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Reimagining Surface Transportation Reauthorization: Pro-Market Recommendations for Policy Makers

Today, CEI published my white paper, “Reimagining Surface Transportation Reauthorization: Pro-Market Recommendations for Policy Makers.” In it, I lay out the case for making some small but important changes to federal surface transportation policy.

Traditionally, free market fiscal conservatives have advocated for devolving all federal highway and transit programs to the states. To be sure, we at CEI support this eventual goal. Unfortunately, it is wholly unrealistic at this time. But there are still things that can be done to move closer to this direction. We suggest a strategy of “de facto devolution,” which basically involves keeping federal spending steady while increasing the flexibility of states to fund and finance their own highways. To accomplish this, we recommend the following changes to federal highway policy:

  • Repeal the current federal prohibition on states tolling their own Interstate segments for reconstruction purposes, codified at 23 U.S.C. § 129.
  • Uncap or greatly increase the national cap on private activity bonds, currently set at $15 billion, codified at 26 U.S.C. § 142(m)(2)(A).
  • Provide technical and financial assistance to states looking to launch their own mileage-based user fee pilot programs.

With respect to mass transit, most free market fiscal conservatives have long and correctly held that transit is an inherently local issue. As such, it has no business receiving federal funding, let alone the current 1/5 share of total federal surface transportation spending—especially given the fact that mass transit accounts for less than 2 percent of person trips nationwide. You read that correctly: the federal government currently spends 1/5 of its surface transportation dollars on a mode that accounts for less than 1/50 of person trips.

 The federal politics of mass transit could be described as an unfortunate mix of parochial and ideological interests battling over non-federal issues. Given that serious federal mass transit spending cuts are at the moment politically difficult, fiscal conservatives and proponents of sound national transportation policy should embrace some more modest goals to rationalize federal mass transit policy. We recommend the following changes to federal mass transit policy:

  • Work to end Highway Trust Fund bailouts and raise public awareness of the huge discrepancy between transit funding and transit use—that 19 percent of federal surface transportation funding is currently directed to a mode that accounts for less than 2 percent of trips nationwide.
  • Roll existing discretionary transit grants programs such as New Starts into the Urbanized Area Formula Program.
  • Realign spending priorities to a fix-it-first-strategy by allowing federal transit funds to be used for maintenance projects.

Read the whole white paper here.