By Deron Lovaas
Federal Transportation Policy Director, Natural Resources Defense Council
Working with transportation exposes you to some very strong feelings about trust funds. On the one hand, there are those who espouse a strict doctrine of "highways-only" when delimiting investments from the fund since federal gas tax receipts ("user fees") fill the fund (and who appear to assume that such users derive little or no benefit from other components of the transportation system). At the other extreme are those who agree with Winston Churchill, who argued that gas taxes should be treated as "general revenue" during a debate in 1926: "Entertainments can 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."
As you can tell by my quoting him at length, my sympathies lie more with Churchill. Trust funds aren’t holy writ. Having said this, it’s indisputable that they are one of the more clever policy inventions of the past century. As Eric Patashnik writes in his excellent history of trust funds, as of 1995 there were more than 150 trust funds comprising nearly 40 percent of federal revenues, including of course the highway trust fund or, as the Administration proposes, the "Transportation Trust Fund." He notes there are "four main reasons for creating trust funds: (1) to make users pay; (2) to maximize agency budgets; (3) to reduce uncertainty; and (4) to safeguard the Treasury." These functions make trust funds exceedinlgy useful policy tools.
I think what the Administration proposes could split the difference neatly between what Churchill preferred, a model adopted by other industrialized nations, and the too-narrow, non-systemic doctrinal stringency of "highways-only." I say "could" because as Greg notes we need more details about how this new version of the trust fund would work. But even without these details, conceptually it seems sound — expand the trust fund to benefit the functioning of the whole transportation system, not just one mode, but don’t expand it too far and instead keep it in the "transportation system users" camp.
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https://transportation.nationaljournal.com/2011/02/transforming-the-highway-trust.php#1891995oldId.2011022520181653
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