User Fees' Triple Bonus: Cutting Traffic, Reducing Pollution, and Paying for Transportation Improvements
Posted February 13, 2012 in Moving Beyond Oil, U.S. Law and Policy
It’s not often I see eye-to-eye with conservative groups such as the Competitive Enterprise Institute, National Taxpayers Union, Reason Foundation, and Taxpayers for Common Sense. It turns out that user fees for transportation infrastructure are one such occasion, and today we all transmitted a letter to the House of Representatives saying that
...proposals for funding the [transportation] bill passed by the House Natural Resources and Ways and Means Committees the week before last are fundamentally atodds with this longstanding funding principle: directing royalty revenues from expanded onshoreand offshore oil and gas production into the Highway Trust Fund. Further increasing the relianceof the Highway Trust Fund on revenue streams not connected to use would threaten the futurehealth of America’s highways.
As is well known, the maintenance and improvement of our transportation infrastructure is virtually at a standstill because the traditional mechanism for funding these undertakings has stagnated; revenue from gas taxes is woefully inadequate because our representatives lack the political courage to take the unpopular step of raising gas taxes.
While user fees may be inappropriate for many public services – education, libraries, public safety for example – in the case of transportation, they make sense.
That’s because, particularly in the case of roads, we need to avoid the unnecessary cost of oversupplying pavement. This principle is especially important to keep in mind due to the real, measurable "induced traffic" effect on travel demand with new lane mileage. For example, as a conservative friend of mine says, the infamous bridge to nowhere would not have been seriously considered if there had been a requirement that it pay for itself via tolls. (There would have been too little traffic to justify it.)
Marc Scribner, a transportation policy analyst for the Competitive Enterprise Institute, favors user fees to fund transportation infrastructure because this combination is fair, proportional to road use, provides a predictable source of funds, and is attractive to investors.
From an environmental point of view, user fees can reduce pollution, greenhouse gas emissions, and other unhealthy emissions. If, in addition to the costs of maintenance and construction, the cost of externalities such as pollution were incorporated into user fees(click here for a recent, comprehensive study of externalities due to energy use in transportation by the National Academy of Sciences), consumers would be given an even more accurate signal as to the real cost of using roads. Including the costs of externalities would further bring demand in line with the costs, in the broadest sense of the word, we are willing to pay. In addition, making user fees a regular component of the funding mix would provide additional revenue for the funding of new public transportation alternatives.
While user fees and gas tax revenue should fund most highway maintenance and construction, I am concerned about equity and believe that some projects and modes are worthy of some public subsidy. For example, even relatively well-run transit agencies like the Southeastern Pennsylvania Transportation Authority (SEPTA) require a lot of support. At the same time, public transportation agencies need to do a better job of recouping revenue based on the value of their services by charging adequate fares; such "value capture" from new economic activity -- for example, when commercial development thrives at a commuter rail stop -- is a worthy policy tool.
However, House Republican Leadership's unprecedented "drill and drive" linkage which undermines user fees is yet another awful idea in this bill, underlining the need to vote against H.R. 7.
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Comments
Keith Laughlin — Feb 16 2012 02:36 PM
I couldn't disagree more with this framing of the user fee argument. I can understand how environmentalists -- and I consider myself one -- would oppose dedicating off shore drilling revenues to building and maintaining highways. But by using the argument that such activities should only be funded with taxes on users of those highways, you are conceding the political argument that the reverse is also true. Namely, that fees collected from gas taxes on highway users must be dedicated to highways. Since 1982 with transit and 1991 with bike/ped, those revenues have been used to support multi-modal investments in our transportation system. But House Republicans are now using the user fee argument to justify the elimination of federal investment in bike/ped and pushing transit into the general fund because those modes do not contribute user fees to the transportation trust fund. So by using the user fee argument in an attempt to ward off the specter of off shore drilling, you are playing into the hands of those who oppose using federal gas tax revenues to invest in low-carbon transportation alternatives like bike, ped and transit.
Deron Lovaas — Feb 16 2012 05:24 PM
Keith -- Thanks for writing. I know you've been crusading against the term "user fees" for awhile.
I think it's useful to educate people -- as you have, and as the Public Interest Research Group has as well -- about the fact that "user fees" aren't all they're cracked up to be. Other revenue sources are often needed to supplement them when considering transportation investments. That makes sense.
And, they are a useful policy tool. There are other terms that one could substitute to describe them with more precision, of course: Gas taxes, tolls, perhaps one day a VMT fee, as well as fares in the case of some modes such as commuter rail. I'm comfortable with those too. Regardless of what you call them, they're good to have in the toolbox.
And to be clear, I don't advocate that transportation activities "only" be funded with such charges. I realize that some are abusing the term by claiming that it should entail a stringent doctrine whereby the fee revenue only supports one mode of transportation, or even just transportation. But that doesn't make it so.
I think its sensible to rely on user fees as a policy tool that can save energy, maximize efficient use of infrastructure, and generate revenue for transportation improvements.