Stop Using Fuel Taxes to pay for Public Transit
About 20 percent of what Americans pay in federal fuel taxes, which goes into the Highway Trust Fund, now goes to pay for public transportation. In light of the transportation funding crisis in Pennsylvania, Governor Rendell wants to use more of this trust fund money to pay for public transit rather than for highways. It would make more sense to use money from fuel taxes as it was originally intended - to pay for highways. Public transit should be funded primarily from fares and if fares are not enough, local governments in the areas served by public transportation should provide the subsidies.
Two economic arguments are used to support subsidies to public transportation- one is that low fares will result in more people using public transit instead of driving, thereby reducing congestion and other external costs associated with automobile use, such as pollution. The second reason for subsidizing public transportation is to provide an affordable alternative for low income and elderly people who do not have access to an automobile.
Although both reasons for subsidizing public transportation have some merit, subsidies from the federal government promote lack of accountability on the part of local transit agencies. Each transit agency competes to get as large a share of federal transportation dollars as possible rather than focusing on making the most of its limited resources. Grants to local transit agencies are a relatively small share of total federal government expenditures so that taxpayers are not likely to notice how inefficiently the money is used. Subsidies from the federal and state governments have resulted in rapidly rising costs and inefficient management. As noted by the Commonwealth Foundation, operating costs of of Pennsylvania's two major transit agencies rose by a combined total of $245 million more than the rate of inflation between 1983 and 2002 with little or no increase in ridership.
Besides contributing to inefficient management, it is inequitable to use federal fuel taxes, which are paid by rural and urban drivers alike, to pay for transit since public transportation primarily benefits residents of large metropolitan areas. In Pennsylvania, 90 percent of transit operating grants is paid to the Southeast Pennsylvania Transportation Authority and the Port Authority of Allegheny County. But only 50 percent of the state's population lives in the Philadelphia and Pittsburgh areas that are served by those transit agencies. In those two metropolitan areas, less than five percent of local trips are on public transportation while almost all the rest are by automobile.
The best way to reduce highway congestion is not to subsidize public transportation, but to implement congestion tolls during rush hour. This will provide an incentive for fewer people to drive on congested highways. Using public transit is not the only alternative to driving on congested highways. To avoid tolls, many people may choose to carpool or schedule their trips during different times of the day. With congestion tolls in place, some people will be willing to pay more for public transit. This combined with greater accountability due to local funding will make it possible to reduce subsidies for transit.
Pennsylvania and many other states do not have enough money to maintain highways and bridges adequately. Using the money paid in fuel taxes exclusively for highways and bridges would eliminate most of this funding shortfall. This is a better use of fuel tax revenue than continuing to prop up bloated transit agencies that benefit primarily a small percentage of the residents of the state's two largest urban centers.