Michael S. Bronzini
by James A. Bacon
For years, Republican politicians in Virginia have held firm in their opposition to higher taxes, even if those taxes, like the levy on motor fuels, can be construed as user fees. But the ground seems to be shifting. A study published September and underwritten by former Gov. Jim Gilmore’s Free Congress Foundation stops just short of endorsing an increase in taxes/user fees to upgrade the nation’s surface transportation system. This comes at a time that the McDonnell administration says it is “considering seeking additional revenue sources” to maintain state roads and highways.”
In his paper, “Surface Transportation: The Case for Growth,” Michael S. Bronzini, an engineering professor at George Mason University, argues that investments in surface transportation promote economic output and productivity, that public investment has been lagging needs for several decades, and that the private sector is unable on its own to meet the need for regionally and nationally interconnected networks of transportation services.
“While some gains can be made through better use of existing revenue, rehabilitating the existing system and investing in our future will require spending that is tens of $billions per year above recent levels,” Bronzini writes. “It may be time to recognize that investing in surface transportation is one of the most productive uses of tax revenue, hence citizens should expect their legislators to accord this high priority.”
Bronzini cites a number of sources to make the case that investments in roads, highways, transit, railroads and maritime systems have a “provable link” to economic development. Most notably, transportation infrastructure lowers production costs, permitting more output and a higher GDP than otherwise would occur. Investment in non-local roads between 1950 and 1980 yielded annual cost savings to industry of 24 cents for each dollar of investment. The rates of return were significantly higher than returns to private capital and the long-term interest rate.
(Bronzini cites a Rand Corporation study in support of this argument, but he mentions only in passing Rand’s conclusion that the returns have been declining steadily over time and have reached a point by 1980 at which point it is was debatable whether additional investment in road and highway represented a net social gain or loss.)
Bronzini points to a February study by Stephen S. Fuller, also of George Mason, that calculated the economic impact of constructing 16 proposed mega projects as public-private partnerships backed by tolls. The projects, ranging from the Third Crossing in Hampton Roads to the Coalfields Expressway, would cost a total of $30 billion but create a $4 billion gain to State Domestic Product, including 57,000 jobs and $2.9 billion in personal earnings. Two years’ of added economic growth attributable to the mega projects would equal the state’s financial contribution.
In making the case for higher levels of government investment (he can’t bring himself to say higher taxes), Bronzini argues that real (inflation-adjusted) highway spending per mile has fallen by 50% since the federal Highway Trust Fund was established in the late 1950s, that the number of miles traveled by automobiles and trucks has roughly doubled, and that half the lane-miles on federally funded roads are in various stages of decrepitude. “An ever-expanding backlog of investment needs is the price of our failure to maintain funding levels — and the cost of these investments grows as we delay.”
Bronzini discusses the motor fuels tax, which can be construed as a “user fee” on the grounds that “the more you drive, the more you pay.” Increasing the tax is one way to deal with the funding shortfall, he suggests. An increase in the fuel tax of 10 cents per gallon would amount to $5 per month per vehicle, or $9 per month per households. He warns, however, that the motor fuels tax are not a stable, long-term funding source as cars get more miles to the gallon, and that an alternative such as a Vehicle Miles Traveled fee may have to be considered.
Two things are missing from Bronzini’s analysis. First is the recognition that not all projects are created equal. Some provide a better return on investment than others. He avoids drawing the obvious conclusion that there needs to be a mechanism for separating economically viable projects from the boondoggles Secondly, he shuns any discussion of human settlement patterns. The economic payback of transportation improvements is inseparably tied to the balance, or lack of it, of land uses served by the improvements as well as the density and connectivity of development. A case can be made that the motor fuels tax should be raised to a level that can pay for properly maintaining existing infrastructure. But at present, no sound methodology exists for determining where funds for new construction can be most effectively deployed. Until we develop that methodology, the discussion of how much money we need to raise in taxes and user fees is getting the carriage before the horse.
