Our nation’s major roads are effectively a utility like any other. It’s time we treated them as such.

National Review
Robert Poole

Here are two recent events you might have missed:

In March, House speaker Paul Ryan was widely quoted as saying, “The last thing we want to do is pass historic tax relief and then undo that, so we are not going to raise gas taxes.”
The next month, in California, Republicans submitted 54 percent more than the required signatures to put on the November ballot a measure that would repeal the 2017 state law increasing gasoline and diesel taxes.

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:

There is no pricing;

Major investments are not financed via long-term revenue bonds;

Decisions on what gets built are made by politicians;

Proper maintenance gets what little funding is left over after legislators spend most of the budget on projects in their districts; and,

You are not a customer — just a “user.”

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.

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.

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For anybody who has used the tollways in N. TX, you know how much nicer the roads would be in this scenario.

TL;DR

But, if they could make the interstates and highways straighter and smoother and increase the speed of travel down these roads to autobahn speeds I'd gladly pay a little more in taxes.

There would probably need to be yearly vehicle inspections instituted to guarantee there aren't any jalopies trying to pull 100 mph or more down the highway, but I'm fine with that.

That works out fine for the major highways, but what about everything else? Not all crumbling roads/bridges are on major highways. I'd venture a wild ass guess, but maybe only 25% of bridges are on those major thoroughfares. Does the author want just about every road a toll road?

quote:

Originally posted by Skull Leader:
There would probably need to be yearly vehicle inspections instituted to guarantee there aren't any jalopies trying to pull 100 mph or more down the highway, but I'm fine with that.

New Jersey has yearly state inspections for motor vehicles. NO THANKS.

We have several toll roads in CFL, they are all well maintained, the surfaces rarely have any issues and if they do they are addressed quickly.

Traffic on these roads outside of a few locations during super high traffic times moves quickly. The problem for them has been the same as the government run roads, the growth in the area has exploded. They have been building multiple new toll roads and no new government roads in the area to handle the needs.

The worst road in the area is an interstate, I-4 from Tampa to Daytona is very heavily traveled, it was poorly designed to start and is constantly under construction.

Again a lot of it is due to high influx of people into the area. If I have to go anywhere it's never on I-4 unless that's the last choice

More toll roads would be a good thing, if you don't like the concept and shun paying a couple of bucks for better roads, well, it's a free country, get back on the government roads and into the traffic.

Allow corporations to sponsor sections of highway. They can paint their logos on the road and be responsible for maintaining their sections.

quote:

Originally posted by Skull Leader:
TL;DR

Dumb question: What is the meaning of “TL;DR”?

Thanks!

It means "To long; Didn't read"

How about you actually use the state and federal fuel taxes for road maintenance instead of allowing it to go into politicians pockets to spend on what ever they want?

If you could do that, and then convince me that there isn't enough money generated to properly maintain the roads, then talk to me about more tolls or higher gas taxes.

Right now, fuel taxes in some states go into the general fund, not into the road fund. In other states, they are used to supplement public transit. Screw that. I pay, I should get the benefit.

Road building, on the other hand, should be either general obligation bonds, or general tax revenue, because the decision to build roads is fundamentally an economic one that benefits the entire area.

So, general taxation or general bonds for building and gas taxes for use. Either do that, with no exceptions before you come looking for more money from my pocket or dump the gas tax entirely if I have to pay tolls or user fees, but I shouldn't have to pay twice.

Agree with Artie. Use the money collected to maintain the roads and nothing else.

Agree. No more taxes. I'm not convinced we don't have sufficient funding now to do everything we need to do. Get rid of wasteful government spending across the board first. Then let's see what additional revenue generation is required.

quote:

Originally posted by Skull Leader:
It means "To long; Didn't read"

“A man who doesn’t read has no advantage over a man who cannot.” Mark Twain

quote:

Originally posted by konata88:
Agree. No more taxes. I'm not convinced we don't have sufficient funding now to do everything we need to do. Get rid of wasteful government spending across the board first. Then let's see what additional revenue generation is required.

