By Jeff Flake and Ronald Utt
Georgia clearly could use an extra $206 million a year to fix its roads and bridges. And it could get that much – without increasing taxes, without cutting other government programs and without borrowing.
Georgia and about two dozen other states pay far more fuel taxes into the federal highway trust fund than they ever get back. If Georgia and the other so-called “donor” states were to join forces, the state can start getting its fair share.
The combined effort is essential. It will take a concerted push to get Congress to remedy the situation. Many lawmakers fear offending their colleagues from states that get more than their fair share from the trust fund. These “Donee” states are more than happy to spend all that out-of-state highway tax money on their own roads, and they won’t give it up without protest.
The federal highway and transit program today constitutes a perverse system of trickle-up economics. Last year, the trust fund shorted Georgia $206 million and showered New Yorkers with a $178 million bonus. In effect, moderate-income Georgians (median household income of $49,692 in 2007), paid excess federal fuel taxes to subsidize transportation for far wealthier folks in Massachusetts (median household income, $57,681) and Connecticut ($65,496).
This reverse Robin Hoodism flows from flawed formulas that Congress uses to determine how big a slice of the pie each state gets. Donor states are concentrated in the South and the economically battered Great Lakes region. The current program transfers billions of dollars from these areas to wealthier states, most of them clustered in New England and the Middle Atlantic region.
This costly inequity was built into the program from the start, more than a half century ago. Since 1956, Georgians have gotten back only 84 percent of the share of money they’ve poured into the highway trust fund. Meanwhile, New Yorkers have gotten back every penny, with a 13 percent bonus. It adds up to a lot of money. In just the last three years (2005-2007), the funding formula has cost Georgia a staggering $632 million in lost money.
Over the years, some donor states have made a few half-hearted efforts to remedy the inequities. To date, all they’ve won are a few cosmetic changes that did little to stem the South-to-North flow of motorist-paid fuel taxes.
This year, however, presents a golden opportunity to raise the ante and rectify the situation. The current federal highway law expires and Congress must write a new one. Every aspect of the federal program will be in play. It’s the perfect time for state officials, congressmen and senators from donor states to demand equity and fairness. All it takes is a coalition of donor-state lawmakers dedicated to fighting for their states’ fair share of highway taxes. By organizing lawmakers into the Donor State Working Group, we will carry that effort right into the Halls of Congress.
The path of least resistance for reformers would appear to be a simple rewrite of the state-by-state spending formulas. But past efforts to do so have produced little progress, leaving donor states no better off than before.
It would be far more effective to cut out Washington regulators and bureaucracy altogether. Each state should simply keep the 18.3 cents per gallon federal fuel tax paid by motorists within its borders (as well as the diesel fuel tax paid by truckers). In turn, states would be held fully responsible for their own transportation programs.
The upshot: State transportation agencies would have the funds and the flexibility needed to keep things running smoothly within their borders.
D.C.-based central-planning and financial management made sense back in 1956, when the sole task of the new federal program was to build the interstate highway system coast to coast and border to border. But that task was completed in the mid 1980s. Since then, the highway program has become little more than a piggy bank for special interests, outrageous earmarks and wealthy states.
Unless Georgia and other donor states band together, using their combined clout to force change in Washington, motorists in the Peach State will continue to subsidize our wealthy friends to the Northeast, much as they have done since 1956.
This commentary was written for the Georgia Public Policy Foundation by U.S. Rep. Jeff Flake of Arizona, another donor state, and. Dr. Ronald Utt, the Herbert and Joyce Morgan Senior Research Fellow at The Heritage Foundation. The Georgia Public Policy Foundation is an independent think tank that proposes practical, market-oriented approaches to public policy to improve the lives of Georgians. Nothing written here is to be construed as necessarily reflecting the views of the Georgia Public Policy Foundation or as an attempt to aid or hinder the passage of any bill before the U.S. Congress or the Georgia Legislature.
© Georgia Public Policy Foundation (May 1, 2009). Permission to reprint in whole or in part is hereby granted, provided the authors and their affiliations are cited.