A Broken Transportation System

A Conservative Transportation Alternative” rejects Business As Usual transportation policy on the grounds that the existing transportation system is broken, and no amount of money raised through taxes and allocated by politicians, is likely to fix the problem. The authors marshal a powerful body of evidence to make their case.

First, they make the point that, contrary to assertions by the Axis of Taxes, Virginia has dramatically increased transportation spending since 1986, when the modern era of transportation funding began. The chart below shows that spending outstripped growth in the number of licensed drivers and even growth in Vehicle Miles Traveled.

(Click on image to enlarge.)

(I would add one important caveat to this data: It appears not to adjust transportation spending for the inflation in construction costs. There has been little if any increase in real spending, as opposed to nominal spending. Still, the data demonstrates that Virginia’s transportation system has hardly been starved for funds.)

Over the years, the General Assembly has supplemented the 1986 Baliles-era funding sources with several additional revenue streams: the state recordation tax, a state tax on insurance premiums and General Fund appropriations in 2000 ($307 million), 2002 ($147 million), 2005 ($348 million) and 2007 ($661 million).

No amount of spending under the current system, the authors argue, will ever be enough to solve traffic congestion. I will quote the document at some length because I couldn’t say it better myself:

The model of urban development that the Virginia legislature has been funding for decades simply doesn’t work anymore — if it ever did. … Virtually all of the assumptions underlying the model are flawed. It is foolish to assume, for example, that every resident in a region should be able to move by automobile from one point in the region to any other without substantial delay.

Another assumption is that interstate motorists can be whisked around or through urban centers on new highways. Whenever a highway is built for that purpose, it serves as a magnet for development, resulting in yet another clogged corridor.

The model also assumes that the public should be required to pay to extend roads and utilities to new residential and commercial developments located far beyond urbanized areas where the price of land is relatively low. Perhaps more than any single factor, this proposition has produced the sprawl that characterizes Virginia’s metropolitan areas.

The prevailing attitude is that traffic congestion is a problem that can be relieved by constantly constructing new roads and adding lanes to existing ones. … Government tends to respond with a single formula: raise taxes and build more of the same. … Elected officials have been too quick to pass over the most equitable, efficient and disciplined option for paying the staggering cost of transportation projects. That option is tolls or other user charges, land or cash contributions by adjacent property owners who will benefit or other methods of having special beneficiaries rather than taxpayers pay for new projects.

Well said, gentlemen! Well said!


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Comments

  1. E M Risse Avatar
    E M Risse

    Great document, Patrick and others!!

    Good sound transport ideas.

    Two problems:

    1. None of this will be possible without a clear, comprehensive exposition of the human settlement patterns the future system is intended to serve.

    Without such a vision, implementing these ideas will be an economic disaster.

    2. There will need to be a new stable of transport vehicles and systems to provide Mobility and Access. The Large, Private Vehicle will not meet the needs of future.

    EMR

  2. E M Risse Avatar
    E M Risse

    “Without such a vision, implementing these ideas will be an economic disaster.”

    What I mean by this is that without a vision of a functional future and strategies to transition from the current dysfunctional human settlement patterns to ones that are sustainable, this set of criteria will be a tourniquet around the neck of economic, social and physical activitey.

    EMR

  3. Larry Gross Avatar
    Larry Gross

    I was doing a little back-of-the-envelope doodling… in anticipation of the “why can’t we fix this with a simple Statewide increase in the gas tax” crowd advocacy.

    One of the reasons the just-outlawed TAs were considered butt-ugly was the dizzying array of chinese-menu like taxes but there was a method to the madness… because if they tried to solve it with a single increase in the gas tax – this is what would have happened:

    the envelope.. exercise started with a stated annual dollar need of $300 million for NoVa which has perhaps a 1/3 of the population of Virginia.

    Then that would mean that the State as a whole might need 900 million a year.

    We also know that each penny on the gas tax generates about 50 million.

    so the math is 900 / 50 = 18 cents.

    So.. 18 cents increase in the gas tax would be needed to fund the NoVa Ta…

    To complicate this further….
    Kaine is indicating that a core part of his plan will be at the minimum to assure adequate funding of the 250 million maintenance shortfall.

    I don’t think even the boldest of the pro-gas tax folks are going to head into the fall elections having supported an 18 cent gas tax increase.

    Certainly none of the R’s and probably few if any of the D’s from RoVa…would fall on that sword either.

    So.. I wonder what the advocacy for more money will be….

    I’m betting that what will happen is the State is going to give localities – local option taxes.

    i.e – if you want to fix your local/regional roads – here are the taxes that you can raise to do that.

  4. Larry Gross Avatar
    Larry Gross

    Here’s another idea being kicked around:

    “Senate Finance Committee chairman Steve Ogden floated the idea of a public-private partnership to invest in roads and other infrastructure in Texas, possibly using state pension fund money. His rationale: if the likes of Spanish company Cintra are willing to pony up billions of dollars (eventually) to build and operate roads in Texas, why not get the state’s big pension funds into the deals as lenders or investors?”

    http://tinyurl.com/2ug9rb

    on first breath this sounds like a spectacularly bad idea but I don’t know what the investment grade of Fluor or Transurban are or whether or not public pension funds invest in such companies.

