Another bipartisan effort to make transportation policy worse

A misguided proposal to give state DOTs yet more “flexibility” in spending federal dollars is one more example of how the desire for bipartisanship on transportation too often leads to bad policy and outcomes. This proposal would almost certainly result in more money being transferred into wasteful highway spending, especially in states that are currently failing to produce good outcomes with the massive “flexibility” that they already have. Why give these low performers more in exchange for nothing in return?

Senators Kevin Cramer (R-ND) and Angela Alsobrooks (D-MD) have put forth a bipartisan proposal intended to be included in the upcoming 2026 transportation law. ¹ The Senators’ proposal is very straightforward, increasing the amount of flexibility in highway formula programs from 50 percent up to 75 percent. What does that mean? States could transfer more money from one program to another, giving them yet more discretion and Congress even less control. All under the banner of “streamlining” the federal program and providing more accountability (while actually reducing accountability and oversight.)

Quick primer on the flexibility of federal transportation funding

Before we explain the impact of this proposal and the terrible impacts of this kind of bipartisanship, we need to quickly explain two things about “flexibility:”

First, the most important thing to understand about the federal transportation program is that it is a federally funded block grant program administered by the states. State DOTs receive the lion’s share of the funds, and they largely decide what to build and where. The biggest limitations are how much money they receive within each particular program and what types of projects are eligible within each program. (And to a lesser degree, which federal agency administers those funds.) For example, funds from the National Highway Performance Program (the largest program by share) can only be spent on projects on or that benefit the National Highway System. The Congestion Mitigation and Air Quality program can fund a wide range of projects, but they are supposed to reduce emissions, pollution, or congestion. Federal Transit Administration (FTA) formula grants can only fund capital transit improvements like upgrading buses or buying new railcars.² And the Surface Transportation Block Grant program (the 2nd biggest program by share) can fund almost any type of project, including transit and projects to make biking and walking safer or more convenient.

Second, the transfers between these programs are capped at 50 percent between any of the core highway programs listed below.

• National Highway Performance Program (NHPP)
• Surface Transportation Block Grant Program (STBG)
• Highway Safety Improvement Program (HSIP)
• Congestion Mitigation and Air Quality Improvement Program (CMAQ)
• National Highway Freight Program (NHFP)
• Carbon Reduction Program (CRP)

For example, say Texas gets $100 million in CMAQ funding. Under current law the most they could transfer into programs to build new highways that increase harmful cancer-causing emissions would be $50 million. These bills would dramatically increase that amount to $75 million—trading real consequences for children’s asthma rates in exchange for state DOT’s convenience to spend as they please. The current limits at 50 percent have balanced the states’ desires for flexibility while retaining the priorities that Congress has set in each authorization. I.e, improving air quality is a long-standing priority, so Congress has required a certain percent of highway funds go to projects that accomplish that goal.

Now, interestingly, there are no restrictions for the amount of money a state can transfer from these highway programs into transit projects. But this flexibility isn’t as widely used. (There are some notable other restrictions we’ll cover in a minute.) A TRB report a few years ago, as profiled here by Jeff Davis at Eno, showed that although states transferred a total of $13 billion into transit from highway programs from 2013-2022, the lion’s share of that funding was transferred within just a handful of states. 32 other states transferred less than 2 percent of their highway funds to transit and Mississippi and North Dakota transferred none at all.

What problem is this solution trying to solve?

This is our biggest question. We were deeply puzzled when we heard that Sen. Alsobrooks was co-sponsoring this legislation. Let’s just give the Senator a (huge) benefit of the doubt for a moment and say that Maryland wants to transfer more money into transit, and she wants to help them out. Looking at Maryland’s investment data in our State of the System hub, two trends do jump out.

Maryland is transferring a lot of highway funds into transit: $304 million in total from FY21-23 based on the data we were able to compile in the State of the System. The TRB report noted above also shows that Maryland was the #3 top performer in transferring highway money to transit at about 9 percent, as a percentage of all FHWA funds they received.

That’s good. Maryland also transferred $480 million total across 3 years from the highways-only program (NHPP) into the most flexible program (STBGP). The devil is in the details when it comes to precisely what they chose to fund with that $480m, as it could be literally anything. These are good trends but this logic breaks down quickly—especially once you get beyond Maryland.

