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.
No one has mentioned that the primary purpose of the interstate highway system when built was national defense.
Provide more oversight of the competitive bid process for highway repair.
Ensure those highways NEED repair and that it isn’t a vote buying scheme.
The history of national highways goes way back before the Federal Highway Aid Act of 1956 that established the U.S. interstate highway system. The first national road was legislated into existence all the way back in the early years of the 19th century.
They were pikers back then...
More like 60-75 million illegals.
The whole premise behind diversion of fuel taxes is to get people out of automobiles and onto other modes of travel, because of the overall cost of highways. However, in study after study, the cost in people miles traveled, of alternative transportation systems is much higher than in the passenger automobile. While trains do carry a lot of passengers, the cost per passenger mile far exceeds that of the personal automobile. Elitists dont like buses, but putting people on buses is much less expensive per passenger mile than putting them on trains. And those bicycle lanes. Their cost per passenger mile is exorbitant, and their riders don’t contribute a cent in fuel taxes! The automobile driver pays for all of these through fuel taxes! They’re the geese who lay the golden eggs, through state and federal, and sometimes local fuel taxes. And if the fuel taxes weren’t being robbed, the roads could be better maintained and upgraded.
Just rode Amtrak north to Vermont from NY city- the coaches are nice, but the tracks and signal stops are so bad that the train almost derailed twice and almost hit a truck coz the stop bar electronics was stuck.
-With all the Billions of Dollars $$$ You would think they would at least install NEW TRACKS!
Where is all the tax dollars going- they must all be corrupt Amtrak crooks if the tracks are not even safe.PS we were going 30 mph all the way and were always late.
I still remember the story of the company that got about $1800 per sign to advertise the construction project jobs that were displayed along the highways.
Of the $1.2 trillion, only $80 billion went to actual Public Works projects. The city where I worked at as the PW Director got $150,000 to repave a busy intersection. I was reluctant to take that because of all of the added regulations that came with the ARRA.
Deport the illegals and there will be less traffic and less wear and tear on our roads and other infrastructures.
Achilles heel:
“they should have to comply with existing planning and environmental regulations.”
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.
However, the political system was just as corrupt a half century ago as now. Lyndon Johnson, Richard Daley, Wilbur Mills, etc., were just as corrupt as the current batch in power, if not as leftist. Yet the Interstate system was built in spite of the normal graft.
“Was that really the primary purpose of the interstate highway system, or did they just say that in order to justify spending Federal money on it?”
No, it was really the purpose. Eisenhower was faced with a choice of developing rail transport or creating the interstate system. Based on his observations during WWII, he chose the autobahn.
It’s much easier and quicker to bring a stretch of bombed-out road back into service than it is a stretch of bombed-out rail.
The irony is that solving transportation problems is actually easy. I do it for a living, and I always tell people that I could have done 90% of my job as a professional with a 10th-grade education.
The biggest challenge isn't solving the problem: its paying for the solution and dealing with political opposition -- much of it completely understandable because the solution is at odds with everything people want in a free society.
I'll fix any transportation problem you're dealing with right now. The only conditions are:
1. You have to give me the authority to tell you where you can live.
2. You have to give me the authority to tell you where you can work.
3. You have to give me the authority to tell you when you travel to and from work.
4. You have to give me the authority to tell you how to travel to and from work.
5. You have to give me the same authority over all of your travel -- including school, vacation, errands, etc.
Anyone who would accept such things belongs in a prison camp.
The first modern U.S. highway system came into existence around World War I. These are the roads you now see designated as the old Federal routes US-1, US-66, US-22, etc.
Interestingly, part of the political pressure for a national highway system in the early years of the 20th century was a general feeling in this country that the railroad industry had simply become too powerful. Most of the companies in the original Dow Jones Industrial Index were railroads, and the decades after the establishment of the railroad industry in the U.S. saw frequent widespread economic chaos due to railroad strikes and other service disruptions.
LOL, good points - and yes, definitely a pencil neck.
“I don’t think you’re right about that. The first modern U.S. highway system came into existence around World War I. These are the roads you now see designated as the old Federal routes US-1, US-66, US-22, etc.”
I don’t know if it’s accurate to speak of a two-lane road as “modern.”
The interstates were designed to allow the military to load up and move long distances at high speeds without interruption or incident. Load tanks and everything else on trucks that can do 90 mph without chewing up the roads.
Accommodation of aircraft is not as important as it once was, but it was still a design spec.
“He has a legitimate point. How is it that we’re OK with “tolling” when it comes to electricity and gas, but not when it comes to highways? “
Because, at least until very recently (if even), the tolling for utilities was not used to try to control behavior. For example, I can turn on my air conditioner at 4 in the morning, or 4 in the afternoon...and beyond that, my electricity rates are controlled, as opposed to these ‘contracts’ which often have NO RECOURSE when the private operator decides to ream the users (429 ETR in Ontario is a great example...something like 50 cents per mile now, way, way more than it costs to operate).
We went through utopian idea here in Texas and TOTALLY REJECTED IT...you’d think Pencil Neck could learn something from our reaction.
You are so right! It is frustrating to see a bad stretch of road just sitting there for years while a mile away a pretty sound stretch is being ground down and repaved. Not to mention when they build a nice new bike lane alongside a crumbling roadway that's being ignored.
...make that 407 ETR (in Ontario).
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