Bacon's Rebellion

Democracy Thrives in Sunlight

Transportation Revenues Still Tumbling, System Still Dysfunctional

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by

James A. Bacon
in ,

The economic slowdown isn’t just hammering the General Fund, it’s also putting the squeeze on the Transportation Trust Fund. Reports Peter Bacque with the Times-Dispatch: State transportation revenues will be $1.1 billion less than projected over the next six years.

Virginia Department of Transportation CFO Reta Busher attributes the revenue shortfall to lower-than-expected tax receipts on vehicle, home and retail sales, fuel consumption, and vehicle licenses, as well as the pending repeal of abusive-driver fees.

Debt payments get first claim on Virginia highway dollars, followed by maintenance expenditures and state matches to federal funding. That means the cuts will fall hardest on the new construction budget. Local street and highway construction will see an average 44 percent reduction, and funding for transit will decline an average of 10 percent per year.

Bacon’s bottom line: Virginia’s transportation financing system is broken. Clearly, Virginia needs to invest more in its transportation system. But there’s no more agreement on how to raise the money than there is on where to invest it. Little wonder: There is no transparent nexus between who pays and who benefits from the current system.

The only way around the logjam is to move to an explicitly user-pays system so citizens can see a direct link between what they pay and the benefits they receive: (a) a gasoline tax (with plans to convert eventually to a Vehicle Miles Traveled tax) to cover maintenance and to match federal funds; (2) privately funded ventures to build major new projects, paid for with tolls; (3) congestion tolls for gridlocked corridors and urban districts; (4) impact fees and/or proffers for secondary roads; (5) CDAs and TIFs to tap the increased value of private property made possible by public improvements, especially as a means of mass transit funding; and (6) no General Funds for transportation.

Advantage #1: Requiring drivers to pay the cost associated with their road use will dampen automobile travel demand, thus reducing Vehicle Miles Traveled and easing the strain on the system.

Advantage #2: Such a system would not be dependent upon political vagaries for funding. Funding would materialize as demand materializes.

Advantage #3: A user-pays system would eliminate the inter-regional transfer of funds to build new roads and bridges. Citizens could be assured that they’re not getting reamed by politicians and lobbyists manipulating the system.

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  1. Larry Gross Avatar
    Larry Gross

    Let’s use some facts

    VDOT Revenues Total $4,014,203,140

    MNOF (Maint+Op) $1,797,991,661
    Construction $2,216,211,479

    http://www.virginiadot.org/projects/resources/VDOT_Budget.pdf

    now to get some perspective

    Education $ 15 Billion
    Health/HR $ 9.8 Billion
    Public Safety $ 2.7 Billion

    http://www.dpb.virginia.gov/budget/buddoc08/index.cfm

    4 Billion dollars a year, with 2 billion allocated to construction is not chump change.

    It’s hard to be convinced that VDOT is “broke” at 4 billion bucks a year.

    It’s over $500 per capita

    So I have two questions:

    1. – how much should we be spending if the current amount is “not enough”

    2. – How do we determine the projects that would be built – that would be the actual “shortfall”?

  2. Anonymous Avatar
    Anonymous

    “Requiring drivers to pay the cost associated with their road use will dampen automobile travel demand, thus reducing Vehicle Miles Traveled and easing the strain on the system.”

    Be careful what you wish for.

    I can’t post it here, but I have a graph that shows the amount of VMT and the GDP for 30 countries over the last 15 years.

    In every case, the countries with higher VMT have higher GDP. For every country, the increase in VMT closely tracks the increase in GDP for that country.

    Including those European countries with great rail systems. (Incidentally, rail usaage in those countries is flat compared to the increase in auto usage.

    Generally, when people get in their vehicle it is to go sell something, or go buy something.

    RH

  3. Anonymous Avatar
    Anonymous

    “Requiring drivers to pay the cost associated with their road use will dampen automobile travel demand, thus reducing Vehicle Miles Traveled and easing the strain on the system…………
    Funding would materialize as demand materializes.”

    Does anyone besides me see a problem with this approach?

    Let’s kill the demand with fees and depend on demand to provide the funding.

    Good.

    RH

  4. Anonymous Avatar
    Anonymous

    “A user-pays system would eliminate the inter-regional transfer of funds to build new roads and bridges.”

    It would also eliminate the funds to build new roads and bridges.

    RH

  5. Michael Ryan Avatar
    Michael Ryan

    I understand Advantages #1 and #2, but is there anything to suggest #3 is more than a fantasy? Money comes in from many sources, but politics will still determine where it goes out to.

  6. Anonymous Avatar
    Anonymous

    That’s all good but user pays only works for the automobile.

    Transit, bikers, and walker should be funded by the gas tax (will needs to be hiked up), because of all the externalities that are costs to the public created by private automobiles that are never captured.

    At some point in the near future the U.S. is going to agree to cut carbon emissions drastically. With both McCain and Obama talking about 80% reductions.

    Then what?

    -OGS

  7. Anonymous Avatar
    Anonymous

    OGS:

    At last, an honest person, expressing their true opinion.

