States Are Actually Driving Transportation Funding Declines

According to a new report, states' spending on transportation has dropped far more than the federal government's in the last decade.
by | September 23, 2014

It has become an oft-repeated talking point in discussions over how to fix the federal transportation funding formula: The federal government has become an unreliable partner to the states.

But states are at least as much to blame for the drop in transportation spending over the last decade as the federal government.

State spending on transportation dropped by 20 percent between 2002 and 2011, when accounting for inflation, according to an analysis released Tuesday by the Pew Charitable Trusts. That compares to a 4 percent drop in federal transportation spending over the same period.

The federal government's numbers are higher in part because it was still spending some $13 billion in stimulus money on transportation in 2011. Without the money from the recovery package, federal spending would have dropped by 25 percent between 2002 and 2011.

The biggest reason for the spending drop at both levels was a decrease in buying power from fuel taxes.

The federal government's spending comes from the gasoline tax of 18.4 cents, which hasn’t changed since 1993, and related taxes, Pew researchers noted. Before Congress started pumping general funds into the Highway Trust Fund in 2008, fuel taxes brought in 90 percent of federal highway money.

States are only in a slightly better position. They rely on vehicle taxes for a fifth of their road funding, but those revenues, too, have been falling. Pew suggested that declining vehicle ownership may be one reason those taxes dropped by $8 billion, or 21 percent, in the decade leading up to 2012.

Legislators in many states are also skittish about raising fuel taxes. Two dozen states had not raised their taxes in more than 10 years as of this spring, and 16 states have left those tax rates untouched for more than 20 years.

Meanwhile, the cost of road construction increased by 60 percent between 2002 and 2012, meaning the dollars states and the federal government collected did not stretch as far.

Local government spending on transportation remained relatively flat in the decade examined by Pew. That may have to do with taxing structure. Localities tend to rely on general funds, rather than fuel tax revenues, to pay for the construction and operation of transportation projects.