Saturday, July 03, 2004
Copyright © Las Vegas Review-Journal

Highway funding pits states that give vs. states that take

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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 massive bill to fund highway and mass transit programs.

Drivers long have 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. And 56 percent of Americans 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, with their drivers sending more money to Washington than what is returned in highway grants.

The last six-year highway program, worth $218 billion, expired in September. It has been extended provisionally 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 threatens a veto of anything 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, meaning 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."

Nevada gets back $1.11 for every dollar of gasoline taxes that its motorists pay into the federal highway trust fund.

Unless federal lawmakers make radical changes in the new highway bill they are negotiating, then Nevada's share of the fund is expected to increase, state officials say.

The last highway bill gave Nevada $1.2 billion over six years.

The new House-passed version would increase Nevada's gasoline tax apportionment by 8.3 percent over six years, while the Senate version, written in part by Sen. Harry Reid, D-Nev., contains a 35.6 percent boost. Reid sits on the negotiating committee forming the final bill.

Nevada expects to gain enough new money through its new share of gasoline taxes and through special earmarked spending to complete such major projects as the Las Vegas Beltway interchanges at Summerlin Parkway, U.S. Highway 95 and Interstate 15, according to the state's Washington lobbyists who report to Gov. Kenny Guinn.

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.

Alaska, for example, reaped $6.40 in highway funds for every $1 of gasoline tax paid by its motorists from 1998 through most of 2003.

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

There have been adjustments in rate of return 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.

Raising the guarantee to 95 percent will be nearly impossible unless Congress and the White House agree on a bill approaching 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.

The House has complicated the issue further by including in its bill several thousand special projects sought by individual lawmakers for their districts and not calculated in coming up with the minimum guarantees.

Representatives of donee states dispute the claims of unfairness and say they will fight any bill reducing 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 like "being punished for being energy efficient," he said.

"It's completely perverse."

Stephens Washington Bureau Chief Steve Tetreault contributed to this report.