Tag Archives: welfare

Cars and Suburbs on Welfare

By Owen D. Gutreund

Twentieth-Century Sprawl (2004)


“The coordinated Good Roads movement had successfully lobbied government to provide better roads as a free-of-charge public good, ostensibly to get the farmer out of the mud. One of the most significant aspects of the landmark 1916 legislation was that there were no federally imposed user charges associated with the Federal-Aid highway program. Furthermore, motorists were protected from toll charges, and attempts to levy a federal gas tax had been repeatedly defeated by lobbying efforts of motorist groups, oil companies, and other highway lobbies…as a result, there was an enormous government subsidy of auto use, and the technical provisions of the Federal-Aid Highway Acts directed these subsidies exclusively toward rural areas. In effect, the federal government established a system of transfer payments, from urbanized regions to rural regions, and from all taxpayers to those who drove automobiles. In 1921, users of the 9 million motor vehicles in the nation paid only 12 percent of ALL highway costs.”

pp. 26-7.


“…the Hayden-Cartwright Act of 1934, which threatened to reduce aid to any states that increased ‘diversions’ of revenues from gas taxes to nonhighway purposes. The preamble of this act of Congress serves as an excellent example of the insertion of auto subsidies into the fabric of American political culture: ‘Since it is unfair and unjust to tax motor-vehicle transportation unless the proceeds of such taxation are applied to the construction, improvement, or maintenance of highways…’…many states passed legislation requiring that all gas-tax revenues be used to directly benefit motorists. Within a few years, 20 states had enacted CONSTITUTIONAL provisions to ‘protect’ highway revenues…As a result…gasoline consumption could not be taxed to support nonhighway expenditures, even though virtually no other type of consumption was similarly privileged. Highway construction was now sheltered…from the need to compete with education, law enforcement, prisons, or welfare programs for scarce government funds, unlike virtually all other government endeavors.”

“Entertainments may be taxed; public houses may be taxed; racehorses may be taxed…and the yield devoted to general revenue. But motorists are to be privileged for all time to have the whole yield of the tax on motors devoted to roads? Obviously, this is all nonsense…such contentions are absurd, and constitute an outrage upon the sovereignty of Parliament and on common sense.”

— Winston Churchill

pp. 32-5.


“…highway-related borrowing…was another powerful (albeit subtle) subsidy to automobility. Virtually all the highway debt of local governments…was backed by pledges of future revenues, mainly property taxes. Even at the state level, where user fees were levied, 20 percent of state road bonds were serviced by general revenues (in addition to the use of general revenues to fund road construction and maintenance). This meant that ALL taxpayers were bearing the burden of accommodating automobility, regardless of how much they used automobiles (if at all) or how much they benefited from lower transportation costs.”


pp. 36-7.

“The Interstate Highway legislation [1956] was the latest in a succession of laws that established and perpetuated a skewed American system of highway finance…the Act went a long way to closing any remaining gap between what was good for General Motors and what was good for the country….Over time, these measures established, then institutionalized, two related subsidy patterns. First, they undercharged motorists by a wide margin, penalizing the non-motoring majority while simultaneously inducing more and more Americans to adopt the automobile as the preferred mode of transport. In contrast, other developed nations in the world chose to impose user charges far in excess of road expenditures. A study of 14 industrialized European nations found that, on average, user fees were nearly three times the amount of direct highway costs, while in the US they were only about half. Second, American highway legislation consistently favored construction in unpopulated areas while impeding investments in urban transportation networks…The deductibility of mortgage interest was certainly a major component…[and] the sales tax on automobiles (which was invariably dedicated to state highway programs) was tax deductible. Likewise, employers could deduct the (often substantial) costs of providing free parking for workers, a benefit that was not taxable for the recipients. Company cars were similarly privileged. In contrast, any reimbursement for commuting by transit was fully taxable. More arcane tax provisions like the investment tax credit, and Accelerated Depreciation also favored corporate investments in new, unbuilt locations, instead of reinvesting at existing urban locations. As marginal tax rates rose during the postwar era, the power of these inducements grew, even as the Interstate Highway legislation sent automobility incentives to new highs…Cities and towns in all regions of the nation, of all shapes and sizes, were affected as resources were persistently directed to the periphery, away from downtowns and town centers.”

pp. 58-9.


“Concerned that Colorado was moving toward a user-fee funded system, the AAA and Good Roads groups obtained legislation…that imposed a statewide property tax for highway construction and a prohibition against locally levied user fees.”

pg. 68


“Americans who purchased cars could count on other Americans, even those who did not own cars, to share the cost of vehicle [parking] (in addition to the shared costs of usage built into the highway finance system).

pg. 81.


