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Is reauthorization of federal highway funding really

necessary?

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1956 legislation

Construct 41,250-mile Interstate Highway System.

Fund it mainly by means of federal fuel taxes.

Abolish the powers under the 1956 act, including the taxes, in 1972, three years after the completion of the highway system, assumed to be in 1969.

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What actually happened:

Length of Interstate Highway System was increased to 46,726 miles.

Highway system deemed completed in 1996.

The 1956 powers, including the federal fuel taxes, were not abolished.

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What is to happen next?House Transportation Committee Proposal

Highways20%

Safety2%

Flexible & Earmarks

48%

Transit20%

High-Speed Rail10%

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Advantages of federal financing of state roads

It enabled the Interstate Highway System to be completed.

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Disadvantages of federal financing of state roads

By forcing road users to pay for non-road projects, it violates the principle that users pay the costs of the services they consume.

It increases the costs of providing and maintaining roads.

It encourages the financing of low-priority projects.

It increases federal powers, e.g., to impose “Livability” standards in urban areas

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Federal financing increases road costs because:

Federal standards can be higher than state standards.Federal regulations (e.g. Davis Bacon) increase costs.Federal involvement increases administrative costs.Cost increases can be 25% or more.

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Low-priority projects encouraged because

States select projects but pay only 10 to 25 percent of the costs.

Fifty people dining together are more likely to economize when each diner pays his or her own bill.

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Federal powers increasedThe 58% of funding designated “Flexible & Earmarks” will enable individual congress-people to influence more than half of federal transportation funding.

The "Office of Livability”, to ensure that "States and metropolitan areas achieve progress towards national transportation-related greenhouse gas emissions reduction goals”, will enable congress-people to influence all urban land use.

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The consequences of non-reauthorization

Taxes supporting the federal highway trust fund expire on Sep. 30, 2011.

Highway financing reverts to the states. Revenues from federal road-use taxes no

longer available for diversion to transit and other non-road uses.

Road users in all states benefit.

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Effects of state financing on consumer-driven mobility

Easier for consumers to influence state government than federal government.

Less easy for states to run deficits. Therefore high probability that some

states will pursue consumer-driven policies for transportation.

Successful policies will be copied by other states.

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How might reauthorization be prevented?

Congress-people unlikely to volunteer to give up any of their powers, but -

Many face elections in 2010.Road users vote.

There may be time to persuade road users to vote for candidates opposing transportation reauthorization