One More Time Now… Devolve Transportation Funding to the States

Graphic credit: Wall Street Journal
Graphic credit: Wall Street Journal

by James A. Bacon

Congress is floundering over what to do about the Highway Trust Fund, which collects the federal gasoline tax and plows it back to the states to finance a smorgasbord of transportation projects. The original justification for the gas tax was to build the Interstate Highway System, but the program has morphed over the years into a  piggy bank for all manner of Interstate, highway, transit and miscellaneous projects that must be supplemented with General Fund appropriations. Congress persons are loathe to relinquish the perk of doling out money to constituents, but fiscal pressures make it impractical to continue the General Fund subsidies, while raising the gas tax is a political killer. What’s a Congress person to do? What he or she does best — dither.

Meanwhile, in the wake of Amtrak’s deadly derailment last week, we hear the usual wailing and gnashing of teeth that America isn’t investing enough in infrastructure.

The idea that the United States is significantly under-investing in infrastructure is nonsense — the kind of special pleading you hear from big construction and engineering firms who grow fat on infrastructure spending. Among the G-7 countries (Japan, Germany, France, the United Kingdom, Italy, Canada and the U.S.), the total capital stock of the U.S. (transportation and other infrastructure) is the third highest, equivalent to 52% of the Gross Domestic Product, as seen in the graphic above, published today in the Wall Street Journal. While Japan is off-the-charts higher, that country arguably has way over-invested in transportation, creating a system that it cannot afford to maintain over the long run.

Graphic credit: Wall Street Journal

Likewise, the quality of infrastructure (the general state of repair) is also in the middle of the pack, as seen at left.

The problem isn’t the level of spending, it’s the mis-allocation of spending. As WSJ columnist Greg IP writes (sounding a long-time theme here at Bacon’s Rebellion), the economic Return on Investment of federally funded projects varies widely; indeed  the feds have no mechanism for ascertaining ROI. “It’s nobody’s job in Washington to figure out which roads or bridges we should invest in,” Ip quotes Aaron Klein with the Bipartisan Policy Center as saying.

pavement_life_cycle2It’s time for Congress to get out of the business of building new transportation infrastructure. Having constructed the Interstate Highway System, Uncle Sam should commit to maintaining it and devolve responsibility for other projects to the states. That means adjusting the gas tax to whatever level it takes to maintain that system at an optimal level, and no higher. By optimum, I mean at a reasonably high state of quality and repair and with sufficient spending to undertake deep repairs at the most economically advantageous point on the life-cycle curve. Presumably, that level would require a much lower federal gas tax than the one in place now. A reduction in the federal gas tax would free the states to increase their own gas taxes by a like amount, more, or less, depending upon their circumstances.

A bedrock principle for maintaining an optimum level of infrastructure investment is to put each component — roads, highways, mass transit, ports, airports, railroads — on a user-pays basis. When users pay for the transportation amenities they want, they are more careful about what they ask for. Any other system results in a political free-for-all in which every interest group seeks to get its favored projects funded at the expense of everyone else, in which case ideology and politics prevail over economic rationality.

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  1. larryg Avatar

    oh , what a load of conflicts here.

    Transit – the underpinning of Smart Growth and those lovely compact settlement pattern FAILS – ROI … as bad or worse than highways.

    Next up – what Interstates and Beltways have done to put sprawl on steroids!

    Next – the concept of Commerce Infrastructure – the things that powers this nation economically – is the robust transportation infrastructure – from highways, to rail, to ports, to airports.

    Anyone just about anywhere in the nation can get something within a week – often within a few days. Other countries -you simple cannot get it there or it cost you so much to transport it – that it’s not cost effective.

    but let’s cut to the chase. Virginia primarily funds new construction from the Federal money.

    Take that away and what happens to new construction in Va? Well, it becomes even more tolls.. right?

  2. Give more money and power to the Imperial Clown Show in Richmond? No thanks. De-evolve more of the money and control to localities? Now that’s a good idea.

    1. LifeOnTheFallLine Avatar

      Nothing says efficiency of scale like cobbling together a road network out of 133 smaller road networks.

