An End to Highway Robbery?

Lower taxes, less pork, better roads


The federal government collects around $15 billion in gasoline-tax revenue a year, but not all of that money funds highway construction or maintenance. For instance, the big 1991 transportation bill called the Intermodal Surface Transportation Efficiency Act (ISTEA) included $30 million to build a moving sidewalk in Altoona, Pennsylvania, $30 million to maintain recreational motorcycle trails, and $17.3 million to subsidize a trolley, a visitors' center, and a museum complex in Texas.

Now Sen. Connie Mack (R-Fla.), Rep. Nick Smith (R-Mich.), and Rep. John Kasich (R-Ohio) hope to dry up a major source of that pork-barrel spending by repealing most of the federal gasoline tax and making tax collection and road construction state responsibilities. By 1999, the plan would do away with all but two cents of the 18.4 cents-a-gallon federal gas tax. The remaining two cents-a-gallon tax would fund maintenance and emergency repairs on the Interstate system, giving states the option to make up the difference.

At press time, Mack, Smith, and Kasich hadn't resolved how quickly they would phase those taxes out. Before House Speaker Newt Gingrich and then-Senate Majority Leader Bob Dole talked about repealing the 1993 4.3 cents-a-gallon tax increase, Mack had originally planned to leave it in place. And all the sponsors want to make sure gas taxes raise enough money to fund highway construction projects already under way. Sometime before the July 4 recess, the legislators will decide whether they will offer identical bills in the House and Senate or make separate proposals with different phase-in schedules.

Pork-barrel spending isn't the only raw deal taxpayers get from federal highway projects. Transportation analyst Gabriel Roth, author of Roads in a Market Economy, says such mandates as Davis-Bacon wage laws and requirements that contractors buy American-made products make federal road projects as much as 28 percent more expensive than those financed by state governments. A Claremont Institute study issued last September estimates that federal mandates add more than $200 million a year to highway costs in California. And "Defederalizing Transportation Funding," a forthcoming Reason Foundation study, points out that only 13 states gain money from the arcane formula that redistributes money from the Highway Trust Fund to the states.

Writes Reason Foundation President Robert W. Poole Jr., "All 37 other states would be better off, in dollar terms, if there were no federal gasoline tax and no federal Trust Fund." By the time ISTEA comes up for reauthorization next year, Congress may have a lot less money to throw around.