Road funding: Clinton goes for transit

The Clinton administration’s FY1997 budget appears to be an election year bid for support from the transit lobby. It proposes maintenance of transportation spending overall at around $37.5 billion, but moves spending away from highways toward transit. Highways would lose $500m, going from $20.2b to $19.5b; transit dedicated funds would rise from $4.0b to $4.3b; the Surface Transportation Program mainly used for transit would go up steeply from $4.7b to $5.6b.

With different parties at each end of Pennsylvania Avenue a president’s budget does not give any clear indication of what is likely to be eventually legislated but it is suggestive of the Administration’s desire to project a concern for big city transit interests in an election year.

The GOP earlier produced a budget for transportation for FY 1997 that envisaged a $1.3b drop on this fiscal year, and is inclined to concentrate the cuts on transit and to maintain highway spending. The different stances reflect both interests and ideology, the Democarts drawing their greatest support from inner cities with high transit needs, and being predisposed toward the collective nature of transit, whereas the GOP gets its votes from the suburbs where transit is a minor factor and regarded with greater skepticism.

Off-budget

Highways seem likely to be increasingly under-funded as the federal government uses highway trust funds to support its broader budgetary purposes. An analysis by Jack Schenendorf chief staffer of the House Transportation Committee shows how the administration’s five year budgetary plans would bottle up an additional $36b in highway trust funds as part of its effort to spend money elsewhere while containing the overall budget deficit.

Highways FY1997 FY1998 FY1999 FY2000 FY2001 FY2002

Spending 22.0 17.0 15.5 14.1 15.9 18.1

Trust fund 23.9 27.6 33.1 41.1 50.8 60.4

House Transportation committee chairman Bud Shuster has propsoed to take highway funds off-budget to prevent this diversion to other budgetary purposes, and as we go to press there is a House vote scheduled on HR 842 designed to achieve this. Such a move would be a boon to highway construction so long as other means of diverion were not devised. But it is considered unlikely to succeed. Highway spending is probably not popular enough to garner the political support to end the manipulation of the trust funds.

What gives toll roads an economic base in the U.S. is the following figuring from the U.S. Department of Transportation in is “1995 Status of the Nation’s Surface Transportation System: Condition and Performance,” Report to Congress, pXXXII: annual investment in highways and bridges required over 20 years to reach an economically efficient system $68b, annual investment required to maintain present conditions $50b, current capital outlays $35b. If the present financing system via government is producing only about half the justified investment, there’s clearly a huge opportunity for market-based investment by toll organizations, if only the right incentives and institutions can be gotten in place.