Bush Admin Wants to Rob Transit to Pay for Highways

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Construction projects like these additions to San Antonio’s I-410 may stop short without an infusion of cash.

On Wednesday, Mobilizing the Region called attention to the Bush Administration’s proposed 2009 transportation budget. While New York City stands to get welcome earmarks for projects like the Second Avenue Subway, the big picture is more sobering. The administration wants to transfer billions of dollars from transit to highways:

It proposes to shore up the Highway Account of the federal Highway Trust Fund (HTF) by “borrowing” $3.2 billion from the HTF’s Mass Transit Account. It would also cut national transit spending by more than $200 million from previously proposed levels.

What’s going on here? I’ll do my best to make it interesting.

The Highway Trust Fund has two components: By law, 18.2 percent is set aside for transit, and the rest for
highways. Problem is, the highway people have been spending down their part of the fund at an unsustainable clip, and they are on pace to run out of cash around October. If that happens, they will have to stop jobs — cutting off exactly the kind of big-ticket construction projects that legislators love.

"That’s going to be very unsavory from a political standpoint," says David Burwell, a DC-based transportation policy expert. "So they’re robbing Peter to pay Paul."

The administration looks at the Transit Fund, which still has several billion left in the piggy bank, and sees a quick fix to postpone facing a long-term problem head-on. But raiding the Transit Fund would drop it, too, into the red within two years. In a letter of opposition, Maria Zimmerman of the national transit advocacy group Reconnecting America warns of this scenario:

Bush’s FY09 budget proposal would further push the cost and obligation of maintaining the multi-trillion dollar transportation system — one of this nation’s greatest assets — onto the backs of state and local governments.

Now the good news: The gambit is unlikely to succeed.

"The people on the Transportation and Infrastructure Committee are going to scream bloody murder," says Burwell. "It’s a violation of the spending structure established by ISTEA."

The most logical way to make up the shortfall, he believes, is to bump up the gas tax, but of course that’s politically unpopular too. A more likely scenario will be a stop-gap measure like taking money from the general fund (which bumps up the federal deficit) or cracking down on gasoline wholesalers who cheat on gas tax payments (apparently this is a widely known problem that has gone largely unaddressed for some time).

In the not-too-distant future, more drastic measures will be necessary. The attempt to raid the Transit Fund is symptomatic of the same unsustainable financial situation that has caused the idea of privatizing highways to gain so much traction.

Burwell, an early champion of "context-sensitive" approaches to transportation projects, thinks privatization skirts the issue. "The solution is to figure out how to re-finance the Trust Fund and do it in a way that addresses public goals like reducing VMT and emissions."

The current authorization for the Highway Trust Fund expires on September 30, 2009, nine months after the new president takes office. The next authorization law will likely involve a commitment in the range of $300 to $350 billion over the next five years. Wouldn’t it be great to hear the candidates weigh in on how that money should be spent?

Photo: Kaptain Krispy Kreme/Flickr

  • Larry Littlefield

    (Problem is, the highway people have been spending down their part of the fund at an unsustainable clip, and they are on pace to run out of cash around October.)

    Before the election.

    (Raiding the Transit Fund would drop it, too, into the red within two years.)

    After the election.

    This is happening all over the United States at the state and local level. I read aboiut it in article after article. Calfornia raided the proceeds from a transportation bond to balance this year’s budget, but a far deeper crisis awaits next year. And it isn’t just transportation.

    We’re facing tough times, but many other parts of the country — those without foreign ties (to those who still have money) are worse off. In NY, expect the real state budget to be released in November, after the battle for control of the State Senate is decided. I fear what might happen then, and/or in June 2009 when the city faces a budget without a left over surplus.

    Again, bicycles, telecommuting, carpooling with existing vehicles on existing roads. Limited public capital cost. No public operating costs. And personal savings for Americans who have already spent their own future income with personal debt and their children’s future income with public debt.

  • Temp

    It’s not so much that raising the gas tax for an obvious need is politically unpopular, but that such a step is ideologically rejected out of hand by the Bush Administration.

