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Senators Introduce Bill to Allow States to Opt Out of Federal Highway Program

Sens. Tom Coburn (R-Okla.), Orrin Hatch (R-Utah) and Mike Lee (R-Utah) and 11 more Senate Republicans have introduced legislation which would empower states to free themselves from “wasteful mandates and heavy-handed interference from the federal government” by enabling them to opt out of the Federal-Aid Highway and Mass Transit Account (MTA) programs.

Under the current system, the Highway Trust Fund (HTF) often spends more than it receives in user taxes, which has resulted in Congress bailing out the fund three times since fiscal year 2008 for a total of $35 billion. Hatch said a large part of the problems with the fund is due to the fact that Congress keeps expanding the type of projects eligible for HTF revenues. Further exacerbating matters, Congress often links the release of the funds to mandates – beautification projects, museums and landscaping projects, for example – that are unrelated to transportation needs. This causes significant delays and drives up the cost of transportation projects.

States opting out of the HTF under the State Transportation Flexibility Act would give up their annual authorization from that fund in exchange for their share of the 18.3 cents per gallon federal gas taxes collected within their boundaries. The states would then be free to use that money to set and finance their own transportation priorities, subject only to their pledge to abide by certain federal safety and maintenance standards.

“The federal government’s one-size-fits all transportation policies and mandates are wasting billions of taxpayer dollars and causing inexcusable delays in the construction of highways, bridges and other transportation infrastructure in Utah and across the nation,” Hatch said. “It is time to unshackle the states from federal meddling and burdensome regulations and let them manage their own gas tax dollars. I am confident they can do a much better job of it than the federal government, which is fraught with waste and mismanagement.”

The State Transportation Flexibility Act would:

  • Allow state transportation departments to opt out of the Federal-Aid Highway program and instead collect all excise tax revenue collected within that state for the Federal-Aid Highway program for the next year under the following conditions:
    • The governor of the state must notify the Secretary of Transportation at least 90 days before the start of the upcoming fiscal year that he intends to opt out;
    • The governor must agree to maintain the interstate system in accordance with its current interstate program;
    • The governor must  submit a plan to the Secretary describing the purposes, projects, and uses of the highway funding; and which programmatic requirements of Title 23 the State elects to continue;
    • The governor must agree to obligate or expend amounts received under the program exclusively for transportation projects (defined as projects listed in 23 USC 133(b)).  No other federal limitations apply to these funds;
    • The amount transferred would be equal to the dollar amount that is attributable to highway users in the state.  Additionally, states opting out would receive a similar percentage of any General Fund transfers to the Trust Fund;
    • The governor must agree to report annually to the Secretary on the use of amounts received under the program and to make the report available to the public; and
    • The governor must certify within 30 days of enactment that funding returned to the state is being used for transportation projects and list the amount for each project.
  • Allow state transportation departments to opt out of Mass Transit Account (MTA) and instead collect all excise tax revenue collected within that state for this account for the next year under the following conditions:
    • The governor of the state must notify the Secretary of Transportation at least 90 days before the start of the upcoming fiscal year;
    • The governor must  submit a plan to the Secretary describing the purposes, projects, and uses of the mass transit funding, and which programmatic requirements of Title 49 title the State elects to continue;
    • The governor must agree to obligate or expend amounts received under the program exclusively for transportation projects covered under the MTA. No other federal limitations apply to these funds;
    • The governor must agree to report annually to the Secretary on the use of amounts received under the program and to make the report available to the public;
    • States must fulfill their existing commitments made under the federal transit assistance program;
    • The amount transferred would be equal to the estimated amounts state highway users made to the MTA.  Additionally, states opting out would receive a similar percentage of any General Fund transfers to the Transit Account; and
    • The governor must certify not within 30 days of enactment that funding returned to the state is being used for transportation projects and list the amount for each project.

Sens. Richard Burr (R-N.C.), Saxby Chambliss (R-Ga.), Dan Coats (R-Ind.)  John Cornyn (R-Texas), Jim DeMint (R-S.C.), Johnny Isakson (R-Ga.), Jon Kyle (R-Ariz.) John McCain (R-Ariz.), Rand Paul (R-Tenn.), Rob Portman (R-Ohio) and David Vitter (R-La.) have also signed on to the legislation.

The legislation also has support from a number of national organizations, including Americans for Prosperity, the National Taxpayers Union, The American Legislative Exchange Council, Americans for Tax Reform and the Council for Citizens Against Government Waste.

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April 23, 2014

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