Posted on 06/18/2018 8:13:18 AM PDT by Tolerance Sucks Rocks
Here are two recent events you might have missed:
Meanwhile, roads in Los Angeles are in such bad shape that it costs the average driver $892 a year in additional vehicle wear and tear, some 25 percent of all U.S. highway bridges are either too narrow or structurally deficient, and chronic traffic congestion costs Americans $160 billion per year in wasted time and fuel.
Fuel taxes were sold to the public last century as “highway-user fees.” And originally, they were used solely to build and maintain highways. Yet that is far from the case today. Nearly one-fourth of all federal fuel taxes are used for non-highway purposes, and it’s worse than that in some states. In California, over the next 30 years, $18 billion of state gas-tax money is pledged for paying off bonds issued to build Jerry Brown’s high-speed-rail boondoggle.
It’s not hard to see that there is something fundamentally wrong with the way we fund and manage the highways we all depend on. Highways are one of our basic public utilities — along with water, electricity, natural gas, telephones, etc. Yet we don’t have huge political battles over how to pay for those utilities. Every month you get a bill from your electric company, water company, phone company, and satellite or cable company. You pay for the specific services you used, and the money goes directly to the company that provided those services. None of that is true for highways.
Many years ago, Milton Friedman put his finger on what was wrong. Highways, he wrote, are “a socialized industry, removed from the test of the market.” Compared with other utilities, that means that for highways:
In my new book, Rethinking America’s Highways, I make the case that because highways really are utilities, they need to be financed and operated as utilities, rather than as politicized, state-owned enterprises. That means each highway needs an owner. Highway customers should pay their highway bills directly to that owner, based on how much they use the roads and how damaging their vehicle is to the pavement. The owner should assess the need for new links or more lanes, and finance the construction by issuing long-term revenue bonds. Of course, as with any other major construction projects, they should have to comply with existing planning and environmental regulations.
This might sound like a libertarian fantasy, but it’s a model with a long history that stretches into the present day. Private turnpikes were the main inter-city roadways in 18th and 19th century Britain — and 19th century America. After WWII devastated Europe, three countries — France, Italy, and Spain — developed their major highway networks as investor-owned toll roads. Highways there remain very similar to our electric-utility franchises today. Companies bid for a long-term franchise to build and operate a particular highway, subject to the terms and conditions of a long-term contract called a “concession.” In the 1980s and ’90s, this model was embraced by the three largest metro areas in Australia as they sought to develop modern expressway systems. And by the dawn of our current century, private investment in long-term highway concessions was becoming common in most of the countries of Latin America, especially Brazil and Chile.
If done right, a shift from politicized highways to customer-friendly highway utilities could address the American system’s major shortcomings.
It has taken a couple of decades for this model to catch on in the United States, with the first two projects — the 91 Express Lanes in California and the Dulles Greenway in Virginia — opening in 1995. Since 2000, investor-funded toll projects worth $36 billion have been financed, primarily in Colorado, Florida, Texas, and Virginia. Three of these projects — in Chicago, Indiana, and Puerto Rico — are long-term leases of existing toll roads. Those highways are being upgraded with all-electronic toll systems, resurfacing, some added lanes, and better service plazas, among other things.
Of course, we also have an array of state and local toll-road agencies, some of them (like the Florida Turnpike) run as customer-friendly businesses and others (like the New Jersey Turnpike and the Pennsylvania Turnpike) run as money machines that divert toll revenue to politicians’ favorite projects.
If done right, a shift from politicized highways to customer-friendly highway utilities could address the American system’s major shortcomings. Highway owner/operators have strong incentives to properly maintain their facilities, so that customers willingly pay to use them. (In fact, those who purchase the revenue bonds insist on proper maintenance for this very reason.) With per mile toll charging, they have reliable, bondable revenue streams that make it possible to finance large-scale reconstruction, widening, etc. when it’s needed, not someday in the future when the money is somehow cobbled together.
Chronic expressway congestion has a twofold solution: Market pricing brings demand into balance with supply, which in this case means capacity, but it also generates the funds to expand capacity to what makes sense for current and projected traffic levels. Like a cell-phone company, a highway company wants to have the capacity it needs to provide good service — and unlike the state, it will have the means to pay for that additional capacity.
You may see the merits of this case yet despair over how such a large change could ever come about. But continuing the status quo is untenable.
The federal highway-funding system, which now depends on tens of billions in “general revenue” each year to supplement dwindling fuel-tax revenue, is not sustainable. As the national debt nears 100 percent of GDP and entitlements, defense spending, and interest payments consume nearly all federal revenue, there will be little or no general revenue left to subsidize highways and transit. State governments are poorly positioned to take up the slack, since the majority of them have massive unfunded liabilities in their public-employee-pension systems that will restrict their spending for decades to come. And the 20th century gas-tax system is running out of steam, as conventional engines go twice as far on a gallon of gas and electric and other propulsion sources get set to become mainstream in coming decades.
