AND WHY TRANSIT SPENDING IS THE BIGGEST DRAIN ON THE HIGHWAY TRUST FUND’S GAS TAX REVENUES
By Terri Hall l April 23, 2012
Light Rail Transit
It’s hard to disagree with much of what a recent Wall Street Journal (WSJ) editorial advocates, like making the Highway Trust Fund solvent, returning gas tax money sent to Washington back to the states, and loosening the federal purse strings attached to road money. However, where they’re missing the boat is this notion that private money will be the silver bullet to fix road revenue shortfalls and provide what’s often called ‘gap funding.’
There’s a hefty price that comes with seeking private money to build public roads using public private partnerships (P3s), as well as the loss of sovereignty and control over the surrounding free routes (through non-compete clauses that prohibit or penalize expansion of free roads). Not only are toll rates on these privatized roads punitively higher than public toll roads (75 cents a mile versus 12-15 cents per mile on a public toll road), heaps of taxpayer money subsidize these government-sanctioned monopolies, including TIFIA loan guarantees, creating indebtedness way into the future. So having to pay a toll, too, is tantamount to DOUBLE TAXATION.
Also, these sweetheart P3 deals are structured to GUARANTEE private profits at the public’s expense. For example, on the North Tarrant Express project (I-820) in Dallas-Fort Worth, Texas, taxpayers brought three-quarters of the money to the table, while the Spanish firm, Cintra, and its investors only put up one-quarter. Yet, Cintra gets the exclusive right to set and collect tolls at a rate of 75 cents per mile in peak hours for the next half century in return for their paltry investment.
Quite accurately, the WSJ points out all the waste in congressional transportation bills calling transit spending the “biggest drain” on the Highway Trust Fund’s gas tax revenues. “In a typical year only about 65 cents of every gas tax dollar is spent on roads and highways,” they write. “The rest is intercepted by the public transit lobby and congressional earmarkers.” Justifiably, the question is asked, “why should people in Akron, Ohio or Casper, Wyoming have to pay gas taxes to finance the New York subway or light rail in Denver?”
And then Congress points to the fact that the Highway Trust Fund is insufficient and therefore an inadequate mechanism to finance America’s transportation needs, in part, due to the static federal gas tax fixed at 18.4 cents per gallon, unchanged since 1997. A capped indexation to cover inflation along with restrained congressional spending, including the elimination of earmarks, would greatly enhance the viability of a pay-as-you-go system.
The WSJ’s solution, however, is tolling, which is really just another form of taxation and one that would cost drivers far more than a simple matter of indexing the gas tax for inflation.
The WSJ’s subhead reads ‘Americans don’t want to live in LaHood’s car-free utopia,’ knocking Secretary of Transportation Ray LaHood’s livability agenda, which is actually a more sanitized name for the United Nations’ Agenda 21 anti-car policies that are permeating the American driver’s daily lives seeking to herd people into high density housing in the inner cities and forcing motorists out of their cars and into mass transit.
Yet, the very policies the WSJ advocates, P3 toll roads, have the same net effect. It makes driving unaffordable and forces the majority of the traveling public out of their cars or stuck in unbearable congestion on unimproved free routes – so those who cannot afford to pay 75 cents a mile to get to work will be treated as second class citizens without mobility, even though they continue to pay gas taxes for roads.
The average worker has no control over when he reports to work. Many cannot afford to live close to their jobs, others plain don’t want to. Yet, the WSJ and many libertarian and conservative think tanks advocate so-called ‘congestion pricing’ that gouges commuters during peak hours in an attempt by government, or its private surrogates, to ‘manage’ traffic flow and purposely discourage peak hour travel.
‘Managed lanes’ utilize ‘congestion pricing,’ which is a variable toll rate that changes depending on time of day and level of traffic on the toll lanes. The more cars, the higher the price, creating road scarcity through pricing. Economists love it since their textbook free market theories get put into practice by governments.
However, the WSJ knows that government-sanctioned monopolies cannot be considered a free market solution to congestion. When there’s only one way to get where you need to go and the state puts that road in the hands of a private, often times, foreign corporation that controls the toll rates and dictates how much you’ll have to pay to get to work at your appointed time, that’s not free choice nor free market – it’s tyranny.
Changing the tide
Georgia Governor Nathan Deal had his own awakening to the threat to state sovereignty by handing control of public roads to private, even foreign, corporations and he pulled the plug on Georgia’s P3 program, calling it “ill-conceived sell-outs” of state sovereignty. Recently, a Cato Institute scholar, Timothy Lee, also reconsidered his support for P3s reasoning that it threatens our freedom to travel. So the tide is turning as the political and financial realities of these failed innovative policies come to light.
So while we need to get a fiscally responsible federal highway bill passed and while we need to give the states back the money they send to Washington and stop diverting road funds to non-road purposes, advocating these heavily taxpayer subsidized P3s as part of the solution to make-up structural road funding shortfalls is fiscally irresponsible and a taxpayer rip-off, putting the cost of transportation so far out of reach for the average person that these toll roads will go bankrupt from lack of use, necessitating more taxpayer bailouts and malfeasance.
What we need is truth in taxation – a responsible pay-as-you-go system of financing America’s transportation needs NOT DOUBLE TAXATION in the form of tolls on top of the current gas tax.
Terri Hall is the founder of Texans Uniting for Reform and Freedom (TURF), which defends against eminent domain abuse and promotes non-toll transportation solutions. She’s a home school mother of eight turned citizen activist. Ms. Hall is also a contributor to