“Wasteful government spending” depends almost entirely on who is asked. The WGS you rail against means life, liberty and pursuit of happiness to someone else, and vice versa.

Every dime of government spending is the mothers milk of life to someone.

A tidbit on Jerry Browns CA high speed rail money. Seems the original budget was ~$25M to relocate utilities along a ~35 mile stretch between Fresno and Modesto in the CA Central Valley. Now the are talking something like a $400M budget for that work. Did they just miss a line item in the budget spreadsheet, maybe a bad formula? Or is it like any gov't project in CA, mostly a piggy bank for politicians, bureaucrats, and their cronies?

There would be plenty of money to go around to fix things if politicians didn't prop their families up financially with tax payer dollars. Think about how many of these politicians are related to the developers and owners of the construction companies that are "paid" to do these jobs....

I don't have any solution myself, but it would be damn nice if those in power weren't funneling the money they just got from ME to someone in their family.

quote:

Originally posted by ArtieS:
How about you actually use the state and federal fuel taxes for road maintenance instead of allowing it to go into politicians pockets to spend on what ever they want?

If you could do that, and then convince me that there isn't enough money generated to properly maintain the roads, then talk to me about more tolls or higher gas taxes.

Right now, fuel taxes in some states go into the general fund, not into the road fund. In other states, they are used to supplement public transit. Screw that. I pay, I should get the benefit.

Road building, on the other hand, should be either general obligation bonds, or general tax revenue, because the decision to build roads is fundamentally an economic one that benefits the entire area.

So, general taxation or general bonds for building and gas taxes for use. Either do that, with no exceptions before you come looking for more money from my pocket or dump the gas tax entirely if I have to pay tolls or user fees, but I shouldn't have to pay twice.

I have a solution that would fix this - 100% of all fuel taxes shall go to road maintenance or all congressman and senators will be ineligible for reelection to current seat, ineligible for any elected position, ineligible for any government job, and subject to prosecution for fraud.

Same thing for lotteries going 100% to schools

Fuel taxes and lotteries only serve to illustrate how fungible money is. You cannot force it to go to that for which it is collected, no matter how many laws you pass.

Looking at our current state of affairs I have only one question.

How did America afford to build all the interstates,sewer systems,power lines, and other utilities?

Now we can not maintain what has been built.I am glad our predecessors figured it out. I only wish they had left the instructions with us.

quote:

Originally posted by Skull Leader:
TL;DR

But, if they could make the interstates and highways straighter and smoother and increase the speed of travel down these roads to autobahn speeds I'd gladly pay a little more in taxes.

There would probably need to be yearly vehicle inspections instituted to guarantee there aren't any jalopies trying to pull 100 mph or more down the highway, but I'm fine with that.

Aaah. You mean “reasonable and prudent”. I’ve gotten a few $5 tickets

Good friend got pulled over on I-90 for doing 165 in a M5 with a full stage 4 Dinnon setup. MTSP asked if he was going a bit fast. Friend pulled out his Racing credentials, 5 mil liability insurance and stated his car was set up to go 200mph, he’d not seen another car in 20 miles And it’s a clear bluebird day.... $5 ticket, have a good day and be careful.... the good old days in MT. This was shortly after Denny Washington’s company finished repaving the section between Bonner and Deer Lodge (that car was scarey fast)

The problem isn't that we're not paying enough, the problem is the corruption in government. Fuel taxes added to the general fund and then siphoned off to welfare payments to illegals who never paid into the system in return for a vote.

We already paid for the construction of those roads, we've already paid for their upkeep.

We own them! Giving them to a private corporation is folly and IMO immoral!

Have the government contract with corporations using the current fuel and other taxes without transferring ownership.

Private corporations can and will do a better job owing to the juicy $$ they can make from this. Efficiency & accountability - something the government knows little about.

I can not abide paying to use something I bought and paid for already.