Taxpayers lose in gas-tax ‘match’ game

One word I could go the rest of my life without hearing again, in relation to transportation spending, is “match.”

“Federal match” — as in the money we won’t get if we don’t increase state and local spending. “Local match” — as in the additional local funds required in regions that didn’t approve the T-SPLOST.

I’d like to strike a match and make this entire concept go up in smoke. It’s nothing but a symptom of our broken division of labor among levels of government.

After all, it’s all our money. Most of it is raised by the same levy on the same purchase. But it’s been divided among different agencies, leading us to believe some of it’s “free money” we can have — if we agree to someone else’s priorities.

Take the federal gas tax. That tax is commonly thought to have begun during Dwight Eisenhower’s presidency to pay for the interstate highway system. That’s not true, according to a history of the tax on the federal Department of Transportation’s website:

In fact, on the second day of his presidency, Eisenhower received a visit from Govs. Walter J. Kohler, Jr., R-Wis., and Dan Thornton, R-Colo., who asked him to support a commission to study federal-state relations, citing the gas tax as an example of a federal activity that should be abandoned in favor of the states.

That was almost 60 years ago. In the meantime, the federal gas tax did pay for the interstates we now use. But that system of highways is pretty much complete, and yet there are still no plans to do as Kohler and Thornton requested.

Instead, states compete with one another to reclaim the tax revenues their motorists send to Washington. This is how a metro Atlanta region seeking new infrastructure to relieve traffic congestion ends up with a $94 million boondoggle of a streetcar — one scheduled to run along a tourist route that couldn’t sustain its last two tries at public transit.

It’s a boondoggle, by the way, that is costing an increasing amount of “local match” funds. Which brings me to the next use of this term.

A “local match” for road projects is the source of the first post-T-SPLOST debate. The law authorizing the tax created a penalty for those regions that failed to approve it: Local projects would require a 30 percent local match rather than just 10 percent.

Some of those who opposed the tax now want the governor and the Legislature to repeal this penalty as a misguided attempt to coerce voters into going along with a misguided plan.

I am skeptical that this is really a way to solve the distrust of government that sank the T-SPLOST. Voters turned more sharply against the tax after Gov. Nathan Deal’s late-hour promise to end the toll on Ga. 400 next year; many saw this as a sign elected officials will only do what the people want when backed into a corner. How, exactly, would reneging on the local-match penalty increase trust, especially in the regions that approved it?

Anyway, let’s do the math. Say a project costs $100. If the “local match” is $30, the state pays $70. If it’s just $10, the state must find $20 more — $20 that can’t be used for the next project. And where should the “extra” $20 in local funds go, if not the next project? It is, or should be, a wash.

The only way this robbery of Peter to pay Paul makes sense is if one believes the state money — or, in the earlier examples, federal money — is gotten at someone else’s expense.

But what most taxpayers want, I think, and what we certainly deserve, is merely what we paid into the system in the first place. The “free money” talk ensures that won’t happen, at least not for everyone. (To say nothing of the administrative cost of maintaining multiple levels of bureaucracy.)

There will be no rational transportation funding as long as we play this game. The money will always seem pea-sized as long as we’re forced to figure out if it’s under the shell marked “federal” vs. the “state” shell vs. the “local” shell.

Let’s decide which level of government is best-suited for the task, keep the bulk of the money there, and then decide how much more or less is needed. Here’s a hint: Govs. Kohler and Thornton were right about Step 1.

– By Kyle Wingfield

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155 comments Add your comment

Finn McCool (The System isn't Broken; It's Fixed)

August 9th, 2012
10:07 am

that system of highways is pretty much complete

Now we just need to fix the potholes and the crumbling bridges….and repave a good deal of it every couple of years.

md

August 9th, 2012
10:11 am

For some perspective on boondoggles related to chasing federal money, one needs to read up on the “train to nowhere” out in CA. Due to political back room deals, that monstrosity will first be built in the central valley (basically starting in the “middle”) with an end result connecting SF and LA.

