USC Price School of Public Policy

Transit Policy Is Pivotal on Road to the White House

Knowledge in Action:

Transit Policy Is Pivotal on Road to the White House

By Matthew Kredell

Associate Professor Lisa Schweitzer USC Price associate professor Lisa Schweitzer discusses the “Future of Federal Transport Policy.”
Photo by John Roberson

Following decades of bipartisan consensus, federal transit policy has turned into a hot-button issue in a presidential election for the first time.

Lisa Schweitzer, associate professor at the USC Sol Price School of Public Policy, took a look at what the various proposals and candidate positions mean for the future of U.S. infrastructure during a discussion on March 21.

Two USC Price students – Ph.D. candidate Mohja Rhoads and Master of Public Policy student Theodore Minch – joined Schweitzer in the discussion.

The event was part of the “Road to the White House 2012: Politics, Media and Technology, a weekly conversation series presented by USC Price’s Judith and John Bedrosian Center on Governance and the Public Enterprise, the USC Annenberg School for Communication and Journalism’s Center on Communication Leadership & Policy, and the USC Dornsife College of Letters Arts and Sciences’ Jesse M. Unruh Institute of Politics.

Schweitzer provided a brief history of how federal transit policy got to where it is today. The policy began in 1956 when the gas tax was created with the express purpose of going into a highway trust fund. For the next 30 years, the federal role in transportation was to build those highways.

In 1987, with the initial highway system complete, public opinion broke into two factions. One believed the federal gas tax should end, and the states should control and maintain their links of the national highway system. The other thought this revenue was still needed for transit projects, maintaining roads and rebuilding bridges.

The path for how this federal money would be handled in the post-interstate era was decided in 1992, when the Intermodal Surface Transportation Efficiency Act set out that federal gas-tax revenue would be used to help cities build better transit systems.

In 2009, the highway trust fund had a $9 billion deficit. The gas tax, which sits at 18.4 cents per gallon, hadn’t been raised since 1992. The recession hit, gas prices climbed and many people couldn’t afford to drive as much. Consequently, gas tax revenues took a nose dive.

“The political firestorm became much hotter, and the partisanship that had been growing arguably since 1987 and really took off in 1992 just got splintered in a way we had never really experienced in transportation before,” Schweitzer said.

Policymakers were left with three options – to raise the federal gas tax, reduce the federal role in transportation by authorizing fewer programs and projects or take money out of the general fund to make up the deficit. The latter option has been the temporary fix used thus far.

Proposed legislation in each house is not expected to go anywhere this year. The Senate bill, introduced by Sen. Barbara Boxer (D-Calif.), would compromise on eliminating some earmarks and making some cuts while maintaining transit funding. It’s not a long-term solution but essentially another extension.

The bill has passed through the Democrat-controlled Senate but isn’t expected to be considered by the Republican-controlled House of Representatives, which has a bill that would eliminate earmarks, cut transit/bike funding from general-fund programs and reduce the federal role.

It appears this year will see another basic extension of subsidizing the highway trust fund from the general fund, which is not sustainable.

“The problem with that is that next year the highway trust fund is going to be officially bankrupt,” Schweitzer said. “We can’t keep passing these extensions.”

More permanent solutions include raising the federal gas tax; focusing on user fees, fares, tolls and ticket sales rather than taxes; creating a national infrastructure bank that would leverage private investment to fund public-work endeavors; and reducing the federal transit role or eliminating it all together and make it a local issue.

The first two options do not go over well with voters.

“In my opinion, the conversation is much better now than it was a decade ago,” Rhoads said of spreading user fees. “It’s there but it’s just highly unpopular among voters, so there’s not many leaders [who will put it] on their agenda.”

There are a lot of people, particularly the ones who live in rural areas, who don’t understand why they should be paying for rail in Dallas and would like to see the federal gas tax eliminated. As a donor state that contributes more gas tax to the feds than it gets back, California would be better off by turning that 18.4 cents per gallon into a state tax.

However, there is a benefit to having a federal fund.

“You have a centralized nexus of a lot of money,” Minch said. “It opens up doors in terms of financing and bond issues. With the federal government involved, you have the full faith and credit of the U.S. as a backstop to insure investment.”

President Obama, who Schweitzer said places a lot of importance on transit policy, is a supporter of a national infrastructure bank. As an example of the partisan splintering on transit in recent years, Schweitzer cited how high-speed rail used to be a bipartisan issue until Obama made it a centerpiece of his agenda. Then conservatives treated high-speed rail as a symbol of how liberals don’t understand that you can’t keep spending with the country in financial trouble.

Mitt Romney takes a moderate opinion on transit policy. He has said that infrastructure is essential for the economy and that he is willing to invest, and even borrow in some circumstances, if there is going to be a reliable revenue stream.