The big question, where is the money coming from, and the private sector is a good place to start.
Time to ask the infrastructure funding question
Richard G. Little
Wednesday, March 5, 2008
The National Surface Transportation and Revenue Study Commission, a bipartisan federal effort to study the future of transportation funding in the United States, released its findings recently, and the results are neither pretty nor surprising. In a nutshell, the "Highway Trust Fund," the politically created lock box in which the government salts away money to pay for future transportation needs, is empty - and current revenues won't fill it back up.
This is particularly troubling because it comes at a time when much of the national transportation system, just like the Baby Boomers who grew up with it, has reached the end of its working life and needs to be replaced or renewed. This will come as no surprise to anyone with even a passing knowledge of how the federal government funds the transportation system.
For every gallon of gasoline or diesel fuel sold for highway use, the government collects 18.4 and 24.4 cents, respectively. These rates have been static for almost 15 years despite the fact that construction costs have more than doubled over that period. At the same time, better vehicle fuel economy has further reduced the revenue collected. Increasing costs and decreasing revenues are not the basis of a sustainable business model.
The commission members were of two minds about what to do to close the revenue gap. As an immediate fix, the majority view was to increase the fuel tax by 25 cents to 40 cents per gallon over the next five years and then to index future increases to inflation. The minority view, led by Transportation Secretary Mary Peters, was to allow more toll roads financed, built, maintained and operated by private companies, as is now done around the globe and to a limited extent in the United States.
We will actually need to do both, and in California the time to make some hard choices is upon us. The governor recently proposed the widespread use of privately built toll roads to address the estimated $500 billion of infrastructure needs the state will face over the next 20 to 25 years.
Despite the incorrect claims of the Public Engineers in California Government that these arrangements are "proven failures," privately financed toll roads could be an ideal solution to address the state's needs for some projects, under some conditions. For example, an Interstate 710/210 tunnel connection under South Pasadena would lend itself nicely to a road supported by tolls and built and operated by a private party with some state oversight.
