In California, we are leveraging transportation bond proceeds with private sector, federal and local resources to multiply the total funds that can be dedicated to improving our transportation system and reducing congestion. We are also working to implement a network of high occupancy toll (HOT) lanes that would significantly reduce congestion and emissions, provide more reliable travel options for buses, carpools and other users who choose to pay for the service, and at the same time raise needed revenue to fund infrastructure and operational improvements. Leveraging private sector investment and using innovative tools like road pricing are critical for states and local agencies that are struggling to maintain and improve transportation services without busting their budgets.

Jacqueline Gillan also makes a good point about the significant economic cost of vehicle crashes and the need to including safety in the equation.  We have come a long way in mitigating the impacts of crashes after they occur.  The next giant step in reducing fatalities is to adopt intelligent vehicle and infrastructure-based technologies that will warn drivers of dangerous situations in real-time and prevent crashes from happening in the first place.  The technology is here, and the next surface transportation bill should jumpstart the deployment of these advanced safety systems in our vehicles and on our roadways.

A VMT-based system could be a viable option sooner than we may think.  The technologies exist to enable a mileage-based system in which user fees could vary by time of day, weight, or other factors, while also protecting privacy.  The next authorization bill will be a key opportunity to try out some different approaches to implementing a VMT-based financing system.

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I agree with Phineas that it is difficult to provide a road system partly tolled and partly un-tolled because (as he writes) “what happens on one road affects what happens on others.”

No doubt he will, on reflection, agree with me that it would be best for all roads (except local ones) to be electronically tolled. They could then all be privately funded, supplied, and managed, like food, water, electricity, telecommunications and most other necessities. 

Stimulus and PPPs

The nearly $800 billion stimulus has a mix of transportation infrastructure proposals that seem to make sense given that (1) they rely--for the most part--on existing authorities, (2) the need for expediency, and (3) the feedback given by federal agencies about what they could handle responsibly.

The surprise of the bill without question was the $8 billion high speed/inter-city number, which will require substantial effort on the part of USDOT and FRA to spend responsibly within the allotted time.  Although not unprecedented for conference politics, it is rare to see such a plus-up when neither bill had anywhere near that much money.

The tax side had several useful provisions, including relief for private activity bonds and language enabling tax-exempt refundings for bonds issued within the 2004 and 2008 time period.  If these can help kick-start the public finance market they will be great steps.

All in all, the $50 billion share of the nearly $800 billion of stimulus, while lower than some of us would have liked, was a good first-step toward addressing our needs.

I must take issue with Phineas's sweeping critique of PPPs.  Transportation infrastructure will require public, public and private, and private revenues to address our capacity and congestion issues.  Certainly poorly designed PPPs have problems similar to poorly designed public and private projects but the benefits of well negotiated agreements can be substantial (D.J. listed a few below and the global experience suggests that they have been critical to the upgrading of infrastructure across the modes).

As with anything else, public agencies should take care that their lease agreements or other devices are in the public interest and, if necessary, they should obtain independent and objective financial expertise when they are the seller in a transaction.  I think Mr. Oberstar's set of principles released last year are a good start of a dialogue about their use in the upcoming surface authorization.

Steve Van Beek

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If the last few years have taught us anything, it’s that talk about “innovative finance” is a sign to hold onto your wallet.

As I’ll argue below, the aggressively touted “innovative” private infrastructure deals also pose serious risks and fundamental conflicts with the public interest. Moreover, the current means of financing transportation are more constrained by lack of political will than by economics.

Much like the mortgage industry in recent years, innovative private infrastructure deals often involve heavily leveraged debt and the trading of long-term risk. Worries that the model is not sustainable have been voiced by House Transportation & Infrastructure chairman Oberstar and the analyst who first blew the whistle on Enron. A recent analysis by PricewaterhouseCoopers describes the resemblance between the private infrastructure market and the now-infamous subprime mortgage market, both of which depend on a cycle of leveraging debt and selling the risk to others:

“In the early 2000s, an increasing number of large project finance lenders aggressively cut back on their project and infrastructure finance lending business or amalgamated them into their wider leverage finance business. This led to the now well-practiced strategy of “originate and distribute,” often cycled through the dedicated securitization structures. … These were initially used to demonetize a bank’s balance sheet but then took on a life of their own as they became conduits for banks to originate business, take a fee, and then sell on the exposure.”

The issue isn’t public versus private per se. With strict public protections and under certain circumstances, there’s nothing wrong with new ways of financing that involve the private sector. For example, private developers of transit-oriented development should have a role in financing nearby rail investments that will boost their property values. Similarly, the Miami tunnel project and Missouri bridge repair deals were looking like potentially beneficial deals for the public, although neither deal was profitable enough for investors to put up enough cash and both fell through.

There are three fundamental conflicts between the private toll road business model and the public interest.

1. They depend on massive tax subsidies that dictate contracts that generally last longer than fifty years, which is far longer than the future public needs or risks can be anticipated.
2. Private debt and equity is inherently more expensive than public capital – especially now when Treasury bonds are at near zero rates and scarce private capital is at a premium. Therefore any private deal entails outsourcing to a higher-cost supplier and is only tenable with either additional subsidies or higher tolls than would be necessary with public financing.
3. Carving up transportation corridors under the operation of private companies also entails loss of public control over transportation policy and management. As any driver knows, what happens on one road affects what happens on others. Toll increases on one road, for instance, can lead to large diversions of trucks and other traffic through nearby towns. The public interest depends on sometimes acting upon larger social, environmental, or regional concerns that are not well met by separately maximizing revenue and profit on individual roadways.
   

While policy makers should consider new-fangled user fees, they have been too quick to echo claims that gas-taxes are obsolete as the basis for funding of our nation’s transportation system. Yes, more efficient cars and declining rates of driving will (hopefully) mean that the number of gallons of gasoline we consume will not grow apace with our transportation needs – and therefore gas taxes would need to continually ratchet upwards to provide enough revenue. But one quick look across the pond at sky-high gas taxes in Europe show how much room we have to work with.

Before we would reach the limits of ratcheting up gas taxes to gain additional revenue, the planet would likely run out of viable sources of new oil. The point is not that the United States should institute $4 gas tax hikes to match other countries; but should realize that gas-tax financing is a viable option. To the extent that we reject gas taxes, it should be because we have found superior alternatives, not because they are obsolete.

