April 21, 2009

April 21, 2009 | Commentary on

'Donor States' Must Team Up

Arizona sure could use an extra $127 million a year to fix its roads and bridges. Well, guess what? It could get that much - without increasing taxes, without cutting other government programs and without borrowing.

Sound too good to be true? It's not. States like Arizona - called "donor states" - pay far more fuel taxes into the federal highway trust fund than they ever get back. By joining forces with the two dozen other donor states, Arizona can start getting its fair share. The federal highway and transit program today constitutes a perverse system of trickle-up economics. While the trust fund shorted Arizonans $127 million last year, it showered New Yorkers with a $178 million bonus.

This reverse Robin Hoodism flows from flawed formulas that Congress uses to determine how big a slice of the trust-fund pie each state gets. Donor states are concentrated in the South and the economically battered Great Lakes region. The current program transfers billions of dollars from these areas to wealthier states - like Connecticut, Massachusetts, Pennsylvania and New York - most of them clustered in New England and the Middle Atlantic region.

This costly inequity was built into the program from the start - more than a half century ago. Since 1956, Arizonans have gotten back only a 93 percent share of the money they've poured into the highway trust fund. Meanwhile, New Yorkers have gotten back every penny, with a 13 percent bonus. It adds up to a lot of money. In just the last three years (2005-2007), the funding formula has cost Arizona a staggering $410 million in lost transportation money.

This year presents a golden opportunity to rectify the situation. That's when the current federal highway law expires, and Congress must write a new one. It's the perfect time for state officials, congressmen and senators from donor states to demand equity. All it takes is a coalition of donor-state lawmakers dedicated to fighting for their states' fair share of highway taxes. And to do just that, we are now working to organize those lawmakers into the Donor State Working Group, and we'll carry that effort right into the Halls of Congress.

The most effective reform would be to cut out Washington regulators and bureaucracy altogether. Simply let each state keep the 18.3 cents per gallon federal fuel tax paid by motorists within its borders (as well as the diesel fuel tax paid by truckers). In turn, states would be held fully responsible for their own transportation programs. The upshot: State transportation agencies would have the funds and the flexibility needed to keep things running smoothly within their borders.

D.C.-based central-planning and financial management made sense back in 1956 when the sole task of the new federal program was to build the interstate highway system coast to coast and border to border. But that task was completed in the mid-1980s.

Unless Arizona and other donor states band together, using their combined clout to force change, our motorists will continue to subsidize our wealthy friends to the northeast, much as they have done since 1956.

Congressman Jeff Flake, a Republican, represents the 6th District of Arizona. Ronald Utt is the Herbert and Joyce Morgan Senior Research Fellow at the Heritage Foundation.

About the Author

Ronald D. Utt, Ph.D. Herbert and Joyce Morgan Senior Research Fellow

First appeared in the Arizona Republic