How States Compensate for Less Federal Transportation Funding

In Kenneth Orski’s latest Innovation Brief, Orski explains what the states have done to buffer themselves from the effects of less transportation funding from the federal government — and it’s not the dire picture being painted by big spenders in Washington: 

While transportation stakeholders and the Washington press corps are focusing on the impending Highway Trust Fund shortfall and the emerging House-Senate consensus to “patch” the Fund with $10.8 billion in short-term funding until May 2015, they are ignoring developments outside the Beltway that go a long way to compensate for the lack of an assurance of long-term federal funding.  For in fact, individual states, far from sitting idly by, are responding to the current fiscal uncertainties in Washington by stepping up and raising additional revenue to meet their transportation needs. 

Twenty-eight states have launched transportation-related revenue initiatives according to surveys by the American Road and Builders Association (ARTBA), the National Council of State Legislatures and the American Association of State Highway and Transportation Officials (AASHTO).

Collectively, these measures are generating billions of additional dollars for state and local transportation programs and providing a buffer against the possibility of delayed federal reimbursements and inadequate federal funding.

State officials we have talked to are quick to remind that “we cannot do it all” and that all levels of government, including the federal government, should share in the cost of maintaining and improving the nation’s highways.  But they concede that the recent revenue initiatives by various state legislatures are helping to relieve concerns about a slowdown in highway construction and cushion the impact of any eventual reduction in federal funding.   

 

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Highway Funding: 700,000 Lost Jobs?

“All told, nearly 700,000 jobs could be at risk next year.”

That was President Obama earlier this month, urging Congress to bail out the federal Highway Trust Fund (HTF).  He warned failure to act would be the equivalent of Congress laying off the “entire population of Denver, or Seattle, or Boston.”

Seriously?

A November 2013 paper by James Sherk, Senior Policy Analyst in Labor Economics at The Heritage Foundation, provides some different numbers:

“Across the U.S., just over 300,000 Americans work in highway, street, or bridge construction—less than the population of Wichita, Kansas.”

Obama’s math just doesn’t add up.

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Pennsylvania, Utah Can Deal with Transportation Cuts

State and local lawmakers have been in crisis mode recently, as D.C. politicians try to figure out how to keep the Highway Trust Fund solvent.  But folks in Utah and Pennsylvania have a much less frenzied outlook than their counterparts in other states.  

In Utahfederal funds make up only 20 percent of their total transportation budget.  That’s why John Gleason, spokesman for the Utah Department of Transportation, says his state is better equipped than others to cope with cuts in federal funds.

In Pennsylvania, PennDOT spokesman Rich Kirkpatrick said, “We’re in a position where we don’t have to alter our plans; we can weather this immediate crisis.”  

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Highway Funding: Is 7 Percent a Crisis?

“It’s not socialism…We’re just building roads and bridges.”

That was President Obama’s argument today as he urged Congress to bail out the federal Highway Trust Fund (HTF).  In a letter sent to states yesterday, Obama’s transportation secretary Anthony Foxx “attempted to provides states with the most equitable, straightforward approach possible for managing this crisis.”

What exactly is the crisis?

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Another Highway Bailout and How Not to Finance It

On May 30, 2014, House Republican Leaders announced a plan to bail out the federal Highway Trust Fund (HTF) to the tune of $15 billion, paying for it with savings generated by reforms to the U.S. Postal Service (USPS). This proposal is flawed on a number of levels and should be rejected by Congress.

Highway Bailout:

Under current law, drivers pay a tax of 18.4 cents per gallon on gasoline and 24.4 cents on diesel fuel, which gets deposited into the HTF. Excessive spending levels set by highway bills enacted in recent years, and many spending diversions to non-road, non-bridge activities, have left the HTF with too many bills to pay but not enough money on hand. An additional $5 billion is needed to keep spending on pace through the end of the fiscal year, and that figure jumps to $15 billion for a one-year extension at current spending levels. If Congress does not bail out the HTF by the end of July, the federal government will continue to collect federal gas tax revenues, but it would have to begin slowing down its reimbursements to state Departments of Transportation.

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