Blog note, Randal O'Toole, Taxes, Transportation

‘Transportation Empowerment Act’ devolves power back to the states

Senator Mike Lee (R-UT) and two other senators and joined Representative Tom Graves (R-GA) and 18 other representatives in introducing the Transportation Empowerment Act. This bill would phase out most federal involvement in surface transportation, including 80 percent of the federal gas tax, over five years. In the meantime, federal funds would be given to the states as “block grants” with few strings attached.

As I read the bill, funds would be distributed to the states using the same highway formulas now found in MAP-21, the 2012 transportation bill. The transit formulas are dropped. However, if a state determines that the highway funds it receives are in “excess of the needs of the state” for highways, that state may use those funds for any surface transportation program including transit and intercity rail.

The bill limits distributions in the first year to about $38 billion, which is the current estimate of gas tax revenues in that year. However, if revenues fall short of that estimate, the bill states that no more funds may be distributed than are actually collected. The gas tax and distributed funds are cut in half in the second year, then by approximately 33 percent per year over the next three years.

icon_blog_noteThe bill’s sponsors point out that 33 states are “donor states,” meaning they nominally get less transportation money from the federal government than the feds collect in gas taxes from their residents. Thus, assuming their legislatures raise gas taxes by the amount of the federal reduction , these states will all “win” under the proposed bill.

While I think this proposal is a great idea, it seems highly unlikely that a Democratic Senate will support it. Instead, many observers believe a divided Congress will pass another two-year bill, like the one passed in 2012, that tinkers with existing programs but does not significantly reduce federal spending–even though that spending greatly exceeds gas tax revenues.

The one thing that might make a difference in 2014 is if the House can get behind a significant reform bill. In 2012, House Republicans failed to support a fairly fiscally conservative bill; for some, it wasn’t fiscally conservative enough; for others, who represented cities with major transit systems, the cuts it proposed for mass transit were unacceptable.

The Transportation Empowerment Act fixes the first problem–it is certainly fiscally conservative–but not the second. That means this bill could even have a problem passing the House, much less the Senate. Instead of putting their efforts into a bill like this, Republicans should find a bill that they can get unified behind and use that to negotiate some serious concessions from Senate Democrats.

Randal O’Toole is transportation policy center director at the Independence Institute, a free market think tank in Denver.  He writes at the Antiplanner blog, where a version of this first appeared.

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