“As with many other motor vehicle programs, the general budget absorbed these [off-street parking] costs while benefits accrued only to commuting motorists, most of whom lived outside of Denver city limits.”

pg. 88.


[The new 35-year old mayor of Denver created the Denver Planning Office in 1949.] “Under [the new planning director], the…goal was clear and simple: ‘to give the automobile maximum freedom of direction and speed.’…Not only did the planners accept auto-dependency as an unalterable fact, they also embraced the notion that it was the government’s responsibility to meet the resulting demands without question, without alteration, and without charging motorists directly. As a result, their assumptions and forecasts became self-fulfilling prophesies…[The planning staff] offered a vision of new six-lane divided freeways with cloverleaf intersections (and a median strip too narrow to accommodate transit)…designated truck routes, re-timing certain traffic lights, and numerous street widening projects…even though the plan was geared toward the automobile, the planning office did not expect motorists to pay for it. This planning approach persisted for decades. A 1963 downtown plan focused almost entirely on increased automobility…the report dismissed [transit] because it was not self-supporting. Instead, it concluded that freeways ‘must be built’ to facilitate the flow of private automobiles…the report urged that access streets be widened and limited to one-way traffic, and called for $80 million of new off-street ‘parking terminals.’…a 1966 plan proclaimed that ‘the need for additional freeways within the urban area is acute and irrefutable when future traffic projections are examined.’…Despite its claim to comprehensiveness, the focus was exclusively on ‘street and highway systems and related highway-oriented transportation facilities for motor vehicles…[other forms of transportation] are not treated.’ It called for the expenditure of $200 million on freeways and $50 million on streets, with the city’s share of costs paid for by a bond issue that would be repaid out of property and sales tax collections…While the city’s planners indicated that suburbanization was inevitable, they in fact actively encouraged it. They planned to eliminate agricultural land use, increase low-density residential development, and limit high-density areas…[Denver planners] believed that ‘the mistake to avoid is over-concentration’ and ‘the advent of the private automobile liberated urban growth from central congestion.’ ”

pp. 89-93.


“…Middlebury’s [VT] entire share [of revenues for road and bridge expenditures] came from local property taxes, although the vast majority of the area residents did not yet own or drive a motor vehicle [in 1923].

pg. 140.


“…the lobbying group sought to maintain the growth of the automobility subsidy by removing what they called the “nonhighway” expenses from the highway department budget. In particular, they began to complain that money from the highway fund was used to pay for the state highway police. They argued that such costs would be more appropriately classified as law enforcement expenses and that motorists were being unfairly taxed, through gas taxes and registration fees, to pay for the highway patrol. This strategy…serves as an example of the relentless efforts on the part of the automobility lobbies to expand construction while keeping motorists’ contributions down to a small fraction of the total funds spent accommodating automobiles.”

pp. 156-7.


“The engineers in the state highway department considered the narrow portion along Court Street [downtown]…a nuisance for motorists passing through Middlebury [VT]…Many townspeople had a different perspective. For them, Court Street was a charming tree-lined and grass embanked approach to their small New England town. The engineers’ plan would have allowed four lanes of traffic along this congested stretch but at the cost of all the trees along the street…state policy required the town to pay half of the state’s share of the costs…Overrun by cars and sprawling in all directions, the town was being transformed, refashioned by the now-overwhelming influence of automobility, whether inhabitants liked it or not.”

pp. 183-5.


“Motorists have been persistently undercharged. This has produced more demand for automobility than supply. In response, [Vermont] has poured enormous sums of money into new construction (at the expense of maintenance), trying to help the supply catch up to the demand. The result is a highway system that the government can not afford to maintain and an economy that is now predicated on artificially cheap, subsidized automotive transport. Small towns like Middlebury, as much as big cities like Denver, have been remade by this dynamic, rapidly spreading out across the countryside…”

pg. 195.


“…the consistent underpricing of auto use produced an imbalance between supply and demand. Demand far exceeded supply for the economic commodity at hand: properly maintained toll-free and traffic-free roads. Public response to this disparity, under the influence of Good Roads movement rhetoric, was to build [wider] roads to satisfy the excess demand, without addressing the underlying disparity between the costs of automobility and the charges passed on to motorists. Furthermore, a consistent emphasis on new construction to help the supply of road-miles catch up to demand exacerbated the pricing problem, creating a highway system that governments could not afford to maintain.”



