Road funding reformed – dedicate fuel taxes to deficit reduction

A former student sends me to Peter Samuel @ TOLLROADSnews, who has a very nice rant (as with many things I post, I don’t necessarily agree with it): Road funding reformed – dedicate fuel taxes to deficit reduction:

“It’s high time highways supported themselves. Gasoline and diesel tax revenues are needed much more urgently for reducing dangerously bloated government deficits. The federal government should stop spending money on highways or transit. Those needs should be managed by the states. States too should use their fuel taxes for deficit reduction – devolving most responsibility for highways to metropolitan areas and counties, and encouraging user fee (toll) financing as an optimal and sustainable funding method.
As part of the end of federal-state grants and state grants, they’d of course lift restrictions on how roads are funded and managed. And they’d end the protracted federal permitting and planning and federal ‘records of decision.’
Let counties and metro areas be fully responsible for their roads and transit. State devolution can proceed state by state at their own pace as dictated by their own legislatures.
Federal abandonment of highway and transit spending is most urgent. A deal has to be reached to control the federal deficit without increasing damaging new taxes. The new Congressional Budget Office report on choices for deficit reduction notes that continuing federal deficits:
– raise interest costs as a proportion of the budget and reduce the spending power of any given level of revenues
– reduce national saving and increase dependence on foreign lending
– limit national options
– increase the likelihood of a fiscal crisis in which investors lose faith in the US Government and require increasing risk premiums to lend to it
Present deficits they say are “ultimately unsustainable.” “

And it goes on beyond that …

Similarly with Interstate highways. As a descriptor of the actual function of these roads it’s such an absurd term that only governments could embrace it. Interstate highways carry predominantly intra-metropolitan traffic. Or intra-state traffic in the sense of traffic moving within the state. Except in the tiniest states like Rhode Island and Delaware the vast majority of traffic using so-called Interstate highways is intra-state.
In short interstate traffic on misnamed Interstate highways is trivial.
There is no justification or rationale for the federal government to take financial responsibility for these highways.
Maybe there was at some point in the past – there was a certain charm to the idea of a national government stitching diverse states together. Or emulating the Nazis national ‘autobahn’ network was held to support national defense. That provided a justification for federal funding of interstates.
However all this is history now. Nostalgia and inertia is all that keeps the federal government financing highways.
In a rational scheme of governance local and metropolitan government would work out a framework for charging for roads. It’s unlikely the locals would do much tax financing because obviously taxes fall only on local people and businesses and don’t charge visitors and passers-through.
So there would be lots of tolling.
Now that gantries over a road can collect tolls at highway speed it’s feasible to toll surface arterials as well as expressways. Major road improvements could be financed in part by assessments made of increased property values where those property owners agree to opt in to an improvement scheme. Strictly local streets could be funded by property taxes.
Separate segments of highways should be self-contained business operations, charging what the traffic will bear in competition with others, and making improvements where the risk takers make the judgment that users will subsequently pay for those improvements in tolls.
No VMT charges please
What we do NOT need is some centrally collected vehicle miles traveled charge.
Milleage based fees would perpetuate the dysfunctionality of centralized fuel taxes in which funds are allocated by politicians according a mix of ideology and favor trading. Central government management of roads and political management of funds is a disaster – improper pricing and lack of incentives to provide service produces chronic congestion, totally unnecessary congestion, high cost, neglect of high return projects and wasteful investment in unnecessary ones.
Proper pricing would manage traffic for freer flow and provide strong incentives to invest where there is a need for extra capacity and where that extra capacity can be provided profitably. But that requires highways to be privatized into many separate businesses. Or at least run as county or city owned businesses. The important thing is that their revenues derive from customers they serve.
They could get economies of scale by banding together to contract for joint services. But we need highways to be a diversity of different business units each managing its investments and operating expenditures based on what users will pay and where profits (the excess of consumer value over cost) lead them.