Equity of highway grants debated

WASHINGTON – The question of which states pay the most in gasoline taxes and which get the most money back is rekindling a perennial battle as Congress and the White House scuffle over a huge spending bill to finance highway and mass transit programs.

Drivers have long helped finance road construction and repair by paying 18.4 cents in federal tax for every gallon of gas they buy, money that goes into the highway trust fund. More than half of Americans – 56 percent – would be willing to pay even higher gasoline taxes if the money were used for significant road and mass transit improvements, according to a poll by the Associated Press.

However, about half the states say they aren’t getting what they pay for, and their drivers are sending more money to Washington than Washington is returning in highway grants.

The last six-year highway program, worth $218 billion, expired last September. It has been provisionally extended because of an inability to settle two key questions about its successor: How much? And who gets the money?

The size of the pot must be decided before it can be divided up. Negotiators are faced with a $318 billion Senate bill, a $284 billion House bill and a White House that is threatening a veto of anything that goes much beyond $256 billion over six years.

Even if the amount is settled, there won’t be a bill unless the so-called donor states – those paying more into the trust fund than they get back – are satisfied.

“It’s the No. 1 priority for many of us,” said Republican House Majority Leader Tom DeLay of Texas, whose state over the past six years received about 90 cents in highway funds for every $1 its motorists paid in gasoline taxes. “It goes to the heart of the fundamental fairness that is currently lacking.”

Rep. Baron Hill, D-Ind., with DeLay a leader in pushing for state equity, said that when the trust fund was established in 1956, the main goal was to build the Interstate Highway System, originally promoted as a Cold War defense tool. Less-populated Western states got a much better rate of return.

DeLay contends that the spending inequity since 1956 has cost his state $5.3 billion and 250,000 jobs.

The States Highway Alliance for Real Equity (SHARE), a coalition of donor states, finds 24 donor states, including Washington state, in the 1998-2003 period, using rate-of-return calculations different from those used by the Federal Highway Administration.

There have been adjustments over the years. The 1987 highway bill guaranteed that each state would get at least 85 cents back for every dollar it contributed. The minimum guarantee went up to 90.5 cents for the 1998-2003 bill, and this year’s Senate-passed bill would ensure that every state would get back at least 95 cents by the time the legislation has expired in 2009.

The lists of donor and donee states vary slightly depending on the period considered and the formulas used for calculating their rate of return. Generally, the donors include big, fast-growing states such as California, Texas and Florida and heavily traveled states in the South and Midwest.

Getting the guarantee up to 95 percent will be close to impossible unless Congress and the White House can agree on a bill that would approach the higher $318 billion sought by the Senate.

The American Road & Transportation Builders Association estimates that, under a $275 billion bill, a 95 percent guarantee would mean that the District of Columbia and 22 donee states would face real funding cuts from the previous six-year program, with inflation factored in.

“The losers are going to filibuster that bill” in the Senate, said William Buechner, the ARTBA’s vice president of economics and research.

Representatives from donee states dispute the claims of unfairness and say they will fight any bill that would reduce their slice of the pie. New York, which according to the government, had a $1.23 rate of return, has invested billions in its mass transit system, and its drivers thus use less gas, said Rep. Jerrold Nadler, D-N.Y.

More than 2 cents of the federal tax on each gallon is devoted to mass transit. Still, shrinking his state’s share of highway funds “would be the same as being punished for being energy efficient,” Nadler said. “It’s completely perverse.”

He said lawmakers should look at the big picture: New York sends far more in taxes to Washington than it gets back.

“If everybody gets back what they put in,” Nadler said, “what’s the point of the federal government?”