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Filed under New Urbanism: Timeless, Traditional, Walkable Design, Sprawl and Suburbia

Erik Hare: Think Drivers Pay the Costs of Roads? It’s a Myth

Published September 7, 2003

Minneapolis/St Paul StarTribune


We tend to assume that driving pays entirely for itself, and that that’s reason enough for government to favor roads over other transportation choices. Not only do drivers pay for their cars, we believe, but also for gasoline that is taxed enough to cover the construction and maintenance of all the roads we’ll ever need.

But this is a myth.

Minnesota’s 20-cent gasoline tax would have to rise by 39 cents to cover all of the state’s current road-related expenses. To start building the roads we actually need in order to deal with congestion, the tax would have to rise 42 cents beyond that, pushing the price of gasoline beyond $2.60 a gallon.

Clearly, somebody besides the driver is paying for Minnesota’s roads. Drivers-through gasoline taxes, car registration fees and sales taxes on vehicles-actually pay only 62 percent of the costs of roads. General taxpayers “subsidize” the rest, no matter how much or little they drive.

Because of this arrangement, a good portion of Minnesota’s demand for roads is forced to compete with the whole array of other pressing government needs. This competition now threatens the integrity of our road system, especially in busy urban areas. It also chokes off opportunities to provide other viable transportation choices, like transit.

The problem’s roots date back to Model T days. Dirt roads were fine for horses, but muddy roads were terrible for cars. The political cry to “Get the farmers out of the mud!” led to changing the state Constitution in 1920. A system of paved trunk highways, plus help for county and city roads, was to be funded by a gasoline tax and a vehicle registration fee. Thus pavement replaced dirt.

Much has changed in 83 years, but the outline of that financing structure remains in place. A formula for the distribution of state gasoline tax revenues (62 percent to the state, 29 percent to counties and 9 percent to cities) took effect in 1956, but that hasn’t changed either, even as the state has become considerably more urban and our economy more diverse and sophisticated. We still have a transportation financing scheme designed mostly to get farmers out of the mud.

Thanks to this antiquated system, Minnesotans who tend to drive the least-urban residents-tend to pay a disproportionate cost for roads. Not only is this unfair; a heavy reliance on property taxes leaves the entire road system vulnerable to other budget constraints.

St. Paul offers a good case study. Public Works is the largest department in city government, accounting for more than a third of municipal operating costs. It spends most of its money on roads-$67.3 million last year.

But only about 30 percent of that comes from driver-generated income on parking, snow-plowing fees and so on. The other 70 percent comes from general revenues, assessments based on street frontage and type of property, and an infusion of $10.3 million from the city’s general fund-money that must compete with police and fire operations and other pressing needs.

That’s still not the whole picture. Debt service is a major part of city spending. This year, 36 percent of St. Paul’s $78 million in bond repayment will go to cover road projects. That’s an additional $19.9 million draw on the city’s hard-pressed general fund.

The bottom line is this: Only 24 percent of the cost of St. Paul’s roads is borne by driver-generated taxes and fees. The other 76 percent is a subsidy from general revenues and property assessments. There’s no reason to believe that St. Paul’s situation is atypical for cities and older suburbs.

This scenario is repeated in developing suburbs as well, where state-aid roads are only a part of the picture. Feeder streets that are not part of the antique aid system are also funded by local property taxes, and these costs have to compete with other brand-new infrastructure that has to be built daily.

This pressure is worsened by the state’s reluctance to keep up with transportation needs. The Transportation Policy Institute recently estimated Minnesota’s unmet needs at $1.2 billion a year to prevent further congestion, bridge closures and so on. The current rate of spending doesn’t even begin to meet our needs, says Anne Finn of the League of Minnesota Cities.

“We’re just not planning for the long-term viability of our paved streets,” said Don Sobania of the St. Paul Public Works Department. “My crystal ball doesn’t show me where that money will come from.” A lot of the blame for this situation belongs to a funding system that does not direct money to where more of it is spent-the cities.

We’ve been less than honest with ourselves about how transportation is paid for in Minnesota. We’ve heard a lot of misleading rhetoric in recent years about cars and roads being the superior choice because they are entirely paid for by users, while transit is heavily subsidized. But if you add up all the money spent in Minnesota on transportation, then subtract the money contributed directly by users-at the gas pump, through registration fees, through sales taxes on new vehicles or at the transit fare box-you’ll find a leftover subsidy of $1.3 billion from general taxpayers. Of that total, 89 percent went to roads.

Our transportation financing system is as outdated as the Model T it was meant to accommodate. Relying on a patchwork of local property taxes to shore up the road system obscures Minnesota’s real transportation picture and crowds out the funding of transit and other alternate modes. It’s time to stop pretending that driver-related taxes and fees pay the entire cost of building and maintaining our roads.


Erik Hare is a research engineer living in St. Paul.


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