      Although I’m sure the buying price for a city councilman is much lower than it is for a state senator or a governor, so there would definitely be some benefits for certain interests.

      1. You’re right. The state has done a fine job with transportation over the years. How is the hundreds of millions of dollars lost on Rt 460 without a shovel of dirt being dug coming along? Has the former governor been assigned a jail cell yet?

        1. LifeOnTheFallLine Avatar

          The state HAS done a fine job with transportation over the years, although far from perfect. Just because the current system is imperfect doesn’t mean there aren’t worse systems waiting in the wings.

          1. TooManyTaxes Avatar

            Point well stated. The federal government should continue involvement in the Interstates and other major transportation facilities with interstate and international implications, but otherwise get out of the funding business. Uncle Sam funds projects that lobbyists want. The federal gas tax should be cut accordingly and the state gas taxes raised by the same amount.

            We have situations where regional and local needs go unfunded to shift the money to some landowner’s investment. For example, many people in southeast D.C. daily watch full buses go by them while we built bullet trains in California. Local spot improvements remain unfunded while lobbyists got the Silver Line funded despite the fact the project did NOT meet federal funding guidelines. Since the line is built I support its use, but the fact remains the Silver Line did not qualify for federal funding under the grandfathered FTA regs. It received funding because of lobbyists.

            As far as state versus local control of roads are concerned, Fairfax County (and other counties) could take over local streets from VDOT, but the BoS does not want local control. Further, Maryland transportation advocates regularly complain about the inability to get things done because control over roads is split between the State, county and municipality. LOTFL’s statement, “Just because the current system is imperfect doesn’t mean there aren’t worse systems waiting in the wings” rings true with me.

  3. larryg Avatar

    I support the local option taxes for NoVa and Hampton. I’d like to see Fredericksburg get that option also.

    Let me point out something though.

    In the current “states’rights” mentality now in vogue with Conservatives – think about what the Interstate highway system would have looked like with 50 different ideas of what it should look like.

    and think about what would have happened to the interstate highway system had it not be for the FHWA – NOT little localities degrade the “limited access” standard.

    want proof? Look at what has happened to US signed highways like US 29 or US 50 or US 17 , Route 1… there were the original interstate concept except they made a huge mistake and let the DOTs and localities decide how to do land use adjacent to them.

    now these roads are pretty much abandoned as roads that one could use to get from one locale to another – they’ve just become – more or less – “local” roads.

    Imagine what the Washington Beltway – I-495 would look like if you let Fairfax, Arlington and Loudon county make decisions about “limited access”.

    I-495 would end up like US 29, 50 and route 1.

    Clown Show , indeed.

    1. “Imagine what the Washington Beltway – I-495 would look like if you let Fairfax, Arlington and Loudon county make decisions about “limited access”.”

      It would look like the Beltway – 4 lanes in Virginia narrowing down to 2 lanes in Maryland with no engineering to handle the runoff. Or like Rt 66 – 2 lanes in Arlington with no plans for expansion but $2B being considered for expansion further west.

      1. larryg Avatar

        DonR – what do you think caused “bypasses” to be built? Why did they have to “bypass” the original road? What was/is the rationale for the Charlottesville Bypass of US 29?

      2. slowlane Avatar

        DonR: A correction — the Beltway (95/ 495) is 8 lanes in its entirety through Maryland. And since its 2008 reconstruction, the Woodrow Wilson Bridge has been 12 lanes.

        1. Drive from the Cabin John (American Legion) bridge toward I-95 in Maryland. The beltway drops to three and then two lanes (in that direction) immediately after the 270 split. Eventually it widens back to four lanes but that choke point is permanently congested.

          The Wilson Bridge expansion took a long time but it solved the choke point problem at the bridge.

          1. TooManyTaxes Avatar

            Maryland is not interested in making any changes to the American Legion Bridge unless the new Governor has different ideas. The State has said so on a number of occasions.

