Financing the Nation’s Infrastructure in Our Age of Cutbacks

Commentary from The Transport Politic blog.

The United States suffers from a deficit of long-term thinking about transportation funding.

The message from the White House on transportation financing over the past few weeks was ambiguous at best. President Obama, frustrated by Florida Governor Rick Scott’s rejection of federal aid for a high-speed rail line between Tampa and Orlando, suggested that it would be foolish for states to abandon investment in infrastructure, arguing that these projects are essential to the advancement of the American economy in the 21st Century. In a year filled with discussion about how to reduce the federal deficit, the Administration has been a major supporter of increasing funding for new transportation projects that it hopes will help the U.S. “win the future” — starting with a proposed $53 billion for high-speed rail over the next six years.

At the same time, the White House and Secretary of Transportation Ray LaHood have been remarkably opaque in describing their conception of how the federal government will pay for these projects. Even as the Administration’s Fiscal Year 2012 budget suggested that transportation programs would be funded without burying the country deeper into debt, Mr. LaHood was unable to describe for skeptical senators how exactly that could be done considering the current and future expected limitations of the federal fuel tax, which has been set at a low 18.4¢ per gallon since 1993. He repeated the Administration’s recession-based argument against increasing that tax or implementing a vehicle miles traveled tax, the only user fee that is a realistic replacement for the fuel tax. Other potential funding sources, like selective tolling or public-private partnerships, will provide only marginal expansions in funding.

Though certain members of Congress have promoted doing as much, there is no majority support for such tax increases in the Democratic-controlled Senate and even less in the GOP-led House. If there was once a sense that the government has a responsibility to guarantee the good condition of the nation’s roads and rails, that feeling has evaporated from the consensus.

All that seems to be acceptable is passing continued extensions of the existing transportation bill, first approved in 2005 and in theory supposed to be replaced in 2009. That funding is by most estimates too limited to account for the nation’s continued population growth and the age of its existing infrastructure, which is rapidly falling apart due to funds being too thinly spread around. The now-popular concern about the ballooning national debt has taken its toll, and the nation’s mobility systems will suffer.

To make matters worse, states — which conservatives claim they want to take more power — have abdicated responsibility. The decisions by Florida, New Jersey, Ohio, and Wisconsin governors to give up on major rail improvement projects says something about those conservative politicians’ feelings about spending on any ground transportation other than highways, but this problem extends beyond the matter of transport mode. Indeed, most states have kept their respective fuel taxes at relatively low levels even as their own needs have increased. Calls for reducing taxes continue to define the national political scene, despite the fact that as a percentage of gross national product, taxes are the lowest they have been in 60 years. This inconvenient fact, however, does not seem to bother many policy-makers.

The private sector, whose ability to solve all of our problems is frequently promoted by politicians across the spectrum, has unsurprisingly not swooped in to save anything.

Indeed, the only actors who appear to be taking any responsibility on these matters are the citizens of municipalities across the country who have supported sales tax increases over the past few years to pay for improved transportation. While federal and state actors have mostly kicked the can around — defunding some things to pay for others, relying on debt to fill gaps — the inhabitants of cities and counties from Los Angeles to Charlotte to Denver have approved increases.

With diminishing aid from higher levels of the government, these cities have few choices other than looking to increase their local taxes. L.A. Mayor Antonio Villaraigosa wants federal loans to speed up by 20 years L.A. County’s 30-year transportation investment plan — a reasonable idea since in the long term it would do nothing to the U.S. treasury — but the nation’s second-largest metropolitan area will need more than that, especially in those latter twenty years, since even the 30/10 program Mr. Villaraigosa has advocated will not do enough to resolve Southern California’s transportation woes. Will cities like L.A. be able to convince their voters to take even more of the burden?

States could play a far more important role in assuming the costs of upgrading transportation systems, but they are frequently handicapped by the dominance of rural and exurban interests, especially after 2010′s Republican wave.

Which leaves the federal government. The Obama Administration’s attempts over the past two years to make the argument that government investments in infrastructure have had bipartisan support for more of the past century has arguably backfired in the face of a stridently anti-government-investment Tea Party and its apparent backers in the Congress, many of the increasingly conservative members of the Republican Party. Attempting to differentiate themselves from the Democrats, the GOP has taken a no-compromise approach and will fight any increases in spending.

Without persuasively arguing for a tax increase to pay for such transportation improvements, the White House sounds depressingly like the Bush Administration when it was defending the Iraq War by arguing that it could be accomplished with no public sacrifice. President Bush, rather, encouraged us to increase our personal consumption, as if that would somehow compensate for the massive tax cuts his Administration had pushed through a cowardly Congress. We now suffer from the resulting consequences. Does Mr. Obama think he can get away with the same thing, when his Administration cannot identify a sound funding source?

Investments in transportation, as cities have proven, are popular. If provided a compelling argument, voters are willing to pay more to get access to better roads, transit systems, and railways. The question for the Obama Administration is not so much how much it wants to spend, but rather what defense it will mount (if any) for increasing taxes to pay for that spending. Whatever the current political atmosphere, we are not going to substantially improve the nation’s transportation system without doing so.


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