Data Points: Transportation Spending in the U.S.

The United States’ transportation infrastructure is the web that connects Americans to the places they live, work, learn, and play. Our country’s vast network of roads, from interstate highways to rural byways, is supported by federal dollars matched, in most cases, with state and local funds. Today, with gas prices at historic highs and cities seeing unprecedented shifts from private vehicle travel to public transit, transportation spending should be adapting to the times - but it’s not.

With fewer cars on the road and more daily commuters crowding subways, the federal government still disproportionately favors highway spending over transit spending, leaving states and cities primarily responsible for mass transit infrastructure.

Transportation spending in the U.S. needs a makeover, and not just to get us through our current gasoline squeeze. A new, long-term vision for transportation spending is a critical step in heralding the new energy economy, one that delivers cleaner skies, more spacious roads, economic growth through good jobs, and freedom from foreign oil to millions of Americans.

Below is a summary of what we know - and what we need to do - about transportation spending in the U.S. Unless noted otherwise, all data comes from the National Conference of State Legislatures’ “Surface Transportation Funding: Options for States” report, published May 2006.

Federal Transportation - An Overview
Federal transportation funding is done through huge spending bills, reauthorized roughly every six years:

1991   Intermodal Surface Transportation Efficiency Act (ISTEA): $155 billion

1998   Transportation Equity Act for the 21^st Century (TEA-21): $218 billion

2005   Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU): $286 billion

2009  Reauthorization of SAFETEA-LU

Federal transportation dollars go to a variety of projects, including highways and roads, infrastructure repair, transit, and bike/pedestrian lanes. States and local governments must match federal dollars: for capital projects (e.g., highways), the match is 80/20; for operating expenses (e.g., transit), the match is 50/50.

Amtrak receives less than 1% of all transportation funding. In contrast, Germany and France spend about 20% of their transportation budgets on passenger rail.
Source: Salon.com, November 21, 2001

Where the Money Comes From
Among the gas tax proceeds collected in the federal Highway Trust Fund (HTF), the motor fuel tax is the largest source of federal transportation funds: it was set by Congress at 18.4 cents/gallon in 1993, but has eroded over time due to inflation and increased fuel efficiency.

About a third of most state transportation budgets (which provide matching funds for federal transportation dollars) are funded by gas taxes. To supplement these funds, legislatures in 14 states have voted to raise the state gas tax 19 times. Other state transportation funding comes from the general fund, motor vehicle sale taxes, licensing fees, bond proceeds, and toll roads. Some localities, notably New York City, have looked into congestion pricing.

Where the Money Goes

SAFETEA-LU authorized $241 billion for highway spending and $52.6 billion for transit programs. This is roughly an 80/20 split in funding between highways and transit. More than 5,600 earmarked projects received $24.3 billion in SAFETEA-LU funding.

From their highway budgets, states spend:

• 48 percent on capital outlay (improvements to physical highway infrastructure, including land acquisition and right-of-way).
• 25 percent on maintenance (to keep roads in usable condition; does not include major resurfacing) and highway and traffic services (congestion relief, traffic flow and aesthetic measures).
• 8.4 percent on administrative costs.
• 9.4 percent on highway law enforcement and safety.
• 4.6 percent on debt service.
• Remainder in transfers to local governments.

From their transit budgets, states spend:

• 66 percent on operating expenses (mostly for scheduling and operations, less for vehicle and facility maintenance)
• 33 percent on capital expenses (mostly for facilities and vehicles)

In 2002, states transferred $12.7 billion to local governments.  Of this amount, $11.8 billion was intended for highways and only $99 million for mass transit.

Challenges for Transportation Funding
Declining value of the gas tax. Since 1996, the federal gas tax has declined approximately 26% in real purchasing power to a real value against inflation of only 13.5 cents/gallon. A 2005 study by the National Chamber Foundation of the U.S. Chamber of Commerce predicted that, if no action is taken, “the HTF will be bankrupt by 2010 and will run a $41.7 billion deficit by 2015.”

Lower gas tax receipts as Americans drive less. The New York Times reported that Americans drove 1.8% fewer miles on public roads in April 2008 than they did in the same month last year. This was the first instance in 17 years of an actual downturn in gasoline demand.
Source: New York Times, June 19, 2008

Bigger demands on public transit systems. Just as gas tax receipts go down and fuel and energy costs go up, demands on public transit systems escalate. Studies have estimated that ridership is up 10-15% from last year, especially in metro areas in the South and West.
Source: New York Times, June 21, 2008

Increased pressure on aging infrastructure. In 2002, both the Federal Highway Administration (FHWA) and the American Association of State Highway and Transportation Officials (AASHTO) estimated significant deficiencies in revenues needed to maintain the nation’s transportation systems in 2004. AASHTO projected shortfalls of $37 billion for highway spending and $19 billion for transit.

What America Needs

• A new transportation bill that puts at least as much money into transit as into highways.
• A more equitable matching system so that states don’t have to put up so much more cash for transit systems and infrastructure than for highway systems.
• A “fix it first” program to prioritize infrastructure repair and maintenance over new highway spending.
• More local control over transportation spending.
• New infusions of money - perhaps from a cap-and-invest program - into transportation options that are good for the environment and that save fuel.

  Additional funding, however, should not supplant existing federal transportation funding for such options.

What Smart Transportation Spending Is Good For

The environment

• Transportation currently accounts for one third of all U.S. greenhouse gas emissions and is the fastest-growing source of emissions. The U.S. Department of Energy estimates that by 2030, the average number of miles Americans drive each day will increase by 59%.
  Source: Natural Resources Defense Council

• Every mile of highway lane added to existing roads increases CO₂ emissions by more than 100,000 tons over 50 years.
  Source: Texas Transportation Institute

• Public transportation produces 95% less carbon monoxide (CO), 90% less in volatile organic compounds (VOCs), and about 50% less carbon dioxide (CO₂) and nitrogen oxide (NO_x) as private vehicles, per passenger mile.
  Source: American Public Transportation Association

• Public transportation use saves the equivalent of 300,000 automobile fill-ups every day and 34 supertankers of oil every year.
  Source: American Public Transportation Association

Jobs and local economic development

• In 2000, America’s public transportation systems employed 350,000 workers to operate, maintain, and manage all modes of transit.
  Source: Center for Transportation Excellence
  
• A 2004 Surface Transportation Policy Project study found that for every $1.25 billion spent on new public transportation projects, nearly 51,300 jobs are created. In contrast, only 43,200 jobs are created per every $1.25 billion spent on new roads and bridges.
  Source: Sierra Club

• Access to mass transit as an extremely important factor in business location decisions, according to 77% of New Economy companies.
  Source: Jones Lang LaSalle

Family budgets

• The average American household saves approximately $6,500 from not owning and operating a car.
  Source: Center for Neighborhood Technology

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http://www.ncsl.org/print/transportation/item014233.pdf

http://archive.salon.com/tech/feature/2001/11/21/amtrak/

http://www.nytimes.com/2008/06/19/business/19gas.html

http://www.nytimes.com/2008/06/21/us/21mayors.html

http://www.nrdc.org/smartGrowth/smartgrowth_helps_solve_globalwarming.asp

http://www.sierraclub.org/sprawl/report04/transit.asp