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New York's Fight for Transportation Dollars in Congress

by Mark Seaman, Jun 09, 2003
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Federal highway funds are used to restore and repair the city's bridges - including the Manhattan Bridge, shown above.
Every six years, Congress sets out to reauthorize the transportation funding that supports highway and mass transit programs. And every six years, the states scramble to get the biggest share of that funding. This year, with the current funding set to expire September 30, a coalition of mostly Southern and Midwestern states is looking to increase their shares at the expense of a few states in the Northeast and North Plains. New York's highway program would be particularly hard-hit, with a cut of 18 percent, or close to $2 billion over six years if current funding levels remained the same.

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New York's funding is being attacked on the grounds that the state is being subsidized by the rest of the country, and should be "self-sufficient" when it comes to highway programs. A recent study (in pdf format) at the Rudin Center for Transportation Policy and Management that I co-authored shows, however, that New York receives a relatively small share of the highway pie.

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Underlying the debate is the mechanism used to fund the federal highway program. Since the mid-1950s, gas taxes and certain other highway-user fees such as sales taxes on tires have been deposited in a national Highway Trust Fund and paid out in grants to the states. Originally, these taxes financed a grand national project - the Interstate Highway System. As that project came to an end, Congress added programs to support pedestrian amenities, safety, and air quality improvement, and the states began to squabble more over the distribution of funds. The fact that highway programs were supported by dedicated taxes made it easy for states to compare the amount of taxes they sent to Washington with the funding they received in return.

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The states that pay more in federal gas taxes than they receive in highway funding - so-called "donor" states led by Florida, Texas, and Michigan - argue that they are shortchanged by this system and end up subsidizing other states. States such as New York, on the other hand, which are net recipients of federal highway funds, argue that the maintenance costs of their older infrastructures, and the wear and tear caused by their harsh climates, require higher levels of federal funding.

These arguments, however, obscure some of the underlying realities of the finances. Our study shows that, by a number of measures, New York receives a very low level of transportation funding:

  • On a per capita basis, New York receives less federal highway funding than all but one state.
  • As a percentage of the state's total highway spending, the portion covered by the federal government in New York is the smallest of any state.
  • When it comes to mass transit, New York City's Metropolitan Transportation Authority receives 16 percent of the federal transit funding, but carries 32 percent of the nation's transit riders.

New York is seen as a net recipient of federal highway funds, despite receiving a smaller-than-average amount, because New Yorkers pay an even smaller share of federal gas taxes. The federal gas tax is the same throughout the country - 18.4 cents - but New Yorkers drive less and take transit more than the rest of the country. According to the 2000 Census, nearly one-quarter of state residents take transit to work, compared with less than five percent in the United States as a whole. As a result, New Yorkers pay far less in federal gas taxes and other highway-user taxes than other Americans - $67 versus $112 for the nation as a whole in 2001.

If the donor states have their way, the implications for New York could be serious. In the last 12 years, New York City has spent $1 billion in federal highway funds to restore and repair bridges, notably the Williamsburg, Brooklyn, Manhattan, and Queensboro bridges. Federal funds have helped pay for the city's high tech traffic management system, for safety enhancements on Queens Boulevard, and for the creation of bike lanes and greenways. Mass transit has also benefited from highway funding, as the state has transferred more than $120 million in federal highway funds each year to mass transit programs. A cut of $2 billion over six years could slow the city's bridge rehabilitation program and affect new projects such as the Second Avenue Subway.

What are the chances such a cut will pass Congress? The last time transportation funding was renewed, in 1997, the donor states were placated by a small increase in their share, and a large increase in the overall level of federal funding. New York's share shrank, but it received an absolute increase in funding, thanks to the overall increase.

This time around, the political and economic climate is different but the outcome may be similar. With the slowing economy, tax receipts into the Highway Trust Fund are falling, meaning the overall funding will shrink unless measures are taken such as increasing the gas tax - something the Bush Administration is loath to do. But Majority Leader Tom DeLay of Texas, a lead sponsor of the proposal, has not ruled out a tax increase, and the chairman of the House Transportation and Infrastructure Committee, Don Young of Alaska, has proposed increasing the gas tax and indexing it for inflation. His bill would increase the size of the program by about 50 percent, more than enough to make up cuts to individual states.

Interestingly, when the entire federal budget is considered, most of the states that are pushing for a bigger share of the highway funds already receive more in total federal spending than they pay in taxes. Florida, for example, paid $227 million more in gas taxes than it received in federal highway spending in 2001; but when the entire budget is counted, including defense, Social Security, and other programs, the state received $5.7 billion more from Washington than it paid in taxes. Oklahoma ran a "deficit" of $74 million with the federal highway program in 2001, but had an $8 billion "surplus" with the overall budget. In contrast, New York, New Jersey, and Connecticut together received $182 million more in federal highway spending than they paid in federal gas taxes, but they ran an overall deficit with Washington of $65 billion. These numbers should make legislators think twice about which states really are "self-sufficient."

Mark Seaman is project manager for the Rudin Center for Transportation Policy and Management at New York University's Wagner Graduate School of Public Service.




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