Public Policy Forum Blog

Proposed new transportation policy mirrors national debate

A key transportation provision in the governor's proposed budget that may have huge implications for mass transit also reflects a larger ideological debate that's raging in the nation's capital.

The provision stipulates that effective in 2013, state operating assistance for local transit systems no longer will be provided from the state's transportation fund, but instead will come from General Purpose Revenue (GPR). According to the Budget in Brief, the move is designed to "strengthen the relationship between user fee revenues and investments in transportation infrastructure." In other words, motor vehicle-related taxes and fees should be used exclusively for highways and roads, leaving other transportation modes to seek assistance from the general fund.

Wisconsin's transportation fund collects about $1.7 billion annually from transportation-related fees and taxes to help fund the state's transportation infrastructure. In the 2009-10 fiscal year, about $970 million of the fund's revenues came from the state's 30.9 cent per gallon gasoline tax, while another $610 million was derived from vehicle registration fees. The remaining $120 million came from other transportation-related fees.

In 2009, the fund provided $112 million in assistance to local transit systems, including $65 million to the Milwaukee County Transit System (accounting for more than 40% of its operating budget). The proposed budget would cut local transit assistance by 10% in 2012, then make the shift to GPR funding in 2013, freeing up an extra $116 million for highway needs.

The long-term impact of the proposed budget provision on local transit systems could be substantial. Rather than having to compete with the relatively small universe of transportation-related programs that currently receive support from the transportation fund, transit would have to compete with the much larger array of programs that vie for GPR. Considering the state's overall budget challenges, it is possible that local transit assistance could suffer dearly under such a scenario.

In the end, whether the provision is appropriate public policy may depend on one's definition of a user fee. And, interestingly, that's a debate that is now playing out on a national stage.

In Washington, the federal Highway Trust Fund (HTF) essentially has run out of cash. With the 18.4 cent per gallon federal gas tax frozen since 1993, and substantial gains in vehicle fuel efficiency, the ability of the gas tax to keep up with the country's infrastructure needs has been exhausted. In fact, more than one bipartisan blue ribbon commission has urged prompt action to rectify the situation.

Because both congressional Republicans and the Obama administration have said a federal gas tax increase is off the table for now, attention has now turned to how HTF dollars are being spent.

In an August 2010 report entitled "Restoring Trust in the Highway Trust Fund," two researchers from the Reason Foundation argue that the diversion of 2.86 cents per gallon of the federal gas tax for mass transit operating assistance - first initiated in 1982 - is an inappropriate use of a motor vehicle-related user fee and has weakened public support for the gas tax. Consequently, they recommend "shifting non-highway programs either to general revenues or to the states" and using HTF funds only to rebuild and modernize the Interstate system.

A few months later, two researchers from the U.S. Public Interest Research Group issued a rebuttal entitled "Do Roads Pay for Themselves?" The paper argues, among other things, that the federal gasoline tax is not a true user fee, as the amount an individual driver pays in gasoline taxes has no relationship to the frequency with which he or she uses interstate highways. The authors also contend that the notion that highways pay for themselves via user fees is a "myth" used by highway advocates "to secure access to scarce government revenue for their desired public policy ends—distorting transportation decision-making."

The debate on this issue will heat up soon, as Transportation Secretary Ray Lahood recently predicted Congress would have a new federal transportation bill on the president's desk by August. Given the change in policy in the new Wisconsin state budget, might this be another instance in which a debate in Madison will drive groundbreaking debates occurring on a national level?

Rob Henken