Transportation



The Issue


Transportation is vital to the nation’s economic health. Ease of movement in the air and on highways, roads, rails, bridges, and waterways contributes to the productivity of workers, manufacturers, and other businesses. Yet the current Washington-centric approach hampers transportation investment with bureaucracy, mismanagement, and resource misallocation. The inefficacy of federal management undermines the goals that should be the basis of federal transportation policy: relieving congestion, improving mobility, and increasing safety in cost-effective ways. Instead, workers have received longer commutes, growing congestion, and lackluster benefits for the federal gas taxes they pay.

Politicians often justify increased transportation spending with hollow promises of job creation, economic growth, and idyllic dreams of achieving “livability.” The country’s allegedly “crumbling” infrastructure is invoked to justify stimulus and special-interest spending. As a result, spending out of the Highway Trust Fund (HTF) is diverted to low-value programs unrelated to highways, diluting the fundamental “users pay, users benefit” concept by shortchanging the motorists and truckers who pay gas taxes.

The question is not whether we should be investing in infrastructure, but how we can do so most effectively. In order to achieve maximum efficiency and accountability, vital infrastructure decisions should be made at the local and state level, free from federal mandates. Local and state governments are more accountable to those who rely on their infrastructure and know their transportation needs better than Washington. Thus, they are in a better position to address these needs and, indeed, already independently enact policies to generate their own transportation funding. Congress and the Administration should seek to empower states by limiting the role of the federal government to concerns that are truly national in scope.


Recommendations


Remove Programs that Are Not Federal Priorities from the Highway Program. As long as the federal government has a role in transportation policy, it should eliminate the HTF programs that are not federal in nature or fail to reduce congestion, enhance mobility, or improve safety in cost-effective ways. Currently, more than 25 percent of HTF spending is diverted to programs that have little to do with the federal highway program or national priorities. Programs that should be eliminated include:

  • Mass Transit. Nearly one-fifth of trust fund spending is diverted to inherently local transit projects that are rarely cost-effective, do not live up to congestion reduction or environmental promises, and serve a small subset of the population.
  • Congestion Mitigation and Air Quality. Despite its name, this program funds few projects that effectively reduce congestion, instead focusing on transit and local trivia like bike-share programs.
  • Transportation Alternatives Program. Possibly the worst offender, this program siphons highway dollars to local projects such as sidewalks, recreational trails, landscaping projects, and historical renovations.
  • Funding for Other Non-Priorities. Further funding is directed to various local or improper federal programs such as ferry boats, the federal lands access programs, scenic byways, and education programs.

Reform the Federal Role in Transit Funding. Transit systems across the country are plagued by unnecessarily high operating costs, paid for in part by subsidies that remove incentives for transit agencies to cut costs and operate efficiently. Federal subsidies distort inherently local transit decisions made by state and local governments, as those programs which Washington subsidizes are given priority over more imminent local needs that Congress does not favor. Without these costly federal subsidies, local and state governments, not Washington, would better gauge the funding and operating feasibility of transit systems. Congress should phase out the federal transit program and its funding over a five-year period, thus refocusing the HTF on its core mission and restoring the integrity of the “user pays, user benefits” model. Likewise, lawmakers should eliminate discretionary competitive grants such as the “New Starts” program, which provides perverse incentives for localities to build new, unnecessary transit systems while maintenance of existing infrastructure is ignored.

Reform the National Environmental Policy Act (NEPA). Congress should reform the National Environmental Policy Act, which can lead to costly transportation project delays, as a step toward ultimately rescinding the law. Instead of pursuing wholesale reform, Congress has moved up deadlines for environmental review and suggested imposing fines for stalled reviews. Reforms such as eliminating greenhouse gas emissions analysis from the review process, narrowing the NEPA review to only major environmental issues, and requiring NEPA to incorporate previous analyses into similar projects would streamline the environmental review process and accelerate transportation and infrastructure projects, generating cost savings.

Identify and Appropriately Address Federal Barriers to the Use of Public-Private Partnership (PPP or P3) Agreements. When complete privatization is not suitable, public-private partnerships are an option that can increase efficiency, lower taxpayer risk, and spur private investment in infrastructure projects. Traditional highway funding—collected through the federal gas tax—will be insufficient to pay for states’ future needs to expand capacity on roads and bridges. Instead of creating a new federal transportation funding stream, Congress should identify and appropriately remove federal barriers to expanded P3 use so that states that have removed their own barriers can use these arrangements to finance capital-intensive projects. P3 successes include the high-occupancy toll lanes added on the Capital Beltway in the Washington, DC, metropolitan area and in the Dallas–Fort Worth area.

