Who Should Build the Roads? Whomever the Users Pay

By: Nick Zaiac - @NickZaiac - Jul 22, 2014, 10:41 am

EspañolThe Federal Highway Trust Fund is running out of money. Congress has failed to enact a long term solution, and is instead opting for short-term fixes that ignore the real problem.

One of the common tropes among free-market types is the question of “Who will build the roads?” The question is so ubiquitous that it is generally used to mock those who do not agree with the ideas of limited government in general. Yet the answer to this question is one of the hardest for such people to answer. Unlike most areas of society, where government intervention has caused problems, the answer to the “infrastructure question” is far from easy.

There is no clear answer to the issue of infrastructure and transportation in general. Road infrastructure is generally paid for out of some combination of federal, state, and local general fund spending and, most important, federal and state taxes on gasoline. The later are both some of the best, and most popularly hated, taxes in the US government.

There is a reason federal gasoline taxes have not been raised in more than 20 years; popular backlash against them is both passionate and immediate. The problem is that gasoline taxes introduce something rarely seen in other aspects of government: user fees based on how much infrastructure one uses.

One of the most important goals of infrastructure and transportation policy should be to make the costs of infrastructure clear to those who use it, and to charge based on usage. Because gasoline taxes amount to a per-mile tax on travel, individuals pay (relatively) directly for the infrastructure they use.

However, the current system is still opaque. Not all gasoline taxes are used to fund roads, but are used for things like mass transit. Also, because the costs are not transparent and money is pulled from general tax revenues, drivers are systematically subsidized for the travel they undertake.

This results in ever more infrastructure spending, along with the related upkeep costs. Put simply, the current incentive system causes overspending on new road projects, while insulating the users of the roads from the costs.

It doesn’t have to be this way. While raising gasoline taxes would be one solution, there are other options as well. First, serious cost-benefit analysis could be applied to new road projects, while general funds for the current division of transportation could be removed. This keeps the decisions on what infrastructure to build where in the hands of those best suited to the task: engineers, not politicians.

Even better, the federal role could be devolved. A 2011 study published by the RAND corporation proposes that the federal government not support projects that only benefit small geographic regions, even if they pass cost-benefit analysis. The remaining projects should be left to the states to choose whether to fund them or not. While not direct user fees, devolution brings the costs closer to the users of infrastructure, as most driving is done close to one’s home, rather than across state lines.

495 Express Lanes
(495 Express Lanes)

Finally, one solution to lower the federal burden and move the costs to road users is simple innovation in infrastructure itself. There have been many recent advances in infrastructure and surface transportation technology in recent years, and the results are slowly coming to fruition. The advent of electronic tolling has made it easy to convert highway lanes to toll roads, placing the burden of paying for such infrastructure in the hands of road users. New High Occupancy Toll (HOT) lanes, such as those on the Virginia portion of the Capitol Beltway, also serve to relieve congestion for those willing to pay a premium.

All of these show that the solution to the “infrastructure problem” will come in a number of forms. The debate over this issue will return when the just-passed funding runs out some time next May. One hopes a long-term solution can be agreed on to move the funding for new infrastructure toward road users, and if not, to local governments that understand the costs of the projects they promise voters.

The answer to the question of “Who will build the roads?” isn’t a company, the federal, state, or local governments, or some other group. It might just be all of the above, paid for by those who travel them.

Nick Zaiac Nick Zaiac

Nick Zaiac is a public-policy researcher in Washington, DC. He also serves as a policy analyst at the Maryland Public Policy Institute. His column, The DC Leviathan focuses on the often-ignored bureaucratic agencies, from the Department of the Interior to the General Services Administration. He has been published in the Baltimore Sun, City AM, CapX, and other outlets. Follow @NickZaiac.