    So we have folks complaining about private companies taking over Virginia’s roads.. How about Virginia’s Pension Funds being in charge of Virginia’s Toll Roads?

    If Virginia is going to invest it’s public pension funds.. why not invest them in Virginia?

    If congestion pricing is such a profit-maker.. just make sure the Pension funds gets a better cut that it would get on the investment market.

    Bad idea? Good idea? Incredibly dumb idea?

  5. Anonymous Avatar
    Anonymous

    Touch not one dime of my wife’s VRS money…not one thin dime.

    It’s pathetic. Pat McSweeney is still trying to prove that the Baliles transportation package was a mistake, even as the Virginia eocnomic miracle it helped create chugs on keeping us ahead of the national economy….incomes, jobs, wealth, by any measure that 1986 package paid off big time.

    I don’t a tax increase — I want to start with ending the annual tax CUT everybody enjoys as the 17.5 cent Virginia motor fuels tax is eroded by inflation. Just paying the same amount in real economic terms as we paid in 1987 (probably about 25-28 cents a gallon in today’s money) would make a huge difference. And any proposal that leaves that tax the same in effect leaves the price of using the highway system DROPPING every year. And when a commodity is priced below its actual cost, there are economic consequences.

    Should some of that cost be paid through tolls? Sure (but then don’t whine about the debt load.) Should some be proffered by developers? You betcha, and that is already happening far more often than it did 20 years ago. But some of that should be paid every time you fill up at the gas (or ethanol or hydrogen) pump, and the more you drive or the less efficient your vehicle, the more you should pay.

    Who is getting rich off a system taht encourages waste of our energy resources (by keeping the cost of the system too low?) Mainly the oil producers, who have enough left over to fund Al Quida.

  6. Larry Gross Avatar
    Larry Gross

    “And when a commodity is priced below its actual cost, there are economic consequences.”

    What “A CONSERVATIVE TRANSPORTATION ALTERNATIVE” points out is that it’s not only how much revenue is collected and spent but HOW it is spent.

    And when you have a system that does not have an objective way of prioritizing -what will almost be limited funds – you get waste and an uninstantiated demand for more money.

    A point is made of the economic consequences of not investing enough in inrastructure.

    What are the economic consequences of higher taxes especially on fuel?

    What are the consequences of building “dumb” in such a way that the needed transportation infrastructure has to be bigger and more expensive than if we built “smarter”?

    What are the consequences of PRIORITIZING road infrastructure that encourages long-distance commuting rather than infrastructure than improves and benefits communities and nearby employment?

    The article pointed out the benefits that Alexandria and Henrico have enjoyed as a direct result of careful land-use planning because they knew they would also bear responsibility for the transportation impacts.

    But without a doubt – the most relevant point in the debate is the need to recognize that 25 cents increase in the gas tax is NOT a viable option.

    It’s true. if the gas tax had been indexed, that we’d be better off but it’s also clear that the trendline is the same. We’d end up the same way.. it would only take longer.

    There ARE states that have indexed the gas tax and they are facing the same problems as Virgina.. in part because of the same underlying problem in Virginia and that is a road prioritization process that is primarily politically motived and not based on objective needs-based criteria.

    And a lot of this goes back to any locality that is making land-use decisions without regard to the transportation impacts – because they believe that VDOT and the State of Virginia will fix whatever needs to be fixed.. REGARDLESS of the cost and regardless of whether the cost of those fixes exceed the amount of gas tax paid by the folks that will use the infrastructure.

    We continue to have localities and elected officials who believe (or pretend to) that somehow their county will get more money from the State than their citizens actually pay in gas taxes.

    This problem would exist no matter whether the gas tax in indexed or not.

    and that is why money alone will not solve the problem.

    The system needs to be reformed such that localities must become responsible and accountable for the traffic impacts of their land-use decisions.

    Alexandria and Henrico as well as Virginia cities have proven through years of operation that this is not an insurmountable task.

    It does take discipline and strict attention to what you are approving and how to mitigate..

    in other words.. it requires some intelligence in understanding what you are doing – and a commitment growth in responsible ways that the locality can afford – without expecting the “State” to bail them out.

  7. Anonymous Avatar
    Anonymous

    “The model of urban development that the Virginia legislature has been funding for decades simply doesn’t work anymore……”

    The answer is clear, then.

    Stop urban development.

    RH

  8. Anonymous Avatar
    Anonymous

    Where is the EVIDENCE that transportation infrastructure will be smaller and less expensive than if we built “smarter”?

    Show me ANYPLACE where people travel less, earn the same, and enjoy lower overall annual living costs.

    Tom Davis had letter in the paper today urging passage of a bille for 1.5 billion in federal money, to be matched by 1.5 billion in new, local, dedicated funds for Metro.

    $3 Billion.

    Plus whatever they can squeeze out of tolls and selling off state assets.

