“Dirty Dozen” in Transportation Spending

Jul 9, 2014 by AFP

By Akash Chougule and Mary Kate Hopkins

The Highway Trust Fund is set to run dry in the coming weeks, and leaders in Washington as well as interested parties around the country are scrambling to find ways to fill the Fund’s shrinking balance. Lawmakers on both sides have proposed gimmicks that would provide one-time revenue boosts. Some have even suggested raising fuel taxes and fees, despite the billions Americans already pay.

Instead, Congress should consider the most common-sense reform to transportation spending: eliminating wasteful spending and returning responsibility for local projects to the states. Doing so would save billions of dollars and lead to better roads and bridges for the American people.

Here is a list of 12 problems with the current transportation spending practices, all of which should catch the attention of lawmakers as they look for solutions for the Highway Trust Fund:

  1. Congestion – In 2011, American commuters wasted 5.5 billion hours in traffic, costing $121 billion. This translates to 38 hours – nearly a full work week – and $818 per person.
  2. Poor Budgeting – Congress is consistently overspending for the Highway Trust Fund, and not seeing consequences: Since 2008, they have borrowed $54 billion from the General Fund to cover extra costs instead of cutting spending to meet their budget.
  3. Diversions – In 2010, 17% of the Highway Trust Fund was diverted to transit programs that account for 1% of surface travel. Transit formula grants from HTF are about $9 billion annually. For example, lured by $800,000 in grants, Arlington VA built a $1 million bus stop.
  4. Transit favored over highways – The Highway Trust Fund is increasingly focused on transit programs over highway improvements, despite the fact that driving is far more popular. Driving costs about 22 cents per passenger mile, while transit costs a whopping 90 cents per passenger mile, 70 cents of which is subsidized by taxpayers.
  5. Amtrak – The nationwide rail service received $1.4 billion in subsidies in FY 2013. In 2011, the federal government subsidized a whopping $5.62 per ticket. Yet Amtrak consistently loses money due to mismanagement and routes that serve few passengers—15 long distance routes lose a combined $600 million each year. Taxpayers were found to be footing the bill for a $72 million loss on food and beverage service in 2013—because the railway was providing free wine and champagne on long distance routes.
  6. Transportation Alternatives Program (TAP) – Congress mandates that 2% of gas tax funds that states receive must be set aside for bike and walking paths – obviously inherently local projects. In FY 2014, TAP amounted to $819 million. TAP also funded $67 million worth of ferry boats in FY 2013.
  7. Community Development Block Grants (CDBG) – These grants are supposed to be used to support low income neighborhoods and prevent slums—yet in 2012, Fairfax County, Virginia received $4.4 million. 8 of the 10 wealthiest counties received CDBG money – while NONE of the 10 poorest did. CDBGs are ripe for cronyism and pet project procurements.
  8. Davis-Bacon Act – This legislation requires all workers on federally funded projects worth more than $2,000 be paid the prevailing wage, which is usually the local union wage. This is a blatant piece of pro-union legislation that destroys the one advantage that unskilled workers have over unions: their ability to work for less. It also raises the construction wages on federal projects to 22% above the market rate. In 2010, the Heritage Foundation found that repealing the act would have saved taxpayers $11.4 billion and created the potential for 160,000 jobs.
  9. TIGER Grants – In FY 2013, TIGER grants included: over $15 million to add bicycle lanes in Boston, $17 million to narrow roads in New York, $10 million for Florida bike lanes, and $10 million to plant flowers and add bike lanes in North Carolina. A GAO report this year found a lack of transparency, and recommended that DOT improve documentation of key decisions in the TIGER grant program.
  10. Student Loan Subsidies – The most recent iteration of the Highway Trust Fund included a provision to keep Stafford Student Loan interest at 3.4%. This costs $6 billion, has nothing to do with highways or transportation, and contributes to artificially inflating the cost of higher education.
  11. GROW America Act – President Obama’s bill would increase overall transportation spending by 38 percent, including a 22 percent increase in highway spending and a whopping 70 percent increase in transit funding. To pay for this, President Obama has proposed to reform corporate taxes, which is supposed to reduce them in the long run but produce a $150 billion one-time increase in revenues over 10 years. Obama proposes to spend four years of this increase on transportation. After that, the Highway Trust Fund would go over another transportation cliff.
  12. D+ for Infrastructure – Despite the spending, American infrastructure is in extremely poor shape. As of April 2014, there are 63,000 bridges nationwide in need of significant repair and forty-two percent of America’s major urban highways remain congested.

Instead of focusing on urgent transportation infrastructure needs, the Highway Trust Fund has become a piggy-bank for special interests. Rather than calling on taxpayers for more taxes or yet another bailout, Congress needs to take a serious look at the numerous areas for improvement in the transportation budget. Cutting spending and allowing state, local, and private entities to more effectively and efficiently plan, fund and complete transportation projects is the real way to save the Highway Trust Fund and our nation’s infrastructure.