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The stimulus bill, about to be enacted as I write this note, provides an indication of how the new Administration and Congress may deal with financing the Nation's transportation system in these turbulent economic and financial times.  It hardly needs to be said that we are facing the most severe financial, credit, and economic crisis that America has experienced, since the Great Depression.  This intial reaction suggests a recognition that transportation infrastructure investments can bring substantial economic benefits.

The needs for, and the benefits of, transportation infrastructure investments have been discussed by many panels and organizations in the past few years, including the Congressionally-authorized National Surface Transportation Policy and Revenue Study Commission in its 2008 report.  Civil engineers have noted a need for over $1.5 trillion just to bring the Nation's infrastructure to a state of good repair, one in eight bridges nationally is structurally deficient, and highways, transit facilities, ports, and airports are aging, deteriorating, and congested.  These conditions threaten the reliability and productivity of the transportation networks on which America's economic growth and competitiveness depend.

This economic crisis present, as the President's Chief of Staff was reported to have said, an opportunity that should not be missed.  But the opportunity is not merely one of spending more money.  That same opportunity demands that we spend, not only to create construction and construction-related jobs in the next few months (as critical as that need is), but that we spend with a sense of providing for long-term economic growth, based on broadly shared national goals and purposes.

While the stimulus bill will provide much-needed money for projects, it will not alleviate the continuing crisis in transportation funding. The cash shortfall in the Highway Trust Fund (HTF), that is, its inability to meet the obligations that Congress enacted in SAFETEA-LU in a timely manner, required an $8 billion "fix" from general funds just a few months ago.  The transportation projects that will come from the stimulus bill will, also, be supported by general funds, and further "fixes" or "patches" of the HTF from general funds can be expected, even during this federal fiscal year.

All of this means that transportation investment will occur within the context of severe financial constraint.  The opportunity that this economic crisis presents is one to reform transportation programs, as well as to invest more.  It is the case that, while we have not been investing enough in transportation infrastructure for the last several years, we have been spending a great deal of money on transportation, and we have not always been spending it well.  In the words of the National Surface Transportation Infrastructure Financing Commission in its interim report a year ago, ". . . greater investment must be accompanied by wiser investment."

We should not be spending on transportation infrastructure only to create jobs.  Rather, we should establish clear national goals, and transportation investments should be related to them.  We need to establish priorities of investment, and invest in those programs and projects that bring the greatest returns, in terms of economic productivity, safety, and energy security.  We should look to outcomes, measure performance, and demand accountability in the use of limited public capital for transportation.

In this crisis we should also begin to shift away from a dependence on general revenues and on the gasoline tax, and to move steadily toward a greater reliance on user charges.  Those charges should incorporate into the cost of transportation its impacts on energy, environmental resources, safety, and congestion, and pricing transportation facilities and systems can provide useful signals about where new investments are needed.

Finally, we should use this moment to expand the sources of investment capital for transportation.  Federal funds, whether in this stimulus bill or in the surface transportation authorization bill that the Administration and Congress must address this year, should be used to leverage other sources of public and private investment capital for transportation

While we are understandably currently focused on the issues of stimulating the economy and creating jobs, addressing these issues should force us, as well, to move toward the establishment of a system of funding and financing transportation that is characterized by performance, outcomes, and accountability.

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I'm glad that Governor Kaine mentioned the success that Virginia has had with public-private partnerships.  There is no question about it -- public-private partnerships are good public policy.  These projects provide major public benefits such as reduced highway congestion, cleaner air, improved safety, and enhanced mobility. And these partnerships are already working in places like the Alameda Corridor in Southern California, the Heartland Corridor from the Atlantic to the Midwest, the Capital Corridor in Northern California, the Gateway Corridor in the East, and the CREATE Project in Chicago. 

The railroads are also advocating infrastructure tax incentives as a way to help meet the estimated growth in demand for freight transportation.  Railroads are continuing to make the massive investments required, but will come up short of the $148 billion that is needed to meet this demand.  Passage of the short line infrastructure tax credit has been helpingful in bridging the estimated shortfall, however we still estimate a funding gap of about $1.4 billion a year for the next 25 years.  The time to invest is now.  Infrastructure tax incentives will go a long way toward expanding the rail network that America needs to remain globally competitive.
 

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Gabriel, I was suggesting we manage demand through pricing, like we do for almost every other good and service in our economy. But again, the benefit of pricing is not that it raises revenue – there are numerous ways to raise revenue. Pricing manages demand, improves system performance, and increases the number of drivers able to utilize the network. As Michael points out below, “But stop-and-go freeways that now lose a third or half of their effective capacity when congested might be restored to free-flow while expanding travel choices with different approaches to pricing transportation.”

FYI :The stimulus bill text and explanatory statement are now available at http://appropriations.house.gov/

 - Bill Text - Division A
 - Bill Text - Division B
 - Joint Statement - Division A
 - Joint Statement - Division B

Feel free to sound off on the stimulus's infrastructure provisions -- as well as on the question of the week, of course. I also wrote a short story in this week's magazine on Obama's infrastructure spending agenda (such as it is), which you can find on the magazine homepage or with this link:

http://www.nationaljournal.com/njmagazine/nj_20090214_6911.php

DJ suggests that spending other people’s money might not always the best way to tackle shortages, and that “demand management” should sometimes be used. Is he referring to banning private cars from some roads? Or to banning parking? Or might he, just possibly, be thinking of better road pricing?

In market economies we use pricing to manage demand, and also to stimulate additional supply, to the point at which users get the facilities they are prepared to pay for. So pricing congested facilities can generate funds for appropriate expansion. Why do we not apply these principles to relieve highway problems? Many free marketeers would even accept the idea that some places, such as the White House or the Mall, should not be turned into additional road space.

Now that electronic E-ZPass-style systems enable prices for road use to vary with the time and place of travel, and that payment can be as easy as payment for cell-phone use, has the time come to bring roads into the market economy? And to provide them on a commercial basis, like telecommunications?

Might Lisa accept this “innovative approach” as a response to her question?

A number of comments, including those by Bob Poole and Steve Hemminger, have touched on the fact that raising money is not the sole solution to providing greater mobility.  In many of the most congested areas of the country it is extraordinarily difficult to add additional physical capacity. The answer to the question, “How will we pay for the transportation system we need?” should be judged on its fundraising potential and the potential to produce improved system performance. While fossil fuel taxes, and the corporate tax suggested by Dick Mudge, have the potential to raise considerable sums, they do very little to manage congestion. Any answer to the question of how we raise funds has to include a demand management component to provide additional capacity when adding lanes is not an option.

