NCPA - National Center for Policy Analysis

Federal Government Should Leave Transportation Infrastructure to the States

June 20, 2011

For two principal reasons, the federal government should fund no transportation infrastructure at all, says Gabriel Roth, a research fellow at the Independent Institute, in testimony to the United States Senate Committee on Finance.

The first reason is that, in these times of financial stringency, government should not finance facilities for which users themselves could pay if they wished to cover the costs.

  • For example, those wanting railroads should cover the costs themselves, and those wanting roads should pay more into the dedicated funds that support them.
  • The U.S. air, railroad and road sectors have a long "user pays" tradition, and the current financial deficits require that this tradition be restored.
  • Government funding for interurban travel can be eliminated for this reason alone.

The second reason is that federal payments currently support local services, such as mass transit and other projects, to promote an undefined concept of "liveability."

  • Such payments are not appropriate for federal funding.
  • If local services are to be subsidized, it would be better for the funds to be raised from the localities that demand them.

These considerations do not apply to appropriations from the federal Highway Trust Fund, which receives dedicated revenues from road users, and has no claims on general revenues.  Highway Trust Fund revenues could be increased by raising the dedicated federal fuel taxes but, because conditions vary from state to state, and because of the waste involved in the federal financing of state roads, it would be preferable to meet road funding shortages by raising state charges.  States are in a better position than the federal government to reform the current systems of owning, funding and managing highways, says Roth.

Abolition of federal financing is likely to encourage state and private sector funding, and successful reforms pioneered by some states could quickly be replicated in others.

Source: Gabriel Roth, "Testimony on Financing Infrastructure," Independent Institute, May 17, 2011.

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