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Mode-Specific Trust Fund Out?

A THINK TANK STUDY says our congest- ed and crumbling surface transportation network is so badly underfunded that “al- most anything” to bring about short-term improvement “will be better than what we are doing now.” In the long-term, the Free Congress Foundation (FCF) argues that “re- habilitating America’s aging surface trans- portation system will require spending that is tens of billions per year above recent levels” and that fuel taxes from the Highway Trust Fund (both in the manner and the level in which they are levied) have been inadequate. “Whether increased or not, fuel taxes

should be converted from excise (per gallon) to ad valorem (percentage of price) taxes, in order to preserve future purchasing power,” writes the report’s author, Dr. Michael S. Bronzini, (PHD.P.E.) who had been asked by FCF President James Gilmore (former Governor of Virginia) to “undertake a thor- ough examination of the importance of transportation in economic growth in the United States.” Almost anyone who uses surface trans- portation can attest to the report’s descrip- tion of the sub-par condition of much of the infrastructure. That includes segments of the passenger train (inter-city, local, and commuter) systems that are challenged to maintain a repair schedule that keeps pace with service requirements. Passages in the report cite statistics showing the social, economic, and national security benefits of rail transit. 1) “Rail transit systems running on their

own separate guideways carry significantly more passengers per hour than urban ex- pressway lanes.” 2) “Each $1.00 spent on transit generates

an increase in Gross Domestic Product (GDP) of $1.80. 3) Properties near rail transit stations sell

for ten to 25 per cent more than other com- parable properties. 4) Public transportation investments gen-

erate 31 per cent more jobs per dollar than new construction of roads and bridges. 5) Public transit investments produce 1.7

times as many jobs per dollar as did invest- ments in highways and bridges. The FCF report touches on some prob-

lems involving Amtrak, most of which have been explored in some depth in this space and thus there is little need for a lengthy re- hash here. Dr. Bronzini includes the fact that the Amtrak map is “not dense” and is missing entirely in two states, Wyoming and South Dakota — or four if the non-contigu- ous (but federal tax-paying) Alaska and Hawaii are counted. The author notes high ridership is a factor in several Amtrak short distance corridors; the annual appropria- tions battles for funding out of the general treasury; the frequently-cited reasons why the U.S. — with wide open spaces — has been unable to match the inter-city passen- ger rail successes in Europe and Asia; and the high-profile battles on High-Speed Rail since the Obama administration assumed


office. The report does acknowledge that “despite these difficulties,” Amtrak rider- ship has reached record highs (30 million in the latest fiscal year, reported since the Bronzini document went to print). “So far,” the report’s author writes, “Con-

gress has deemed maintaining intercity pas- senger rail to be in the public interest and has continued Amtrak’s capital needs, and some of its operating costs, albeit at levels that keep Amtrak continually on the verge of financial failure.”

Public Confidence Missing? FCF cites other reports that America’s faith in the federal government’s ability to deliver transportation solutions is waning. Dr. Bronzini (of George Mason University) says any changes in the fuel tax structure “must be combined with improved performance- based criteria, to ensure that public funds are being spent only on truly beneficial pro- jects.” On that score, the report adds that currently “only federal navigation projects are subject to a requirement that national economic benefits must exceed project capi- tal and operating costs, and the freight rail- roads, being private rather than public, em- ploy return on investment and profitability criteria to justify their expenditures.” FCF, however, notes recent federal funding that has included modest outlays for freight rail such as interconnecting roads serving freight terminals and removing bottlenecks that impede freight flow.

The Main Point “Public investments in surface transporta- tion,” Free Congress warns,” have been lag- ging needs for several decades to the point where our crumbling and congested infra- structure threatens our economic and social well-being and our competitiveness in world markets.” And this: “Longer term, we must face up to the inevitable conclusion that fuel taxes, by themselves, are not sustainable as our primary revenue source. It may be time to recognize that investing in surface trans- portation is one of the most productive uses of tax revenue, hence citizens should expect their legislators to accord this high priority.” Then Dr. Bronzini gets to the hard part:

“If non-productive spending on other pro- grams is eliminated, or at least reduced, there should be plenty of funds available for maintaining and improving our surface transportation system. This of course, raises the policy issue of what portion, if any, of the surface transportation program should be funded from dedicated user fees and how much from general tax revenue. The pend- ing shortfall in the federal Highway Trust Fund has forced the issue.” This gets back to the “priorities” issue, something on which political Washington had difficulty in reach- ing an agreement. In that event, Free Congress warns, “It is

urgent that we get on with the process of identifying and analyzing acceptable alter- native or supplemental funding methods.”

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