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As
the General Assembly prepares to resume
consideration of proposals to increase state taxes
for transportation, it might be useful for all
involved to have a refresher course in economics.
Elected
officials have listened to transportation planners
and engineers for decades but have paid little
attention to economists. An economist would approach
the problem of congestion from a different
perspective than a planner or an engineer.
Economists would not consider the need for mobility
in a vacuum, as planners and engineers generally do.
Proponents
of a tax hike to fund transportation are right about
one thing: Money will be needed to improve mobility.
Where they err is in jumping to the conclusion that
taxpayers should fund the program.
That
is where the input of economists would be most
helpful. How the money is raised for
transportation has a profound impact on the
efficiency of the system. It also influences whether
innovative alternatives are considered.
If
Virginia continues to rely primarily on taxes to
fund transportation, we are likely to get more of
the same. Government spending won’t solve
our short-term or long-term mobility problems. It is
also inherently more wasteful than other options
because government has shown it can’t avoid
pork-barrel spending once it gets its hands on tax
revenues.
Consciously
or subconsciously, government bureaucrats resist
innovation and change. Their bias in favor of
governmental solutions is understandable:
those solutions are the reason for their employment.
Any significant shift in policy is a threat to their
positions.
Toll
financing dramatically alters the picture.
Generally, projects that are funded by tolls and
other user charges resort to debt financing to
obtain construction funds upfront. This necessarily
shifts control from government bureaucrats to
underwriters who look to private capital markets
which, in turn, look to the consuming public to
gauge whether the project is likely to attract
sufficient ridership at the rates to be charged to
be a financial success.
Public
opinion surveys have indicated that the public will
support toll-financing for new projects. This option
is clearly preferable to tax financing for major new
projects.
Tolls
won’t work in every instance, but there are other
ways to impose virtual user charges, even for
secondary road projects. Fees imposed on developers
to cover the cost of new roads are ultimately
incorporated in the price of lots. The lot purchaser
pays the cost of the new roads.
The
General Assembly should consider letting developers
provide off-site transportation improvements to
serve new developments. Developers would find the
most efficient solution if they -- as opposed to the
government -- had responsibility for the problem.
They might find development sites far removed from
the existing transportation network less desirable
if they were required to pay for roads or transit to
serve their developments.
There
is virtually no incentive at the moment for any
player, whether private or public, to consider a
non-structural solution to the mobility needs of new
commercial and residential development. Private
transit and para-transit options that best meet the
peculiar requirements of each development would
begin to get the attention they warrant.
It’s
about time our legislators heard from economists
about how our mobility and growth problems can be
addressed in the most equitable and efficient way
possible. The transportation planners and engineers
have had their chance.
--
August 28, 2006
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