Marco Rubio's gas tax cuts would give greater flexibility and political fights
Marco Rubio's plan to cut federal gas tax and federal aid for transportation projects would give states greater flexibility, but also cause disputes on interstate projects.
Marco Rubio's plan to cut federal gas tax and federal aid for transportation projects would give states greater flexibility, but also cause disputes on interstate projects.
Republican presidential candidate Marco Rubio recently introduced a聽transportation planthat cuts the federal gas tax 80 percent鈥攆rom 18.4 cents per gallon to 3.7 cents鈥攁nd eliminates the聽Highway Trust Fund's聽(HTF) Mass Transit Account. Similar to otherdevolution聽proposals, Rubio's plan would radically diminish the federal government's role in transportation projects. States would lose federal dollars and gain flexibility鈥攂ut also inherit political fights.
The federal government currently sends state and local governments more than聽$50 billiona year ($44 billion for highways and $8 billion for transit in 2015) in grants for surface transportation projects鈥攐r a quarter of all public transportation funding. Motor fuel taxes account for 87 percent of HTF receipts. Congress has struggled to balance the HTF and pass new transportation bills in part because the gas tax rate was聽last increased in 1994.
There are good reasons to reform transportation funding 鈥擟ongress's apparent inability to fund the HTF聽and antiquated funding formulas that do a聽poor job聽sending dollars to where people work and live. But the arguments in Rubio's plan for killing the gas tax and HTF are questionable. One is stopping "Bridges to Nowhere," but Congress already made headway on this problem when it聽banned earmarks. In fact,聽some argue聽the inability to make political trades has made passing multi-year transportation bills more difficult.
A second is freeing states from "strings attached" to federal funds. HTF dollars definitelycome with mandates鈥攕uch as requirements that local governments contribute 20 percent of spending and labor laws鈥攂ut it's debatable how debilitating these rules are. A 2012Government Accountability Office study聽found the feds were "lax" in their oversight and "reluctant" to make states comply with grant requirements.
A third argument is inducing more public-private partnerships (P3s). But the Obama administration is already聽taking steps聽in this area and P3s are not a panacea for infrastructure (ever heard of聽Bertha?).
After the HTF-funded federal grants are eliminated, most states would have to substantially聽increase and reform their gas taxes聽to fill the funding gap. And the quest for more state transportation revenue will create political headaches. While聽seven statesincreased their gas tax rate this year, the legislative fights were nearly always contentious and voters have聽continuously聽shown聽their disdain for the gas tax at the state and federal level.
Rubio's plan would also create political fights between states. It's hard to see why states would undertake or coordinate projects of regional or national significance like the interstate highway system without the聽incentive of federal dollars.
One small but聽illuminating example: Maryland does not want to fund a bus that services Dulles airport (in Virginia) even though Maryland residents benefit from it. Why? Because Virginia does not fund a bus to BWI airport (in Maryland) even though Virginia residents benefit from that. Now envision this fight on every road or train that crosses state lines.
Putting states in the driver's seat on transportation funding has some appeal but also creates new fiscal problems for states already聽governing with tight budgets. And even if states solve those problems, the solutions might not work well for people who rely on interstate travel, or the country.
This article first appeared at TaxVox.