In one word, the answer is yes. Yes we should use every possible financing approach available to us to help meet our present and future transportation needs. Yes, once credit markets recover, public-private partnerships will play an increasingly important role in financing transportation projects. Yes to increased reliance on toll revenue, especially considering that the majority of major highway projects underway or under consideration are tolled facilities. Yes to increased use of innovative lending tools like the federal government’s Transportation Infrastructure Finance and Innovation Act (TIFIA) loans. And yes to long-term approaches like charging drives by their vehicle miles traveled instead of their gas consumed.

But we also need to be candid and recognize that these innovative finance measures must be in addition to, and not instead of, the existing method for financing transportation projects – the gas tax. As many in the blog, including Ken Orski, have noted, the financial pressures facing this system are simply too great to walk away from any single source of revenue, not to mention the single largest source of revenue. The gas tax isn’t perfect, but it’s in place, in use and indispensible. As Governor Kaine said, none of the other innovative financing approaches do much for the nation’s existing aging infrastructure. And they likely lack potential in many of the nation’s rural areas, where traffic is sometimes light, but always essential.

None of these is an easy option. And as folks like Mike Replogle have noted, years of wasteful spending and earmarks have undermined our ability to finance the nation’s transportation system. That’s exactly why it is so hard for politicians to adjust gas taxes to inflationary levels, or support tolls or talk about the benefits of public-private partnerships. So before we innovate how we raise the money, we first need to improve how we spend the money. It’s time to stop wasting money on earmarked projects that never get built and niche programs that do little to repair roads, improve traffic or ease shipping bottlenecks. It’s time instead to rebuild investor confidence in our transportation system.

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As the National Commission stated, in the short term we are going to have to rely on an increased gas tax to meet our basic needs within this next authorization. That funding could be supplemented with general funds in the short term, but that is a stopgap measure. The political reality of the situation doesn’t allow for much more than that, even with a delay in the next authorization. However, that does not mean that the next authorization cannot create the environment by which we transition the funding of the transportation system.

To restate a point made by Mr. Gribbin, we need to be open to looking at all forms of financing our needs in the transportation system. One of the ways to examine how to finance the system is to look at where the benefits of the system accrue, and thereby create a system of taxes and user fees that adequately balance the burden as well as accurately capture revenue from the users of the system. This is not a one size fits all solution, but requires balancing at all levels (federal, state, and local) and means that regulatory barriers to innovative financing mechanisms need to be reviewed.

What must be ensured as a component of this examination is that we are not relying on the taxation of a resource that we are encouraging to decline. In the end, this is one of the fundamental flaws of the gas tax and could potentially be a flaw in any VMT tax scheme. Other suggestions have been made to look at property and income as other methods for ensuring a broad-based financing scheme. Sen. Dodd’s National Infrastructure Bank proposal should also be considered in this context, as well as capturing revenues from mobile source emissions in any cap-and-trade scheme, user fees, tolls, congestion pricing, metropolitan cordons, local option taxes, and many other options and possibilities. We need to be open to both the advantages and flaws of any of these options and be realistic on what they can accomplish. In addition, we need to ensure that we do not end up in the current situation of the continually declining value of the gas tax by indexing our new schema to inflation.

A component of this continued investment also needs to be a broadening of private sector participation in the funding and decision making processes around transportation. The first major improved roads (and canals for that matter) were undertaken through private investment. We have just taken our first steps back into the application of private capital into transportation capital with the long-term leasing of facilities to ensure their ongoing maintenance. Regardless of the merits of the individual leases, that sort of shift in concept is an improvement towards how we look at our transportation system. In public transportation, we have a similar sort of activity being undertaken with private employers and companies finding private capital to support what are essentially public transportation solutions. In the absence of federal acknowledgement or encouragement through tax or regulatory structures, being able to apply all of the varying types of resources to meet our transportation needs will become impossible.

Transformation overnight only happens in Hollywood. This authorization can, and should, set the groundwork by which this new funding structure can be set. To do so, Congress should concentrate on the articulation of national goals and encourage DOT and the transportation community to bring forward the policy details to implement those goals.

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The transportation community urgently needs to focus on a variation on Ms. Caruso's question, borrowed from the movies: SHOW ME THE MONEY!

Ten days before being swore in, President Obama said in an interview that he is opposed to an increase in fuel taxes.  It seems to me that we should take him seriously.  I also recall that when the National Commission issued it report last year recommending a fuel tax increase in the 25-40 cents range, not a single member of Congress endorsed it.

Second, the Democrats in Congress seem intent on passing cap and trade legislation, which, no matter the particulars, will be a massive floating excise tax.  They talk of collecting trillions of dollars over the next 40 years.  One estimate is that approximately 30% of that will be paid by owners and operators of transportation vehicles.  So we are likely to see a major fuel tax increase, but there is no serious effort under way to see that it it dedicated to transportation needs.

I am opposed to cap and trade for numerous reasons, but I recognize that there is a substantial chance such a scheme will be enacted into law, perhaps quite soon.  Thus, the leadership of the transportation public policy community needs to focus on the line from the Jerry McGuire film.  Transportation generated revenues in a cap and trade system should be dedicated to transportation programs.  That should be our mantra; and our time, energy and resources should be entirely dedicated to that goal.

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There are many new (and old) ideas being proposed for funding our nation's surface transportation system but regardless of what approach is taken there are some life saving and money saving strategies that need to be adopted by Congress in the reauthorization bill. Increasing safety has the potential to offset increasing revenues for families who are paying the exorbitant economic and social costs of motor vehicle crashes. These specific strategies will reduce the financial burden on families regardless of what financing method or combination of methods are implemented. Prevention may not be sexy, but it works. 

Since the 1980s the U.S. Department of Transportation has published societal cost figures associated with annual motor vehicle crashes. We’re up to $230.6 billion per year, and these figures have not been updated since 2000.   Losing over 40,000 lives and injuring millions more each year in motor vehicle crashes puts a tremendous drain on our nation’s economy as the effect and cost of these fatal and property-damage crashes ripple through our society. 

