free Press)
- The Hummer brand goes to a company in China. (New York Times)
Senate restores highway trust fund
September 11, 2008By Andrew Bielak
The U.S. Senate approves a plan to move $8 billion dollars into the highway trust fund. (Associated Press)
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- Atlanta-area transit system 14 days from shutting down, 2 million rides disappearing
March 17, 2010 - U.S. Transportation Department makes good on promise to ensure our streets are made safer
March 16, 2010 - Obama’s livability programs help rural America too
March 16, 2010 - 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
- Atlanta-area transit system 14 days from shutting down, 2 million rides disappearing
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
Transportation: In your eyes
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