Transportation Funding: More won’t get us there by default
NOTE: A version of this commentary was originally published in the April issue of the Traverse City Business News, where I write a guest commentary every other month. I’ll be the first to admit that I attempt to tackle a lot in this piece and that my thoughts and understanding have altered a little since the writing of this back in February. Still, my concern is the same: We can’t keep building more and more of what we already can’t afford.
On down the road…
The only thing more expensive than good roads, aren’t just bad roads, but wasteful roads that create liabilities for current and future generations. Every newly paved lane mile of highway is like a new car freshly driven off the lot, the moment it’s open for business it begins to depreciate and become a liability. And, like teenagers with too much money buying their first car, most DOTs and road commissions have traditionally been goo-goo eyes over the fresh paint and smooth ride.
Unfortunately, the last 50 years of pavement expansion (Slate), nationally going from 1.23 million miles to 2.73 million miles from 1960 to 2008, has life-cycle costs that are now coming due. Like any other socialized commodity that users have enjoyed on the cheap for decades, once past bills are due, everyone screams about the bill. Worse, single-minded interests pounce and take over the debate in legislatures across the country.
Contrary to popular mythology, the national gas tax is not a user fee. In fact, when it was first introduced back in 1932, it was enacted as an excise tax used as deficit reduction mechanism. There was a brief period from 1956 to 1973 where it more resembled a user fee and helped build the interstate highway system, but even that was subsidized by people filling up gas tanks to simply cross hometowns like Traverse City—not an interstate in sight. Since 1973, the gas tax was again raised as a deficit reduction tool (1990 and 1993) and roads, and transportation generally, continue to be heavily subsidized through taxes unrelated to transportation.
The Tax Foundation recently released a study looking at the degree that user fees paid for road spending. Nationally, in 2010, the gas tax and other so-called user fees covered about 32% of all road spending. Among states, there is a wide range, from 59.3% (Delaware) to 5.2% (Alaska); Michigan stands in the middle with 29.9% of all road-spending coming from user fees. The rest of our road funding comes from general revenue sources that we pay regardless of how we get around.
Elsewhere, the 2011 U.S. PIRG report “Do Roads Pay for Themselves”(PRIG), calculated that since the build out from city cores began, the amount of money spent on all “highways, roads and streets has exceeded the amount raised through gasoline taxes and other so-called “user fees” by $600 billion.” Over the past four years, Congress has transferred over $48 billion form the General Fund to the Highway Trust Fund, and it will need $15 billion a year after the current transportation bill expires.
We aren’t having an honest discussion when politicians, road agencies, and other organizations of influence, don’t acknowledge the generational transfer of general funds to construct, reconstruct, and maintain roads. It’s an important question: How do we pay to maintain and build transportation needs?
However, a more important question is: What transportation system can we build that is far more efficient and has a better rate of return than the one we built the last 50 years?
Very few people are questioning the ‘spend more now” meme. Admitting it is likely needed in the long run, I’m not convinced more is the starting point, particularly if it is only focused on more of the same wider, straighter, faster approach of the last 50 years. Mostly, the claims about roads and bridges are using numbers put forth by the American Society of Civil Engineers, which is the main source for the billions upon billions claimed to be costing us from our “ruined” system of roadways. Former civil engineer turned blogger of at Strong Towns, has illustrated that the ASCE’s 2011 report projected “costs” to society that don’t quite add up. In addition to the normal inflation one would expect from an organization writing it’s own job wish list, the amount the ASCE says it will cost to bring the system up to “minimum tolerable conditions”, $2.2 trillion over 10 years, is more than double the $1.0 trillion they say the current rate of repair will cost us in loss productivity and car repairs over the same decade. *
Spend $2 trillion to save $1 trillion isn’t quite the two-for-one deal citizen consumers are looking for—and, it is all of us who would pay for it.**
Certainly, macro level facts can’t compete with the visceral pothole we hit on the way to work. However, those holes aren’t going to be filled by any increase in funding related to user fees—unless, perhaps, the state allows for local taxation. What’s needed for our local streets is better ways to fund local governments. That may include an increase in the gas tax, and that revenue needs to have flexibility so communities can build more than just highways. The gas tax isn’t simply to build roads; it’s a Pigovian tax used to help offset the negative externalities associated with burning fossil fuels to move people and goods through communities.
A strong future requires that we invest not just in mobility based on speed and distance, but on access to jobs, businesses, and community for the most people, for the least amount of investment and negative externalities over the life span of an integrated system.
* Marohn’s 2011 article is too good to leave as a one-paragraph summary, google “The ASCE Infrastructure Cult.” The 2013 ASCE report increases the need to $2.7 trillion, and comes with a snazzy to report card.
** These numbers would undoubtedly be different today, but the mentality to over-inflate benefit is still prevalent. StreetFILMS has a quick primer on the doctored-up return on investment for roads.
Disclaimer: Opinions expressed here are that of the author and do not represent the opinions of writers previously published here or any of the organizations, committees, commissions or other affiliation the authors may belong to, unless so stated.