States receive more than they contribute for transportation

| Thursday, October 13, 2011

The argument that some states pay more in highway taxes than they get back from the federal government may be over according to a report by the U.S. Government Accountability Office, or GAO.

Authors of the latest GAO study on the subject say each state received more funding for highway programs than they contributed to the Highway Trust Fund from 2005 through 2009.

U.S. Rep. Nick Rahall of West Virginia, the ranking Democrat on the House Transportation and Infrastructure Committee, requested the study. He says the “donor” versus “donee” debate should be taking a back seat to more pressing matters such as passing the next surface transportation authorization bill.

“Instead of being consumed by the parochial ‘donor’ and ‘donee’ debate, this GAO report confirms that Congress should be working toward crafting a surface transportation bill that meets the needs of a 21st century national transportation system,” Rahall said in a statement.

“Using rate of return as our rationale for how we spend our limited transportation dollars simply detracts from the national focus when we ought to look at the larger picture and determine what investments best help create American jobs and grow our economy.”

Surface transportation in the U.S. is currently functioning on short-term extensions of the highway policy known as SAFETEA-LU, which became law in 2005 and expired in 2009. Current programs are being funded at SAFETEA-LU levels through the extensions.

The Highway Trust Fund is the heart of surface transportation, taking in fuel taxes, tire taxes, heavy vehicle use taxes, and excise taxes on heavy equipment. The money is then doled out to states via a funding formula. Many states have claimed through the years that they’ve paid more into the fund than they have received through the formula.

Decline in revenue
When fuel prices increased dramatically in 2008, the U.S. began heading for a recession. Truckers were buying less heavy equipment and tires. Americans were driving fewer miles and choosing fuel-efficient vehicles for their needs. All of those factors affected the Highway Trust Fund and nearly bankrupted it in September 2008.

It was then that Congress began a series of transfers from the General Treasury to the Highway Trust Fund, which have totaled $30 billion. Highway users have a right to defend the transfers, as various diversions of Trust Fund dollars to other purposes have been occurring since the 1990s.

The GAO says that if the 2008 transfers are included, there’s no such thing as donor versus donee states, but if the transfers are not included in the calculation, a little more than half the states could make the claim that they paid slightly more into the fund than they received back.