All states are "donees" when it comes to highways

Roads

All states are "donees" when it comes to highways

by Angie Schmitt • October 13, 2011 3:01 pm

For quite some time, the country was divided into "donor" and "donee" states, each group either contributing more revenue than they received from the Federal-Aid Highway Program or vice versa.

But that is no longer the case, according to a new report from the Government Accountability Office. Between 2005 and 2009 every state in the union received more Federal-Aid Highway dollars than it contributed through fuel taxes and other fees.

The amount of Federal-Aid Highway money given to each state per dollar contributed to the Highway Account of the Highway Trust Fund for fiscal years 2005-2009. Image from GAO.

But while that might sound great, the truth is it's bad news no matter where you live. This was only possible because the roughly $200 billion in Federal-Aid spending over that time period included $30 billion from the general fund—a trend that presents some rather obvious sustainability concerns, to say nothing of equity for non-drivers.

"A significant amount of highway funding is no longer provided by highway users," GAO stated in the report.

Discrepancies in "rate-of-return" were also mitigated by the 2005 SAFETEA-LU which offered an "equity bonus" to donor states. The program guaranteed a minimum return to states, resulting in a higher rate-of-return for all states, and as much as a 25 percent increase for some.

That doesn't mean funding discrepancies have been eliminated, as the map above illustrates.

Despite the fact that all states received more money than they contributed to the program, some 28 still receive a relatively lower rate than 22 others, GAO reported: "Thus, depending on the method of calculation, the same state can appear to be either a donor or donee state."

The donor-donee issue has been a bone of contention in the federal reauthorization process and part of the conservative push for greater state-level control of transportation funding decisions. By claiming that their state is a "donor" state, some argue that their state should retain full control over its transportation funds, without federal decision-making or any cross-subsidy of other states' transportation needs. In essence, they would wind down the federal program and all national transportation aims, in exchange for autonomous state-by-state transportation programs.

But GAO cautions that over-emphasis on rate-of-return issues can distract from more essential concerns for the country's surface transportation program. For this reason, GAO lists the Federal-Aid Highways program on its "at-risk" list.

Rep. Nick Rahall (D-WV), ranking member of the House Transportation Committee, hopes the new information will throw water on the contentious issue and help streamline the reauthorization process. In a press release, Rahall had this to say:

Instead of being consumed by the parochial 'donor' and 'donee' debate, this GAO report confirms that Congress should be working toward crafting a surface transportation bill that meets the needs of a 21st century national transportation system. Using rate of return as our rationale for how we spend our limited transportation dollars simply detracts from the national focus when we ought to look at the larger picture and determine what investments best help create American jobs and grow our economy.

Cross-posted at Streetsblog Capitol HIll.

18 comments

Tags: roads, transportation reauthorization

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Angie Schmitt is a Cleveland-based writer and activist who specializes in transportatin planning and Midwestern cities. She manages the national sustainable transportation advocacy blog, Streetblog.net. Angie is a former newspaper reporter with a masters degree in urban planning, design and development.

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Well...infrastructure is one of the biggest investments we need our government to make on our behalf. If we pay so much more to the federal government than we give to our local governments (which is the case in all 50 states I imagine), then the money is going to have to come from that pot. Unfortunately, that brings another level of bureaucracy into the game.

From the standpoint of someone who works frequently with both the FHA and VDOT, the FHA is WAAAAAAY more inept and much slower. So...we give all our money to Uncle Sam, our states take much smaller amounts and can't maintain the ageing systems, so we wind up with projects where the feds feed money to the states and both the FHA and state highway departments manage them...and in the process the Federal Government blackmails the states into doing things like raising the drinking age and other crap. In the end, double the oversight = much more money and slower time to completion.

by xtr657 on Oct 13, 2011 3:12 pm

Given that the two whips in the House come from MD and VA, it is surprising that both states get so little money. Cantor and Hoyer certainly do not bring home the ~~porc~~ bacon.

BTW, it is unsurprising that the large empty state (AK, MT, ND, SD) get a lot of money. I wonder how that holds up if you'd take the area of the states into account.

by Jasper on Oct 13, 2011 3:19 pm

Aren't street reconstructions such as is occurring on 18th St NW in Adams-Morgan beneficiaries of of these monies? And aren't a substantial part of theses monies going toward sewer and other infrastructure costs which benefit residents and businesses there far more than drivers? Never mind the benefits of wider sidewalks and new bus stops for other types of commuters ... As usual, a GGW post comes off as selectively presenting information with a clearly biased approach to pseudo reporting and analysis.

by Lance on Oct 13, 2011 3:24 pm

Hmm. A fund that pays out more than it takes in? Sounds like a Ponzi scheme. Actually, I think this is because of the general fund infusions it's gotten.

By the way, does this account for the truck-related taxes, like taxes on trucks and trailers? Or does it only account for fuel taxes?

by Tim on Oct 13, 2011 3:26 pm

Lance, I don't know where you're getting your assumption from but all I read is that pretty much all states take in more federal transportation money than they provide. While I have my own conclusions I found this post doesn't really editorialize except to clear up apparent misconceptions about how highway funding is paid for.

