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« Trivia Tidbit of the Day: Part 807 -- Deficit. | WILLisms.com | Trivia Tidbit of the Day: Part 809 -- America's Debt To Surpass GDP By 2012. »

Trivia Tidbit of the Day: Part 808 -- Infrastructure Privatization Is Conservative.

Texas Is A Donor State-

Texas and many other states are "donor" states when it comes to transportation dollars:

In 2008, there were 25 donor states and 25 donees, although many states were close to being even in their return ratios. In 2008, for example, Texas received only an 81 percent payback, costing it $728 million in underpayments that year, while Florida received just 79 percent back, Indiana received 91 percent, and South Carolina received 90 percent. As column 3 reveals, many of the losing states in 2008 have been consistent losers since 1956. Tabulating return ratios over the past 52 years reveals that, among some of the 24 long-term losers, Texas received just 80.1 percent, Oklahoma received 85.5 percent, and Georgia received 84 percent.


Texas in 2008 experienced an 81.0 percent return ratio, reflecting the fact that its tax revenues accounted for 9.321 percent of the money flowing into the fund compared to the 7.554 percent of trust fund spending that it received (7.554 is 81.0 percent of 9.321).

While few states will have a perfect 100% return on their dollars, states should not be faced with having 1 out of every 5 dollars they send to Washington for transportation evaporate in federal bureaucracy or be siphoned off toward other states.

Indeed, Texas is suffering from this long-term donor state imbalance:

According to TxDOT, Texas typically receives about 70 cents for highways from each dollar remitted to Washington in federal motor fuel taxes. The federal tax is 18.4 cents per gallon of gasoline and 24.4 cents on diesel. In each of the past five years, however, Congress has cancelled some of the previously authorized funds owed to Texas.

This donor state thing is not likely to change anytime soon. Too many states derive too much of their transportation funding from this system. The alternatives?

Higher taxes? Not a great solution. Plus, tax revenue from the gas tax is declining as vehicles become more efficient and thus use less fuel.

More debt? That's only viable up to Texas' debt cap, and we don't need to follow the federal government down that path anyway.

Just not building roads, other new infrastructure? Well, the costs associated with increased gridlock are enormous:


Privatization of roads sometimes gets a bad rap, and I've even heard the peculiar assertion that being in favor of tolls to fund new infrastructure construction instead of higher taxes or more debt is "not conservative."

That's absurd on its face.

As Reason Foundation's Leonard Gilroy predicted back in January:

...playing politics with infrastructure privatization—generally in the form of a challenger's populist opposition to an incumbent's privatization initiatives, while offering no realistic alternative—is unlikely to be a fruitful path to success. The gubernatorial campaign of Texas Senator Kay Bailey Hutchison may learn this lesson the hard way.

Indeed, while there are a sizable number of vocal anti-privatization activists out there, even many within the Republican Party, and they often intimidate politicians into taking psuedo-populist positions against toll roads, being pro-gridlock and anti-infrastructure is ultimately not a winning issue.

I just hope legislators have the foresight to see that, before it's too late and we're all stuck in traffic all the time, with dilapidated roadways, higher gas taxes, and maximum debt.


Previous Trivia Tidbit: Deficit.

Posted by Will Franklin · 4 June 2010 11:42 AM


I'd like to know why no one comments on this blog. I read it every few days but rarely comment. Maybe because Will says everything that needs to be said?

Thanks Will!

Posted by: Tom Bri at June 6, 2010 11:18 PM