So we will soon need to shift from taxing per gallon to charging per mile. The technology to do that on major highways — all-electronic toll collection — already exists. Across the country, toll-road operators are tearing down toll booths and plazas in favor of cashless tolling, which uses windshield-mounted transponders to charge a driver’s credit or debit card electronically. Cashless tolling is well-accepted, and can be adapted to those who don’t have debit or credit cards; in Puerto Rico, for example the system allows people to replenish their toll accounts with cash at kiosks in convenience stores.
Those three factors — federal insolvency, state pension liabilities, and the growing use of per mile charging via all-electronic tolling — will make the transition to highway utilities possible. And three other things will make the transition more likely.
One of these is growing awareness of the global (and U.S.) track record of long-term toll concessions, financed by investors. There have been missteps here and there as this model has been adopted by more and more countries, but by and large it has been much more successful than the socialized model.
A second important factor is the enormous growth of infrastructure-investment funds since 2000. Over the last five years, the largest 50 such funds have raised $316 billion in equity to invest in privately financed infrastructure. Since equity is typically about 25 percent of the total (the rest being revenue bonds), that money could finance nearly $1.3 trillion worth of infrastructure. The real question is whether there will be enough American projects for these funds to invest in — currently, the bulk of their investments are in Europe, Asia, and Latin America. The Trump infrastructure proposal included a number of provisions to make the U.S. a more attractive market for such investments, but that is now in the hands of Congress.
A third factor is the growing interest of pension funds in investing in long-lived infrastructure. This began about 15 years ago with Australian and Canadian pension funds, before their American counterparts got on board about five years ago, mostly investing in privatized airports and toll roads in Europe before beginning to expand domestically. In 2015, when the Indiana Toll Road concession was put up for bid, an Australian fund won the bidding on behalf of clients that included 70 large American pension funds. Since most public-employee-pension funds in the United States invest on behalf of retired, unionized public employees, the desire of these funds for more American-owned projects to invest in could attract moderate Democrats to policies that foster private infrastructure investment.
I’m optimistic that the transition suggested here will happen, and the most likely place for it to begin is with rebuilding and modernizing the aging Interstate highway system. The minimum cost of such an undertaking has been estimated at $1 trillion — and there is no existing federal or state funding source or program to carry it out, making it an ideal starting point for the transition to highway utilities. That transition won’t be altogether painless, but it is long overdue and sorely needed.
Correct, but misleading.
The cause of this serious problem affecting all citizens (except criminal elected, appointed criminals and "public servant" parasites, legalized theft, on a monumental scale, ongoing for a few generations, now.
The best way to see the magnitude and scope of the probem is by way of illustration. What better example than California? The sickest of the sick states, financialy as it affects working citizen taxpayers ("Public employees excluded.)
In California, the following question are never asked, much less clearly answered, sans bullshi* : 1. Why is Prop 13 attacked yearly by the legislature during the budget discussion and debates?
1a. Why are the elected criminals not permanently forced to forfeit they pay permanently for failure to do their job? No entity in the private sector has ever been paid for "pretending" to do their job.
2. Why is there not a mandatory by law, yearly report by the legislature, available on line for the citizens with a detailed (undertandable) accounting on how the vehicle taxes/fees were spent? 3. Why is there not a mandatory by law, yearly report by the legislature, available on line for the citizens with a detailed (understandable) accounting on how the vehicle fuel taxes were spent?
Is it becoming obvious why our highways, roads and streets are in miserable condition?
4. Why is there not a mandatory by law, yearly report by the legislature, available on line for the citizens with a detailed (understandable) accounting on how the revenue for the California lottery is spent?
5. Why is there not a mandatory by law, yearly report by the legislature, available on line for the citizens with a detailed (understandable) accounting on how the tobacco taxes revenue was spent?
6. And as a general statement in future bond issues or taxes that turns out to be permanent the first provision shall be No diversion of these funds to the the State general or emergency funds shall be allowed. No exceptions.
IT'S TIME TO STOP THE LICENSE TO STEAL BY ELECTED AND APPOINTED CRIMINALS!!!
For people transport, self-piloting aircraft will change that. Flight is the most fuel efficient mode of transportation. It's time to put the high in highways. They cost almost nothing to build and maintain and have tremendous capacity. Most schools, workplaces, and stores can go online, relieving half the demand for traditional highways. New technology changes things.
On the national level, why did we never get a detailed accounting of how Obungo's (2009) stimulus $trillion was spent?
IN ANY OTHER CONTEXT THAT WOULD BE STRAIGHT UP THEFT OR FRAUD! CERTAINLY A "HIGH CRIME OR MISDEMEANOR" AGAINST ALL AMERICAN TAX-PAYING CITIZENS.
Parts of I-40 near Memphis have really declined. Three months ago in nearby Jackson, TN, they had digital signs warning I-40 drivers of the huge pot holes! Crews were working on them, so maybe by now those have been fixed.
I noticed a real decline in the Memphis city streets also since just a few years ago when I visited. Sad to see. Makes you realize America’s infrastructure is truly in need of repair. People can’t take higher taxes though or tolls; paychecks are barely enough to keep up with the actual cost of living. Use some of those taxpayer funds going overseas to instead help America first.