  4. We are on the verge of another revolution in transportation: self driving vehicles. This is going to require major investment and coordination, on a national level. –Which is to say, devolving to local oversight alone is likely to set us back significantly. (Apologies to the spontaneous organization zealots in the crowd.)

    I’d be curious what the ‘other’ infrastructure in the data comprises. Looking specifically at transportation might be more useful. Another external (to this data) factor is population and traffic density, which makes it harder to calculate ROI.

    Worth taking a look at David Aschauer and others who have built upon his work. Infrastructure investment is an important factor in the growth of an economy (and is different from infrastructure stock). (The point about allocation is well made though.)


    1. I totally agree. Between self-driving cars, GPS and Uber and the shared-ridership revolution, are ARE on the verge of a transportation revolution. Frankly, I’m hesitant to spend another dime of public money on new megaprojects without taking these factors into account. So, for instance, Virginia is looking at making a $2 billion, multidecadal commitment to upgrade Interstate 66 west of the Beltway. If we’re not factoring in self-driving cars, GPS, Uber and all the rest, we’re setting ourselves up for short-term obsolescence.

      1. Amen to that. And here I thought I was disagreeing with you…

      2. larryg Avatar

        here’s the problem with self-driving cars. They’re not going to replace human-driven cars overnight. Self-driving cars on going to be on roads with human-driven cars – probably for decades.

        let me give you a scenario. You’re in the right lane coming up to an on-ramp -you’re looking about a 1/4 mile away as you seen a car appear coming down the on-ramp.

        what will you do? what will a self-driving car do? self-driving cars are looking immediately in front and sides and back but are they looking a 1/4 mile or a 1/2 mile downstream? When a temporary sign says merge right – what will the self driving car do?

        so we’re going to have a period of time – likely decades where we’re going to have self-driving cars sharing the road with human-driven cars and humans are going to have superior abilities to look far ahead beyond the cars in front of them – to determine that action is needed ..

        but I do have a prediction – on toll roads – HOT Lanes – self-driving cars – drive free…… and toll-road commuters will FLOCK to them.

  5. LifeOnTheFallLine Avatar

    Antifederalism has been trotted out and had its head kicked in twice: once in 1787 then again in 1865. There are changes that could be made at the federal level to lessen spending on special projects since you hate constituent services, but a US transportation network made up by the states doing whatever they want is going to be the infrastructure equivalent of Sybil.

  6. larryg Avatar

    can anyone explain to me why self-driving cars will negate the need for more roads?

    bonus question – How many of you have been on an urban interstate at rush hour? how many of you have seen some incredibly stupid hair-raising maneuvers?

    Now, how many of you REALLY want to be a moving duck in a shooting gallery?

    just asking….

    1. LifeOnTheFallLine Avatar

      The idea is that because self-driving cars will be able to communicate directly with each other it will eliminate user error and the relatively slow reaction times of the human drivers, which will decrease the headway gap – the amount of space between two cars – and result in an increase in highway capacity. Even when capacity is constrained, since the cars are talking to one another they can – barring any roadway obstruction – move continuously without any stop and go movement.

      Which is to say we’ll see improvements initially on the roadways until total demand increases and then the next thing will appear to kick the revenue can down the road.

      1. larryg Avatar

        so there will be no other human-driven cars – jut 100% self driving?

        1. LifeOnTheFallLine Avatar

          Eventually. Sort of like how you don’t see cars that lack seatbelts on the road anymore.

          In the transition period the idea is to have dedicated lanes so that people who adopt the tetechnology early can use it without the risk of them running into vehicles that aren’t likewise equipped.

          Like with most revolutions in transportation technology this has been coming within the next 20 years for the last half decade. I think the advocates of the technology are using previous generations and their car buying habits to overestimate how quickly the current fleet of cars will be replaced with fully autonomous capabilities. And there’s very little benefit a driverless car fleet can deliver that can’t be provided by a robust transit network.

          1. larryg Avatar

            I think I read somewhere that this will destroy the trucking industry employment when trucks can drive 24/7 stopping only for fuel.

            even then how are these trucks going to get fueled or fixed when a tire blows, or caught in a snowstorm , etc.

