Words to Remember
Using Federal Highway Administration statistics, Subsidyscope has calculated that in 2007, 51 percent of the nation’s $193 billion set aside for highway construction and maintenance was generated through user fees—down from 10 years earlier when user fees made up 61 percent of total spending on roads. The rest came from other sources, including revenue generated by income, sales and property taxes, as well as bond issues.
Going back further, the trend is more pronounced. Forty years ago, user fees amounted to 71 percent of revenues spent on roads. Today, user fee revenue as a share of total highway-related funds is at an all-time low since the Interstate Highway System was created in 1957. A complete data set of highway revenue by source is available for download. In 2007, non-user revenues contributed $70 billion to the highway system. By comparison, this contribution totaled $26 billion in 1967 (in 2007 dollars).
The point here is not that subsidies for transportation are bad. It’s that they’re a key part of the funding of all modes. Rather than pretending that roads are some magical form of infrastructure which pays for itself, we should focus on working to use transportation subsidies more effectively — and to increase the user-fee share of funding where appropriate.
“Passenger rail can’t operate without subsidies” is not a meaningful criticism of rail. What’s more, it’s important to note that since roads and rails are substitute transportation technologies, large and unacknowledged highway subsidies generate a persistent drag on rail ridership (and rail-oriented investment), and a persistent boost to highway use and highway-oriented investment. A highway subsidy is necessarily a sprawl subsidy.
November 24th, 2009 at 6:37 pm
There is often a case to be made against government intervention and it often gets made against altering government interventions.
November 25th, 2009 at 1:59 am
It’s good that this study points out that while some of the gas tax is used to fund transit and other things, the amount taken out for other things is far exceeded by what is put in for highways. I think that’s the most important part of this analysis. It’s proof not only that roads are subsidised, but that transit spending is only a negligible amount of gas tax spending.
November 25th, 2009 at 10:05 am
I can’t tell, from the subsidyscope article, whether they have deducted the value of many states’ sales tax exemptions for gasoline from the gas tax revenue. As sales tax rates have increased and gas tax rates have declined (as a percentage of the price), this becomes an increasingly important correction.
November 26th, 2009 at 9:54 pm
“The point here is not that subsidies for transportation are bad.” But isn’t it?
With federal and state governments subsidising transport, distortions are inevitable. I can understand if taxes fund certain infrastructure projects (such as using local property taxes to build roads, bus shelters or tram tracks) on the basis that those infrastructures add value to properties near it.
But it is highly inequitable when the general fund is used to subsidise highways and public transport - user fees is the better way to go. In several cities, like Delhi, Hong Kong, Tokyo and Singapore, expensive mass transit can be operated without public subsidies - only by the lack of imagination that operators in North America and Europe are incapable of so.
Granted, it is a bit wee hard to do that when, for example, a New York transit worker gets paid $52,000 on average.
November 27th, 2009 at 12:17 pm
In Delhi, cars are relatively much less affordable to the population than in the US. And Singapore, Hong Kong, and Tokyo have geographic constraints that create high density that make transit more competitive. And somehow, I don’t think that transit workers in Tokyo are paid that much less than in NYC (US transit agencies do definitely have a problem on the expense side, but it’s mostly in funding various promises they made years earlier, like pensions and health care).
November 28th, 2009 at 3:14 pm
“Granted, it is a bit wee hard to do that when, for example, New York transit worker gets paid $52,000 on average.”
*****
The mean annual income in NYC is $49,670 so that doesn’t seem unreasonable. How little should they be paid?
December 1st, 2009 at 5:21 pm
Just FYI, rent in NYC runs about 1.5 times rent in DC. So don’t start thinking a $52k salary gets you anything above a cardboard box within a bearable commute.
December 15th, 2009 at 2:45 pm
It’s good you prvided the link for the A complete data set of highway revenue. We can see the actual figures.