Seven-eighths of these emergency funds were to be apportioned according to the regular Federal-aid formula and the remainder on the basis of population alone. The Act did not specify how the funds were to be allocated to the highway systems. An administrative decision was made to allocate about 50 percent to the rural Federal-aid system, 25 percent to its urban extensions, and 25 percent to secondary and feeder roads.
Some $95 million of the authorized $400 million went to highway projects on secondary or feeder roads not then on the approved system of Federal-aid highways but which were either part of State highway systems or important local highways leading to shipping points on roads that would permit the extension of existing transportation facilities. This was the first major Federal action directed towards secondary or farm-to-market roads.[1]
The Hayden-Cartwright Act of 1934 authorized a highway appropriation of $200 million to be apportioned to the States immediately according to the revised formula of the National Industrial Recovery Act. No less than 25 percent of the apportionment to any State was to be applied to secondary or feeder roads.
The States were relieved from repayment through deductions from future Federal-aid apportionments previously advanced for emergency unemployment relief. Matching by the States was not required, and the money could be used to pay for such preconstruction expenses as surveys and the preparation of plans.
The effect of the 1934 Act was to incorporate as a matter of continuing Federal-aid highway policy the provisions for using Federal funds to improve secondary and feeder roads and to eliminate such traffic hazards as railroad-highway grade crossings. The Act also provided for withholding sums up to one-third of their subsequent Federal-aid highway apportionments from States using motor-vehicle revenue for nonhighway purposes, except in those instances provided for by State laws in force at the time the Hayden-Cartwright Act was passed. This was the genesis of many State so-called “antidiversion” amendments.
State governments have often dedicated income from particular sources to particular purposes. This practice, which is embodied in State constitutions and statutes, has the effect of removing “earmarked” revenues from the regular annual or biennial review of the legislature. Carried to an extreme, it allows no flexibility in applying income to the governmental services determined to be necessary at any given time, so that a case could be—and was—made for the point of view that the special commitment of funds to highway purposes had no valid significance—that all governmental revenues should be general revenues and all expenses should be defrayed out of general funds.
While it was generally acknowledged that the nonhighway purposes to which highway-user revenues had been directed were, for the most part, essential functions for which money must be obtained from some source, nevertheless the antidiversionists pointed to the fact that the State highway-user tax schedules had been predicated on the concept that in paying these taxes the highway user was contributing his due share to the support of the highway system. Highway-user taxes being measured by the requirements for highway expenditures, the product of these taxes, it was argued, should be used for the purpose that determines their magnitude.
Historically, the highway function in this country had always partaken of the nature of a public utility, with aspects both of a private-enterprise and a governmental activity. Before the coming of the motor vehicle, local taxpayers could not meet the demand for land transportation over long distances, and it was left to private capital to provide these facilities. For a while, the pricing mechanism was tolls, and the user-tax principle was partially developed during the period of the early toll roads. These roads were soon put out of business by the railroads, roads once more becoming a local governmental function. Highway-user taxes, then, could with justification be linked to the benefits received from the service to which they were dedicated, inasmuch as they provided an indirect pricing of the benefits of highway use.
With the development of the road-user tax structure and its growing importance as a source of highway funds during the 1930’s, a number of States followed the lead of New Mexico, the first State to issue general obligation bonds secured by a specific pledge of road-user tax revenue. Bonds backed by this type of security proved to be a more attractive investment than bonds secured by the general taxing power of the State.
Although no regular Federal-aid authorizations were made for the fiscal years 1934 or 1935, Federal funds continued to be authorized for forest highways (begun in 1917) and public lands highways (begun in 1931). Other highway funds not administered by the Bureau of Public Roads were made available through the National Park Service, the Forest Service, and the Bureau of Indian Affairs. Allocations for Indian reservation roads were made for the first time in 1933.
Although 1934 was a mid-Depression year, the indicators of highway use were on the upswing. Motor vehicle registrations were already close to full recovery.
Present patterns of automobile use were fairly well established at that time. More automobile trips were made for earning a living than for any other purpose, and most auto trips were within a radius of less than 10 miles from home. Average annual automobile travel was generally least in the rural agricultural areas and highest in middle-sized cities.
As motor vehicle ownership increased and private automobile travel became more convenient and dependable, other available passenger service began to dwindle and, in some cases, essentially disappear. Among the casualties—mainly after 1930—were the electric interurbans, local railroad passenger service, and local commuter bus and trolley service. By the late 1930’s, many communities were left with no public passenger transportation service at all.
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- ↑ W. Evans, A Legislative, Program Eligibility and Policy Review of Federal Highway Programs, unpublished part of a support study for the 1974 NATIONAL HIGHWAY NEEDS STUDY (Federal Highway Administration, Washington, D.C., 1973), p. 6.
