Federal Stimulus Spending on Transit Running on Empty
Federal stimulus money for transportation seemed like manna from heaven for cash-strapped states needing to repair roads and bridges as well as fund public transit. Now these same states that have enjoyed the gift are starting to wonder what will happen when the funds dry up. They worry that there will not be enough to satisfy all of their projects or, in the case of public transit, where replacement funds for the stimulus programs will come from. Many of them are pushing for a higher Federal gasoline tax. However, the Obama administration is correct in noting that raising the gasoline tax is the wrong thing to do in a recession.
There is plenty of irony in the plea to raise the gasoline tax, not just at the federal level, but the state level as well. The push to get people into cars that get higher miles per gallon driven, as evidenced in the cash for clunkers program, has reduced the demand for gasoline and thus reduced the tax revenue collected. Now they want to raise the tax rates which will further force people into more fuel efficient cars.
Thus the cry for a more reliable funding source for transportation.
But these advocates are missing one important point-the cost of these projects have been inflated by as much as 30 percent due to prevailing wage laws. If they want the money to go farther, this onerous law should be repealed. It’s nothing but a sop to the politically powerful unions. Thus repeal is unlikely to happen. Instead the tax and spenders at the state and federal level will find ways to bleed taxpayers for the benefit of these unions.