Overspending Has Led to Chronic Highway Trust Fund Deficits

Limit Highway Trust Fund Spending to Available Revenue. The HTF perennially spends more than it receives in revenues, requiring constant bailouts from the Treasury’s general fund. HTF spending is projected to total $50 billion–$65 billion annually, meaning a traditional six-year reauthorization bill would spend about $340 billion, while the trust fund would collect only $250 billion. Lawmakers consistently advocate increasing revenues, by such means, for example, as raising the federal gas tax or taxing multinational corporations’ overseas earnings, to pay for desired additional spending. Although the gas tax has lost some of its purchasing power to inflation, a federal gas tax hike would perpetuate diversions of this revenue to transit and other programs that are not federal priorities. Other revenue increases managed at the federal level would similarly maintain the structural problems with the HTF. Instead of hiking taxes to fund new federal spending, Congress should eliminate diversions out of the HTF to focus existing funding on the core mission of the federal highway program.

Reject the President’s Livability Initiative. Through the appropriations process, Congress should defund the Obama Administration’s livability program, which is meant to “coerce people out of their cars,” according to former Transportation Secretary Ray LaHood. Livability programs are politically driven and mark federal government overreach into the lives of citizens. By restricting land use and forcing people into high-density living, so-called livability increases the cost of living in cities and metropolitan areas and is used to justify higher spending on streetcars and other transit projects.


Facts and Figures


  • Since 2008, chronic overspending out of the HTF has required Congress to transfer $143 billion in bailouts from general revenues. This disparity between spending and revenues is only poised to get worse in the future, as the Congressional Budget Office projects a $178 billion cumulative deficit through 2025. Despite myriad opportunities to address this chronic overspending, none of the major highway bills passed in Congress reduced overspending or refocused it on the core mission of the highway program. Indeed, the latest authorization, the Fixing America’s Surface Transportation Act (FAST), which was passed in December 2015, exacerbated these problems by proposing new programs and billions in additional spending out of the HTF.
  • Despite billions of dollars in annual spending, traffic congestion has not improved. According to the Texas Transportation Institute, U.S. commuters traveling in peak periods spent an additional 42 hours traveling annually, compared to 18 hours annually in 1982. Furthermore, congestion worsened in 95 of the nation’s 100 largest metro areas between 2013 and 2014. Diversions of HTF dollars to transit, transportation alternatives, and other programs have come at the expense of funding highway and bridge projects that could relieve congestion and improve citizens’ access to jobs.
  • Mass transit, which includes rail, buses, and streetcars, is local in nature and concentrated in just six “legacy” cities: Boston, Chicago, New York, Philadelphia, San Francisco, and Washington. Although Mass Transit receives about 20 percent of HTF funding, only 5 percent of workers rely on mass transit for their commute and just 2 percent of personal trips are made on mass transit. While supporters claim that transit will relieve congestion, reduce carbon emissions, and improve access to jobs for lower-income citizens, most projects fail to accomplish these goals and can even exacerbate existing problems. Indeed, transit has not even been able to maintain its mode share of urban travel, which has dropped by nearly one-fifth between 1980 and 2012.
  • States across the country are generating their own funding for transportation without waiting for the federal government to act. In 2015 alone, 26 states have sought to bolster their transportation revenues. For example, New Hampshire approved a 4.2 cent per gallon gas tax increase (the first in 23 years) while Mississippi voted to raise $250 million in bond financing. Though some of these changes mark tax increases and some of the revenue will continue to fund improper projects, these measures show that states are capable of addressing their own transportation funding and management priorities without relying on costly federal funding. Indeed, state and local funding makes up three-quarters of public spending on transportation infrastructure nationwide.

Selected Additional Resources


Wendell Cox, “America Needs a Rational Transit Policy,” Heritage Foundation Issue Brief No. 4368, March 24, 2015.

Curtis S. Dubay and Michael Sargent, “Congress Should Not Use International Tax Reform to Delay Highway Trust Fund Insolvency,” Heritage Foundation Issue Brief No. 4461, September 11, 2015.

Emily Goff, “What Congress and States Can Do to Reform Transportation Policy,” Heritage Foundation Issue Brief No. 4352, February 20, 2015.

John Gray, Norbert J. Michel, and Michael Sargent, “House Transportation, Housing and Urban Development Appropriations: The Highway to Bankruptcy,” Heritage Foundation Issue Brief No. 4414, June 4, 2015.

Matthew Grinney and Emily Goff, “Bringing Transportation Decisions Closer to the People: Why States and Localities Should Have More Control,” Heritage Foundation Backgrounder No. 2902, April 9, 2014.

Diane Katz and the Honorable Craig Manson, “The National Environmental Policy Act,” in Jack Spencer, ed., Environmental Conservation: Eight Principles of the American Conservation Ethic, The Heritage Foundation, July 2012, pp. 59–64.

William G. Reinhardt and Ronald D. Utt, “Can Public–Private Partnerships Fill the Transportation Funding Gap?” Heritage Foundation Backgrounder No. 2639, January 13, 2012.

Michael Sargent, “Highway Trust Fund Basics: A Primer on Federal Surface Transportation Spending,” Heritage Foundation Backgrounder No. 3014, May 11, 2015.

Ronald D. Utt, “‘Turn Back’ Transportation to the States,” Heritage Foundation Backgrounder No. 2651, February 7, 2012.