Originally published on New Geography
For years, the Federal Government has been approving general budget stopgaps to fund highway construction across the country. Slowly, they’ve also come around to acknowledging the obvious: That despite their efforts, the Federal Highway Trust Fund, the primary pot of federal roadway dollars, is nearly out of gas.
This article was published on New Geography.
The fund has been fed for decades by the federal taxes on gasoline and diesel fuel. But the gas tax hasn’t been raised in 27 years. At the same time, people are driving less, and using more fuel-efficient cars. As a result, federal fuel tax revenues have fallen to just 60 to 70 percent of gross federal highway expenditures.
The resulting fiscal dilemma has kickstarted a debate among policymakers on how to get the fund solvent again. Simultaneously, it’s also attracted attention from many planners looking for an opportunity to stress what they perceive as the unsustainability of America’s suburban low-density development.
The core of the argument by these critics is that current infrastructure funding policies do not hold drivers accountable for the costs of the roads. Nationally, gas taxes and vehicle fees cover just half of total local, state, and federal road spending. They contend that if roads had to be paid for directly by those who used them, we’d likely have denser development and fewer cars, and that planning policy should embrace an ambitious course to implement that future through centralized land use regulation and urban design.
But this approach is neither desirable nor necessary. Instead, there are ways to restructure infrastructure funding to make roads accountably solvent without turning society upside down.
A first step would be to reduce the enormous control the federal government has over road construction. When first created, the federal highway trust fund was designed to ensure only the maintenance of the national interstate highway network. But today, the fund, which accounts for a quarter of all American roadway spending, is used for numerous other projects that can’t be justified as national priorities. As of 2011 20 percent of federal highway spending went to federal priority DOT projects. The remaining 80 percent was divvied out to states and communities via grants, many of them for capital outlays for new roads at the suburban edges of expanding regions. Communities should be expected to pay for these kinds of roads themselves, especially as the number of local projects continues to grow.
This federal spending has encouraged a lack of accountability at the local level. While it has given the federal government the freedom to address concerns about existing infrastructure projects — since 1990 Washington has reduced the share of bridges deemed “structurally deficient” from 25 percent to 11 percent – it has done little to ensure that local projects will be prioritized responsibly in the future. Instead, cities and states have accrued federal dollars primarily on the basis of marketing, regardless of whether the costs and benefits actually add up.
Balancing those costs and benefits is a crucial issue because, in the eyes of many planners, auto-dependent suburbanites are getting a free ride while urbanites who drive less are being unfairly taxed. Meanwhile, there is no clear answer to the question of how much people would be willing to pay for infrastructure in order to live at low densities if they were shouldering the costs directly.
Polling data does little to resolve the uncertainty. When asked, a majority say that they like their commutes, that they would rather drive than travel by other modes, and that they greatly value the positive attributes of living at low densities in detached homes with yards and privacy from their neighbors. This suggests they would be hard-pressed to relinquish the status quo. Simultaneously, however, they also overwhelmingly oppose raising the federal gas tax.
So where do the public’s priorities really fall? This question could be better answered if more infrastructure were funded locally. Not only would it allow more accountability between those providing the funding and those accruing the costs and benefits, it would more democratically help solve the density issue by letting people vote with their feet. People would be free to choose between the wide-ranging densities and tax rates that compose the many competitive municipalities of most regions.
There are other benefits to concentrating road spending locally. Foremost among them is that communities and states are better equipped than the federal government to tackle congestion, one of the costliest contributors to road degradation.
Since 1982, the primary federal approach to combat congestion costs through the gas tax has been to redirect an increasing portion of revenues to a Mass Transit Account under the principle of encouraging alternative modes of transportation. It hasn’t worked. Between 1978 and 1995 transit funding increased eightfold, while ridership increased just two percent. And by 2005 Americans indicated they still overwhelmingly rejected transit, even when both driving and transit were available.
Much of the gas tax has been wasted. The American Public Transit Association reports that about 15 percent of the gas tax is used for mass transit. Roads carry just 51 percent of their own costs. Ports, airports, and parking facilities, by contrast, paid for 80 to 100 percent of their own costs when measured the same way.
Cutting off the transit syphon would free up significant capital to patch gaps in the Highway Fund. Meanwhile, more effective approaches to reducing congestion could be tackled at the state and local level. These include regulations to stagger travel times and routes, clearing breakdowns more quickly, improving traffic light engineering, providing better traffic alerts, and limiting truck traffic (one of the worst congestion offenders) at certain times of day.
Most of the public debate has been on ways the gas tax itself could be restructured to keep the highway fund afloat. In addition to simply raising the gas tax, universal tolling and taxing people per mile driven are popular ideas for directly funding roads.
While popular, such “miles-based” approaches may not improve a roadway system that is a crucial tool for facilitating economic growth. Housing prices in the United States are lower than nearly anywhere else in the world in part because of roads that facilitate cost-efficient transportation between locations more efficiently than places where most residents are dependent on transit. This creates choice in where to live and work, and facilitates ladders out of poverty.
There are practical concerns as well. When polled, people have overwhelmingly indicated that their primary personal method for alleviating congestion is to take a less direct route to work. Discouraging indirect travel by taxing drivers per mile could actually end up exacerbating congestion, rather than relieving it.
The way the tax is designed now is a solid middle-ground approach, simultaneously charging users while incentivizing fuel-efficiency. If only the revenues were spent more efficiently, recent dips in Highway Fund revenues due to a drop in driving and an uptick in miles per gallon might be celebrated, not maligned.
It’s clear that roadway funding needs a second look. And while a more accountable approach would be a breath of fresh air, accountability may not resemble the high-density, high-tax, transit-rich future that some planners assume.