Think about that for a minute…….if they never finish the line, it goes absolutely nowhere and never serves either city, all the while the cost continues to double and triple from earlier projections.

And folks wonder why we have 16 trillion in debt……….

Kyle Wingfield

August 9th, 2012
10:14 am

Finn: No reason the states can’t handle that themselves. Especially if they keep the gas-tax revenues that now get filtered through Washington.

I Report (-: You Whine )-: mmm, mmmm, mmmmm! Just sayin...

August 9th, 2012
10:28 am

I thought the high price of gas was because of the “speculators.” Don’t tell me the Fed is grabbing some!

I shoulda never listened to the libs.

the red herring

August 9th, 2012
10:31 am

we need to close about 25% of washington d.c. and send money back to the states. Not just this but education as well. When Kyle says money is “filtered” that’s exactly true and each time it’s filtered there becomes less of it. Excellent point Kyle—our tax dollars should go to the level of govt. that can best utilize them and in most cases it’s not Washington D.C.. We need less government not more. In a county I used to be a resident of they have city police, county police, sheriffs dept, a college police force, a hospital police force, the GBI, and the State Patrol (those i can name off the top of my head)— now just who pays for all that? the money doesn’t come from thin air–it comes from the taxpayer who is being taxed to death. TEA is also exactly right—those of us actually paying taxes are paying too much while the freeloaders ride the mass transit trains, drink free bubble up and rainbow stew….

@@

August 9th, 2012
10:33 am

So if we don’t take a bite of their carrot, they’ll hit us over the head with their stick?

…states compete with one another to reclaim the tax revenues their motorists send to Washington.

I’ve always wondered why it can’t be the other way around. The states use what they need before sending the leftovers to Washington.

southpaw

August 9th, 2012
10:38 am

Find taxes that are assessed at two or more levels of government, and then repeal some of them. Hmmm…sounds a little like simplification to me! Even if (for example) a federal tax is repealed, and the state tax goes up by the same amount, we’ll have less administrative burden of one government sending money to another government. Lower administrative costs, alone, won’t solve governmental budget woes, but they will help.

SlickRick

August 9th, 2012
10:39 am

I’d like to see a match lit and regressives everywhere go up in smoke. Taxpayers always lose when regressives are involved.

Schnirt

Kyle Wingfield

August 9th, 2012
10:39 am

red herring @ 10:31: Thanks, and I totally agree transportation is not the only area to which this applies.

I am intrigued by (and I think I’ve at least briefly mentioned in a past blog post) Sen. Lamar Alexander’s “grand swap” idea: Give the states total control over and responsibility for k-12 education, with Medicaid becoming a totally federal program. There are some hiccups with the Medicaid part of it — the feds might end up duplicating some administrative work the states will be doing anyway, although it seems to me the answer is for the states simply to report that info to the feds. But a state like Georgia could save or redirect a whole lot of money thanks to a trade like that if we pay more for Medicaid than we receive in federal funds for education.

Kyle Wingfield

August 9th, 2012
10:42 am

southpaw @ 10:38: If not repeal, at least redirect. For instance, we could maintain the current total gas-tax rate but simply keep all the revenues in-state. Maybe let the feds keep a much reduced portion of it to handle truly interstate needs. But there’s no reason whatsoever federal funds should be going to a tourist streetcar in downtown Atlanta — or Denver, or anywhere else.

Dusty

August 9th, 2012
10:45 am

States’ Rights! States’ Rights! Let us demand states’ rights! (Southerners know a lot about demanding states rights! It is always called something else!)

As Kyle said” Kohler and Thornton were right!”. They were advocating for “gas tax as an example of a Federal activity that should be abandoned in favor of states.”

So here we are again : States Rights! States Rights! ( As Democrats say “What states rights?We’ll take care of your money.” ) National debt ^^^^^^^^^^^^^^^^^^^up & away!

