U.S. gas-tax gap is costly to Ohio

COLUMBUS -- Ohio residents contribute a bigger share each year in gasoline taxes to the federal fund that pays for transportation improvements across the country than their state receives back.

The gap cost Ohio $140.5 million in fiscal 2010, the last year for which the Federal Highway Administration calculated state-by-state spending and gasoline tax collections.

Ohio has lost out on $1.5 billion over the past decade and on more than $5 billion since the Federal Highway Trust Fund was created in 1956.

When Jerry Wray, director of the Ohio Department of Transportation, announced last month that the state should delay 34 major projects across Ohio for as long as 19 years, he said the state could afford $100 million every year in projects to expand and improve its highways.

Last year, the department had $1.6 billion more work on its calendar than budgets through 2017 allowed.

Although Mr. Wray dismissed as outdated the federal policies that take a larger share of money from 24 states and give it to 26 others, he said that discrepancy isn't to blame for proposed delays that will go before the department's Transportation Review Advisory Council this spring.

The agency has promised too much in the past and isn't able to deliver in a time of declining gasoline consumption and rising construction costs, Mr. Wray said.

In addition, since fiscal year 2007, nearly $30 billion in subsidies to the federal highway fund have ensured that every state gets back at least one dollar for every dollar it sends to Washington in gas taxes.

Ohio drivers have paid almost $8.6 billion in federal gas taxes since 2004, and the state has received nearly $9.8 billion back.

But the funding formulas before subsidies have created a substantial gap between donor states and states that get back a bigger share from the federal fund than their residents pay in gas taxes.

Ohio's gap is the fourth-largest.

The states on the winning end typically are sparsely populated and geographically large. They include Alaska, Montana, Wyoming, and the Dakotas. States on the losing end tend to be among the most populous.

Federal officials say gas-tax money has been pooled since the 1950s because of the need for a national highway system built to a uniform standard. A shift of money was needed because the construction timetable varied from state to state. It also ensured that interstate highways didn't suffer or go unconstructed in states with smaller populations.

Ohioans accounted for 3.7 percent of Highway Trust Fund collections in 2010 and received 3.4 percent of its spending, minus the subsidies.

That 0.3 percentage point equaled $140.5 million.

"For far too many years, Ohio has paid far more than it has gotten back from the trust fund," said Sen. Sherrod Brown (D., Ohio).

The state is faring better, Mr. Brown said.

Thirty years ago, when the federal government also subsidized states' gas-tax contributions, Ohio received 72 cents for every dollar its residents paid into the highway fund.

He said more changes are needed, though, in federal funding formulas.

Sen. Kay Bailey Hutchison, a Republican from Texas, has proposed letting states opt out of the federal program and keep their federal gas-tax money.

Mr. Wray said it's something to consider, although the details might make the idea less appealing. The interstate system is in place, he said, so the need for states such as Ohio to subsidize others has passed.