    Now, after we kill the automobile usage with fees, and reduce the consumption of gas by 80%, THEN where does the money come from for transit, bikers, and walkers?

    We are going to need $22,500 billion in new transit, to make up half of the transportaion lost with the decline of the auto.

    RH

  8. Anonymous Avatar
    Anonymous

    “At some point in the near future the U.S. is going to agree to cut carbon emissions drastically. With both McCain and Obama talking about 80% reductions.”

    Capitalism burns energy to make money – there is no substitute for energy. If those guys manage 80% reductions in emissions it is going to result in a direct decrease in the amount of money we have available to buy other resources – including food and clothing.

    When they run short, someone is going to want to have talk with Mccain or Obama.

    RH

  9. E M Risse Avatar
    E M Risse

    Jim Bacon:

    I keep forgetting to suggest that you look into the Dutch “kilometre price” to be implemented between now and 2011.

    There is a short item on it in the December 2007 T&E Bulletin at http://www.transportenvironment.org

    Sounds like it wraps up all the stuff we have been discussing for years. They will start with heavy goods vehicles and move to Autonomobiles and “Lite” trucks.

    EMR

  10. Larry Gross Avatar
    Larry Gross

    “Capitalism burns energy to make money – there is no substitute for energy. If those guys manage 80% reductions in emissions it is going to result in a direct decrease in the amount of money we have available to buy other resources – including food and clothing.”

    hmmm.. isn’t this like saying that we have no choice but to drive vehicles that get 15 mpg?

    essentially.. that efficiency does not affect the equation?

  11. Anonymous Avatar
    Anonymous

    “isn’t this like saying that we have no choice but to drive vehicles that get 15 mpg?”

    Being deliberately obtuse doesn’t help your argument.

    Do you really believe we can get 80% of additional efficiency?

    We can use more solar, but it will take more land. We can use more biofuels, but it will take more land. We can use more nuclear, but we will have to finally solve the nuclear problems we have been postponing for fifty years. (No doubt some bright idiot will suggest proffers on all the “new” nuclear energy: “user pays”).

    On my way home tonight, my Prius logged 54.5 MPG. Do you really think I’m opposed to efficiency? And yet, some people claim the Prius doesn’t do enough, others claim it is a free rider for not paying it’s way.

    Whether you believe it or not, energy is money. You cannot use substantially less energy without damaging the economy. Period.

    Even to the extent you can develop alternatives, they will have cost tradeoffs that have to be paid. We can see it already in food prices.

    Whether you believe it or not, I’m an environmentalist. I beleive that if we don’t do a lot of work, there WILL be catastrohpic consequneces. Tonight on TV there was a special “6 degrees” outlining what might happen with 6 degrees of temeprature increase. One of the consequences was millions of refugees. Anyone who thinks we have an immigrant problem now, will be having nightmares then.

    Some people think Darfur is a current example of the political consequnces of climate change. We could be facing a major die-off.

    With enough work of the right kind, we might be able to engineer a soft landing which will result in only “minor” catastrophes.

    I don’t beleive that soft-pedaling what needs to be done is helpful, and I dont think that much of what is being planned (80% reductions) will be helpful, either.

    We may be faced with hard choices about what it is worth to save lives, and which ones we save. We are eventually going to have to make major economic decisions about when it is rational to let people die.

    We make minor decisions in a distributed way about this every day, and we pretty much ignore it. Sooner or later, the reasonable extension of ethical and economic decisions we make now are going to come back and haunt us.

    ————————-

    Conservation is one rather small part of what needs to be done. EMR is right about that, but he is wrong about how to do it. Environmental costs are people. Environmental costs are energy. Energy is money. People need money to get the resources that keep them alive.

    If you think you cannot put a dollar value on human life, you cannot put a dollar cost on the environment. And yet, states and idividuals make risk trade offs that result in lives every day. Moral indignation results when these choices are made explicit.

    If you believe the impulse for the environmental movement, then you had best believe we are going to have to make some explicit risk choices, that will result in lives lost, and not bury your head in the idea that this is all going to be hunky dory because of conservation.

    We can see that acting to protect human life at all cost involves acts that are just as morally reprehensible a judgment as putting a price on lives. Too big a subsidy is exactly as dangerous and costly as too small.

    You, will undoubtedly think that kind of thinking is “bizarre”.

    So, yes, efficiency affects the equation, but it is FAR from the controlling factor. Right now, we can, maybe, through heroic efforts, save 5 to 15%.

    Then what?

    We are right back where we are now, but we have used up all our options. We need to think a lot farther ahead ahead, and think a lot bigger than recycling soda cans.

    RH

  12. Anonymous Avatar
    Anonymous

    The first article on the cite EMR recommended was concerned with the need for cleaner ship fuel, and showed a cuise liner belching black smoke from bunker fuel.

    Ships, it turns out, burn far more fuel than the aircraft EMR frequntly rants about.

    The research claim is that the use of cleaner marine fuel could prevent thousands of premature deaths each year.

    What people fail to realize is that a research claim is just that: a theory that is pen to continual refinement. But, when environmentalists latch on to research that supports their beliefs, it is gospel, and when it does not support their beliefs, then it is heresy.