And, from this site I'm aware of both what the 18th st. reconstruction and how it was paid for. This isn't about specific projects its by and large how the majority of road funding is handled. Moreover, a lot of the monies that the states use do go to highway maintenance which sees far more benefit for drivers rather than pedestrians, business owners and the like.

by Canaan on Oct 13, 2011 3:36 pm

@Canaan:

from the article —a trend that presents some rather obvious sustainability concerns, to say nothing of equity for non-drivers.

Obviously, it never dawned on the writer that, as I illustrated with the 18th Street example, drivers aren't by far the only beneficiaries of these funds ... either directly or indirectly. And by that I mean does Ms. Schmitt think her farmer's market (or any) produce magically appears at her market without any need for roads?

by Lance on Oct 13, 2011 3:46 pm

I see it as a refutation of the argument that drivers pay for the roads while transit has to be subsidized by everyone which is something I see pop up and is apparently being used in congress. Wanting a better (be it that better mean more equitable, more profitable or whatever) way to pay for road funding doesn't translate to "we don't want any roads". And again, I'd imagine a fundamental redesign of the streetscape like 18th st. (in favor of pedestrians all the more) are probably in the minority though I'd like to be proved wrong.

by Canaan on Oct 13, 2011 4:02 pm

Hmm. I don't know. Doesn't that $30B from the federal fund include money form, I don't know, citizens from every state?

(this is the same argument GGW likes to make about Virginia Board seats on WMATA. The tax money the state raises from citizens in Northern Virginia gets spent in Northern Virignia)

I don't buy either. It is a federal tax. Nothing says federal money needs be spent equaly on all states.

by charlie on Oct 13, 2011 4:04 pm

@charlie:Nothing says federal money needs be spent equaly on all states.

I'm not sure that's the point of the article. The point as I understand it is that every single state gets more than it pays. That means that the tax is a money-multiplier. Give me a where I pay $1 and get $1.19 back like Virginia, and I'll be paying that tax with love.

by Jasper on Oct 13, 2011 9:11 pm

Lance, the answer to your above questions are maybe and "depends on your definition of substantial". But the sewers only exist to handle stormwater runoff caused by the road. So that's not an independent benefit. The sidewalks are only needed to keep pedestrians out of the way. Before cars, peds walked down the street.

by David C on Oct 13, 2011 11:33 pm

All data used in statistics is usually subject to interpretation, and the resulting conclusions are usually a product of the interpreter.

It looks to me as a casual reader of the document like they are actually saying that for every dollar spent less than 50% of it comes directly from the States treasury and more than 50% comes from the Fed. So for that 1 dollar that a given State is putting in the pot the Fed is adding 1+ dollars, not returning 1 dollar and change.

Like another person said, in the end every single one of those dollars is coming from a taxpayer. For the States with lower population numbers and larger land masses the FED contribution number would probably be higher because there are fewer State taxpayers per square mile or fewer jobs for potential taxpayers. The only solution to that is either to breed taxpayers (more sustainability questions there), or create job opportunities in depressed areas (as the case may be). You could always stop maintaining the roads and see how the non-driving public likes that result. The answer will probably show up in the polls.

by Richard D on Oct 14, 2011 8:06 am

to say nothing of equity for non-drivers.

This criticism could apply to a huge range of federal programs that benefit only some people. $30B/year is probably smaller than many of those "subsidies".

I don't have a problem with having a gas tax to pay for road construction, but singling out highway funding as inequitable is risible given the bloated federal budget that subsidizes a huge range of activities to the detriment of non-beneficiaries (e.g., homeowners, high-end health plans, farmers, old people, poor people, college goers, married people, parents of children).

In fact, I doubt there are many true "non-drivers" in the U.S., given that many people are driven by others but also use the roads (children, old people, people who take the bus, etc.)

by ah on Oct 14, 2011 10:26 am

@David C, Before cars, peds walked down the street.

I let you think about that statement ... in light of your argument that sewers are only needed because there's a street there .. implicitly only because their are cars.

by Lance on Oct 14, 2011 10:53 am

Sorry for typos I'm on my phone ....

by Lance on Oct 14, 2011 10:54 am

@Jasper; I see Virginia at 1.11.

I don't want to delve too deeply into the GAO report, but I suspect this is all just stimulus money.

Was it stupid for the stimulus be usd to repave every highway in America? Yes, probably.

by charlie on Oct 14, 2011 11:16 am

@charlie Not just stimulus money. On at least 3 occasions over the past 6 years, Congress has directly transferred billions of dollars from the general treasury to the highway trust fund (HTF). That's the "general fund" money being cited here. If not for that general treasury transfer, Federal highway and transit programs would have been very noticeably curtailed because the HTF didn't have enough money to support it all.

by Froggie on Oct 14, 2011 2:14 pm

@froggie; while you know far more about this than I, my recollation was

1) The first transfer was from interest earned by the HTF that wasn't accounted for it

2) the second and third transfer were for stimulus purposes.

This is all the danger of hypothecated revenue. Works well for building, does not work for upkeep. Now that we've built an interstate highway system,we should move all gas tax revenue into the general fund.

by charlie on Oct 14, 2011 2:22 pm

The three transfers I'm referring to were NOT "for stimulus purposes". They were specifically because Congress wanted to maintain the existing level of FHWA funding as set in SAFETEA-LU, but did not want to raise the gas tax to cover the revenue needed for it.

by Froggie on Oct 17, 2011 1:14 pm