Subsidizing Bad Habits: How SC Pays for Other States

On a share-by-share basis, some donor states such as Texas, Florida, and South Carolina get less than an 85 percent share of the highway money they pay in [to the Federal Highway Trust Fund], while New York, Connecticut, and Massachusetts get more than 100 percent. As bad as this disparity is, the allocation of federal transit spending is even more inequitable. Many highway donor states are also transit donor states, receiving much less for transit projects than they paid into the transit account, while many of the highway done states are also transit donees…

While the diversions focused initially on non-road, transportation-related investments such as urban transit programs, non-transportation projects such as nature trails, museums, flower plantings, metropolitan planning organizations, bicycles, Appalachian regional development programs, parking lots, university research, thousands of earmarks, and historic renovation became eligible over time for financial support from the highway trust fund. As a consequence of this growing number of diversions, as much as 35 percent of federal fuel tax revenues paid by the motorists is spent on projects unrelated to general-purpose roads. ...

It goes without saying that Texans and South Carolinians shouldn't be forced to subsidize bad decision-making in New York and Massachusetts.  Under today's system, those state do.  It is time for that system to end.

Read more in PPF’s report on unleashing the power of

Competitive Federalism.