The project I am most familiar with, and which prompted me to look at the Federal funding situation in greater detail, is my cities $90 million Mason Corridor project. ( If you are reading this from outside Colorado, the Mason Corridor, or MAX, is a busway to be built one block west of the main street of Fort Collins. )
Sure, it all sounds fine and dandy that we are getting a BRT system, but here is the real kicker; Transfort has pretty much forgotten about the other routes! We are building a $90 million busway while all of the routes of our 34 bus agency shut down at 7 pm, and exactly
zero operate on Sunday. Most routes are hourly, and the system doesn't service new developments very well. In short, we have a transit agency and city that prioritizes fancy fluff over basic and useful improvements.
How much additional bus service could you buy with the $90 million? If we had a decentralized funding situation, about 20 or so new buses. But because we have Congressman from Alabama and New York determining what
our needs are for the bus system, we can purchase and operate exactly zero additional buses.
Likewise, our federal funding situation has brought us boondoggles like I-25 in Wyoming, where barely 5000 vehicles daily travel it. A two lane road would have been enough, but because Wyoming gets reimbursed 90% by the Federal government (with our tax money, by the way), it tips the scale in favor of waste.
The federal gas tax has changed from a weakly defensible "Money for the Interstate System, and that only" to an indefensible "Money for anything which uses asphalt". A while back the USDOT was trumpeting the fact that gas tax money was being used to rebuild sidewalks in Kansas City. Don't get me wrong, I am fully in favor of rebuilding sidewalks, but the fact that you have to go to Congress to rebuild a 4' wide Sidewalk shows a sickening circus seal/welfare attitude amongst Transportation Departments.
Federal funding tends to increase project scope and costs. Suppose that you are capable of spending $200,000 on a house. If someone promised to pay 80% of the costs of your new house, wouldn't you be tempted to try to buy more house than you would otherwise buy? For you, it changes the cost from $40,000 to $50,000, but the other person now has to pay $40,000 more than they would have originally spent.
You see this where a light rail project becomes a light rail/bike lanes/repaving/fancy streetlights/modernize the utilities project, of which most will be funded by the Federal Government. Sure, you could rip up just 20' in the center and slap down two tracks, but when you get "free money" the motivation to increase the scope deepens.
With that said, Fort Collins does need to contribute more to transit, even though the Federal Government still meddles in local transportation issues. Transit in Fort Collins is very underfunded, and my hat is off to the people at Transfort trying to make the best of a bad situation.
Because a branch of the discussion about Ron Paul is the reason this conversation happened, I thought that his unedited views should be made clear. His prediction of what America would look like with no federal funding would be that we would have "Less fancy highways and more mass transit."
http://www.youtube.com/watch?v=u3Tu8L7fV9g