Can highway spending ever be fair?
The Government Accountability Office has a new report out today looking at how much federal highway money each state gets, per dollar of gas-tax revenue they chip in to the Highway Trust Fund. Here’s a map, looking at fiscal years 2005-2009:
A few things stand out here. Low-population states such as Alaska, Montana, North Dakota and South Dakota receive much more in federal aid than they pay in — Alaska gets $4.99 back for every $1 it contributes. But notice what’s striking. Every single state now gets more federal highway aid than it pays in gas taxes. Even Texas. There’s not a state in the union where federally funded highways “pay for themselves.”
How did this happen? As I’ve noted before, the gas tax is no longer high enough to cover the Highway Trust Fund, partly because it’s not indexed to inflation and partly because people are driving less. Between 2005 and 2009, the federal government spent roughly $200 billion on highway aid, and $30 billion of that was paid for by general taxes. “A significant amount of highway funding,” the GAO report notes, “is no longer provided by highway users.”
As Angie Schmitt notes, this report also has implications for another arcane — but surprisingly heated! — policy dispute. For years, different states have bickered over how federal highway aid should be doled out. Donor states like Texas, which have long sent more in gas money to D.C. than they’ve gotten back, have argued that they’ve been subsidizing other states (and projects like aging roads in the Northeast). As such, the donors say, the federal role in highway spending should be scaled back so that states can spend their own money. “Donee” states, by contrast, have long argued that needs are more important than fairness.
In the big 2005 transportation bill, Congress tried to make spending “fairer” by setting up the Equity Bonus program, which ensures that states get back at least 92 percent of what they pay. One problem here, as Robert Puentes of Brookings has pointed out, is that this program creates incentives for states to encourage fuel consumption. After all, more fuel guzzling equals more taxes equals more federal money. A better approach, Puentes notes, would tie transportation spending allocations more closely to factors such as economic benefits or energy use.
But Puentes’s argument has had a hard time getting traction. Could it have an easier time now that it’s clear that all states are “donee” states? At least one key politician involved in transportation issues seems to think so. “Instead of being consumed by the parochial ‘donor’ and ‘donee’ debate, this GAO report confirms that Congress should be working toward crafting a surface transportation bill that meets the needs of a 21st century national transportation system,” said Rep. Nick Rahall (D-WV), ranking member of the House Transportation Committee, in a statement today. “Using rate of return as our rationale for how we spend our limited transportation dollars simply detracts from the national focus.”