We know several inexpensive and proven fixes in the form of better, more uniform state traffic safety laws that prevent teens from destroying their own and other lives, and that result in higher seat belt use rates and injury prevention nationwide. But accomplishing such uniformity requires putting aside philosophical opposition and mustering political will to assure legislative success in all 50 states and DC. We need a federal system of financial incentives followed by financial sanctions if a state does not adopt the law.   It worked for the 21 drinking age and lower national blood alcohol limits. Once we have uniformity in all states, traffic law enforcement improves dramatically, deaths and injuries are reduced, economic costs are cut, and our nation saves billions of dollars every year. And, this approach doesn’t cost the nation one cent to implement but reaps billions of dollars in return -- money that could be spent on other worthwhile programs.  

Along more conventional lines, we also need to look at donors and donees and not just as it relates to states. An important examination of true user fee equity is needed in the trucking industry to right the wrongs of the past several decades. Currently, publicly subsidized highways provide the underpinning for truck freight transportation that does not even come close to paying its fair share for the deterioration of U.S. roads and bridges. Numerous recent studies agree with this premise and support a more balanced fee system, particularly the December 2007 Congressionally-directed report, Transportation for Tomorrow, in which multiple strategies for securing user fee fairness in the trucking industry are suggested. These include diesel fuel taxes indexed to an inflation measure; reforming the woefully inadequate heavy vehicle user fee, unchanged from a fixed amount since 1984; weight-distance fees for highway use by heavy trucks; and additional infrastructure heavy truck adverse impact taxes. However, increasing user fees should not be traded for increasing truck size and weights which will only threaten safety, accelerate road and bridge damage and exacerbate funding inequities.

 It’s time to get some common-sense balance back in our nation’s crippled surface transportation system. If we do it right we can save lives, save money and save our infrastructure.

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The longer we ponder the question, the further the answer will be out of reach.  In just the past four years, the American Society of Civil Engineers reports the cost of taking care of the basics of our country – our transportation systems, energy systems and schoolhouses – has soared 37 percent due to continuing deterioration and inflation.

It’s a matter of priorities.

During the last eight years, when tax cuts for the rich and a misguided foreign policy were top priorities, our leaders found enough money to spend over a trillion dollars on each.  The current economic recovery plan prioritizes rewarding $12 billion to the top 15 corporate homebuilders who caused our economic crisis by pushing subprime loans through their lending subsidiaries – that amount alone would make up the mass-transit funding gap for one year if we made building mass-transit a priority. 

Vice President Biden said frequently during the campaign, “don't tell me what you value, show me your budget, and I'll tell you what you value.” By that measure, we must do better for America’s transportation system. 

America is spending $10.5 billion annually to build and repair our bridges but we need $17 billion each year to do the job right. We spend $9.8 billion on transit but $21.6 billion annually is what it will take to build our mass-transit network. America’s highways get short-changed the most – the $70.3 billion we spend each year currently is about one-third of the $186 billion we should be investing.

With a funding gap of such magnitude, all funding options should be considered. However, there must continue to be a strong federal component to transportation funding because we cannot sell off valuable public assets to the highest private bidder or pass the buck to state and local governments.

We must also think beyond the gas tax because funding transportation with user fees has proven insufficient to meet our needs and is unsustainable in the long run as Americans look to gas-alternative means of transportation. Also, user fees lay the burden on the person who is relying on our transportation system and not necessarily all those who benefit. For example, a working person who cannot afford to live in an expensive city relies on our transportation system to commute to work, but their employer also benefits from employees being able to get to work. A truck driver benefits from efficient roads but so do the businesses that depend on that driver’s deliveries.   

Finally, it is important to consider the costs of not building America. Gridlock on our roads cost the economy $78.2 billion every year. That is an expensive price tag for failing to build America but it is not the most costly – we can never put a price on the lives of those who were killed when a neglected bridge collapsed in Minnesota or on the lives of people who die every day in accidents caused by crumbling highways. 

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Most of my fellow bloggers have turned the question of "How Will We Pay...?" into "How Should We Pay...?" Predictably, the answers they gave were heavily colored by the interests they represent or the causes they champion, leavened by their personal convictions. Those of us who attended the just-concluded two-day Annual Meeting of the Coalition for America’s Gateways and Trade Corridors were treated to a sobering factual assessment of the funding prospects. We heard from Sen. Barbara Boxer (D-CA), Chairman of the Senate Environment and Public Works Committee (EPW), Rep. John Mica (R-FL), Ranking Member of the House Transportation and Infrastructure Committee (T&I) and a panel of senior congressional committee staffers representing the House T&I Committee, the Senate EPW Committee, the Senate Commerce Committee, and the Senate Finance Committee (the panel also included veteran congressional analyst Jeff Davis, editor of the Transportation Weekly.)

Here is what I heard the speakers say, supplemented by off-the-record conversations with some of the participants:

(1) Funding remains an overarching concern. Just to maintain spending at the current (2009) level would require an extra $100 billion over the next five years. However, the prospect of enacting a big gas tax increase is slim. "There is no enthusiasm in Congress for a big tax increase," several speakers observed. It was noted that Congress might be reluctant to enact a tax increase in the absence of strong leadership from the White House, and President Obama is not likely to spend political capital championing a tax increase that falls disproportionately on low income drivers. Nor is there a clear answer yet as to what other sources of funding could be mustered. "We are not yet at a stage of knowing where we are headed," confessed one speaker. Bonding is problematic because of the prevailing high interest rates. Prospects for a National Infrastructure Bank are uncertain because of opposition in the Senate Finance Committee to a process that would deprive Congress of its authority to make major infrastructure decisions. The proposed vehicle-mile travel (VMT) fee is still some 15-20 years away. What we may end up with during the transition period is a hybrid funding approach. Part of it could consist of a modest increase in the federal gas tax. Supplementing the Highway Trust Fund revenue might be some kind of a new federal infrastructure financing initiative (e.g., tax-credit bonds), and a mix of funding sources, such as dedicated fees for a freight program, incentives for tolling, private investment and general funds (general funds already are used to fund a portion of the transit program and have been used to cover the shortfall in the Highway Trust Fund earlier this year). As one panel participant put it, enacting the next transportation legislation will be "a wrenching effort."

(2) Much as Chairman James Oberstar and Rep Mica would like to push the reauthorization process "full steam ahead," some panelists cautioned against excessive optimism. The stimulus bill, they suggested, will affect the urgency with which Congress perceives the need to act by the October 1 deadline. The transportation funds in the stimulus bill represent a full year’s appropriation for the surface transportation program at current funding levels, thus relieving the pressure to act during the current session of Congress. Moreover, it was pointed out, States will be busy "digesting" the stimulus money and may not be equipped to obligate additional funds immediately. The authorization process may also be slowed down by delays in the appointment of senior level U.S. DOT officials and by a crowded congressional legislative calendar during the summer months, focused on appropriation bills. Funding a one-year extension with general funds is a possibility that cannot be excluded, one speaker told us. As another Conference participant observed, that might not be such a bad idea, for it would give the Administration and Congress some breathing space to develop a truly thoughtful legislation and an opportunity to generate popular support for genuine reform of the transportation program. "I would much rather see a one-year delay and do it right, than rush the process and end up with a poorly thought out bill," he told us.

