REGIONAL INEQUITY IN THE FEDERAL HIGHWAY TRUST FUND
December 12, 2007
Among the many flaws in the federal highway and transit program are the pervasive regional inequities in the way that federal highway spending is distributed among the 50 states, says Ronald D. Utt, Senior Research Fellow at the Heritage Foundation.
- Under current law, motorists and truck owners pay a federal fuel tax--18.3 cents per gallon on gasoline and 21 cents per gallon on diesel fuel.
- That money is put into the highway trust fund, which returns these fuel tax revenues to the states for their highway and transit projects.
However, as annual U.S. Department of Transportation (USDOT) data reveal, many states were shortchanged, says Utt:
- Using the trust fund returned ratio (returns divided by payments), Mississippi (0.893 trust fund return ratio), the poorest state in the union, subsidizes motorists in Connecticut (1.451 return ratio), the richest state.
- The system also effectively transferred $559 million from motorists in Texas (median income of $41,645 in 2004) to motorists in Connecticut (median income of $56,617) and Alaska (median income $52,141).
- Overall, in the past 50 years, motorists in Alaska -- the biggest recipient -- have received six times as much from the federal highway trust fund as they have paid into it.
Another perverse consequence of the misallocation is the difference in population. For example, between 2000 and 2006:
- Among donor states, Texas' population increased 12.9 percent, South Carolina's increased 7.7 percent, and Georgia's increased by 14.4 percent.
- Among the winning donee states, Connecticut's population increased by just 2.9 percent, New York's increased by 2.1 percent, Pennsylvania's increased by 1.3 percent, and West Virginia's increased by only 0.5 percent.
In Alaska the population increased by 7.0 percent -- just slightly higher than the national rate -- but its extremely small population (670,053 in 2006) meant that its 2005 windfall of $412 million helped to accommodate the road needs of just 43,121 new Alaskans.
Source: Ronald D. Utt, "Restoring Regional Equity to the Federal Highway Trust Fund," Heritage Foundation, October 9, 2007.
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