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R. Richard Geddes is an associate professor at Cornell University and a visiting scholar at the American Enterprise Institute where Brad Wassink researches domestic policy.
The AAA Memorial Day travel forecast released yesterday estimates that about 31 million Americans will drive 50 miles or more to reach their destinations this weekend.
As travelers reflect on the sacrifices of the United States Armed Forces and visit family and friends, many motorists will be waylaid by an unwelcome interloper: traffic congestion. In 2010, congestion wasted 4.8 billion hours of travel time and 1.9 billion gallons of fuel. That problem is worsening, with annual hours of peak-time delay increasing 136 percent between 1982 and 2009 in the nation’s fourteen largest urban areas. The Washington, D.C., area, home to the nation’s worst traffic, will likely be gridlocked.
Congestion imposes large costs on people both inside and outside of the car. Infants developing near congested traffic areas have worse health outcomes, and longer commutes are associated with higher rates of obesity and divorce.
To make matters worse, the system is sagging under decades of deferred maintenance that costs motorists billions each year. The American Society of Civil Engineers has tagged 32 percent of roads as in poor or mediocre condition and estimates they cost drivers $67 billion annually in added repairs and operating costs.
Given the state of America’s highway system, perhaps members of Congress should be required to drive home for the national holiday as well.
At fault is an outmoded revenue structure that doesn’t adequately fund the system or allocate revenues efficiently. The National Highway Trust Fund – through which the bulk of highway construction and maintenance monies flow – relies on a fuel tax that hasn’t been adjusted for inflation in 20 years. The growing efficiency of cars in the U.S. compounds the shortfall – the fuel tax brings in considerably less money from a Prius than it did from a late 90s SUV. These twin forces ultimately pushed Congress to provide $35 billion in bailouts to the fund between 2008 and 2010.
A status quo solution would raise the gas tax to fund these needs. But Congress’s willingness to raise the tax depends on Americans’ willingness to accept a hike. And poll after poll shows Americans aren’t willing. So where will the money come from?
Private investment in national infrastructure is a key part of the solution. Public-private partnerships offer an avenue for private dollars to substantially improve the quality and capacity of deteriorating roads while alleviating pressure on tight public budgets. Such arrangements allow a private partner to lease the right to toll – or construct and toll – a transportation facility from a public authority in return for an up-front payment, called a concession fee.
These partnerships help restore the “user pays” principle underlying the original fuel tax/highway trust fund arrangement. Just as homeowners pay for electricity and telephone service, motorists would pay directly – in the form of a variable toll – for the cost they impose on a transportation facility. Because the costs are transparent, appearing either at the toll booth or on an EZ-Pass bill instead of hidden in the price of gas, consumers can make more informed decisions about how much they are willing to pay to save time.
Additionally, public-private partnerships direct investment more efficiently. Maintenance and new construction decisions flowing from the political process are inefficient, and at times downright embarrassing (think: Bridge to Nowhere). Partnerships allow motorists’ demands, as reflected in their willingness to pay for road services, to guide investment. New facilities will be constructed where the need for congestion relief is greatest, rather than where the political returns are highest.
And, because private partners must compete with un-tolled roads to maximize their investment returns, they respond to those incentives by making their roads noticeably better and faster and by advertising those services.
Partnerships also utilize innovative pricing strategies to alleviate the chronic congestion plaguing U.S. drivers. By raising prices during peak travel times, congestion pricing allocates scarce road space to those who most value it. Such arrangements, facilitated by new transponder technology, have already been implemented with great success on the I-35 West Express Lanes in Minnesota and the newly-opened 395 Express Lanes in Northern Virginia.
Fresh investment. More capacity. Lower congestion. No new taxes. These are the promises that public-private partnerships have already delivered to metro areas across the country. In a time of public budget potholes, they offer a well-paved path forward.
The prospect of sequester-induced flight delays prompted Congress to address the air-traffic controller snafu in record time. Perhaps the reality of driving home in Memorial Day traffic will focus Congressional leaders on the need for innovative reforms and investment in a transportation system sorely needing both.
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