Under Current Law, Census Should Have Zero Effect on Highway Funding to States

Under Current Law, Census Should Have Zero Effect on Highway Funding to States

June 27, 2019  | Jeff Davis

June 28, 2019

Yesterday, the U.S. Supreme Court issued an opinion that, at least temporarily, prohibits the Trump Administration from adding a citizenship question to the 2020 Census. The Administration is prevented from asking a citizenship question until they can come up with a better rationale for asking the question, and it is not at all clear if the resulting questions can be resolved before the decennial Census is supposed to take place in, you know, 2020.

But ETW has, in recent months, been hearing about this Census question from a lot of people, most of whom want to know if any kind of systematic Census undercount (if they are from a state with a large Latino population that might be under-counted by a Census with a citizenship question) or overcount (if they are from a state with a smaller-than-average Latino population, which would stand to gain a share of total U.S. population with a systematic nationwide Latino undercount) would affect their federal highway funding.

The answer is: no, not a dollar of federal highway funding is currently subject to changes in population or any other real-world apportionment factor (except for the federal tax dollars that a state is credited for paying into the Highway Account of the Highway Trust Fund). A state could lose its entire population in the 2020 Census but, under the system established in the MAP-21 law of 2012 and continued in the FAST law of 2015, would continue to receive the exact same amount of money it got before all its people left.

Coincidentally, this system came under criticism on the House floor this week, with Rep. Bill Foster (D-IL) offering an otherwise-meaningless amendment to the fiscal year 2020 Transportation-HUD appropriations bill that, he said, was to emphasize the need for future federal-aid highway apportionments to be based on population (per capita), not the current system. Foster was correct when he said that the current system of distributing federal highway funding by percentages that were, by and large, set in law in 2005 is a ridiculous way to do business. However, his brief statement on his amendment did not establish any real reason why population should be a new funding apportionment factor.

The very first federal highway law (in 1916) established a simple formula: federal-aid highway funding would be given away based on three factors – one-third on the state share of total U.S. population (for the Eastern states), one-third based on the state share of total U.S. land area (for the Western states), and one-third based on the state share of the total U.S. postal route miles (for the federal interest). This formula stayed in place for decades (though a second, urban formula was eventually established when Congress, decades later, allowed federal dollars to be used for rural roads as well).

More and more programs kept being created, and those formulas were based on real-world apportionment factors. But those formulas were also countered by more and more fights between states (particularly in the Senate, where all states have the same vote) that led to an increasing level of Rube Goldberg-type mechanisms that gave money to states outside the formulas just to get everyone to the place where a bill could pass the Senate and House.

It is worth looking at how the current highway funding entitlements for states were arrived at. We will look at Illinois just because Rep. Foster brought up his state’s funding this week (but we can do writeups for any state, or all states, if only someone will give us money to hire a data analysis fellow for a semester). See below.

Why Does Illinois Get Its Current Share of Total Federal-Aid Highway Funding?

First. What did Illinois get in the last year of the SAFETEA-LU law (FY 2009)?

There were 12 factor-based highway formula programs under SAFETEA-LU in 2009:

  • Interstate Maintenance Program. At the time, this program had three equal apportionment factors; state share of total U.S. Interstate lane-miles, state share of total U.S. Interstate VMT, and state share of total U.S. taxes on commercial motor vehicles. Illinois had 4.1795 percent of the weighted total U.S. share of that, which gave them $210.0 of the $5.024 billion Interstate Maintenance program under the original apportionment (see below).
  • National Highway System Program. At the time, this program had four apportionment factors: state share of non-Interstate principal arterial lane-miles (25%), state share of non-Interstate principal arterial VMT (35%), state share of total U.S. diesel fuel use (30%), and state share of principal arterial miles divided by population (10%). That weighting gave Illinois 3.0087 percent of the $6.135 billion program ($184.6 million) in the initial apportionment. But…
  • Joint IM-NHS floor-ceiling. The law provided that no state (or DC) could receive less than 0.5 percent of total collective IM-NHS funding, so Illinois had to be reduced by $5.5 million so that DC, DE, NH, RI and VT could get up to 0.5 percent. Illinois total IM-NHS apportionment: $389.0 million.
  • Surface Transportation Program. This program had three factors: state share of federal-aid lane-miles (25%), state share of federal-aid VMT (40%), and state share of HTF Highway Account tax payments (35%). Illinois’ total weighted share of those factors was 3.6521% of the national total, which would have been $236.0 million of the $6.461 billion national total, but it was reduced by $4.2 million so that AK, DC, DE, HI, NH, RI, VT and WY could get to their 0.5 percent minimum shares.
  • Highway Bridge Program. In this case, the only factor was the estimated cost to bring the state’s bridges up to par as a percent of the total national cost. At the time, Illinois had 2.5886 percent of total national bridge improvement costs. Times $4.293 billion for the program gave $111.1 million, and this was actually increased because the law capped any state’s annual take at 10.0 percent of the program, and California, New York and Pennsylvania were going to exceed that, so Illinois had its share bumped up to 2.6985 percent of the national total ($115.8 million).
  • Congestion Mitigation and Air Quality Program. The only factor for this program was the total state share of the weighted U.S. population living in a Clean Air Act nonattainment area. The Illinois share of the U.S. total for this for FY 2009 (which meant that the actual measure had to be in 2007 or earlier) was 4.7764 percent of the U.S. total, but this had to be adjusted down so 24 states and DC could get their 0.5 percent minimum, so Illinois’ apportionment fell to $76 million.
  • Highway Safety Improvement Program. This formula was one-third federal-aid lane-miles, one-third federal-aid VMT, and one-third fatalities on federal-aid highways. The FY 2009 average was 3.4225 percent of the national total, which would have been $36.8 million out of a national total of $1.074 billion, except that Illinois got reduced by $668 thousand so that 7 states and DC could get up to the 0.5 percent minimum.
  • Recreational Trails Program. Half the money for this program ($42.1 million) was split 51 ways evenly ($825.1 thousand), and the other half was based on estimated off-road gasoline use (Illinois had 1.6640 percent of the U.S. total), so the total take from this program was $1.522 million.
  • Metropolitan Planning Program. Illinois had 5.0599 percent of the U.S. total of people living in metropolitan areas, so they were set to get that share of the $304 million in MP money, except that they had to be reduced by $679 thousand so 16 states and DC could get up to the 0.50 percent minimum. Illinois’ total net MP apportionment was $14.7 million.
  • Rail-Highway Crossings. Illinois had 5.7953 percent of the U.S. share of the total number of grade crossings and 3.6521 percent of the total pre-adjustment STP program, which averaged out to 4.7237 percent of total rail-highway grade crossing money, times $220 million initially equalled $10.4 million, minus $235 thousand so 8 states and DC could get up to 0.50 percent, leaves $10.2 million.
  • Safe Routes to School. Illinois had 4.3533 percent of the U.S. total of students in public and private K-12, times $180 million for the program, gave $7.8 million, less a $282 thousand adjustment left a total apportionment of $7.6 million.
  • Other programs. Illinois got zero from the Appalachian Development Highway Program or the Coordinated Border Infrastructure Program, on account of not being in Appalachia and not sharing an land border with the U.S. or Canada.

Illinois’ total take from all of the factor-based formula programs in 2009 was $882.7 million, which was 3.6584 percent of the national 50-state-plus-DC total.

But then, Illinois was given an additional $337.1 million in “Equity Bonus” money in order to get the state up to a 92 percent rate of return (measured, as it was then, on the percentage share of dollars that the state was estimated to have paid into the Highway Account of the Highway Trust Fund versus the percentage share of total funding apportionments and allocations from the account).

In total, Illinois had 3.4075 percent of the total U.S. formula funding (including Equity Bonus) in FY 2009).