(A fuller discussion of the prospects for the transportation reauthorization will be the subject of the next issue of our NewsBriefs)

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 It was good to see the support for “User pays” as a way to finance transport services, but sad that Bill Graves, President of the influential ATAs, has doubts about the idea.

Bill is correct that the federal fuel tax is cheap to collect, and that this would be a net benefit to road users if 30-40 per cent of the revenues were not diverted by the federal authorities to non-road uses.

But taxes on fuel seem to be neither equitable nor efficient as a way to finance roads. Trucks that cause heavy damage often pay less than trucks that do not. And the fuel tax does not adequately deal with congestion.

Might Bill explain why truckers have such strong objections to mileage charges replacing fuel taxes?

The beneficiary pays principal as called for by Eric Britton implies we should consider using a broad-based economic resource.   Work by Professor Ishaq Nadiri (NYU) shows that the economic benefits from the nation’s highway system provides significant productivity gains for virtually every economic sector (mining is one exception).  Gains are not focused on those industries with a direct link to highways (trucking, for example) but rather cover services and agriculture as well as manufacturing.   

This line of reasoning opens the door to considering a portion of the corporate income tax as a beneficiary tax for transportation.  This idea has been advocated by Bill Ankner (currently Secretary of Transportation for the state of Louisiana).  Such a fee would not require any additional collection costs – as for example would be the case with VMT-based fees.   We would still need to supplement this with variable tolls in order to provide travelers with a guaranteed level of service during congested times of day or locations.

Rethinking User-Pays

I agree with several others who have suggested that the basic principle should be “user-pays.” But there are quite a few different ways to interpret that principle. I recommend that we distinguish between two different things that users of the transportation system should pay for: the infrastructure they use and the externality effects they impose on unwilling others.

For the former we should have user charges, analogous to the payments we make to other network utility providers—electricity, gas, water, cable, etc. These charges should cover the costs of building, operating, maintaining, and ultimately replacing the infrastructure used. They make it possible for the infrastructure provider to remain solvent as a “going concern,” providing reliable services to its customers. And this should be the case whether the provider is an investor-owned company operating under some kind of long-term franchise or concession, or a public-sector toll authority. Both are businesses, and should operate as businesses.

For externalities, government should play the key role, via taxes on the “bads” produced in the course of people using the infrastructure. In the case of highways and rail systems, those bads include noise, conventional tailpipe emissions, and greenhouse gases (GHGs). For noise, the most efficient solution is probably for the infrastructure provider to be held accountable for mitigating noise externalities (as done today via sound walls, which could be more effective than typical US practice—see Japan for a much better model). Federal regulation has worked pretty well for conventional tailpipe emissions, which continue to decline in importance as the auto and truck fleets turn over. For GHGs, the most economically neutral approach is a carbon tax, which should apply across the board to all forms of energy use.

Making this kind of separation between charges for using infrastructure (utility bills) and taxes (or regulation) to mitigate externalities is far wiser than trying to mix the two into some kind of all-purpose tax on driving, intended (by some) to force dramatic shifts in mode share. It would be foolish, as some are now proposing, to start making transportation funding depend on proceeds from a carbon tax or cap-and-trade system. The purpose of those taxes is to reduce the thing being taxed, ideally eventually to zero. That’s hardly a sustainable basis on which to build 21st-century funding for transportation.

A true charge per vehicle mile traveled (VMT) should vary between cars and heavy trucks, since the latter take up a lot more space per vehicle and do vastly more pavement damage than cars. It should also vary by time and place, as a powerful tool used by the infrastructure provider to ensure high-quality service (just as 21st-century electricity providers will do via differential pricing enabled by smart meters). But a true VMT charge should not vary by engine size or SUV vs. mini-car. Those factors have nothing to do with the infrastructure and everything to do with externalities, the proper domain of taxes and/or regulation.

In a VMT-charge world of the kind I’m suggesting, my guess is that there would be a lot of urban congestion pricing, which would mean a lot of urban driving would be more costly to drivers, at the point of use, than it is today. That would certainly motivate shifts to other modes, shifts of some trips out of peaks, etc. That would make transit relatively more competitive with driving (especially express buses on premium-priced lanes), but it may not, by itself, be enough to make transit self-supporting.

But here’s what might do that. Convert whatever public subsidy is provided to transit operators (today frequently a monopoly provider) into transit vouchers, available to households below a certain income level. Deregulate the provision of transit, so that transit users have more choices, and so that the former transit monopoly must compete for business. Allow transit providers to charge fares based on their costs, to everyone except those using vouchers. This set of changes, I predict, would stimulate considerable innovation in urban transit. I have no idea if it would eventually eliminate the need for taxpayer subsidy; if not, urban-area transit sales taxes would still be needed to close the gap (including paying for the transit vouchers). But I see no reason why the customers of road utilities should be the ones paying for transit subsidies. A measure to help lower-income people travel should be paid for by all the taxpayers in a given metro area. And except for the poor, transit’s users should be the ones paying for transit.

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• Virginia has used creative public-private partnerships to finance key elements in a globally competitive transportation system.  For example:
  • The first privately financed port in North America supported by publicly-funded rail and highway improvements
  • A special tax on commercial property that supports the $2.7 Billion extension of the Washington Metrorail system to Dulles Airport in Virginia
  • A toll for users of managed lanes on the Capital Beltway that supports the $2 Billion expansion of the Capital beltway
  • An ongoing partnership to reduce highway construction costs by reclaiming energy production sites as rough-grade road beds
• So it is possible to create NEW capacity and NEW capital investments using these innovative financing approaches
• But our weakness has been and will continue to be paying for the maintenance and operation of our EXISTING transit, rail, highway, port and airport facilities.  Traditional resources will still be necessary to carry out these less-than-glamorous but absolutely critical governmental functions.