Road Scholar

August 9th, 2012
10:49 am

” But that system of highways is pretty much complete,…”

As Finn pointed out the system needs maintenance. The system allows and promotes INTERstate trade and access. Many of the bridges and the pavement need fixes for INTERstate commerce. Pavement is designed for a 20yr life, but some small overlays can extend it’s life. Bridges are built for a 50 year lifespan, and also their life can be extended by maintenance. But many pavements and bridges are close to ending their lives since the core interstates were built before 1970, and our wonderful legislature has increased weight limits/axle loads multiple times at the bequest of haulers and the tree farming industry, which accelerate the structure’s demise.

Also many local governments do not factor maintenance into their long term costs. Some of the features on a project can also be laid at the feet of the local government as “nice to have”. Locals participation in the cost and maintenance of projects weeds out the “nice to have” items, versus gotta have. Especially since revenue is scarce.

It was YOUR party and leadership that placed the “penalty” in the bill. Now that it may harm YOUR county, you are against it. Interesting the lack of clear vision that YOUR elected officials have had!

I know they are OUR officials, but think before you ask…you may get what you request!

I have proposed many times the “conversion” of a portion of the Fed gas tax to the state tax except for the portion allotted for Interstates, US/Defense Hwys, and pooled research. Safety research and rule proposing should remain with the Feds, but most other programs esp Safe Routes to Schools, Enhancements, etc. and local road decisions should be made by GDOT, or if local like schools, by the local governments.

As for schools the school board decides where to build or expand new schools, but they do not pay for turn lanes or other improvements needed to make access multimodal or safe. Even after the school is built, they lay those costs at the foot of the local government who regularly run to the state for money to address the safety issues. This has got to stop and the school boards need to pony up all the funds necessary to build and operate the school.

Kyle Wingfield

August 9th, 2012
10:50 am

Dusty: This is not so much “states’ rights” as it is: Which level(s) of government would be best-suited to make these decisions? And then: Why would another level of government control much of the money, allowing it to butt in on those decisions?

BW

August 9th, 2012
10:55 am

Kyle

Do you not think the same game will be played on a state level rather a federal level? First, Georgia receives $1.01 for every $1 sent to Washington in federal taxes. I don’t have the fuel tax breakdown but if it’s similar to the overall tax distribution, the state would need to find the additional penny. Also metro Atlanta contributes at least 67% of state GDP (from informal web search: Georgia economy: $404B & metro Atlanta: $270B which is 67%), why should we care about the rest of the state, save the federal military bases and the ports of Savannah and Brunswick? Metro Atlanta’s tax revenues are re-distributed around the state now and I don’t see how this would change if all decisions on transportation spending is left to the state.

http://visualeconomics.creditloan.com/united-states-federal-tax-dollars/

http://www.metroatlantachamber.com/files/file/global/Executive%20Profiles/Exective_Profile_Brochure.pdf

http://en.wikipedia.org/wiki/Georgia_(U.S._state)

Kyle Wingfield

August 9th, 2012
10:55 am

Road: If I’m not mistaken, the states handle the maintenance on those roads already — they just get much of the money from Washington, even though it came from their own motorists. So why not cut out the middle man? At least for the vast majority of the money.

As for the “penalty”: If you read my column, you know that I didn’t endorse getting rid of it. That said, if the governor and Legislature are not going to let us have a re-vote, then the penalty should not last until a T-SPLOST is approved, as stated in the law. Either have a re-vote — and for the record, I don’t see a lot of point in having one after the first vote lost by such a large margin — or take out that stipulation and limit the penalty to the two years also mentioned in the law.

Kyle Wingfield

August 9th, 2012
10:55 am

@@ and Slick Rick: That’s enough bickering between you two.

SlickRick

August 9th, 2012
10:57 am

Why moderate that comment Kyle? (A) it was in direct response to @@’s aspersions cast my way, yet you didn’t subject her comment to moderation, and (B) it did not violate any rules. Selective purification for ideological disagreements?

Dusty

August 9th, 2012
10:58 am

Kyle,

If we decide it is states’ rights I think it will be states rights. We already know the Feds are doing a poor job at the greatest expense.