  • Ian D

    So, all over the news today is that Bush is going to sign Congress’ economic stimulus package and send (nearly) everyone a check.

    What am I going to do with my check? Put it in the bank…or maybe travel overseas on vacation and spend it. Lot of good that does the economy.

    What if instead the government used those billions to fix America’s crumbling bridges (see: I-35 MSP), build true high-speed rail systems between major cities to offload overcrowded airports, or, hell, build mixed-income affordable housing in swing states to give the GOP a hint of a chance in Nov.?

    Any of those things will create real jobs here in the US (“Oooo – let’s spend our check at WalMart buying cheap Chinese crap!”), offer long-term benefits to us, and prevent having to steal “good” money from “good” projects to pay off the bad debt.

    Oh, sorry, how far fetched. Sounds much too “New Deal” for a Republican administration.

  • Larry Littlefield

    (What am I going to do with my check?)

    I believe the idea that Americans have borrowed so much money people are no longer willing to lend them more to blow for short term benefit.

    So the government is going to borrow the money for them, to a greater extent.

    Perhaps during the 2009 State of Union, our next President will admit to us that this generation of Americans has just about bankrupted the country.

  • Ben, I promise I didn’t read this before I posted over at Street Heat!

    I think Larry is right, the states, while talking big on transportation, have over and over again chosen to underfund it. The federal government has to believe at this point that this issue just isn’t a priority for anyone anymore.

    Hopefully TSTC is right and the Dems in Congress will stick up to the president (for once) and send this budget back.

  • This is good news for increasing the gas tax. Sure, Bush would rather privatize interstates than do that, but he doesn’t get to make those decisions much longer. If he does manage to sell off a few interstates before leaving office that’s fine too; road tolls, gas taxes, they go hand in hand with understanding driving as the expensive commodity that it is.

  • matt

    I don’t understand how much of this works but why if Transit sitting on so much money? Why hasn’t it been used?

  • John

    Actually, putting it in the bank is the best thing you can do with the money, from a long-term economic perspective. Money in the bank alleviates the credit crunch, and provides money for investment

  • Ben Fried

    Matt,

    Others here may be able to speak more authoritatively on this than I can, but one reason the transit fund still has cash is that it is supposed to. I may have made it sound like the transit fund is sitting on a mountain of money, but really it just hasn’t been managed as recklessly as the highway fund.

    The single-minded focus on expanding capacity has caused the highway fund’s costs to soar out of control. Burwell told me there is talk of doubling the allocation for highway funds in the next authorization law. The reason being that the allocation doubled the last time they reauthorized. Even adjusting for inflation, it is absurd to increase highway spending at that rate.

  • Corey Bearak

    So just maybe Congressman Anthony Weiner may be on to something in terms of the Washington D.C. Republicans’ desires to defund mass transit and its tie to their promotion of congestion pricing.

  • Larry Littlefield

    (So just maybe Congressman Anthony Weiner may be on to something in terms of the Washington D.C. Republicans’ desires to defund mass transit and its tie to their promotion of congestion pricing.)

    Of perhaps the belief that there is mountain of money other than CP in an essentially bankrupt country is a bunch of bull. You’ve got nothing on the line here. But other CP opponents will get the blame if CP goes down and negative consequences for the transportation system result.

    We’ll need that gas tax increase and CP. And any payroll/income tax increases will be going elsewhere.

  • it’s because all of our fucking money is being spent on iraq.

    yeah, i used an expletive, cuz i’m pissed.

  • Braddy

    San Antonio, one of the fattest cities in the country!

  • amused

    Not to spoil the party, but perhaps you may wish to inform your credulous readers how the mass transit set aside is funded in the first place.

  • Tee hee. I think we’re all aware of gas taxes, and we all pay them in the form of goods delivered by diesel fuel. We also see our income tax dollars exported to automobile infrastructure (like connecting/creating suburbs of Anchorage) in all sorts of creative ways. If you think that New Yorkers riding the subway are not carrying their own fiscal weight in this country, you’re as confused as you are amused.

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