Future Funding and Financing

Valid estimates of the current balances and forecasts of the trust funds highlight the point that we do not have anywhere need sufficient funding to support our current transportation programs (even with some infusion of general fund monies).  That means we have to (1) raise the current system's taxes and fees that support the funds, (2) reform the structure, or (3) drastically cut back the public parts of our transportation system to align with available public and private monies.

With a couple of exceptions, most of the analysts in this blog have ruled out the first option, not because it could not provide sufficient revenue if taxes and fees were raised, but because the incentives are in the wrong place for problems such as congestion, energy use or climate change.  The third option was something the previous administration introduced under the premise that our program should emphasize the national interest (i.e., interstate highways, freight corridors) and leave the rest to the states or to the private sector.  Many of us believe that while the candor of the approach was admirable, and many of its strategies to employ PPPs and more regional discretion made sense,  its view of transportation's role was too limited, punting on issues such as energy use, climate change, and the public parts of transportation that generate limited revenue streams .  After all, if a transportation service generated enough "farebox" from users to support capital and operating expenses, a private provider would turn a profit and we would not need government to provide it (e.g., the Heathrow Express).

That leaves us the second option.  While it is attractive to focus on the concept of  "user pays" the concept has yet to be developed to the point where it could form the basis of public policy.  It ignores the non-user benefits (e.g., air traffic control or public transit in a congested corridor); it does not at first glance answer what costs the user should pay for (externalities?); and, it is not clear how revenues generated would be redistributed to pay for the public parts of the system (those that are incapable of supporting themselves).  Nevertheless, the principle of user pays is very helpful in recognizing that fees and taxes should help both on the micro-level with incentives, and on aggregate funding level, providing sufficient revenue to support our program.

Here are several principles that should form the foundation of a new system of funding:

1. Many transportation services provide non-user benefits that should be supported by the federal government.  For example, the costs of the FAA and air traffic control have been supported by the federal to the tune of 16-20% in recent years. Taxpayers, in addition to users, have interests in transportation security, a redundant and resilient transportation system, conversion to non-fossil fuels, and other transportation priorities. We need more research in this area.
2. Taxes and fees that support the funding streams should align with costs and provide incentives for important concerns such as congestion relief and reduction of greenhouse gas emissions.  We need to agree on what externalities we want to price into our transportation decisions, both nationally and locally.
3. We should not "stove-pipe" our funding but should provide communities and regions with the discretion to choose the best intermodal passenger and freight solutions. 
4. A wide range of PPPs should be explored and encouraged including privatization, tolling, congestion fees and development banks.  In general, we need to do a much better job in putting together public and private monies for transportation solutions that serve both public and private interests (e.g., Alameda Corridor and airports).  As we do so, we should recognize that they play an important role but that not every worthwhile transportation project will generate a revenue stream.

We have a lot of work to do.  Let's open our minds and get started.

Steve Van Beek

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I would like to start with Steve Heminger's excellent suggestion of yesterday afternoon that "Our guiding principle for financing the 21st Century transportation system ought to be "user pays" ", but take it one step further – and this on the grounds that one of the most valued contributions of a very good idea is that it may lay the groundwork for an even better one.

So in the spirit, might we not jiggle this idea just a bit and take as our guiding principle "beneficiary pays"? Now ugly though this phrase may be I propose that it takes us right to the core of both the issue and the broad solution path for the financial retrofitting that is clearly so much needed.

If we take this expanded principal as our guiding theme, it will lead us to think with more complexity about the full range of beneficiaries of transportation services and improvements. This has significations for institutions such as the intolerably challenged public transportation providers in just about all of our towns and cities. 

If we think of the "user", the woman or man sitting in a bus or rail car instead of driving their Hummer, as the only beneficiary of public transportation, I would respectfully submit that we are casting our net not nearly wide enough. The beneficiaries of this choice on their part are many and include, among others, employers, businesses in the area in which the services are provided, holders of real estate value, the city itself who gains direct economic benefits every time one car is removed from its roads, etc., and this is without even starting to look into the realm of only slightly more removed beneficiaries such as public health providers, law enforcement agencies, and the long list goes on.

The simple fact is that the best ways of getting in and around our towns and cities are those that offer high quality services for people via public transportation, ridesharing, carsharing, cycling, walking, slugging and everything that is more efficient than sitting by yourself alone in an idling car in traffic. So let us cast the net of those who benefit and who should therefore contribute their fair share very wide indeed, and not to be satisfied ourselves that the "users should pay". Let us think in terms rather of all those who benefit as our guiding principle. We want them to step up to the plate to when the time comes.

And by the way, the time is now.

Comments?

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While transportation system funding alternatives exist, and may become more useful in a number of years, they currently cannot match the efficiency and equitability of fuel taxes. The collection of fuel taxes costs only a few cents on the dollar, while versions of tolling can cost a third of the revenue collected.

The less the cost of collection, the more that actually goes toward transportation infrastructure.

With a federal fuel tax system, a far greater percentage of money collected will be invested in highways than under any tolling or privatization scheme. A federal fuel tax is the simplest, most cost-effective way to raise essential transportation funds. It also ensures that all drivers contribute equitably for the miles they log on our nation’s roads.

Of course, the fuel tax is effective if the revenue is targeted for infrastructure, not diverted to other purposes, as some of the revenue has been in the past. America needs an immediate investment in highway infrastructure and a federal fuel tax efficiently provides the necessary funding.

Our guiding principle for financing the 21st Century transportation system ought to be "user pays".  A user-based financing system has several advantages, including (1) connecting the burden of paying the tax or fee with those who benefit from its expenditure; (2) allowing variation of the fee charged by time or place of use to manage system performance; and (3) reducing demands on the general funds of all levels of government.

In my opinion, we spend too much time debating whether tolls or gas taxes should play a more prominent role in future surface transportation finance.  The fact is that we will need more of both measures to finance our future needs, and both are user fees.  Obviously, the closer we can get to "point of use" fees the better, but I'm not willing to let the perfect be the enemy of the good by dismissing the gas tax before a replacement user fee is ready for prime time.

Meanwhile, the transportation community should resolve to wean itself from our recent reliance on general fund financing.  The $8 billion bailout of the Highway Trust Fund last autumn was general fund money.  The $50 billion we will get from the federal economic recovery package is general fund borrowing from our kids and grandkids.  The local sales taxes that we have come to depend on in California have nothing to do with use of the transportation system.  Indeed, the underlying transaction is "buy a refrigerator, build a road."

We need to return to the "user pays" principle that built the Interstate system with gas taxes and many of the nation's major bridges and tunnels with tolls.  It is fair, and it works.

