The term “donor” usually refers to a person who bestows something voluntarily – a vital organ to a person in need or blood to a blood bank; even someone offering money to an organization without expecting anything in return is considered a donor.
But, Indiana’s title as a financial “donor state” in the federal transportation system has never been voluntary. (States that put more money into the federal transportation program than they receive out of it are considered donor states.) A total of 28 states have the moniker, and Indiana receives only 92 cents for every dollar given to the federal system.
To combat this inequity, Indiana Republican Dan Coats has joined with several other senators from around the nation in introducing the State Transportation Flexibility Act, legislation that would allow states to opt out of federal highway programs. The act gives states the flexibility to manage and spend the gas tax revenue collected inside each state on transportation projects without federal mandates or restrictions.
The federal gas tax is the biggest revenue generator for the federal highway trust fund. With more fuel efficient vehicles and people driving less on average, the gas tax has been pushed into a steady decline and the trust fund has been bailed out several times.
“For too long, Indiana has been a donor state and sent more gas tax dollars to Washington than it has received back,” Coats says in a press release. “This isn’t fair to Hoosier taxpayers, which is why I support the State Highway Flexibility Act. Hoosiers know our state’s transportation needs better than bureaucrats in Washington, and Indiana should be able to control its own resources.”
States that choose to opt out would have to continue to maintain the Interstate system in accordance with its current program, but all gas tax revenue gained inside its borders would be used at the state’s discretion on transportation projects without federal interference.
“Anytime you can eliminate a layer of federal bureaucracy from the state’s ability to govern, it is a good thing,” adds Sen. David Vitter (R-Louisiana) in the release. “The states know their transportation needs better than Congress, so let’s put them in the driver’s seat to manage their own gas tax.”
In 2009, Alaska received $3.28 for every dollar it put into the federal fund, the District of Columbia received $5.04 for every dollar and Montana, North Dakota, Rhode Island and Vermont had returns of greater than 200% that same year.
For more information on the federal highway transportation fund and the challenges Indiana faces with the current transportation funding system, check out the story "Stuck in Neutral" in the May/June 2011 edition of BizVoice®.