You know, I think we better get Newt to Washington again. He can still out think and out talk anyone up there. Just saw him on Political Action or one of those sections. He is smart….something we really miss in Washington these days. We are now saddled with a bunch of bumpkins

Kyle Wingfield

August 9th, 2012
11:01 am

No, SlickRick. I also unpublished @@’s comment. So there’s nothing selective about it. But I am (still) trying to purify some of the pointless sniping that goes on here.

Kyle Wingfield

August 9th, 2012
11:02 am

And you, Slick Rick, are one of the worst offenders.

@@

August 9th, 2012
11:02 am

Kyle:

And yesterday morning’s unprovoked attack? Where were you then?

Offer some suggestions? What do you want your conservative posters to do about the unprovoked attacks?

On another note…George Will’s column parallels well with yours.

A Golden State train wreck

Eager to hook states on higher spending, especially for high-speed rail, the Obama administration wants California to quickly spend $3.3 billion of federal funding (much of it borrowed from China, one source of Barack Obama’s train envy). Simitian says the $3.3 billion is about 5 percent of the cost “if the project stays on budget.” If. The $3.3 billion and $2.7 billion of state money would finance 130 miles of track in the Central Valley — a train from, and to, nowhere.

Simitian notes that the 130 miles would not be high-speed rail and would not be electrified, and that there are no commitments for more federal funds, or for any dedicated funding source, or for private funding. And the 2008 ballot measure that launched this folly forbids tax money for operating subsidies.

California’s voters evidently understand that Washington’s $3.3 billion is spending for the purpose of committing Sacramento to much greater spending: Polls show that 59 percent would now reject the project they authorized. But Democrats will not allow reconsideration. They like direct democracy but love spending.

BW

August 9th, 2012
11:07 am

Let’s try this without the links

Kyle

Do you not think the same game will be played on a state level rather a federal level? First, Georgia receives $1.01 for every $1 sent to Washington in federal taxes. I don’t have the fuel tax breakdown but if it’s similar to the overall tax distribution, the state would need to find the additional penny. Also metro Atlanta contributes at least 67% of state GDP (from informal web search: Georgia economy: $404B & metro Atlanta: $270B which is 67%), why should we care about the rest of the state, save the federal military bases and the ports of Savannah and Brunswick? Metro Atlanta’s tax revenues are re-distributed around the state now and I don’t see how this would change if all decisions on transportation spending is left to the state.

BRW

August 9th, 2012
11:10 am

Newt, smart, oxymoron of the day.
He doesn’t even have the good sense to know when his own party doesn’t want him.

JDW

August 9th, 2012
11:11 am

@Kyle…”they just get much of the money from Washington, even though it came from their own motorists.”

Isn’t the point of that exercise to enable the Federal Government to manage the project parameters for work on an interstate highway system for which they have jurisdiction.

If they give the money back to the states, with no conditions, what is to stop them, particularly in places like Georgia, Alabama and Mississippi from spending it on something else other than the interstate system?

SlickRick

August 9th, 2012
11:15 am

Kyle – thank you :) .

@@ – what ‘unprovoked attack’ yesterday morning? I’m doing my damndest to abide by the rules unless attacked first.

JDW

August 9th, 2012
11:15 am

O and one other thing…isn’t just a portion of these taxes subject to this exercise…in GA we have gas tax of 47.6 cents per gallon but only 18.4 cents is Federal. Isn’t that the only portion that goes up and comes back?

Kyle Wingfield

August 9th, 2012
11:19 am

SlickRick: I assume @@ is talking about the color-of-her-lipstick remark. Don’t think I didn’t notice.

SlickRick

August 9th, 2012
11:23 am

Kyle – fair enough – I’d forgotten; something about @@ just seems to bring out the worst in people. And since I have a rapier wit, it’s hard not to swing at the softballs!

