I thought this was interesting. The Texas highway department—Texas, no less!—says that roads simply don’t pay for themselves.
… no road pays for itself in gas taxes and fees. For example, in Houston, the 15 miles of SH 99 from I-10 to US 290 will cost $1 billion to build and maintain over its lifetime, while only generating $162 million in gas taxes. That gives a tax gap ratio of .16, which means that the real gas tax rate people would need to pay on this segment of road to completely pay for it would be $2.22 per gallon. This is just one example, but there is not one road in Texas that pays for itself based on the tax system of today. Some roads pay for about half their true cost, but most roads we have analyzed pay for considerably less. To conclude, in the SH 99 example, since the traffic volume for that road doesn’t generate enough fuel tax revenue to pay for it, revenues from other parts of the state must be used to build and maintain this corridor segment. The same is true across the state, meaning that, as revealed by the tax gap analysis, overall revenues are not sufficient to meet the state’s transportation needs.
There may be some political shenanigans at play here that, not being a Texan, I know nothing about. (Haven’t I heard that Texas is trying to build a massive toll-road corridor?) Still, the idea that roads don’t pay for themselves—and instead, must sap money from other funding sources—seems like quite an admission from a highway department. Perhaps there are lessons here for road construction projects all across North America, not just in Texas.
Jeff Youngstrom
It’s kind of strange to argue that every stretch of road should pay for itself through the taxes on the gas people consume driving on that stretch of road. Seems like costs and benefits of roads are better considered at a system level.This post reminded me to go look up how different states pay for roads. It got complicated so I wrote it up over on my blog instead of here in the comments. http://tomecat.com/madtimes/index.php/2008/07/23/paying-for-roads/The piece relevant to this post, though, is that according to the FHA, funding for local roads and streets in Texas is 88% from “motor-vehicle and motor-carrier taxes”. Less than 3% comes from fuel taxes. For Texas highways, only 22% of funding comes from fuel taxes, another 14% from those motor-vehicle taxes, and the rest comes from a variety of sources, but mostly federal funds.If Texans want to pay for roads with gas taxes they’ve got a lot of shifting to do.References:highway funds: http://www.fhwa.dot.gov/policy/ohim/hs06/htm/sf1.htmlocal road funds: http://www.fhwa.dot.gov/policy/ohim/hs06/htm/sf5.htm
Clark Williams-Derry
That’s a fair point, Jeff (and a great post on your site). And I agree, expecting each road, street, or right of way to pay for itself is probably a bit odd. I’m not convinced that it’s the wrong way of looking at things, but I’m not convinced it’s right either.I guess my opinions on the matter are: 1) to the extent that roads cost money, road users should pay; 2) the people who use the roads most should pay the most; 3) we should pay a-la-carte, rather than in lump sums, since that gives incentives not to overconsume, but rather to drive only as much as makes sense. Current road financing schemes are imperfect on all accounts.
Dan L
Paying a la carte is an option once the road is constructed.Until then, it is lump sum, because nobody will use a road that does not(yet) reach its destination. And once your toll-road has been paid for, what happens to the toll? Doesit drop to maintenance levels, or do you let private enterprise profit fromyour transportation?Personally, I think operating a road as a utility makes more sense than what happens now.
David Hiller
Dan:It’s not just the construction and maintenance, but the other costs associated with driving that add up to a huge subsidy.Public safety, public health, delays from congestion and other marginal costs all have to be factored in. In 1996, Delucchi calculated 1991 costs to be in the neighborhood of $0.50 per mile. Adjusted for inflation, sociaty at-large subsidizes driving to the tune of roughly $1.00 per mile in 2008.
Jeffery J. Smith
Perhaps drivers can persuade me to cover some of their costs, but I’d rather they ask rather than bludgeon me with taxes. Using fuel taxes to cover ongoing costs of maintenance, police patrols, collision response, insurance, pollution, etc, seems fair to me.Roads also attract higher land values to nearby sites. Shifting the property tax off buildings, onto land, could recover that socially generated value and use some of it for the capital costs of roads – paying back bonds sold to build them.