    I beleive that as environmentalists, we need to be more scientific. We need to look for refutation as diligently as we look for support.

    If we are lucky, we will discover we have been wrong.

    RH

  13. Anonymous Avatar
    Anonymous

    EMR needs to expand his reading list.

    “The Commission has announced it will propose a revision of the Eurovignette directive in June that will include internalising external costs.”

    Just listen to what that says. “Internalizing” external costs is a cute way of saying that we will have the other guy pay, when we know that is not true. WE are going to pay the costs, one way or another. The only question is which way is less expensive, and therefore uses less resources.

    IF we invent a repayment method for “externalities” that costs (in the end) more than the externalities, then what have we gained? Costs are a good proxy for resources, so let’s impose the minimum amount of costs, and do it in the most efficient way.

    RH

  14. Anonymous Avatar
    Anonymous

    The article goes on to say: “The idea of making road transport pay true prices has moved a step closer.”

    Fine. If it is such a good idea, why stop at road transport?

    We are not thinking large enough.

    RH

  15. Anonymous Avatar
    Anonymous

    Gee EMR, thanks. This is the best laugh I’ve had in a while.

    The following article is hysterically funny.

    “The EU strategy for reducing greenhouse gas (GHG) emissions …is in disarray today following the European Commission’s proposal to massively increase biofuel use..”

    Biofuels are not going to reduce GHG. Simple energy economics. What they will do is allow existing fossil fuels to remain sequestered. That is probably a lot cheaper than using fossile fuels and sequestering the result. Cheaper means we use less resources.

    Let’s not let the perfect be the enemy of the good.

    “[While] BirdLife International …..strongly support the Commission’s proposal of a 20% target for renewable energy by 2020, they argue that the 10% biofuels target is a dangerous dead end.”

    Jesus God Almighty. We have become so wrapped up in our own environmental “winner take all” theology that we are willing to completely reject logic. At this point, it is ALL a dangerous dead end. What we have to decide is which is the least dangerous dead end.

    Renewable energy of whatever kind has costs. Get used to it. And evelauate them fairly. Don’t let the fact that you are a birdwatcher, and you think the natural environment is better for birds than the biofuels environment, set you up for a situation that will kill you.

    Watching some birds is better than not being around to watch birds, maybe.

    RH

  16. Anonymous Avatar
    Anonymous

    “[While] BirdLife International …..strongly support the Commission’s proposal of a 20% target for renewable energy by 2020, they argue that the 10% biofuels target is a dangerous dead end.”

    I just can’t get over the stupidity of this. If we think that fossile fuels are the problem, then the answer is 100% biofuels. You then have a closed stoichiometric and carbon chemical cycle. (Not counting the sun’s entropy, which we tend to ignore).

    What are the other options?

    Nuclear?

    Solar?

    You are going to manufacture all those solar panels with biofuels, rather than fossil fuels, right?

    Then you had better plan on more than 10% biofuels. And you had better plan on land wars over food vs energy.

    RH

  17. Larry Gross Avatar
    Larry Gross

    geeze RH.. the best way to describe your dialog style sometimes is to compare it to throwing fertilizer on weeds…

    re: energy efficiency

    What if everyone buys a Prius and/or starts carpooling/riding mass transit to work?

    Will either one of these actions to reduce energy use – result in people not being able to buy food or clothes?

    That was my question.

    I wasn’t asking about the 10 future episodes of “As the World turns” – only if it were possible to reduce consumption of energy without people substantially altering their ability to obtain adequate food and clothing…

    and you based this on an 80% reduction … instead of what I understand is a 20% goal in the shorter .. decade term….

    But whenever we discuss a 20% reduction.. somehow it’s gets escalated to 80% with folks starving and freezing.. therefore.. the conclusion is that there is no way we can do ANY reductions …

    which is adding fertilizer to the weeds… or playing 52 card pickup with 51 cards…

    Let’s turn this around.

    You tell me how MUCH we can reduce energy usage BEFORE we get to the point of starving and freezing.

    Have you got a reasonable number?

    Is it MORE than 20%?

    no mo fertilizer… please..

    and remember we’re not getting paid by the word either. 🙂

  18. Anonymous Avatar
    Anonymous

    “Will either one of these actions to reduce energy use – result in people not being able to buy food or clothes?”

    A Prius costs considerably more to buy than a smaller car with a conventional engine. Depending on the cost of fuel and how much you drive, it might be a good buy, or not.

    If it isn’t (for your area nad case) then it might cut into your clothing budget. It would be a false economy.

    The 80% number wasn’t mine: it was mentioned above.

    “You tell me how MUCH we can reduce energy usage BEFORE we get to the point of starving and freezing.”

    Actually, somewhere I have an article that discusses exactly that, and I think it does it pretty reasonably. I’ll see if I can dig it out. As I recall the author thought we could do about 40% of our energy needs through various kinds of renewables, before the other costs of competing for land took over and made it a false economy.

    I’m not opposed to conservation, just conservation at any cost.

    RH

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