Is the Federal-Aid Highway Program Compatible With the “Green New Deal?”

Is the Federal-Aid Highway Program Compatible With the “Green New Deal?”

January 25, 2019  | Jeff Davis

January 25, 2019

The Democratic takeover of the House of Representatives has energized progressives, and many are choosing to spend a lot of that energy pushing the concept of a “Green New Deal.”

At present, the Green New Deal is a slogan in search of specific policy suggestions. It was described by Vox as “a massive program of investments in clean-energy jobs and infrastructure” with the goal of rapid decarbonization of the U.S. economy.

(Ed. Note: Of course, the infrastructure programs of the original New Deal were all about job creation, because the U.S. unemployment rate in 1933 was 24.9 percent. With today’s jobless rate at 3.7 percent (which is near what economists call “full employment”), a Green New Deal would be as much about job substitution (getting rid of jobs in carbon-producing sectors in favor of new, equivalent jobs in non-carbon sectors) as it would be about net job creation.)

The transportation sector is the source of 28 percent of greenhouse gas emissions (per the EPA), so no comprehensive anti-carbon strategy can ignore transport. There are no official specifics out there – freshman Rep. Alexandra Ocasio-Cortez’s (D-NY) original proposal for a House Select Committee on a Green New Deal did have some general principles, including “eliminating greenhouse gas emissions from, repairing and improving transportation and other infrastructure.”

For more specifics of what that might mean, one could turn to a more detailed policy paper written in September 2018 by the think tank Data for Progress, which proclaimed two overall transportation policy goals:

“✔ 100% Zero Emission Passenger Vehicles by 2030

“The technologies already exist; we only need to scale-up charging infrastructure and consumer incentives to transition 100 percent of sales to zero emission passenger and light duty vehicles by 2030, followed with a swift phase out of internal combustion engines.

“✔ 100% Fossil-Free Transportation by 2050

“To reach decarbonization goals, we must transition away quickly from the use of fossil fuels in aviation, heavy duty vehicles, and rail. Not everything can be electrified, meaning we must innovate and scale up the next generation of biofuels and carbon-neutral fuels.”

-A Green New Deal: A Progressive Vision for Environmental Sustainability and Economic Stability (Policy Report by Data for Progress, Sept. 2018)

With regards to the first point, that is a mighty swift ramp-up to a complete zero-emission fleet. In 2018, according to insideevs.com, the number of all-electric passenger and light duty vehicles sold in the United States was 232,139 (191,627 from Tesla and just 40,512 from all other manufacturers combined). This was just 1.3 percent of the total 17.3 million vehicles sold in the U.S. (we don’t have a precise final number because GM unhelpfully went from monthly sales reporting to quarterly sales reporting).

Getting from 1.3 percent of new sales to 100 percent in twelve years is a hugely ambitious goal. The report suggests that this transition be implemented through a combination of CAFE-like emissions standards and an increase in the tax credits for the purchase of EVs (tax credits which are currently in the process of phasing themselves out). It also suggests investment in a nationwide EV charging network and, eventually, a federal program to buy back internal combustion engine vehicles and recycle them somehow.

The report does acknowledge that getting fossil fuels out of the aviation, rail and trucking sectors is a much bigger problem for which off-the-shelf technology does not yet exist, so that transition gets an extra 20 years. The report suggests a carbon fee for those sectors, alongside the electrification of mass transit, buses, rail lines, and train engines, and more incentives for biofuels for aviation. (Interestingly, it’s the Pentagon that has been doing all the real R&D on biofuels for aviation – see here.)

The report is silent on the fact that most federal highway spending (and most federal mass transit spending, which the Green New Deal proposes to increase massively) is currently paid out of the receipts from excise taxes on fossil fuels. (The Highway Trust Fund in fiscal year 2018 received $36.6 billion in fiscal 2018 on a net basis from gasoline and diesel excise taxes.) Phasing out the internal combustion engine by 2030 would, presumably, put a big dent in gas tax receipts, and any Green New Deal legislation would have to include either the abolition of the trust funded, user-financed method of paying for surface transportation, or else replace gas and diesel taxes with some other user tax.

Speaking of the Highway Trust Fund, all of this discussion of a Green New Deal, and of climate change legislation in general, for the next two years will be happening alongside discussions of legislation reauthorizing federal surface transportation program (since the current authorization expires in September 2020) and of a cross-cutting infrastructure initiative.

