As governor-elect of an economically distressed Midwestern state, I have spent the four weeks since the election in transition briefings learning in minute detail about the problems and the policy choices that will confront me in January. Not once so far in the search for answers has anyone jumped up in a briefing and said, "What this country needs is a good 5-cent gas tax increase."
So before Congress constructs a bona fide bandwagon for highway legislation during the lame-duck session, will somebody explain once again why this particular highway legislation is important and why those of us digging out of the economic rubble in the Midwest should be happy to see it?
It is not that the roads and bridges in Wisconsin and the Midwest do not need attention. On the contrary, the amount of investment needed for basic road preservation efforts is staggering, as it is in other parts of the country.
It is not that we feel that enough money is already being devoted to highway needs. Rather, stagnant highway revenues and repeated deferral of necessary revenue increases at all levels have contributed greatly to the current situation.
And it is not that jobs are not needed in the region. New jobs are in desperate demand, especially jobs related to a productive investment in our economic future, like highway jobs.
Yet, on balance, it appears that the legislation likely to be considered by Congress will do more harm than good for Wisconsin and much of the Midwest. Unless the highway legislation that is actually passed makes some significant changes in the traditional federal highway program, passage of highway legislation this session will be one more problem to be overcome by several distressed states.
First, the jobs issue: everyone agrees that the highway legislation being proposed is not a jobs bill, as such. But everyone recognizes that if there were not intense pressure for some federal action to stimulate job creation, this legislation would not have such a high priority.
What seems to be overlooked in the rush for legislation is that the existing federal highway program, with its dedicated user taxes and categorical distribution formulas, is highly redistributive. It taxes all highway users equally, but sends far more back to some states in proportion to their contributions than to others. Thus a dollar of federal highway taxes will result in $1.50 in federal aid in one state, but will produce only 65 cents of federal aid in another.
For the "loser" states, the federal highway program actually exports jobs to other states. A 5-cent federal gas tax increase would cost Wisconsin highway users about $100 million annually, but we would expect to get back only about $70 million under existing formulas. The $30 million difference would be our contribution to highway construction employment in other states, most of which have lower unemployment than ours.
There are even bigger losers under the highway program who can afford their losses even less. Michigan (14.5 percent unemployment) would get back only 67 cents per dollar contributed, and would export about $150 million in FY 83 under the highway legislation under consideration by the House; Ohio (12.3 percent unemploy ment) would get 76 cents back, and export about $134 million; Indiana (11.4 percent unemployment) would get back only 68 cents, and export about $125 million.
This inequity exists in the current highway program at current tax levels. If the federal gas tax is raised and highway funding increased without changing the pattern of spending, the percentage relationships will remain the same, but the absolute amount of dollar loss from these states will, of course, grow even larger.
Unless the highway legislation expressly recognizes unemployment as a factor for distributing funds, or some realistic minimum level of return on contributions is established, an expanded highway program could actually worsen the relative economic positions of some of the most severely affected states.
The other argument that is most often made in support of immediate action on an expanded federal highway program is that we can no longer ignore our decaying "infrastructure," especially the roads and bridges that serve as the basic arteries of mobility and commerce.
Again, this concern is valid. There is a need for greater resources to be devoted to highway system preservation at all levels.
Most often, rehabilitation of aging Interstate routes and repair or replacement of vital bridges are cited as examples of what increased emphasis on the highway program will accomplish.
But under last year's program, only 22 percent of the federal aid was directed at those two critically important needs. Under the bill to be considered by the House for an expanded program, in FY 83 the proportion of federal aid for these categories would rise only to 29 percent. By contrast, by conservative estimate, probably more than 40 percent of the expenditures from the Highway Trust Fund under the House bill would go for new construction. The remainder would probably be used for resurfacing, rehabilitation and reconstruction of routes not on the Interstate system.
Further, much of the work that is usually associated with road and highway repair is not done with federal aid: pothole repair, joint and shoulder repair, minor bridge repair and resurfacing of many older roads. These are specifically excluded from the federal program because they are defined as maintenance, which is a state or local responsibility, or because the most cost-effective repair or resurfacing alternative did not allow for widening shoulders, grading new sightlines or leveling hills, which is necessary to qualify for federal aid.
Two other factors about a federal gas tax increase and an expanded federal highway program appear to raise red flags at the state level.
First, most states are currently facing a need for increased revenues to fund their own basic preservation efforts. If a federal gas tax is passed along with a federal aid program geared to upgrading and new construction, many states may find it difficult to raise their own taxes next year enough to fund basic state and local preservation programs.
Second is the broad consensus that is developing in favor of completely redefining and restructuring federal-state highway relationships.
There is agreement that essentially local needs should be met locally, and that the future federal responsibility should only involve highways of overriding national concern. There is not yet agreement on where the lines of local and national interest should be drawn, on whether responsibilities and fiscal capacity will be passed in tandem to states, or on what the size and scope of the remaining federal programs should be.
Further, as documented by a Congressional Budget Office study this summer, there is increasing uncertainty regarding whether there exists either the fiscal capacity or the justification to continue blindly to pour money into a pot called "Interstate completion" since only one-quarter of the remaining cost actually represents unbuilt links in the intercity network, the rest being local segments primarily of benefit to commuters in various cities.
Considering the serious, informed questioning of the existing program that is going on, in contrast to the almost universal support that it has historically enjoyed, this does not appear to be the time for Congress routinely to authorize, and in fact to expand, the traditional program for four more years. If such authorization is enacted, it should come only after Congress has had time to examine the alternative approaches that have been proposed. The current session does not appear likely to offer an opportunity for realistic consideration of alternatives.