    “Over the years, the General Assembly has supplemented the 1986 Baliles-era funding sources with several additional revenue streams:…” which merely shows that the a gas tax fixed by the gallon instaed of by the dollar has been a sham and a failure for decades.

    “Smart” or “Dumb” it is going to take a lot more money to meove all the goods and services we will need to keep the economic engine running.

    Or, we can save a lot of money and shut down the engine. But, hey, it will be good for the environment.

    RH

  9. Groveton Avatar

    Jim Bacon writes:

    “I would add one important caveat to this data: It appears not to adjust transportation spending for the inflation in construction costs.”.

    You MUST be kidding.

    If true, they present a 20 year financial trend without adjusting for inflation? That would have gotten you an “F” in Econ 201 at UVA.

    If true, they are taking the pseudo-conservative approach of being dishonest in order to justify an anti-tax argument. Oddly, this type of systematic dishonesty is one of the things that pseudo-conservatives always get their undies in a bunch over when it comes to Bill and Hillary Clinton. However, in my mind, there is little to no diffrence in the failed ideas and false analysis of the traditional right and the traditional left.

    Please note – I am writing these comments in the belief that Jim is right with his belief that the financial data is not inflation adjusted. If that turns out to be true, this analysis is not worth the disk drive space it is wasting.

  10. Jim Bacon Avatar
    Jim Bacon

    ccording to the Bureau of Labor Statistics inflation calculator, there has been 93 percent inflation in the Consumer Price Index since 1986.

    I’m probably calculating this wrong (sorry, never took statistics class), but that 150 percent increase in transportation funding would look more like 67 percent in real, inflation-adjusted terms. Inflation in the construction sector is worse, but I don’t have a calculator for that. If we assume that construction inflation has exceeded GPI inflation by one percent annually over the past 20+ years, then the real, inflation-adjusted increase in funding may be closer to 45 percent.

    That’s less than the increase in Vehicle Miles Traveled but it’s more than the increase in the number of licensed drivers. The larger point of McSweeney et al remains true: It’s hard to maintain that the system has been starved of funds.

  11. Larry Gross Avatar
    Larry Gross

    not dealing honestly with the inflation issue seriously taints the credibility of the document.

    This whole thing is probably destined for the dustbin as a result… too bad

    and any politician hanging his/her hat on this.. is begging to get their clock cleaned…

  12. Anonymous Avatar
    Anonymous

    “…there is little to no diffrence in the failed ideas and false analysis of the traditional right and the traditional left.”

    I love it. False analysis on either side does us no good.

    ——————————

    “The document does leave some work undone: It does not offer specific policy prescriptions for raising the funds that the transportation system clearly does need.” – Jim Bacon

    “It’s hard to maintain that the system has been starved of funds.” – Jim Bacon

    Compare it (road spending) to the State Domestic Product. These two are heavily interdependent. If one ets shorted the other won’t be far behind.

    RH

  13. E M Risse Avatar
    E M Risse

    In the comments under the first post about this report, Larry Gross asked:

    “EMR – how would you change what these folks have said to make it better?”

    The first thing we would do is stop talking about “fixing” the “highway system” as if this would provide a “solution” to the Mobility and Access Crisis.

    If one wants to talk about public facilities for Large, Private Vehicles, then they should talk about:

    The Street System to serve Clusters, Neighborhoods, Villages and Communities;

    The intraRegional Highways to serve Regions, and

    The interRegional Highways to serve interRegional travel demand.

    Contrary to the advise of MacKay and others in the 1920s, Autonomobile advocates have mixed up the needs (and the facilities to meet these needs) in these three fundamentally different geographies.

    We would also repeat from above the observations that:

    1. None of the ideas in this “manifesto” will be possible without a clear, comprehensive exposition of the human settlement patterns the future Mobility and Access system is intended to serve those patterns and denisties of land use on a Commonwealth wide basis.

    Without such a vision, implementing these ideas will be an economic disaster.

    What we mean by this is that without:

    A vision of a functional future, and

    Agreed-to strategies to transition from the current dysfunctional human settlement patterns to ones that are sustainable and transportable,

    This set of criteria will be a tourniquet around the neck of economic, social and physical activity.

    2. There will also need to be a new stable of transport vehicles and systems to provide Mobility and Access.

    Large, Private Vehicle will not meet the Mobility and Access needs of future.

    As we will point out in a long post being prepared for this Blog to run next weekend, failure to address big issues allows many well meaning commentors to waste thousands of hours restating their pet misconceptions.

    EMR

  14. Anonymous Avatar
    Anonymous

    “…Private Vehicle will not meet the Mobility and Access needs of future.”

    No, they won’t meet all the mobility and access needs, but they will meet some, and we should plan accordingly.

    Meanwhile, that new stable of transport vehicles and systems doesn’t exist yet. We are still flying a space shuttle that was designe din the 1950’s. If we get that new stable in 50 years,that would be close to a miracle, and 150 years is probably more like it.

    What do we do in the meantime?

    RH

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