(No “schnirt” this time, by the way, as a show of good faith)

Kyle Wingfield

August 9th, 2012
11:24 am

BW @ 11:07: First, the fuel tax breakdown is lower. I don’t have the numbers off-hand, but it’s less than $1 for $1.

Second, I don’t know where you got that $1.01 for $1 stat, but some of those comparisons don’t take account of the simple fact that Georgia has higher-than-average numbers of veterans and retirees living here, which skews the numbers a bit.

As for why to care about the rest of the state, and speaking broadly: Maybe so metro Atlanta and its taxpayers don’t have to bear so much of the burden? All things being equal for metro Atlanta, wouldn’t you prefer that Augusta, Macon, Columbus, Savannah, etc. be stronger?

On transportation spending specifically: I’ve argued before that equal distribution based on population doesn’t make sense, because needs are not equal on that basis. Transportation policy is slowly reflecting that reality. It could and should change faster.

Kyle Wingfield

August 9th, 2012
11:27 am

JDW: I’m sure the devolution of federal gas tax to the states could come with a stipulation about maintaining a certain level of gas tax. For example, there might be no federal gas tax in states that charge at least $0.XX in gas tax. The feds could fine states that do not maintain their interstates at a certain minimum condition. That’d be a whole lot closer to “regulating interstate commerce” than most of what Congress does in the name of same…

ByteMe

August 9th, 2012
11:30 am

If I’m not mistaken, the states handle the maintenance on those roads already — they just get much of the money from Washington, even though it came from their own motorists. So why not cut out the middle man?

Think of it as a “smoothing algorithm”. You collect more in taxes pretty much everywhere outside of Mississippi, but that state also has interstates to maintain… at least as a way to get from here to somewhere not Mississippi. So you can’t just leave them to their own devices, because they’ll just leave the roads to rot while they spend the money on their pathetic football teams….

JDW

August 9th, 2012
11:35 am

@Kyle…I am sure there are inequities and inadequacies in the system, but from a practical point of view its always better to hand out the money than to come back with “penalties”…see current TSPLOST discussion.

I have driven roads in 48 states and can tell you that some are way better than others…even in the interstate system. There has to be some method of creating and enforcing guidelines.

JDW

August 9th, 2012
11:38 am

BTW…this whole concept is straight out of the private enterprise playbook…HQ organizations are constantly charging off percentages for any number of centralized programs and then feeding those dollars back in.

Don Abernethy

August 9th, 2012
11:46 am

We all wish we could close 50% of the government in Washington D.C. but reality tells us it is only going to get bigger and more expensive. When the country goes broke in the near future that might force the issue and make federal government smaller.

Kyle Wingfield

August 9th, 2012
11:48 am

JDW @ 11:35: So if the current system results in uneven conditions, why continue it? Isn’t that the only justification at this point?

JF McNamara

August 9th, 2012
11:54 am

“But what most taxpayers want, I think, and what we certainly deserve, is merely what we paid into the system in the first place.”

Most of the South gets back MORE than what they contribute to the federal government. The Southern states are welfare states. We would have much less money for everything. You’re complaining about something that we are actually getting a good deal on.

http://taxprof.typepad.com/taxprof_blog/2004/09/red_states_feed.html

Up Up and Away

August 9th, 2012
12:01 pm

Kyle

Doesn’t the current system, even if one is not looking at the gas tax, produce uneven results.

Just look at the states who gets back less in Fed monies than they send to the Feds.

Should a state like Massachusetts get money back or send less.

Should some of the red states only get what they pay in.

Of course that is a mixed bag in terms of states, however I did want to throw out valid examples that meet the right / left paradigm that is being played out here

Kyle Wingfield

August 9th, 2012
12:03 pm

JF: The link to the underlying report is broken, but see my 11:24. Most of these comparisons don’t take account of things like larger populations of veterans and retirees. And military bases.

Up Up and Away

August 9th, 2012
12:07 pm

Kyle

That is truth to your 12:03, but does not hold for every state that receives more than they pay.

You are fully aware that doesn’t hold for every state in that category.