But all of the FY 2009 numbers and factors were largely determined in 2005 when Congress wrote the SAFETEA-LU law, when Dennis Hastert (R-IL) was Speaker. Because of Hastert, Illinois received 5.8794 percent of the earmarked funding under the six major earmarked programs of the bill. When that extra $255.6 million (one-fifth of the 5-year SAFETEA-LU earmarked funding) was taken into account, Illinois got 3.6752 percent of the national total $1.475 billion).

Then we went into the period of SAFETEA-LU extensions.

Second. What has happened to Illinois since the expiration of SAFETEA-LU?

We have established that in FY 2009, the last year of SAFETEA-LU, all of the aforementioned factor-based formula programs, plus equity bonus, gave Illinois 3.4075 percent of total appointments ($1.220 billion) and that Illinois also had 5.8794 percent of total earmarks under the major earmark programs ($225.6 million).

  • FY 2010 – States received funding equal to a flat-line extension of FY 2009, in dollar amounts, formula major earmarks. (Illinois = $1.475 billion).
  • FY 2011 – States received funding equal to a flat-line extension of FY 2009, in dollar amounts, formula plus earmarks. (Illinois = $1.475 billion).
  • FY 2012 – Each state receives its total percentage share of FY 2011 funding, except that total FY 2012 funding drops by $2.7 billion. (Illinois = 3.6657% of 50-state-plus-DC total, or $1.377 billion.)
  • FY 2013 – Each state receives its total percentage share of FY 2012 funding, and there was an 0.2 percent across-the-board rescission. (Illinois = 3.6675% of 50-state-plus-DC total, or $1.371 billion.
  • FY 2014 –Each state starts with its total percentage share of FY 2013 funding, except that Texas’s share, in dollars, dropped below 95 percent of its FY 2012 estimated tax payments into the Highway Account of the Highway Trust Fund (in dollars), which meant that Texas’s total take had to be increased by $256.2 million, and every other state’s share (plus DC) had to be reduced proportionately by their share of that $256.2 million. (Illinois net = $1.372 billion, or 3.6304%)
  • FY 2015 – Each state receives a straight extension of FY 2013 dollar amounts (Illinois = $1.372 billion. or 3.6304% of the total).
  • FY 2016 – Each state is entitled to the same share of total funding it received in FY 2015 (Illinois = 3.6304%, which translates to $1.442 billion).
  • FY 2017 – Each state is entitled to the same share of total funding it received in FY 2015 (Illinois = 3.6304%), except that Texas again triggered the 95 percent gas tax dollars in – dollars out factor, so Texas’s share had to be adjusted upwards, leaving Illinois at 3.6070% ($1.462 billion).
  • FY 2018 – Each state is entitled to the same share of total funding it received in FY 2015 (Illinois = 3.6304%), except that Texas again triggered the 95 percent gas tax dollars in – dollars out factor, so Texas’s share had to be adjusted upwards, leaving Illinois at 3.6130% ($1.497 billion).
  • FY 2019 – Each state is entitled to the same share of total funding it received in FY 2015 (Illinois = 3.6304%), except that Texas again triggered the 95 percent gas tax dollars in – dollars out factor, so Texas’s share had to be adjusted upwards, leaving Illinois at 3.6251% ($1.535 billion).

Under the FAST Act, Illinois will again be entitled to 3.6304 percent of total highway formula funding in 2020, for no readily apparent reason. And, under any clean extension of the FAST Act, these set-in-stone percentage shares based on decades-old population, lane-mile and VMT factors, and the ability of the state’s politicians to get earmarks in summer 2005, will continue to govern how the federal government distributes highway funding.

(Ed. Note: One addendum needs to be made for the newbies – the SAFETEA-LU equity bonus program was not just about plugging money in for states that were “donor states” on gas tax. It was also about getting a lot of other states up to some set minimum share of total program funding, even if they didn’t merit it for formula-based reasons, and it was all about getting a total funding distribution that could get the Senators from 30+ of the 50 states to buy in and also keep House leaders and chairmen happy. This was not easy, and the SAFETEA-LU equity bonus formula was nakedly political. And it is still baked into the percentage shares of highway funding that states receive today.)

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