Commentary

Ray LaHood Still Wrong on Transportation

Ray LaHood may have left the USDOT for the private consulting world, but he has not stopped giving bad advice. His suggestions would rate less than “true” on most newspapers truth-meters. LaHood, a nice enough guy with an ability to get things accomplished never cared much for the policy details of transportation a fact which frustrates many transportation types to this day. LaHood was recently in Atlanta at a special legislative committee hearing focused on improving Georgia’s transportation system. According to LaHood the solution is simple: Georgia needs to get two representatives on the House Transportation and Infrastructure (T&I) Committee and the country needs to raise the federal gas tax by ten cents. LaHood also claimed that there is no alternative to the gas tax. What’s wrong with LaHood’s advice? A lot.

LaHood needs to understand that federal funding is less than ideal because it comes with numerous strings which limit the funds use. Davis-Bacon laws require states to pay higher wages to laborers on federally funded or assisted public works projects. Buy America requirements force construction managers to buy expensive, low-quality materials just because they were built in the United States. And the Transportation Alternative Program requires states to reserve funds for alternatives that have little to do with transportation. Realistically, the federal government is going to remain involved in transportation policy. But the government could provide more resources without a tax increase simply by focusing on truly national transportation issues and by eliminating burdensome restrictions, so that states can stretch federal resources further.

But even if we need additional funding which definitely is not a given, for a number of reasons, a gas tax increase is not a good option. Such an increase is also unlikely to occur. President Obama is against it and the public is against it. A recent Reason-Rupe poll found that while 46% of Americans think the federal government needs to spend more money on transportation, 85% oppose raising the federal gas tax. Substantially more (although not a majority) support enacting a mileage based user fee or enhanced use of tolling.

And unlike LaHood claims, there are alternatives to increasing the gas tax. It is true that financing requires a funding source so by themselves loans will not solve the problem. However, financing does provide an advantage by stretching resources. Financing allows project costs to be paid back over the life (50 years) of the project creating smaller monthly payments and allowing DOTs to procure more projects. Public private partnerships also can make better use of limited funding although they are not appropriate for every project. But tolling is a funding source and many countries throughout the world fund the maintenance and operations of their freeway system (equivalent to our Interstate system) with tolls. So tolling is definitely a major part of the solution. Mileage-based user fees are also a revenue source. In addition to being more popular than a gas tax increase, mileage based user fees (MBUFs) are a better long-term solution as user fees can easily be indexed to inflation. And MBUFs have other advantages; they can vary by time of day and location to help relieve congestion and they can be collected on a monthly utility bill providing travelers a more transparent record of transportation funding. MBUFs are not going to be implemented everywhere tomorrow and local roads are unlikely to be tolled but with greater use of financing and PPPs they are definitely a viable alternative.

Most importantly the gas tax has another major problem. It is not sustainable. Due to increasing fuel efficiency and increasing sales of hybrid vehicles, a ten-cent gas tax would solve our needs for ten years at most. After ten years, we would need another ten-cent gas tax increase. And then another and another. Further, some drivers, likely the poor, who use older less fuel-efficient vehicles would pay more in gas taxes than other drivers, likely the wealthy, with newer cars and hybrid vehicles. This social-equity factor is one reason why Democrats are not lining up for a gas tax increase.

LaHood also seemed to imply that Georgia needs to raise its state gas tax. Why? LaHood incorrectly stated that GA’s gas tax is the second lowest in the country. The issue is not the rate of Georgia’s gas tax which is actually 20th highest in the country; it is that 48% of Georgia’s gas tax goes to non-transportation purposes. Reason Foundation and others have proposed dedicating the remaining gas tax monies which support the general fund and local county funds to transportation. If we were to dedicate these funds to transportation, we would fix our transportation problem without raising the gas tax.

What about LaHood’s representation committee claim? While LaHood actually made a valid point concerning membership on the House Transportation and Infrastructure Committee (T&I), membership is no guarantee of funding. In the old days (pre-2011) members of the T&I committee were an integral part of the earmarking process. The 2005 SAFETEA-LU surface transportation bill contained billions in earmarked funds. Members of the committee helped write the bill and thus were some of the largest recipients of earmarked funds; therefore, serving on the committee was considered a plum assignment. While a few earmarks supported good projects, most supported waste such as Alaska’s bridge to nowhere. Because of the bridge, Republican House members banned earmarks when they took control of the chamber in 2011. Immediately, the T&I committee lost some of its prestige. The number of members serving on the committee was reduced and many current committee members are now first or second term members with little status in the House. Put simply the committee is no longer viewed as a plum assignment. The elimination of earmarks has led to better transportation policy; whether or not leaders agree with the policy, with Republicans projected to pick up seats in the House, the earmarking rule is unlikely to change. So unlike the days when LaHood served in Congress, serving on the T&I committee will not lead to a groundswell in resources.

All things equal, members of Georgia’s delegation would like to have a member on the T&I committee. The last Georgia representative to serve on T&I, who happened to be my boss at the time, Lynn Westmoreland, exited T&I for Financial Services since his district had the highest number of bank failures in the country. But as a member of the Republican steering committee, that helps pick committee assignments for the next Congress, he stated that one of his top goals was to put two representatives on the T&I committee.

Unlike LaHood, who has not served in Congress in more than five years, current members stated that understanding how transportation works is far more important than placing bodies on a committee. Rep. David Scott (D) of Atlanta stressed that local and state officials need to understand the importance of infrastructure funding, “You can’t have a Georgian on every committee. But what you have to have is coordination with your state and local officials to work with everyone in the delegation to make things happen.”

Understanding infrastructure funding is a vital goal indeed. The problem with LaHood is he never took much time to actually understand U.S. transportation policy. He was happy as Secretary to speak in sound bites. Thankfully, his successor Anthony Foxx has taken time to educate himself on transportation, although it would be hard to care less than LaHood. So do yourself a favor. When Ray LaHood comes to town with suggestions on how to improve transportation, listen to what he has to say. And then take some time to research the problem yourself. Chances are the situation is not exactly as Ray LaHood describes.

Baruch Feigenbaum is assistant director of transportation policy at Reason Foundation a non-profit think tank advancing free minds and free markets.