Kyle Wingfield

August 9th, 2012
12:11 pm

Up Up @ 12:01: I think there are (at least) two types of spending in play. The kind I’m talking about is where a tax is levied for a specific purpose, is filtered through Washington, and comes back to the state for that particular purpose. I’m asking: Why send it out of the state in the first place?

The other kind is where the federal government sets a policy to address a certain need/priority, raises general taxes to fund it, and spends the money to address said need/priority. Food stamps come to mind. As long as that’s a policy, I see no need to equalize it on the basis of population or taxes paid. Spend it where the need/priority is.

Kyle Wingfield

August 9th, 2012
12:12 pm

Up Up @ 12:07: Of course, and for the first type of spending mentioned in my 12:11, I say let states get what they raise — no more, no less.

Up Up and Away

August 9th, 2012
12:14 pm

Kyle

Fair enough. I tend to believe you are being slightly selective, however I do see your reasoning. Might not agree, but I do see it.

Thanks for the reply

Up Up and Away

August 9th, 2012
12:15 pm

Kyle

For the record I just wanted to say that the military bases & retiree variables do play a part, but not the entire story.

Thanks again

BW

August 9th, 2012
12:16 pm

Kyle

My original comment was thrown into moderation with links…second if this argument is about local control, my question is how local are we talking? One argument on T-SPLOST is continually heard was that areas would not vote for projects not directly benefitting them. In fact a lot of the opposition in Dekalb County was explained as no additional rail to other parts of the county. Of course I would love all the other areas to be stronger…I’m simply questioning in this “balkanized” state what are the real possibilities of cooperation in non-continguous counties. I still think that anti-government sentiment would trip any coordination up even if all dollars were locally controlled especially given that most of these people do not trust the people then keep voting into office.

Road Scholar

August 9th, 2012
12:20 pm

Kyle: Yes the states do the maintenance on the Interstate, US routes and nat’l defense hwys, but would you let the state and locals set the priority on what, where and how much they would do it? Building a 4 lane by Perdue’s property is much more important than nat’l security?!? Isn’t it?

If we’re going to change the Tsplost vote, eliminate the orig vote and adjust the gas tax to inflation, the truer cost of servicing our transportation needs!

JF McNamara

August 9th, 2012
12:21 pm

The link works fine for me, I just clicked it twice.

The data is what the data is. You can’t just dismiss data because it doesn’t play into your point (especially as cavalierly as you have). The data was produced by the Tax Foundation which appears credible. The way it works is that you need a credible source to prove that they are incorrect. Otherwise, the glaring hole in your analysis stands.

Another Link
http://taxfoundation.org/article/federal-taxing-and-spending-benefit-some-states-leave-others-paying-bill-1

or

Google: “federal taxing spending state”

JDW

August 9th, 2012
12:25 pm

@Kyle…”So if the current system results in uneven conditions, why continue it?”

I am not saying it doesn’t need changes but giving the states uncontrolled responsiblity for the interstate highway system isn’t a good option in my opinion. That said, I like the idea of doling out the money better than the idea of collecting retroactive penalties.

Jefferson

August 9th, 2012
12:27 pm

We need smarter gov’t not less gov’t. It won’t work the way the GOP wishes for. Just look no futher than GA as to why.

Hillbilly D

August 9th, 2012
12:29 pm

It never has made sense to me to send money to Washington just to have it divvied up and sent back out. State and local control is best for most things, in my opinion.. I can see a case for Federal money for interstates and federal highways, other than that, let it be taken care of locally, where the people are closer to the people doing the dividing.

A Yes Vote!!!!

August 9th, 2012
12:29 pm

Kyle, for once I agree with you, the gas tax should be state revenue. here’s my problem. i don’t trust state government, including the governor, to do anything. he flat out lied about people not wanting marta. they were rejecting their trust in state government. Personally,I trust local government and i trust federal goverment, but state government goes to the capitol in january and make up a buncha crap and lie and never pass anything that works. With the feds, usually we hold htem honest thru lawsuits lol…