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The issue is not how can we pay for it? It’s how can we not? Rebuilding infrastructure plays an important role in job creation and contributes to advancing business interests by providing for cost-effective movement of workers, raw materials and finished product. Finding projects that have the most benefit related to jobs, economic growth and global competitiveness will create the most return for the cost, therefore attracting funding support. Funding should consider all available public and private options in a business-like approach such as gas taxes, tolling, congestion pricing and public-private partnerships—options states are currently considering.

The way out is not to hide our heads in the sand, but to prudently apply any and all resources available to spur economic recovery.

The one thing we can be entirely sure of is that if we are to succeed with this challenge, it will be in very different ways than those we have relied on in the past, back in the long-ago, worn out 20th century if you will. This is one of these issues in which we have to be especially smart and flexible.

The biggest challenge is the one in our heads. To get the job done we are going to have to execute a major paradigm shift when it comes to finding ways to bring additional funding into the sector, otherwise we are going to fail the future. This is not a secondary technical consideration: what we do in these respects is going to shape our transportation system in a very major way.

If anybody thinks that we are going to without challenging our own minds and long-held preferences, they can be sure that they are going to end up way out of the ballpark on this.

Here are a couple of hard truths to get us going before we dig into the specifics but the panel has been asked to address:

1. If you add up all the projects, programs, measures and someone's great ideas that all the various interests are calling for, you get a huge number. No matter how you do the totals, all of the projects that all of the various interest groups and others are stepping forward with are never going to get built on the government's nickel over the next four years. Some folks might see this as bad news and bad for America. Hmm, I am not so sure about that. I got on the various lists I see a considerable number of projects that in my view should never get built, at least from the vantage of our nation's interests and the priorities which have been set by our new government.

2. There is no way in the world in which we are going to be able to accommodate all these proposals and projects. Put in other words, in order to resolve these issues, from the outset we are going to a situation of conflict, and we better get used to that because it is part of the terrain in which we have to work.

3. We know how to separate the sheep from the goats on this one, to get us started. Here are the three main criteria which can be used for screening out all those projects which do not belong in a program that is aiming at serving the national interest at this time:

a. Greenhouse gas emissions reduction: if the project or measure in question does not hold out the prospect for large-scale greenhouse gas emissions over the course of the next four years, it should be set aside. We must now concentrate on the challenges that are directly in front of us. We can take care of the long-term future once we succeed in working our way out of the present crushing challenges.

GHG emissions is the right target because when they are cut substantially they set up a situation in which there are comparable energy savings reducing not only our high import bills but also dependency on foreign petrol sources; they can only be accomplished through corresponding reductions in motorized vehicle traffic, which we now know can be achieved without economic or social sacrifices; which lead intern to public health improvements, accident reductions, and fewer physical and psychological nuisances created by excess traffic and congestion. Greenhouse gas reductions is in short our win-win-win strategy.

b. Job creation: The money which we pour into the transportation sector now must create not only any old job, but a job with a future. It should be a fair deal for workers. To my mind this means that every job created should be accompanied by an individualized training/education, which should be integrally associated with the job. I propose 30 hours of work on the job commented by 10 hours of education and training for the future in all cases. The future of America does not lie in the creation of tens of thousands of pick and shovel jobs.

c. Social justice: We need to offer people, and in particular those who are disadvantaged because of age, physical condition, location, etc., a square deal for transportation which is affordable and as close as we can make it to ubiquitous (one of the reasons why so many people love their cars, when I can afford). Projects and measures which draw on the rich assortment of new approaches we are seeing in Europe and other leading countries offer many possibilities for achieving this important social and political goal.

The above process of screening is what we must engage in a note to ensure that our taxpayer dollars are being put to the right use for the critical projects and opportunities.

But this will leave open a number of opportunities for new financing sources which can complement the traditional financing roots in the sector. We will for sure be getting into these in the days ahead, and they will run the gamut from techniques as varied as road pricing, tolls, value capture, gas etc. taxes, parking charges, cross financing from other related sectors and programs, employer contributions, public-private partnerships , etc. etc. this of course is only the beginning of the list we are now going to examine together.

At the end of the day just about all of us, and I hope me included, are going to have to move away from our preferred positions on much of this. But that is what these panel discussions are all about. So let me stand back and listen and learn.

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America's transportation systems are both broke and broken. Immediate financing problems will likely be patched over with a combination of general revenues, indexed or higher gas taxes, sales taxes, asset leases and public-private partnerships. But these financing structures may do little to solve and could even exacerbate traffic growth, congestion, and related climate change. A 21st century transportation system demands new approaches that align funding and revenue measures with accountability for cutting congestion, traffic, and pollution while improving mobility and equity of access.

Public confidence in transportation agencies has been shaken by decades of declining performance, cost-overruns, and pork-barrel politics. People rightly believe that boosting gas taxes will do little to relieve them of being stuck in traffic without good travel choices. But stop-and-go freeways that now lose a third or half of their effective capacity when congested might be restored to free-flow while expanding travel choices with different approaches to pricing transportation.

Several developments are worth watching.

• Transportation legislation in 2009 could apply 21st century information and communications technologies to funding, pricing, and managing transportation. If Congress embraces this opportunity with new initiatives, we'll see universal mileage-based road user fees and vehicle insurance, with local option time-of-day road and parking pricing eliminating congestion across a growing share of America's surface transportation network in the next decade. This would build on experience from Oregon and Washington to New York, Germany, Singapore, and the Netherlands. Embracing this vision would mobilize greater private investment in transportation system operations and management. Done well, it would spur innovation through performance-based funding and greater use of competitively tendered performance contracts to boost system and environmental performance while protecting labor, with public oversight and accountability.

• As Congress considers urgently needed climate legislation in 2009, it may adopt proposals by Senator Carper and others to dedicate a portion of cap-and-trade carbon allowance revenue to transportation, providing supplemental funding to states and regions that show how they are working to reduce traffic to cut greenhouse gases. This could provide billions of dollars a year in new transportation revenue. This could prompt states and metropolitan areas to exceed minimum performance standards that might be set for greenhouse gas reductions related to transportation and land use plans and programs, boosting opportunities for innovations in transportation operations, pricing, marketing, and system management. These could include mileage-based insurance, smart growth and traffic management, and new mobility services like real-time ridesharing, carsharing, and flexible transit.

