Making War on User Fees

The Highway Trust Fund hasn’t worked, says a new report from the Eno Transportation Foundation, so Congress should consider getting rid of it and funding all transportation out of general funds. In other words, the transportation system is breaking down because it has become too politicized, so we should solve the problem by making transportation even more political.

Eno (which was founded by William Phelps Eno, who is known as the “father of traffic safety”) claims this report is the result of 18 months of work by its policy experts. Despite all that work, the report’s conclusions would only make matters worse.

“The user pay principle works in theory,” says the report, “but has not worked in practice, at least as applied to federal transportation funding in the United States to date.” Actually, it worked great as long as Congress respected that principle, which it did from roughly 1956 through 1982. It only started to break down when Congress began diverting funds from highways to other programs. Then it really broke down when Congress, in its infinite wisdom, decided to spend more from the Trust Fund than it was earning from user fees. (It made the decision to spend a fixed amount each year regardless of revenues in 1998, but spending only actually exceeded revenues starting around 2008.)

Some argue that such breakdowns in the user-fee principle are inevitable when politicians get involved. This suggests that the government should get out of the way and let user fees work again. But Eno ignores that idea, and simply dismisses user fees altogether.

Eno suggests Congress has three options:

  1. Adjust spending to revenues, either by raising gas taxes or reducing spending.
  2. Fund some things out of gas taxes and some things out of general funds (which is more-or-less the status quo).
  3. Get rid of the Highway Trust Fund and just fund all transportation out of general funds.

“Any of these ideas would represent a dramatic improvement over the existing system,” says Eno, which isn’t true since the second idea is, pretty much, the existing system. But “based on our analysis, solution 3 is at least worth exploring.”

In fact, all of the problems with our transportation system are the result of politicians departing from the user-fee principle.

  • Crumbling infrastructure is the predictable result of political decisionmaking, because politicians would rather fund new infrastructure than maintain what they have.
  • Wasteful spending on grandiose capital projects that produce few benefits is the predictable result of giving special-interest groups more say over budgets than transportation users.
  • Increased congestion is the predictable result of the fact that so many of those special interest groups benefit from not solving the congestion problem.

Eno never considers the possibility of getting the federal government out of the transportation business, most of which is not interstate and doesn’t need federal involvement. The only mentions of “devolution” in the report are in a case study of United Kingdom transportation, which only involved a partial devolution and is far from committed to the user-fee principle as petrol taxes all go into general funds.

The report only mentions substituting vehicle-mile fees for gas taxes in order to dismiss it by saying that it would “require Congress to raise taxes.” Actually, it wouldn’t because those fees would be charged and collected by state and local agencies and private parties that own and operate the nation’s highways, roads, and streets. The only reason why the federal government is involved at all is because the federal government can cheaply charge taxes on gasoline at refineries and ports of entry, a benefit that disappears if we switch to mileage-based user fees.

Eno’s solution would take us out of the traffic jam and into total and complete gridlock. Politicians would merrily allocate funds to projects that enriched their pals and campaign contributors while doing nothing for mobility. Cities and states would eagerly propose the most wasteful projects they can find in order to get “their share” of the federal largess. Anyone daring enough to complain about congestion and deteriorating infrastructure would be told that it’s their own fault for using politically incorrect modes of transport. Those who really care about the nation’s transportation system need to look deeper than the authors of Eno’s report.