Why user fees should pay for transportation infrastructure – press enterprise
A recent White House memo to Senate Republicans on the Infrastructure Bill notes that President Biden “fundamentally disagrees with the approach of increasing the burden on workers by increasing taxes on infrastructure. ‘gasoline and user fees’. Instead, he proposes to finance infrastructure from deficit spending (i.e. future American workers) or perhaps by taxing large corporations (which would pass the cost onto workers).
President Biden is dead wrong about this: Transportation infrastructure should be funded exclusively through user fees for at least five reasons.
First, infrastructure financed by user fees is better maintained than infrastructure financed by taxes or deficit spending. Managers whose revenues depend on user satisfaction will keep the infrastructure in good shape to keep the money flowing. Managers whose incomes depend on the satisfaction of politicians will build grandiose facilities and then neglect them because the politician is more interested in the next big project than in maintaining the elders.
Nationally, 7.5% of city and county-owned road bridges, which derive most of their road funds from taxpayers’ money, are in poor condition compared to 5.5% of city-owned bridges. State, which are funded by gasoline taxes and other charges. Best of all are the bridges owned by various toll authorities, only 2.2 percent of which are in poor condition. Worst of all are the rail transportation systems, which are funded primarily by taxpayer dollars and have a maintenance backlog of $ 174 billion.
Second, transport users are the main beneficiaries of the transport they use, so they should pay the cost. There are side benefits of transportation, but there are side benefits to everything, and if we allow subsidies because of those side benefits, then everyone will be claiming those side benefits in order to get the subsidies. The financing of transport will then become a pure political battle that has nothing to do with reality.
Third, user fees are more than just a way to pay for things. These are signals to users and producers about the value of the things they use. Usage charges tell users what types of transport are the most expensive to provide, and they tell providers which types of transport we are most interested in using. Subsidies interfere with these signals.
Fourth, limiting funding to user fees encourages providers to be efficient and avoid grandiose projects. Subsidies isolate transport agencies from the need to be efficient and often encourage unnecessary megaprojects.
Finally, user fees are socially fair because people are getting value for their money. Far from imposing a burden on low-income people, a user-fee-based transportation system gives everyone the choice of what type of transportation is best for them.
In contrast, tax-financed infrastructure usually ends up primarily benefiting high-income people, as they have more political power. At least three-quarters of public transit subsidies come from regressive taxes, but the median income of commuters is much higher than the median of all workers. Nineteen out of twenty low-income people do not take public transit to work, but they pay disproportionately for the transit systems that are disproportionately used by high-income people.
Plus, when it comes to freeways, proper user fees can help eliminate congestion that costs Americans hundreds of billions of dollars a year. Highways are unusual in that their flow decreases when congested. Better road pricing can ensure that they will rarely if ever be congested, allowing more people to use the roads during the busiest hours of the day.
President Biden’s plan to massively increase infrastructure spending without requiring users to pay for it is a recipe for disaster. People who do not have to pay for the transport they use quickly feel that they are entitled to such an obligation: the government owes them the construction of a very expensive project simply because everyone benefits equally from it. ‘free’ infrastructure.
When Congress created the Interstate Highway System in 1956, it declared freeways to be funded solely by user fees. It turned out to be one of the most successful large construction projects in the world.
It’s time to get back to first principles. Congress should stop deficit spending on highways, transit, Amtrak and airports. If necessary, we can give transportation vouchers to low income people just as we give people food vouchers and housing vouchers. But for the most part, paying for the transportation we actually use is less of a burden than paying taxes to support infrastructure projects we don’t use.
Randal O’Toole ([email protected]) is a Transportation Policy Analyst and author of Romance of the Rails: Why the Passenger Trains We Love Are Not the Transportation We Need.