When it comes to infrastructure, the biggest ongoing federal program is of course the federal-aid highway program, which got $47.5 billion in total (non-emergency) federal funding in 2018. Highway funding dwarfs all other federal transportation spending – the federal government gave more money to highways last year than to aviation, mass transit, rail, and water infrastructure programs combined:

FY 2018 Fed. (Non-Emergency) Funding
Federal Highway Administration $47.5 billion
Federal Aviation Administration $18.0 billion
Federal Transit Administration $13.5 billion
Army Corps of Engineers (Water Infrastructure) $7.0 billion
Federal Railroad Administration $3.1 billion

Of that $47.5 billion for highways in 2018, $43.2 billion (91 percent) was given to the states and the District of Columbia via a formula. Going back to the first federal-aid roads law in 1916, those formulas contained a variety of needs-based and equity-based factors including state population, state area, state road-miles (eventually broken down into rural and urban miles), vehicle and truck traffic, etc. And the Interstate system was built using a separate “cost to complete” strategy to build out the roads shown on that original Interstate map no matter how much they eventually cost. But starting in the 1980s, when the initial construction of the Interstate program was winding down, states began arguing over their “fair share” of total formula funding, with states that paid more into the Highway Trust Fund via their gasoline and diesel excise tax payments demanding a greater share of total highway funding.

The formula fights got so bad, particularly in the Senate, that it took massive overall funding increases (and massive earmarking) in the 1998 and 2005 reauthorization laws just to get the votes in Congress to keep the program going. The last two reauthorization laws, in 2012 and 2015, dodged the issue of funding formulas entirely, choosing to maintain each state’s percentage shares of total formula funding they received in FY 2009 (the last year of the 2005 authorization law), more or less, with one big exception.

The federal highway program currently provides financial incentives for states to increase their use of fossil fuels on highways (relative to other states).

The distribution of that $43+ billion per year in highway formula funding to states is governed by the statute in 23 U.S.C. §104. Subsection (c) of §104 provides that each state (and D.C.) get the same share each year that they got in FY 2015 (which was basically the same share they got in 2012, which was basically the same share they got in 2009) – but (c)(1)(B) then provides that each year, the total funding for each state “shall be adjusted to ensure that each State receives an aggregate apportionment equal to at least 95 percent of the estimated tax payments attributable to highway users in the State paid into the Highway Trust Fund (other than the Mass Transit Account) in the most recent fiscal year for which data are available.”

The citizens of Texas, through their profligate use of gasoline on the roads (big trucks and SUVs, driving very fast over a lot of miles with the air conditioning on max), received an extra $181 million in highway funding in fiscal 2018 through what can either be viewed as an equity adjustment or an incentive payment, depending on your point of view. According to Table 1 in the FHWA computation tables, Texas’s initial apportionment of formula contract authority for FY18 was $3.651 billion, but because their estimated gasoline, diesel and trucking excise tax payments into the Highway Trust Fund in FY 2016 (the most recent year for which final numbers were available) totaled $4.034 billion, and 95 percent of 4.034 is 3.832, Texas got an additional $181 million in formula funding to bring their total up to $3.832 billion, and the other 49 states (and D.C.) then had their formula funding reduced pro rata by an aggregate $181 million. (Texas also triggered the 95 percent threshold in FY 2017, getting an additional $239 million.)

It is hard to see how a program that relies on fossil fuel usage as the primary determinant of how the federal government distributes money, and which is funded primarily through excise taxes on fossil fuel use (which need to reliably bring in revenue for many years after the new spending expires, since these reimbursable capital accounts take many years to “spend out”), is compatible with a Green New Deal or any other massive effort towards decarbonization.

(The Eno Center issued a report in December 2014 describing how the U.S. is an outlier in relying on petroleum taxes as the primary funding source for surface transportation funding.)

And the long term is pivotal. State DOTs and stakeholder groups consistently advocate for federal surface transportation reauthorization bills that last as long as possible so that the states and the local transit agencies can have as many years of more-or-less guaranteed funding available in the future as possible so they can plan and execute multi-year capital programs. An authorization of 5 or 6 years has been the gold standard, but the Trump Administration has reportedly been considering a reauthorization proposal that would lock in funding levels and revenue structure for a decade or more.

And speaking of the Trump Administration, progressives admit that getting a Green New Deal enacted under President Trump in 2019 or 2020 will be impossible, so they have been viewing the discussions that are to come over the next two years as a dry run for legislation that could be enacted in 2021 if Democrats keep the House, win the presidency, and get a few votes closer to 60 in the Senate in the 2020 elections. Which means that legislation reauthorizing the Highway Trust Fund, and determining whether or not it remains carbon-centric for the next 5 to 10 years, will probably be the only legislation affecting carbon use in transportation that could conceivably be enacted into law by the 116th Congress.

The views expressed above are those of the author and do not necessarily reflect the views of the Eno Center for Transportation.

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