Rails and Reauthorization: The Inequity of Federal Transit Funding

Federal transportation aid programs often create perverse incentives for states and metropolitan areas. To get as much New Starts money as possible, transit agencies have planned increasingly expensive rail projects. Such expensive projects not only waste federal transportation dollars, they impose huge burdens on local taxpayers. As a result, far from promoting urban growth, regions that build rail transit end up growing slower than ones that don’t. To fix these problems, congress should convert the New Starts and other discretionary funds to formula funds. To encourage states and regions to build transportation systems that respond to user needs, Congress should incorporate user fees into the formulas.

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