Here are four problems with this proposal:

1) Want to spend more on transit? There are already no restrictions

This is the most obvious problem: If the goal is to transfer more funds into transit, your state can do that now: “The decision to transfer funds to FTA is not subject to the 50 percent limit that applies to transfers among federal-aid highway programs,” the TRB report above notes. Maryland DOT can transfer as much money as they want into transit without the Senator’s help.

But there is one very important restriction in current law: Whatever transit project you transfer funds to has to be eligible for both programs—the origin and destination program. So for example, if you wanted to transfer money out of NHPP to transit, it would need to be for a project that brings benefits to the NHS, like building a new transit station on a bus rapid transit (BRT) line that runs on dedicated lanes along a state-owned road.

We think that flexibility to transit can be a bit of a distraction. It’s really about eligibility within the programs and the state’s priorities. A state can use NHPP highway dollars on certain transit projects that fit the description above. If they don’t, it’s not because they aren’t “flexing” money to transit, it’s because they don’t prioritize transit with the flexibility they already have.

For any member of Congress who truly cares about maximizing state flexibility, they should instead propose eliminating this dual program restriction for sending funds to transit. I.e, if a state wants to carve out 15 percent of their NHPP funding to spend on local transit projects, no matter what they are, let them do it! That’s true flexibility and freedom for a state. Why should Congress be mandating a certain amount of highway spending if that’s not what the state wants?

2) It’s incredibly naive to not realize how this will be abused in other states

Maybe Maryland is going to do lovely things with this new flexibility. (At this moment in time, under this particular governor, with this particular administration at MDOT.) But this will open the floodgates in countless other states to whittle down spending on emissions-reducing projects, safety projects, and bike-ped projects even further, to as little as 25 percent of what Congress allocated for those specific purposes. Georgia, the ninth most deadly state for people walking, was one of just five states that transferred out the maximum (50 percent) from the tiny program to support safer walking and biking from 2013-2022. Georgia, a state so far out of Clean Air Act compliance in the 1990s and 2000s that they lost federal transportation funding, transferred the second most money out of the CMAQ program from 2013-2022.

3) If the increased flexibility from MAP-21 hasn’t led to better outcomes, why would more flexibility do it?

States have had this 50 percent flexibility for years within a system that has produced record numbers of traffic fatalities, terrible roads and bridges, and more expansion of a system that many states can’t afford to maintain. How is more flexibility specifically going to help improve those outcomes? That should have been the first question asked at the Senate hearing on this bill a few weeks ago.

This increased flexibility states enjoy was part of a grand bargain struck between Congress and state DOTs in MAP-21 back in 2012 to increase accountability at the same time in exchange for more flexibility for states. We detailed it at length:

Congress made a deal with state DOTs and the broader world of transportation stakeholders: Give them more flexibility to spend (more) federal transportation money however they wish. And in exchange, the public would get more transparency into how they’re spending the money, and be able to hold transportation agencies accountable for making measurable progress on seven core goal areas. “Transparency” turned out to be pretty opaque, and “accountability” became a paperwork exercise. Nearly a decade into the implementation of this system, it’s devolved into a box-checking exercise that provides neither greater transparency nor accountability for accomplishing anything tangible.

This proposal would aim to alter the terms of that deal further: This time, give states more flexibility in exchange for…well, nothing in return. You don’t need to be gifted in the art of the deal to know that’s a terrible one.

4) This reduces accountability and transparency in a bill aiming to improve both

You will not improve accountability by further reducing Congress’ ability to have any oversight or control over the program they are responsible for.

More transferability would reduce Congress’s ability to direct state DOTs toward specific outcomes with (new or old) formula programs. For example, if Congress created a new Carbon Reduction Program in a future reauthorization, states could probably just treat any new reporting as a box-checking exercise and then transfer 75 percent of the funds to other programs and priorities. A provision like this increase in flexibility could be incredibly difficult to roll back if it passes and is included in the next reauthorization (which probably isn’t passing anytime soon.)

What’s next after upping this limit to 75 percent? Going to 100 percent? No more separate programs at all? Congress should just give every state one big check and tell them to do what they want, having abdicated their role entirely to manage the federal transportation program. State DOTs and AASHTO would love that proposal.

Senator Cramer is likely carrying the water of the North Dakota DOT on this proposal—a state which transferred out the max allowed from the program to make people walking and biking safer from 2013-2022. But Senator Alsobrooks is carrying the water for North Dakota and every other state DOT that just wants more flexibility in exchange for nothing in return—she just doesn’t seem to realize it.