U.S. highways and bridges continue their decline, and there is no prospect for a federal program on the horizon.
President Donald Trump has presided over several Infrastructure Weeks since he took the oath of office and they’ve become, more than anything else, a time to recognize a national priority that is being neglected by the United States government. A White House meeting with Trump and House Speaker Nancy Pelosi made headlines in April when the two agreed to make progress on a two-trillion dollar infrastructure program. But they haven’t agreed on how to pay for such a package - and without that, America’s infrastructure will continue its downhill slide.
Paying for Infrastructure
There is bipartisan agreement that infrastructure improvements are critical to the continuing health of the U.S. economy. The problem is that the two sides have very different views on how to pay for the buildout. The Democrats want to fund it through federal spending while the administration proposes to finance the projects with equity participation and tax credits for private-sector builders.
A 2018 report from the bipartisan, centrist Congressional Problem Solvers Caucus recognized the need for Congress “to provide stable long-term sustainable funding for infrastructure.” The report shined a spotlight on problems with the Highway Trust Fund (HTF), which is supposed to provide federal dollars for building and maintaining surface roadways and which is funded primarily with the federal gasoline tax. However, the 18.4-cents per-gallon gas tax has not been increased since 1993, and, since 2008, spending has exceeded declining revenue in the fund.
“This spending,” the report concluded, “puts the burden of today’s infrastructure needs on tomorrow’s children.” The report made the case for hiking the federal gas tax, which it euphemistically referred to as the “federal gasoline user fee.”
Increasing the federal gasoline tax enjoys a growing consensus, gaining support even from the U.S. Chamber of Commerce and the American Trucking Associations. The ATA supports 20-cent per gallon tax increased to be phased in over four years.
“We estimate that the fee will generate nearly $340 billion over the first 10 years,” said ATA CEO Chris Spear. “It will cost the average passenger vehicle driver just over $100 per year once fully phased in.”
Under ATA’s proposal, the gas-tax revenues would, in the first instance, go to fund the HTF to prevent a reduction in distributions. The tax would then fund a new $5-billion annual allocation which would be targeted at the costliest highway bottlenecks in the country. Any remaining funds would be apportioned to states according to the existing Surface Transportation Block Grant Program formula.
“This approach,” said Spear, “would give state and local transportation agencies the long-term certainty and revenue stability they need to maintain and begin to improve their surface transportation systems.”
But increasing the gas tax has its problems: it couldn’t raise more than a fraction of the funds required and it faces political opposition. The Tax Foundation disputes ATA’s estimates, calculating that a 50-cent per gallon hike would generate $306 billion over a decade.
Some oppose an increase to the gas tax as regressive, since it hits lower-income Americans harder than others. Spear counters that “the economic harm of failing to enact our proposal will be far more damaging to motorists,” claiming they pay $1,600 a year on additional fuel and vehicle maintenance, and lost time.
Some proposals see public-private partnerships and privatization schemes as fueling much of the infrastructure improvements of the future. But PPPs often mean tolls or increased tolls and don’t have a great track record. The 2006 privatization of the Indiana Toll road led to the doubling of tolls for five-axel trucks within five years. In Mexico, tolls on the 43 private highways and nine toll bridges built between 1987 and 1994 were among the highest in the world, leading drivers to shun those routes and the government to spend $7.5 billion to re-nationalize some of them.
The ATA is against more tolls—which “would be far more regressive” than a fuel tax hike, according to Spear—as is the aptly-named Alliance for Toll-Free Interstates whose spokesperson, Stephanie Kane, said that “tolls on existing interstates are bad for motorists, bad for the economy and wildly unpopular.”
Kane cited a 2011 Virginia study of tolls on Interstate 95 which recognized “the inefficiency of toll collection” and concluded that “the harmful consequences for businesses due to traffic diversion, and the diminished safety and increased maintenance costs of secondary roads, far outweighed any perceived benefits to the state.”
Kane also contended that tolls waste eight to 11% of revenues on administrative and operational costs, requires an expansion of government bureaucracies, and discriminate against lower-income Americans.
Silver Lining
If there is a silver lining in this controversy it is that concentrating improvements in a small proportion of the highway system could achieve large results. “Seventeen percent of National Highway System miles represents 87% of total truck congestion costs nationwide,” said Spear. It seems logical, therefore, that any infrastructure program should focus on funding improvements for those choke points.
Infrastructure has often been described as a bipartisan issue, yet how to pay for it has no bipartisan consensus, and there lies the rub. Even if, by some political miracle, a bipartisan consensus can be forged, the numbers being bandied about of late will likely fall woefully short of the spending level required to upgrade U.S. infrastructure. The American Society of Civil Engineers, in a report released in 2017 (see sidebar on page 10), estimates that a total investment of no less than $4.59 trillion by 2025 would be required to bring the nation’s infrastructure up to snuff.
Any infrastructure program will require appropriations by Congress of large sums of money. Without the political will to move ahead with spending, the enactment of an infrastructure program during the remainder of Trump’s term appears no more viable than the stillborn proposals that have emerged so far.
