Saturday, 18 February 2012

Alternative approach proposed for US highways funding and charging

With the US President announcing a $476 billion bill to spend money on transport infrastructure (including, bizarre as it is to those of us who happily operate in a world of commercialised airports, air traffic control systems and pipelines, taxpayer funding for those), the question has arisen as to whether this is the best way to meet the needs of US road users in the near future.  This blog doesn't exist to consider wider transport funding and resource allocation issues, but the approach proposed by the President (and also essentially represented by the separate bills in both houses of Congress) is to increase the separation of the relationship between users of the highway network, what they pay and what is spent on them.

Edward Glaeser, Professor of economics at Harvard, has written at Bloomberg of a different approach across a wide range of issues.  The suggestions of his include:

- Embracing user pays:  "User fees support the maintenance of aging infrastructure. Like all prices, they allocate scarce resources to the people who value them most. Perhaps most importantly, as (Adam) Smith emphasized, user-fee financing discourages white elephants, because projects that can pay for themselves are practically guaranteed to deliver plenty of value."  He supports funding highways through electronic tolls, or failing that, make sure fuel taxes are sufficient to fund highways.  One argument being "we shouldn't be bribing anyone to drive" by diverting general tax money into highways.  He has a point, the real argument should be how one pays.

- Implement congestion pricing: "If you have a scarce commodity, whether groceries or roads, and you insist on charging prices below market rates, the result will be long lines and stock outs, like those that bedeviled the Soviet Union decades ago. Yet U.S. roads are still running a Soviet-style transport policy, where we charge too little for valuable city streets. Traffic congestion is the urban equivalent of a stock out."  Quite simply it is about ensuring a scarce resource is used more efficiently.  What you do with the money is another point, and another debate.

He also argues that the federal government role should be reduced in favour of the states, that maintenance funding should not only be a priority but THE mandatory priority for expenditure on roads, promoting public-private partnerships (with tolls) and pushing for buses ahead of rail (he also wants the Port Authority of New York and New Jersey to be split, largely to promote airport competition).

It is abundantly clear that the politics around the Highways Trust Fund has failed and that the "business as usual" approach of raking in money from whatever taxes exist to dish out funds for highways based on politically/bureaucratically defined criteria, has not delivered.

Road pricing can help put the US highway system on a sustainable financial footing to deal with deferred maintenance and with congestion pricing, it can mean more efficient usage that saves time, reduces emissions, reduces fuel consumption and sends signals as to where future investment should be placed (and helps defer expansion of capacity).   The timeline needed to do this is long, and it cannot be led by a grand Federal Government project.  It requires innovation, devolution and a diversity of approaches that can be harmonised and be interoperable.  

However, beyond anything else it needs motorists to be convinced that it will deliver them positive results.   It isn't about technology, it is about delivering value. 

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