Tackle transportation woes by steering toward pilot projects
This article originally appeared in the Washington Examiner on February 11, 2019.
America has a pavement problem. In 2017, substandard conditions on America’s urban roads caused an average of nearly $600 in repair costs per vehicle.
According to a 2016 study , U.S. drivers pay an additional $3 billion per year in maintenance calls due to pothole-related automobile damage. Meanwhile, America has a nearly $900 billionbacklog of highway and bridge capital needs, according to the American Society of Civil Engineers, who gave American roads a D grade. This rising national repair bill has prompted the Trump administration and lawmakers to call for increased infrastructure investment, rallying most often around around increasing a federal gasoline tax that has remained unchanged since 1993.
But even if the tax were indexed to inflation, fuel efficiency gains with new automobiles would result in less revenue over time. Fuel efficiency has increased roughly 20 percent since 1993, meaning that the average driver can drive an additional 60 miles before having to fill up.
Instead of raising the gas tax, policymakers need to explore additional options, such as a vehicle mile traveled, or VMT, fee — particularly for commercial vehicles — and increased privatization of infrastructure systems.
The thinking is simple: Tax drivers per miles driven, rather than gallons of gasoline consumed. Oregon runs a voluntary VMT program, charging participants a fee of 1.7 cents per mile in lieu of a gasoline tax.
Congress has appropriated funds for state pilot and volunteer programs, encouraging experimentation. Rep. Sam Graves, R-Mo., the top Republican on the House Transportation Committee, wants to see a nationwide pilot program paired with congestion pricing to make sure that rural drivers don’t pay far more than urban drivers. While congestion pricing has proven an abject failure where tried in the United States, proceeding with a VMT pilot program alone can show policymakers an interesting alternative to the failing status quo. Any pilot program would be voluntary, to monitor the efficacy of the VMT. Lawmakers could begin with a a voluntary VMT system for large trucks already equipped with “electronic logging devices,” which make implementation much easier.
It may not be the panacea lawmakers crave, though — at least not on the noncommercial side of things.
Therefore, policymakers should also consider privatizing more transportation systems. One possible solution lies in the present-value-of-revenue contract, in which road companies compete for a contract by offering the lowest toll price. The resulting contract is flexible, and the company has ownership over the road for as long as it takes to recoup construction costs. This has proven successful in England and Chile, responsible for wonders like the Queen Elizabeth II Bridge.
Since each company’s responsibility lies in its roads, there’s an immediate incentive to fix issues. Angry customers may threaten to drive on adjacent roads or switch to trains. Even if the road corporation were not bound to a low toll price by a contract, it still probably wouldn’t gouge its customers. Studies focusing on European toll roads conclude that drivers alter their travel habits in response to a toll hike. Moreover, detailed simulations undertaken by researchers have found that market forces keep toll prices in check.
There’s no silver bullet to fixing America’s transportation woes. VMT fees carry the risk of creating new bureaucracies to monitor miles traveled and come with privacy risks for everyday drivers. If done poorly, privatization can open the door to crony contracts with government officials and resulting unfair pricing and privileges given to companies with outsize political clout.
The status quo of relying on gasoline taxes to fund transportation long term, however, is not the answer. By expanding pilot programs, the federal government can take concrete steps toward infrastructure revitalization.