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Gas Tax Fever

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Gas Tax Fever

Alternative-transportation projects rely on federal highway funding, putting bike and rail advocates in a tough spot. November 4, 2015

Millennials are turning away from driving. This trend, according to a recent report from Standard & Poor’s, has created a domino effect with potentially dire consequences for the economy. Reduced federal gas-tax revenues have led to roads that are less well-maintained and thus less safe. Standard & Poor’s sees crumbling or poorly maintained infrastructure as a potential threat to economic productivity and an incentive for state and local governments to take on greater levels of debt. Alternative-transportation advocates labeled the ratings agency’s claims a “bizarre theory about dangerous conditions on American streets.” But S&P is on to something, and transit advocates should take note.

At the national and state level, transportation funding relies almost exclusively on revenues derived from taxes on gasoline and diesel. The gas-tax-dependent federal Highway Trust Fund (HTF)—currently enjoying its 34th temporary extension since 2008—doesn’t just pay for roads; it also pays for much of America’s capital investment in mass transit. Despite its name, the HTF supports bicycle and pedestrian infrastructure, too. In Chicago, the recently opened “606” elevated biking trail was largely paid for by the Federal Highway Administration’s Congestion Mitigation and Air Quality Improvement (CMAQ) Program—which is funded by gas taxes. Federal funds are paying for part of New York City’s Second Avenue Subway and East Side Access commuter rail project. In Indianapolis, over half the cost of the Cultural Trail—a bike and pedestrian path—came from federal transportation funding. Multiple streetcar systems in cities across the country benefitted from Department of Transportation TIGER grants, again coming from federal gas-tax money.

It’s true that, for economic and lifestyle reasons, Millennials are driving less than previous generations did at their age. Moreover, cars are more fuel-efficient than they used to be. These factors have put a dent in gas-tax revenues, a concern for urban-transportation advocates who have come to rely on federal transportation money. Urbanists are now among the staunchest defenders of the current system, which diverts 20 percent of federal highway funding to pay for things like bike lanes and streetcars. Alternative-transportation advocates routinely oppose proposals to devolve transportation funding to the states. They fear—correctly in many cases—that state legislatures and transportation departments will be less friendly to bicycling and transit than the federal government has been. When Congress debates highway funding bills, delegations from states like New York and California often attach provisions mandating that part of the money go to non-highway uses.

By agreeing to throw transit and biking advocates a small federal bone, the so-called “road lobby” inadvertently turned its enemies into allies. Not only does this current status quo entrench an overwhelming allocation of federal transport funds to roads; it also crushes transit agencies under a mountain of costly federal regulations. Rail construction is now more expensive in the United States than anywhere in the world.

Those who believe that Americans should fundamentally change the way they get around now find themselves defending a system that produces results contrary to their goals. Gas taxes, bridge tolls, and congestion pricing may be sensible policies on their own terms, but relying on revenue from these sources to pay for bike and mass-transit projects comes with an obvious limitation—the money goes away if people get out of their cars. Standard & Poor’s is just a messenger here. If the facts make alternative-transport advocates uncomfortable, it’s their own fault.

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