Transportation is About to Get Hosed

July 2, 2014 12:00 pm

by Eric The Younger · 14 comments

Transportation Secretary Anthony Foxx  sent out a letter yesterday to each state head of a DOT and each head of a transit agency to let them know what the Federal DOT was going to do as the money in the Highway Trust Fund gets low. I’ve talked about the HTF before and the effect of an empty account will have on Georgia (here and here). Full disclosure as usual, I do work for PolicyBEST, and we do deal with transportation issues.

I understand that CJ Craig was completely correct when she said highways weren’t sexy. They aren’t sexy, but imagine your commute if 20, 75, 85, 285, or 400 weren’t freeways and they were county highways with stop signs. It’s an important issue. When transportation breaks, we all suffer.

Essentially what is going to happen in the event of a shortfall is that states will still receive payments based on the percentage that is due to them like normal. The exception is that these payments will be delayed and paid on a bimonthly basis instead of paid same day. This is to allow the tax revenue from the motor fuel tax to trickle in and allow the DOT to have some cash in the bank. Unlike most other aspects of government, the HTF can’t go into debt. In addition, there is going to be less travel and administrative spending from the DOT to pinch a few pennies here and there.

While this is all fine and dandy, we still have a major problem. The HTF isn’t sustainable in it’s current form. It only pulls in around $35 billion per year from the motor fuel tax, and the states are currently spending at a rate closer to $50 billion per year.The gas tax has not been adjusted in 20 years, and in that 20 years the price of gas has gone up, cars are more efficient, and people are actually driving less. All this means that the current user fee is no longer acting like it should. If you drive a Leaf, you get to use roads for free and a prius gets to use them at a highly discounted rate compared to my 2001 Jeep Cherokee or my buddy’s 1968 Corvette and its gas gulping 427 V-8.

We’ve talked on Peach Pundit before about how this will affect Georgia too. No new projects after yesterday. I’m sure many of you can come up with a list of projects that needs to get done in order to improve the traffic situation in Atlanta. GDOT has too. And nothing new is going to get started from that list until Congress does something.

So far the plans have been less than ideal. They range from an $9 billion stop gap measure funded by increased enforcement on tax code, to a $265 billion six year plan that passed out of the Transportation Committee without stipulations on how it would be funded. Some folks have called for an increase in the gas tax, which probably should happen, but that started in the Senate and we all know about the inter-house rivalry. Finally there is Tom Graves’ plan to phase out the federal gas tax. While that’d be a great idea, anyone that raises the state gas tax to make up the difference is going to get primaried for a “tax increase” even though it wouldn’t actually raise any individual’s taxes.

A strange detail in all of this is that Georgia has no representation on the Transportation Committee in either house. Think about that one for a moment. We are the 8th largest state with one of the fastest growing metro areas in the country. We pride ourselves on our logistics and transportation based industries, and not a single member of the Georgia delegation is on a transportation committee.

{ 14 comments… read them below or add one }

Rambler14 July 2, 2014 at 12:59 pm

It’s more than just “No new projects after yesterday”

It’s “No new phases of any project after yesterday”
Phases begin defined as beginning the R/W Acquisition process, or building something that they’ve already purchased the land for.

Rambler14 July 2, 2014 at 1:02 pm

Side Topic:

Has Governor Deal or Senator Carter released position statements solving the problem that GA is 49th in the country in per capita transportation funding?
Or is this not actually a problem in their opinion?

Eric The Younger July 2, 2014 at 1:31 pm

I have not seen anything along those lines.

Lwood July 2, 2014 at 1:31 pm

Back in the day, Fritz Hollings and others advocated a “freeze” in spending. Looks like it’s going to happen now without legislation.

The Last Democrat in Georgia July 2, 2014 at 1:49 pm

Good point.

Eric The Younger July 2, 2014 at 2:45 pm

And to everyone’s detriment.

The Last Democrat in Georgia July 2, 2014 at 3:17 pm

Not necessarily. Contrary to popular belief, federal spending from unsustainable amounts of borrowing is not the only way to fund our pressing multimodal transportation needs.

The Last Democrat in Georgia July 2, 2014 at 1:56 pm

Imagine that…we might actually have to come up with transportation funding on our own instead of always needlessly bumming from the broke Feds. Oh the horror!

Harry July 2, 2014 at 3:22 pm

Yeah what a tragedy, to stop freeloading off DC and them stop freeloading from us.

Rambler14 July 2, 2014 at 3:30 pm

“bumming off the Feds”

Excuse me?
Since when does receiving 85-90 cents on the dollar we send them = bumming off the Feds?

The Last Democrat in Georgia July 2, 2014 at 4:10 pm

When neither us (the states) nor the Feds collect nowhere near enough revenue from current sources (mainly non inflation-indexed fuel taxes) to cover our inflationary transportation costs in the first place.

Harry July 2, 2014 at 4:26 pm

Our kids and grandkids are paying for it!

The Last Democrat in Georgia July 2, 2014 at 5:46 pm

+1….All debts eventually come due. Today’s credit is tomorrow’s food money.

saltycracker July 3, 2014 at 7:15 am

Money spent on infrastructure like roads is estimated to have a positive range of results on economic measurements. But the squeaky wheel of social fundings get served first. Unfortunately, scams/wastes/frauds in our social programs far exceed all monies spent in transportation.

60 minutes just ran a repeat program on the $135 billion budget for SS disability where fraud was estimated by one Senator to be at least 25% and possibly 45% as it has jumped from 6 million to 12 Million recipients. 80% of applicants today have legal representative that will cost taxpayers a billion dollars.

Another example of booming costs: The food game: Food stamps, a multi-billion dollar electric wheelchair industry utilized by the grossly obese…..and served by a billion dollar subsidized mega agri-industrial complexes.

The latest multi-billion dollar leak in a failed system: 10,000 unaccompanied illegal children thrown over our border every month.

If we found billions for transportation could we prioritize the needs or spend it on high speed passenger rail connecting populations that could not support it ?