WASHINGTON — Former U.S. Transportation Secretary Mary E. Peters joined a push by House lawmakers yesterday to revamp the federal transportation funding system, which currently has “donor states” such as Texas paying more into the federal highway trust fund than they get back.
Under the current system, states pay fuel taxes into the federal highway trust fund. That pool is divvied up to states based on a complicated formula that takes into account a state’s population, how many miles are driven in the state, and the state’s share of federal highway miles, among other factors.
The formula is more advantageous to large, sparsely populated states such as Montana, Alaska, and North and South Dakota, as well as the very small ones such as the District of Columbia, Rhode Island, and Hawaii.
Between 2005 and 2007, Alaska received a total of nearly $1.2 billion more than it paid, while Texas paid nearly $1.7 billion more than it received, according to data gathered by the Federal Highway Administration.
The District of Columbia got $5.94 on the dollar in fiscal 2007, and both North and South Dakota received more than double what they paid into the system. Montana received about $2.50 for every dollar it contributed. About half of states pay disproportionately more into the fund, Peters said. Florida paid $291 million more than it received in fiscal 2007, and Arizona paid $127 million more than it received.
The system should be changed to equalize states, according to Peters and Reps. Jeff Flake, R-Ariz., and Heath Shuler, D-N.C., who are spearheading a new working group on the issue.
Peters argued for Congress to address the issue in the next multi-year transportation bill, which she thinks will “probably index the gas tax” to inflation and may also increase the tax a small amount. She added that she is “a fan” of a mileage tax.
She suggested a mandatory 96% return on state contributions to the fund. Another option, she said, is to allow states to opt out of the program entirely as long as they maintain spending on highway systems and meet some performance measures.
But Peters noted that the “devil’s in the details” of that plan and asked what would be the penalty for non-compliance for those states if there were no federal transportation funds to withhold. Congress also would need to somehow ensure adequate highway funding for sprawling rural states, if the big donors left the system.
Flake co-sponsored legislation with Sen. Kay Bailey Hutchison, R-Tex., last year that would allow states to opt out and keep their tax revenues.
With a multi-year transportation bill in the works, though, Peters told congressional staffers and reporters that the stars are better aligned for such a change than they have ever been before.