The minimum cost of such an undertaking has been estimated at $1 trillion — and there is no existing federal or state funding source or program to carry it out, making it an ideal starting point for another federal department with a
trillion dollar budget.
Once they get their nose in the trough it’s impossible
to keep them away from it.
I re-read this article and have a new takeaway:
The author is a shill for the government push to install chips/boxes in our vehicles for tracking mileage.
If you support that, rather than under your skin I have a chip to insert up your backside (and will do so with pleasure).
That's remarkable!
In your universe toads use AC??
Eisenhower, after all, had many years earlier been on a months-long military convoy from Washington to San Francisco that made a lasting impression with him of the nation's nearly-impassible roadways. In typical cold-war fashion, he pushed for a network of all-weather highways connecting major military installations in case of a conflict with the Soviets. (And this purpose, of course, could be justified as a constitutional use of federal funds, unlikely to be challenged.)
The hang-up was Ike's intention to bypass the big cities to expedite movement of troops and materiel. Politics reared its ugly head and some routes were changed to mollify mayors and governors. In other cases--I-70 through Utah for example--military needs overrode objections by state politicians and the highway took twists and turns that looked on the map like the road to nowhere.
Times have changed. Enviros now are in control in many states, unfortunately. The Sierra Club, Fiends of the Earth and EDF have used their clout and delayed highways to the point that they don't get built, or get torn up as happened in San Francisco after the Loma Prieta earthquake.in '89.
I can recall when California's then-governor, Gray Davis, opened the last segment of the Foothill Freeway and declared it would be the last freeway built in California. He could be right.
It's time to start over, and do it right. Poole's arguments are valid, especially with respect to the obsolete fuel tax.
The only weak point I can see is treating highways as "public utilities." Good grief! Don't we have enough consumer abuse from politically-appointed public utilities commissions with regard to "tiered" electric and gas rates, "green" meters, incentives to replace our water-wasting top-loading washing machines with clothes-ruining front-loading machines? Does this idiocy have to extend to methods of setting highway tolls, perhaps as a function of family income? Or the number of children you have? Or your vehicle's average MPG?
Why not allow the market to function for a change? Or is that too difficult to understand?
Stop robbing the gas tax funds, and use them to maintain the roads, rather than laundering them back to the politicians through various scams, and everything will be fine.
“If planning restrictions are not bypassed (i.e. climate change focus to force people out of cars), there is nothing “customer friendly” about being in gridlock due to political restrictions on properly-planned roadways.”
To-wit:
Planned Gridlock or Traffic Relief? Governor Hogan’s Traffic Relief Plan Offers Hope
http://www.freerepublic.com/focus/f-news/3664144/posts
“Any Montgomery County voter looking for traffic relief will not get much hope from the transportation manifestos of Montgomery County’s “progressive” Democrats this primary season. Collectively, they all try to outdo each other in their opposition to anything involving spending for roads.”
If the solution for progressivism is more progressivism (tracking our cars) due to progressivism’s failure, then this whole article/discussion is non sequitur.
While railroads are subsidized to some extent, they are typically private entities that give Amtrak permission to use their tracks, so the track problems are with these companies, not Amtrak, as lousy as it is.
Exactly. I get ~32 MPG in my car on the highways. It's closer to 25 for city driving. Given the taxes here in TX, at most I'm looking at about 2¢/mi. Yet, when I get on tollways, it's anywhere from 50¢/mi to almost 75¢/mi. It's crazy.
Tollways are nothing but scams, and we rightly reject them whenever we can. If they actually spent our gas taxes on roads, I'd have little problem with the cost/benefit of the equation, because the roads would be reasonably maintained. However, they are always diverting our highway taxes to mass transit and other boondoggles. (Amtrack - I'm looking at you too). There is also the fact that from what I understand your average automobile causes very little 'wear' to roads. Not so, the big rigs that share the road with us. However, they also get a lot worse MPG than my car, so they are paying more by virtue of that. Additionally, I know that tractor-trailers pay craploads of additional fees. I'm also not really interested in jacking up what they have to pay in any case, as any additional costs would just be passed along to consumers via higher prices. I figre that overall, the system we have is at least moderately fair on the revenue side.
It's the spending side that has to be looked at more closely. Spend the money on the freaking roads, and you can get your graft from the construction companies. (road construction is a huge bucket of fraud that should be more carefully monitored.)
I think Ike was tasked to take military equipment across the country when he was Lt or Major. The conditions of the roads or lack thereof led him to propose an national Hwy system as you said for defense.
I’ll note here that passenger rail largely died out with the major implementation of the Interstates in the 60’s.
I’m totally OK with that. Just sayin’.
democrats squandering monies specifically collected for the purpose (we should put all of THEM in a ‘lock box’ ...)
“I’m totally OK with that. Just sayin’.”
Trains have their place, but I wouldn’t trade what we have for them.
oh thanks for the info
Expecting private entrepreneurs to cater to an unmeasurable and captive public is folly in the long run.
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