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>The more lane miles a state has, the more federal transportation dollars that state qualifies for. What is the incentive? It is, of course, to build more lane
by scythe 9y ago
>The more lane miles a state has, the more federal transportation dollars that state qualifies for. What is the incentive? It is, of course, to build more lane miles. Add to this the fact that federal transportation programs generally pay 90%+ for new construction, but only ~50% for maintenance, and we have a system that encourages states to build more than they can ever maintain.
This is a microcosm of a larger systemic problem with state budgets that started with the Sixteenth Amendment. Not because income taxes are bad (they're fine) but because that was the first step in a process where nearly all revenue in the United States is collected by the federal government. This was a shift from the original situation where the government was funded by excise taxes and most taxes were collected by the states. This didn't become a problem however until the federal government's fiscal advantage became so large that federal outlays began to dominate state budgets.
The result is a growing clusterfuck of incentives that would make Roman Polanski blush. State governments used to get more money by growing their states' economies. Now they pursue the twin goals of getting more money from Uncle Sam and generating more of the kinds of economic activity that they can most easily derive revenue from, because federal income taxes are too high for states to collect very much money from income tax, and because states compete against each other to lower taxes to attract businesses so are better off seeking federal funds than raising taxes. If a state raised its own taxes to build roads they'd never overbuild the network like this. It's completely insane.
It's possible that the election of Senators by state legislatures also served to prevent this slow transfer of fiscal power from happening during the first century of our country's existence.
- rzimmerman 9y agoI think you make a very interesting point that the direct election of senators removed an important protection by effectively shifting representation in the senate away from state governments directly to the people. Direct election was opposed when writing the US Constitution for this very reason.
- maxerickson 9y agoStates and local governments collect lots of revenue. http://www.usgovernmentspending.com/ http://www.usgovernmentspending.com/ And for the point you are making, it would be sensible to pull out some spending as "other" (Social Security, maybe Medicare, some portion of defense spending).
- scythe 9y agoI can't agree. I did not find state revenue numbers at your link, but I did find them: Total state revenue is $930M (across all states): https://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?src=bkmk https://factfinder.census.gov/faces/tableservices/jsf/pages/... Federal revenue is $3180M: https://www.nationalpriorities.org/budget-basics/federal-budget-101/revenues/ https://www.nationalpriorities.org/budget-basics/federal-bud... From your link, states spend approximately $1860M per year. According to the revenue numbers I've found that means that half of all money spent by states must be supplied by the federal government or by debt. That is certainly sufficient to account for the perverse incentives I've noted, since states unlike USG cannot print money to cover debts. There is a slight discrepancy since my revenue numbers are from last year, but generally, I would not agree that your source contradicts my claim.
- maxerickson 9y agoYour factfinder deep link breaks for me. If you go to https://www.census.gov/govs/local/ https://www.census.gov/govs/local/ and click "2014 State and Local Summary Table by Level of Government and by State", "General revenue from own sources" is $2.16 trillion. It also has a number for federal transfers, $600 billion.
- scythe 9y agoThe fact that you have chosen to quote the combined state and local taxes rather than the states themselves in a conversation where I have focused exclusively on state budgets makes me doubt your sincerity. And to the original point, high levels of deficit spending by states are by themselves an indicator of reliance on spending by the federal government, which is the guarantor of state debts. I'm not going to re-find the state tax receipt number; you can do that yourself, and you should have already considering the amount of numbers you've bothered to find.
- maxerickson 9y agoLook at the first words of my first comment, I'm not being inconsistent, I'm arguing against where nearly all revenue in the United States is collected by the federal government. It's obviously not the case, state and local taxes account for a great deal of government revenue.