With strong political leadership, the public will accept new forms of transportation pricing and revenue raising -- if they sense it is fair, safeguards privacy, and produces tangible progress in delivering better performance and expanded travel choices.

What's needed to move forward?

• Congress should nudge states to adopt universal use-based vehicle insurance pricing, with discretion for such policies to be based on odometer readings or automated technology. This would turn a large fixed cost of driving into a variable cost, giving Americans new opportunities to reduce their cost of transportation, which as a share of household income is far higher than experienced in other wealthy countries. In traditional car insurance, consumers pay by the month, with at most a 15 percent discount for low-mile drivers, who end up subsidizing high-mile drivers. Pay-as-you-drive car insurance, now offered by Milemeter, Progressive, GMAC, and other insurers in almost a third of the states, enables consumers to save by driving less, with 40 to 100 percent of the policy price based on miles driven. A 2008 Brookings Institution paper by Bordoff and Noel shows mileage-based policies could save two-thirds of households money, with average insurance savings for these households of $270/year/vehicle, while cutting traffic and related greenhouse pollution by 8 percent.

• Congress should pass a carbon cap and allocate a portion of revenues from carbon allowances for a transportation greenhouse gas investment fund, to be used as an incentive for accelerated efforts to cut traffic to reduce greenhouse emissions.

• The federal government should establish a short, demanding timeline for designing and implementing a federally-supported mileage-based road user fee system over the next half dozen years. It should define the system architecture, support pilot programs, and set requirements for phased deployment, with different paths for light duty and heavy-duty commercial vehicles.

• New road use charges should be designed to protect privacy consistent with Fair Information Practices. GPS-based technologies for road pricing can provide strong privacy protection and support use-based vehicle insurance bundled with automated road user fees, pay-by-the-minute parking, services to call 911 when your air bag goes off, and many other mobility services, a model promoted by Skymeter.

• Equity with respect to low income travelers should be enhanced as new road charges are adopted, devoting an ample share of road user charges to improving transit, paratransit, and real-time ridesharing, user-side transportation subsidies, and refundable income-based mobility tax credits, with requirements for states to measure and report on progress in improving transportation access for all to jobs and public facilities.

• New road user charges should be introduced with a new vision, expectations, and accountability, tying funding to improving overall system performance. If tolls get applied only to new lanes, this leaves the majority stuck on unmanaged lanes without good travel alternatives. That's where a shift to mileage-based fees, with local option congestion pricing, introduced with new mobility services, can accomplish something that gasoline taxes don't – eliminating most congestion and greatly expanding transit, ridesharing, and other travel options.

Singapore is the farthest along at delivering this kind of high performance transportation, delivering congestion relief, a world-class bus and rail network, underground motorways, and highly affordable housing close to public transport. By official policy, time-of-day tolls at over 70 charging points on the metropolitan area's arterial roads and motorways are varied as needed to keep the traffic free-flowing at least 85 percent of the time on major roads. Singapore is a parliamentary democracy with a dominant party system, like Mexico or Japan, and has developed these policies with robust public consultation and media debate.

Germany is farthest along in applying GPS-tolling at the national level, applying it successfully to all trucks traveling on its 12,000 kilometer autobahn network since 2005. Oregon and Washington have both pilot tested GPS-based VMT fees. Oregon's Governor in January 2009 proposed legislation to transition from a gas tax to mileage-based fees, based on the 2007 pilot project, which relied on fees to be paid at the gas pump. The Netherlands plans to transform current motorist charges to time-distance-place based fees starting in 2011.

Experience from Stockholm, London, and elsewhere shows that initial public skepticism to pricing existing free roads prevails until they can see the benefits of increased dependability, travel speeds, and travel choices. With even brief experience, opposition typically turns to large majority support. Substantial public education, research, marketing, and demonstration, with phased introduction and pilot testing is likely to be needed to successfully introduce new road pricing strategies, but the payoff will be large.

If upcoming transportation and climate legislation lays a sound foundation for this transition, America will be on a path to achieving an efficient, environmentally sound, globally-competitive system meeting future mobility needs.

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After the dust settles on a stimulus package, Congress will need to address the highway reauthorization bill and try to reach consensus on how to improve the manner in which we build, maintain and operate our surface infrastructure. A key question in this debate will be how to finance the much needed improvements in our nation’s highways, bridges, and transit programs.

To date, the discussion over funding the infrastructure gap has unfortunately degenerated into a debate between two groups talking past each other. In one corner, we have those who advocate raising taxes and expanding government oversight. In the other corner are those who consider such a traditional approach to be the continuation of failed policy and call for increased use of pricing and private sector involvement.

Those calling for increased private sector involvement are frustrated by the tax increase advocates seeming inability to grasp the fact that the current system is fundamentally flawed because it establishes priorities through a political process and contains no mechanism for managing demand (the most efficient way to add additional capacity to the current system). Those calling for tax increases are equally frustrated by the inability of their opponents to understand the limited nature of a pricing/private sector solution and the impacts of tossing aside a funding mechanism that financed the interstate system and is efficient in its collection.

I had the pleasure of witnessing two Congressional commissions wrestle with this topic and came away convinced that both sides are partially right. Some needs of the current system, e.g. maintenance and non-tolled rural roads, are most efficiently financed through gasoline taxes or other funding mechanisms able to spread costs widely. Similarly, the traditional system of setting priorities and raising financing is wholly inadequate and needs to be adjusted so that it can manage demand and prevent “bridges to nowhere.”

The debate will be quickened if those advocating a gas tax increase acknowledge the shortcomings of fuel taxes and the need for a different long-term solution. Those advocating increased pricing and privatization should similarly acknowledge the relative limited utility of such tools in the short-term.

That said, neither side of this debate has adequately captured the main issue: the need to transition our transportation infrastructure into a model closer to that used by other quasi-monopolistic network services, e.g. gas, telephone, electric, and cable. In none of these non-transportation infrastructure networks do we read headlines proclaiming that the infrastructure is crumbling or that funds have been squandered by expanding capacity where it is not needed. Non-transportation infrastructure is spared these embarrassments because it is operated under a fee-for-service model, which provides adequate funding for maintenance and expansion to meet consumer need. Surface transportation networks are not sui generis. Yet, historically we have treated them as if they are unlike every other form of network.

Until our surface transportation delivery model is fundamentally reformed, our network will continue to suffer from improper maintenance, poor project selection, and crippling congestion. In the short-term, limited additional governmental funding may be needed, but in the long-term, fee-for-service is the answer.

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