            Maybe it’s only me – but this sort reminds me of the Jetsons flying cars… it’s a LONG LONG way off….

          2. larryg Avatar

            ahem – WHO is going to pay for dedicated lanes and there will be dedicated lanes everywhere they go?

            wrong. wrong. wrong. try again , please.

            how is THAT supposed to REVOLUTIONIZE transportation if you have to build a whole new – separate grid from money we don’t have from regular drivers to pay for roads they can’t use?

            I never ever thought that – so perhaps I’m the one out of touch, eh?

            but you’re onto the right issue and that is how will these cars “play” with their human-operated cousins on roads they must share – where there is no room for other lanes – like city streets.

            I see these vehicles in a shared road scenario (which I think is much more likely than new infrastructure) operating first, without human passengers – just delivering goods and they will be festooned with cameras and license plate readers to make human-driven vehicle play nice and legal with them.

            but I also see them being “dumb” in many ways – like not knowing how to deal with a tailgater or someone who passes on the right and pulls back in front or the yahoos who pass on the left, cut in front of you to make the exit.

            or perhaps you were thinking of all these situations also and came to the conclusion that there was no way the driverless vehicles could share the road with human-driven vehicles…

            so I sort of put this is the same ” a little out there” category as I do VMT tolling.. Conceptually it’s doeable… practically – it’s got a long way to go… The first ones are liable to be transport trucks travelling from one terminal near and interstate to another on an interstate – on one tank of fuel and probably at 1 am to 5 am when the roads are mostly empty.

  7. larryg Avatar

    devolve to the states – and then the states devolve to the counties… and any new road built is a toll road.

    re: VMT

    In the current political world where most on the right are vehemently opposed to the govt doing anything..

    as well as trying to get 50 states to agree to a standard (like common core) – the idea that VMT is a viable approach to paying for roads is – ..let me be nice here – a long shot – a snowball in hades… how about the Obamacare of transportation!

    highly irregular that “Clown Show” DonR has latched on to this concept when he has nothing but derision for the states current handling of transportation.

    I have to give the Clown Show in Richmond – credit because :

    1. -they moved us from a per gallon tax to an automatic inflation indexed method.. no more will the gas tax lose value.

    2. – they diversified the funding streams so that right now 1/3 comes from fuel taxes, 1/3 comes from general sales taxes and 1/3 comes from new car taxes (and a fourth from a tax on car insurance).

    but if I were a transit agency local or regional – I would be very a afraid right now – and we may see an outcome where NoVA /md/dc will have to decide how they intend to fund METRO … and other cities similar dilemmas.

    Would NoVa/Md/Dc just bail out of METRO and abandon it if the Feds pull the plug on funding?

    it’ll be interesting.

  8. larryg Avatar

    these issues get a little confused in terms of how govt works in my view.

    For instance, we talk about VMT tolling and driverless cars – in the same breath we talk about devolving transportation (and for that matter – education) to the local level.

    and yet – the current popular political rants tend to track towards opposition to “top-down” govt standards and regulations.

    Can anyone REALLY imagine one county or city instituting a VMT toll or it’s own autonomous car rules so as one travels from one to another -each one has it’s own rules and requirements?

    sometimes I think – these days- the people up on their anti-govt horse are headless….

    we can’t seem to make up our mind – what we expect govt to do or not do – or let’s put it this way – if you ask 10 different folks, you’ll get 10 different answers – and not only that – don’t try to change minds because working to a collaborative agreement – means violating one’s principles.

    not joking here.. we have , more and more, legislative gridlock on what we CAN’T agree to compromise on – from transportation to health care to education.

    Sometimes – we have the same folks – who want to IMPOSE VMT on all drivers – the same guys are railing about …you guessed it .. nasty govmint regulation… 😉 – and these guys would be the FIRST to complain if we devolved transportation to the localities and each one had it’s own VMT regs.

    I call this the “damned if you do and damned if you don’t” – political philosophy – e.g. “keep your stinking govt paws off my Medicare”!

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