Conrad deFiebre @ MinnPost: Rough road ahead for Minnesota drivers:

“‘Misaligned funding incentives’
The authors, Matthew Kahn of UCLA and tough-minded transportation engineer David Levinson of the University of Minnesota, fault the feds for ‘misaligned funding incentives,’ a lack of cost-benefit analysis and ‘mispricing of use.’ Their solution: radically reform federal highway progams to direct all current fuel taxes away from new construction and instead use them to ‘repair, maintain, rehabilitate, reconstruct and enhance existing roads and bridges.’ They call that step ‘Fix It First.’
But what about growing areas that really need new roads? The next part of Kahn and Levinson’s plan, ‘Expand It Second,’ calls for a Federal Highway Bank that would offer states construction loans ‘contingent on meeting strict performance criteria and demonstration of an ability to repay the loan through direct user charges [read: tolls] and capture some of the increase in land values near the transportation improvement.’
Those would be tough pills to swallow, sure to be loudly opposed by any driver or landowner asked to pay more for the direct benefits of new public investment. The hit could be softened, however, by Kahn-Levinson’s final proposal, ‘Reward It Third.’ If a new construction project met or exceeded performance targets such as on-time completion or environmental improvement, the bank would collect a reduced interest rate on the loan, resulting in lower tolls or less value capture from adjacent properties.
There’s plenty of sense in these ideas to correct the incentives and pricing around highways, even if a few oxen get gored. While the current federal highway program encourages new infrastructure at the expense of maintaining what we have, the rate of return on these greenfield projects has been declining for decades. That’s because the most economically efficient facilities have already been built, even if they’re often left to crumble. Furthermore, some studies have shown that road repairs produce more jobs and economic bang for the buck than new construction.
Congress is currently negotiating new a federal surface transportation bill, nearly three years after the last one expired. We’ve had nine temporary extensions since then, with no change in policy. The prospects for reforming the program along Kahn-Levinson’s lines range from slim to none this time. But eventually we’ll have to come to grips with the accelerating disintegration of the world’s greatest highway system and its negative effects on our economy, our job and cultural opportunities and even our pocketbooks.
Conrad deFiebre is a Transportation Fellow at Minnesota 2020, a nonpartisan, progressive think tank based in St. Paul. This article first appeared on its website.“