Mary E. Peters, the U.S. Secretary of Transportation, has published a column in the Times-Dispatch today that displays a surprising familiarity with Virginia’s transportation-policy gridlock. Perhaps, as a federal employee, she is a resident of Virginia, which means she is affected by the actions (or non-actions) of the General Assembly. Or, perhaps her knowledge derives from the fact that Virginia is a national leader in tolling and congestion pricing — which happen to be the very remedies for the nation’s transportation woes that she advocates.
Whatever the case, Peters makes far more sense than most national politicians who pontificate about transportation policy. She’s got the big themes right. Now she needs to work on the details.
At the heart of her message, Virginia needs to change the way it funds transportation projects. She writes: “It makes little sense — and it’s certainly not sustainable — to increase our reliance on gasoline taxes at a time when we all recognize the need to decrease fuel consumption and increase the use of alternative fuel sources. … gasoline, car, property, and sales taxes have little or nothing to do with the use of highways and are ineffective at reducing highway congestion.”
Translation into Bacon-ese: Transportation funding needs to address the demand side, as well as the supply side, of the equation. There needs to be a direct connection between how much, and when, people drive and how much they pay. If drivers pay their share of the cost of building and maintaining roads and highways, they won’t “demand” as much transportation capacity as if they pay by other means.
Peters is a huge fan of variable pricing, or congestion pricing, as am I — the difference being that I recognize there is a gap between abstract economic theory and how congestion pricing is applied in the real world.
Private toll operators, Peters says rightfully, bring private capital to the able, allowing projects to get financed that Virginia otherwise could not afford. Congestion pricing, she adds, manages transportation corridors on the basis of supply and demand, allocating scarce capacity in a manner very much like long-distance phone service.
But the analogy with long-distance phone service is far from exact. There is abundant competition in phone service, with multiple players utilizing multiple technologies. Private toll operators strive to squelch competition in order to lock in their captive markets, as Virginians discovered when we got a peek at the contract between the Commonwealth of Virginia and Capital Beltway Express for operation of the Interstate 495 HOT lanes. (See “The Capital Beltway HOT Lane Deal.”) That was a deal, incidentally, that Peters’ office was intimately acquainted with, as the feds provided much of the low-interest financing to make it happen.
The Beltway HOT lane contract protects the private operator’s revenue stream by imposing significant financial penalties on the state of Virginia for making transportation improvements that would undercut toll revenues. I would humbly suggest that the solution to traffic congestion is more competition, not less. On the other hand, it is questionable whether Transurban and Fluor, the joint venture partners, would have made the investment and taken on the financial risk without some assurances, so there are no easy answers.
Still, Peters articulates the critical issues clearly when writes:
Virginia’s leaders have a clear choice. They can ask drivers to pay more at the pump, more at the store, and more at the DMV — regardless of where they live or when they drive. Or, they can put in place direct user fees that will be targeted to areas where congestion is at its worst, and will actually cut traffic, speed commutes and improve the timeliness and quality of transit bus service. …
Embracing direct pricing for road use would also have the added benefit of encouraging better decisions about land use, stimulate reductions in carbon-dioxide emissions and encourage more of the commonwealth’s commuters to try transit. In short, embracing tolling as a solution to Virginia’s transportation funding challenges would cut traffic, generate needed revenue, improve transit, and significantly benefit the environment.
Now, if we could just get Madame Secretary to start talking about “balanced communities,” we’d really be making some progress!