The United States needs to invest between $132 billion and $155.5 billion a year to improve transportation conditions, contends BusinessWeek magazine, but motorists pay only $54 billion a year for road repairs and maintenance. Another $11 billion a year will be needed over the next 20 years to replace aging water treatment facilities and comply with safe-drinking-water regulations; federal funding is less than 10 percent of the total national requirement. Tens of billions of dollars more are needed to repair dams, wastewater treatment plants and waterways.
Who’s going to pay for it all? It looks like the private sector will play a major role. Private investment companies are raising hundreds of billions of dollars to take over aging infrastructure. The good news is, government won’ t have to raise taxes. The bad news is, the private sector will have to raise tolls and fees.
That raises a great debate: What latitude should private investors be given in raising tolls and fees? What return on investment is reasonable? Could government do the job better for less money? BusinessWeek explores the issues here.
My criteria for Virginia are very simple:
(1) Pay now or pay later — pay much more later. The more government delays maintenance of infrastructure, the more it will cost to fix it down the road. Whether state government, local government or a private operator is in charge, hewing to higher maintenance standards generally pays off.
(2) User/beneficiary pays. Politicians will resort to all sorts of trickery to disguise who’s paying the taxes, levies, penalties and fees that fund infrastructure maintenance and improvemetns. Infrastructure should be paid for by those who use the infrastructure, or those, such as landowners whose property gains value, who benefit from it. Furthermore, the payments should be totally transparent so people can seek alternatives. (Virginia’s recent transportation legislation is a case study in indirect subsidy and opacity. We need to go back and fix it.)
(Hat tip to Jonathan Mallard for pointing me to the article.)
