Conservatives introduce “TEA” highway bill that scraps federal program, but pushes tolls, P3s, & transit boondoggles

While Graves, Lee and Rubio may believe they’re offloading their federal gas tax revenue problem to the states, in reality, they’re seeking to compound the problem 50-fold; the states aren’t any better than the feds on transportation funding. We should not be encouraging more tolling of any kind, whether at the federal or state level. Tolls are a tax. The principle of “pay-as-you-go” must be applied at both the federal and state levels. Indeed, it must be legislated.

By Terri Hall | August 13, 2014

Congressman Tom Graves (R-GA), Senator Mike Lee (R-UT) and Senator Marco Rubio (R-FL)

A group of conservative congressmen filed a bill to scrap the federal highway program and devolve the task of building and maintaining America’s highway system to the states. U.S. Rep. Tom Graves (R-GA), Senators Mike Lee (R-UT) and Marco Rubio (R-FL) introduced the bill dubbed the Transportation Empowerment Act or the TEA Act – H.R. 3486 in the House and S. 1702 in the Senate. The TEA acronym harkens back to the Agenda 21-inspired Transportation Equity Act (TEA) series of highway bills that opened the door to a multi-national highway system, so-called ‘innovative financing’ schemes, and widespread tolling – even imposing tolls on existing interstates.

The Lee-Graves TEA bill would reduce the federal gas tax from 18.4 cents a gallon down to 3.7 cents over 5 years and the authors encourage more tolling, public-private partnerships (P3s), and even light rail. Reducing the federal gas tax will only translate into an increase at the state level, by the authors’ own admission. They tout the bill as a way to reduce the size and role of the federal government while also cutting commute times and improving quality of life, but when you look at the details, it begs the question, for whom? The answer is for those who can afford to pay for the increased cost of tolls in addition to the federal and state gas tax to get the faster ride.

While this idea of “devolving” the job of building highways to the states plays well politically with conservatives by bashing the federal bureaucracy, there’s a need for a federal role in highways, especially for interstate commerce. We all know some states will never collect enough revenue to pay for their interstates, hence some states donate to others because we understand the benefit of a high-quality national interstate highway system – whether to transport goods to market, conduct business, or to explore and visit other states for personal travel.

Do we want Interstate-10, for instance, that crosses every southern state from California to Florida to turn into a patchwork quilt if certain states fail to maintain them or impede interstate commerce if they impose tolls through that state? We’re taking away a seamless national highway network and turning it into a slice-and-dice patchwork that could eventually mean you never know what you’re gonna get when you leave one state and enter the next.

It’s the same reason state governments shouldn’t continue pushing their responsibilities down to local governments. They want to keep making the locals pick-up the tab because they, too, want to avoid raising the gas tax. But raising local taxes isn’t the answer either as it, too, will lead to a patchwork system where people get a different quality of road when they cross from one county to the next or as people flee from one region to another to avoid paying the higher local taxes. As much as conservatives dislike the federal government when it becomes overbearing or creeps into areas where it shouldn’t, there is a federal role to play for highways.

While few want the waste of earmarks and federal strings that have plagued past federal highway bills, like the Transportation Enhancement Program that forces states to waste highway money on fancy landscaping, parks and bike trails, Congress can and should untie those strings and stop the waste while keeping a strong, relevant federal highway program intact.

States aren’t any better

States aren’t saints when it comes to highway funding either. In Texas, the TEA bill would grant the Texas Department of Transportation (TxDOT) its dream policy the agency requested back in 2007 – to reimburse the feds for the construction cost of interstates and/or federal-aid highways, which would take the highway off the federal highway network and transfer that burden to the state highway system so the state could impose tolls on existing freeways.

You read that correctly. The state of Texas wants to make its citizens pay three times to use the same stretch of highway citizens already built and paid for: once for original construction cost, twice for the reimbursement to the feds, then a third time with a toll to use the road taxpayers already paid for twice. It’s simply a revenue generating scheme.

It was this brazen lurch toward “triple taxation” that motivated Sen. Kay Bailey Hutchison to impose a federal ban on tolling federal-aid highways – a ban the Obama Administration now wants to lift. Over half the states have also changed their state laws to allow P3s for road projects. P3s put the taxation in the hands of an unelected corporation, oftentimes a foreign corporation, without competition for 50-99 years, charge punitive toll rates from the traveling public (currently up to 95 cents/mile in Dallas), and involve billions in taxpayer subsidies that socialize losses and privatize profits.

On top of tolling schemes, many states also commit the same sin as the federal government by diverting gas tax revenues to non-road purposes. In Texas, 47% gets sent somewhere else, while Kansas spends some of its gas tax on Medicaid and schools. Both federal and state gas tax revenues get “diverted to transit projects” that auto users don’t benefit from.

