Tags: road | construction | gasoline | tax

Alternative Sources of Funding for Highways, Roads and Bridges

By    |   Wednesday, 04 Sep 2013 07:49 AM

In a recent series of articles on Newsmax and elsewhere, Diana Furchtgott-Roth, a senior fellow at the Manhattan Institute, has made the case for, and discussed alternative sources of funding for the nation's highways, roads and bridges.

The problem is acute. The Federal Highway trust fund ran a deficit of $7.6 billion in 2011, more then 15 percent of the fund's expenditures.

The source of the problem is twofold: Americans are using less gasoline because of smaller and more efficient vehicles; and we are driving less because of the ongoing punk economy. Thus, revenues from the federal gasoline tax (18.4 cents for gasoline, 24.4 cents for diesel) are falling. State gas taxes vary, but many states find revenues inadequate as well.

Furchtgott-Roth, who was formerly a chief economist with the Department of Labor, discusses a few alternatives states such as Oregon, Illinois and Vermont are suggesting. Some states are raising gasoline taxes or sales taxes. Others are considering fees based upon road mileage.

Principles of federalism and economics have a tremendous amount to say about this issue, not all of which Furchtgott-Roth and state legislators have addressed.

First: federalism. Providing highways, roads and bridges has traditionally been a state and local government function and should remain their financial responsibility. Strictly speaking, only the ongoing expenses of the interstate highway system should be Washington's budget concern.

However, to the extent that some highways and roads are federally designated routes (U.S. Route 20, for example, which goes all the way from Boston to Newport, Oregon), the Federal government should help the states with repair and maintenance. Similarly, to the extent ANY road must meet some federal standard for lane width, shoulders, safety, signage, etc., the Feds should pick a share of those costs, as well. To not do so would be just another example of an unfunded mandate, Washington's recent trick for imposing their will on the states without paying up for it.

Microeconomics has much to say also. As Furchtgott-Roth suggests, we should try and tie the fees roadway users pay to the costs they impose on the highway system.

There is a fixed cost that anyone on a roadway imposes. I am keenly aware of this since I was have been cycling throughout the Pacific Northwest since April 15 of this year. Lights, signs, police cars and street sweeping, to name a few examples, are necessary for any vehicle to use the roads, no matter how large or small (such as my Fuji!). These costs are best levied as part of state and federal taxes, or a flat fee at registration. Even those who do not use the roads benefit from these functions, since commerce depends upon reliable, safe transport.

What about the variable cost? The gasoline tax, and to some extent levies based upon miles traveled (such is being tested in Oregon), capture some of these variable costs. Small cars probably log fewer miles and less damage to the road surface, so their fees should be less. Trucks are the opposite: 16 wheels and 40,000 pounds of weight chew up a lot of tarmac. However, wear and tear on the roadway goes beyond simple weight considerations.

We need to be more creative with how the fees are structured and levied, which technology should easily enable us to do. As any cyclist or motorcyclist knows, vehicle width is a critical concern. And widths have increased in recent decades, with more SUVs, camping trailers and pickup trucks on the road. Plunk down nothing more than an credit card at some trailer rentals and you can be driving a vehicle close to 10 feet in width and 30 feet in length with the same license you initially procured 30 years ago in a high school driver's "test."

Unlike truckers, the drivers of these vehicles have remarkably little awareness of their dangerous road profiles. They have little training in using engine braking. They take curves at too high a velocity and too sharply. The damage they do to the road surface is far greater than a typical vehicle driven by a non-CDL licensee.

Thus I suggest that user fees be determined not only by miles traveled, but also by some general measure of "roadway presence." This would include weight, width, length and (as anyone behind an SUV while in a VW Bug would pray) height. More precisely, the cost per mile should depend on the nature of the vehicle using the roadway. Bulky, heavy and awkward vehicles not only tear up the road, but also endanger other roadway users.

No way my Fuji bicycle did more damage to Oregon's Highway 101 this summer than some newbie with a trailer who took out a bridge guardrail.

Conservatives need to be on guard: the mechanisms for raising funds to pay for roadway construction and maintenance should be solely designed to produce revenue. They should not turn into social engineering projects favoring certain types of vehicles/fuels compared with another. That is best left to the free market. Like all public goods, the best use for roadways is multiple use: make them available to all or as many as practical.

We have the technology and political will to make the changes necessary to both raise the revenue needed and levy those fees in a fair and equitable manner. But the case has to be carefully made to the various levels of government so that we have a payment system that improves highway safety and efficiency even as our transportation system broadens to include vehicles that run on fuel other than gasoline.

The case for spending more on highway construction and maintenance is a strong one. Since Roman times we have known just how important a federal and local transportation network is to a successful economy. A smarter system to levy funds, along with devices such as roadway cameras to monitor use and improve safety, will go a long way to helping our roadway system pay for itself.

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Gary-Jakacky
In a recent series of articles on Newsmax and elsewhere, Diana Furchtgott-Roth, a senior fellow at the Manhattan Institute, has made the case for, and discussed alternative sources of funding for the nation's highways, roads and bridges.
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2013-49-04
Wednesday, 04 Sep 2013 07:49 AM
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