U.S. Transportation: Driving Down the Same Old (Bumpy) Road or Paving a New Way Forward?

In the world of unintended consequences, less driving may mean more potholes.

Americans’ driving habits are hanging a u-ey. For decades Americans drove more and more, but for the past 10 years the trend has flattened while fuel economy has climbed. If Congress doesn’t change the policies that fund our roadways in response, we may be in for a bumpy ride on our highways and byways. Gridlock in the vaunted halls of Congress may make commuting gridlock all the more common.

A Failing System

You’d think our country, as proud as we are of innovation, would be smart when our ways become outmoded. Not so much. While Americans seem ever eager to get the latest iPhone — and some even jones for the latest-greatest souped-up electric car — we seem behind the curve when it comes to basic upkeep. Fixing old things to make sure they continue to function properly? Just not as sexy. And when it comes to getting around, upkeep is what is badly needed.

Take the country’s bridges for example. At least since the tragic bridge collapse in Minneapolis that killed 13 and injured more than 150 in 2007, America’s ailing roadway infrastructure has been on the radar of politicians, transportation managers and commuters alike. But nearly seven years later, not nearly enough has been done to fix the looming problems in our infrastructure. As the New York Times reported yesterday,

“Of 607,000 bridges in this country, more than 65,000 are deemed ‘structurally deficient’ by experts. … Some 20,000 bridges around the country are labeled ‘fracture critical,’ a wince-inducing term if ever there was one; it means that the entire structure could collapse should a single critical component break.”

(See if bridges near you are safe.)

Unfortunately it’s not just bridges. It’s roads and rail lines and public transit too. There are lots of cracks but far too few fixes.

Highway Trust Fund Is Not So Trustworthy

Part of the problem is money. The feds are strapped.

And one of the reasons the feds are so strapped stems from the decision way back in 1956 to tie funds for transportation maintenance to a tax on gasoline and diesel. That was when Congress established the Highway Trust Fund. Dollars flow into the fund from taxes paid by motorists on gasoline and diesel fuel, thus the so-called gas tax.1 And those funds are then distributed to the states to maintain and fix our transportation infrastructure — the ~4.07 million miles of roads and bridges, the 120,000 miles of railroad track and the 500 public transit operations that help us get from point A to B.

While the Highway Trust Fund did a fine job of funding infrastructure maintenance for decades, it now is sorely lacking. The taxes collected are nowhere near enough to fund what is needed. Last year the federal government provided about $46 billion to the states for transportation infrastructure, about $40 billion specifically for roads and bridges. But, according to some estimates, the federal government needs to contribute more like $67 billion to adequately address our aging transportation infrastructure. And there are just not enough dollars flowing into the trust fund to meet that need; in fact, with the current trend, the fund could run out of funds as early as August. (See how some previous shortfalls have been dealt with [pdf].)

So How Did We Get Into this Pickle?

Not Keeping Up With the Dollar

One reason is that the gas tax was never tied to inflation. Also, it has been frozen at 18.4 cents a gallon since 1993. And while the tax on a gallon of gasoline has not changed in more than 20 years, the costs of repairing roads and bridges have increased significantly. Accounting for inflation, a dollar in 2014 is equivalent to only 62 cents by 1993 standards. Hence the value of the gas tax has declined by 38 percent due to inflation alone.

Becoming Greener Means Green in Highway Trust Fund Coffers

The other problem comes from the rule of unintended consequences — the consequences of a greener society.

When it comes to transportation, most environmentalists want to see a world where less gasoline in consumed. Two ways to do that: 1) drive cars with higher fuel economy and 2) drive fewer miles. Well, lo and behold, both of those things appear to be occurring in the good old USA. (See here and here.)

And so, hallelujah, we are actually consuming a lot less gasoline than we used to. (More on this here and here.) That’s great for the environment, and for the U.S. economy, but, for a transportation infrastructure dependent on funds from gasoline sales, it’s not so good.

Where Do We Go From Here

That we’ve got an urgent problem in search of solution is agreed by virtually all. Even the speaker of the House recognizes the problem but seems to lack a vision on how to proceed.

“We’ve got to find a funding mechanism to fund our infrastructure needs,” said Speaker John Boehner (R-OH). “I wish I could report to you that we’ve found it, but we haven’t.”

If I may be so bold as to suggest to the speaker that there is a funding mechanism. It’s simple and straightforward: increase the federal tax on gasoline. Alternatively, Mr. Speaker, if you don’t like hiking taxes on gasoline, how about some other transportation-related commodity like a tax on sales of automobiles or closing loopholes on other taxes as the president has proposed. Whatever Congress chooses, if our transportation infrastructure is to get the funds it and we sorely need, significantly more dollars need to flow into and out of the Highway Trust Fund. And to avoid adding to deficits, that will mean raising taxes.

So the conundrum. Raise taxes or have a nation with crumbling bridges and roads. It’s a no-brainer for me, but not apparently for the speaker and his compatriots: We all know the lead-balloon effect in Congress from the mere mention of higher taxes — a problem that extends to the states as well. (See also state funding plans.)

Our transportation network is paramount to our economy. But figuring out how to get the money to bolster the system is proving as stalled as traffic on the George Washington Bridge during rush hour on a Friday night.

_________________

End Note

1 The federal tax is 18.4 cents per gallon of gasoline and 24.4 cents per gallon of diesel. It is estimated that the average motorist spent about $97.70 in 2010 in federal gasoline taxes per vehicle. In addition to the federal gas tax, all states have their own tax [pdf] to help pay for road infrastructure maintenance; this tax ranges from eight cents per gallon of gasoline to more than 38 cents per gallon.

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