So because lawmakers at all levels do not want to raise the gas tax, they’ve turned to outsourcing the tax hike to unelected toll authorities as well as turned to massive borrowing programs instead. Now debt is eating a bigger hole in state highway budgets, consuming scarce road dollars needed for new construction. It’s been almost impossible for concerned citizens to rein-in the state legislatures’ lust for debt and tolling. While Graves, Lee and Rubio may believe they’re offloading their federal gas tax revenue problem to the states, in reality, they’re seeking to compound the problem 50-fold; the states aren’t any better.

President Reagan’s transit solution – keep it local

The states are tied together by the national Interstate Highway System that has created a massive expansion of commerce and brought economic development alongside the interstates benefiting both state and local economies. As Reagan believed, transit is the one program that should be handled at the local level since the vast majority of transit projects and users are local, local taxpayers are the appropriate ones to pay for them. The 1982 highway bill that he signed diverted a portion of the gas tax increase to transit as a compromise to get the bill through Congress – a bad habit Congress hasn’t been able to shake since.

This is the one aspect of TEA that we can agree on. However, the press releases for TEA still advocate for light rail and transit programs to be funded from the revenues sent back to the states, projects that can’t possibly pay for themselves without massive tax subsidies by those who don’t benefit from the projects. So the states’ rights argument just doesn’t apply except for truly local projects.

President Reagan’s simple solution – the highway user fee

The simple solution is to preserve the gas tax system and index it to inflation with an annual cap (to protect against inflation spikes). The growing epidemic of tolls and debt increase the tax burden to punitive levels – other taxes like sales taxes or other fee hikes that states are implementing are simply unsustainable.

Even Ronald Reagan supported a nickel a gallon increase of the gas tax to preserve our federal highway system as stated when he signed the 1982 reauthorization:

“When we first built our highways, we paid for them with a gas tax, a highway user fee that charged those of us who benefited most from the system. It was a fair concept then, and it is today. But that levy has not been increased in more than 23 years. And it no longer covers expenses. The money for today’s improvements will come from increasing the gas tax, or the highway user fee, by the equivalent of a nickel a gallon – about $30 a year for most motorists.”

Reagan went on to preach the value of the federal program, “…its principal benefit will be to ensure that our roads and transit system are safe, efficient, and in good repair. The state of our transportation system affects our commerce, our economy, and our future.”

It was all about the freedom to travel then just as it is today.

Reinstate “pay-as-you-go,” as Ray Barnhart advocated

Lawmakers have kicked this can so far down the road there are no painless solutions, though TEA advocates sure try to paint it that way. The principle of “pay-as-you-go” must be applied at both the federal and state levels. Indeed, it must be legislated. Otherwise, left to their own devices, the special interests, primarily the banksters who finance and refinance all this leveraged debt, lawmakers will continue the debt-death-spiral and hopelessly indebt future generations. Without abiding by that principle, the problem will never be solved.

We should not be encouraging more tolling of any kind, whether at the federal or state level. Tolls are a tax. For example, in Texas, not one toll project today can pay for itself with just the toll users, so every single project is using gas tax and other public money to subsidize the toll roads. So everybody pays whether one can afford to pay the toll to access the road or not. Tolls increase the tax burden far more than a gas tax funded system. Gas taxes are roughly 1-2 cents a mile, whereas tolls are 10 cents a mile up to a $1 a mile or more, costing thousands more per year in new taxes on driving as well as driving up the cost of everything we buy.

Tolls also put the tax in the hands of unelected toll authority boards – so it’s double taxation exacerbated with taxation without representation. P3s are the absolutely most sovereignty-eroding and most expensive way to fund roads and such projects also put that tax rate in the hands of private corporations that the public cannot hold accountable.

Simply outsourcing this outrageous tax hike to those the public cannot hold accountable is not a conservative or taxpayer-friendly solution. Conservative members of Congress like Graves, Lee and Rubio, and conservative groups such as FreedomWorks and others that support them, need to re-consider scrapping the federal highway program and their push for more tolls and P3s. Theirs is a well-intentioned but misguided approach, but it is not a solution. Theirs is a double tax on drivers and consumers that puts taxpayers on the hook for the losses, while privatizing the profits just like the subprime mortgage crisis did.

We need to properly fund our national highway system, stop diversions, get back to “pay-as-you-go,” as President Reagan’s Highway Administrator Ray Barnhart advocated, and prioritize this core function of government without gimmicks designed to fatten the special interests and make taxpayers think they’re getting a tax break, only to be raped-and-pillaged by unelected toll authorities or private toll operators for our lifetimes.

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 nine turned citizen activist. Ms. Hall is also a contributor to SFPPR News & Analysis.