If the State of the Union address was any indication, rebuilding America’s infrastructure is at the top of the Trump administration’s mind. An investment of no less than $1.5 trillion dollars is being contemplated to accomplish the task. And while we might all agree our infrastructure is in dire need of updating, there are, of course, right ways and wrong ways to reach this objective.
So, when it comes to maintaining our roads, for instance, doubling down on the gas tax model of the perpetually insolvent Highway Trust Fund by imposing new and higher gas taxes is a profoundly wrong turn.
The Highway Trust Fund, established in 1956 as a temporary measure intended to dissolve once the national highway system was finished, is responsible for funding road construction and maintenance projects. Yet, because its principal funding mechanism is a gas tax that perpetually under-delivers funding, it has been kept on life support by various budget gimmicks. As a sad result, vital infrastructure projects are always on the cusp of funding shortfalls and delay.
To fix the issue, the American Trucking Association, heavily reliant as its members are on the nation’s roadways, proposes the creation of a “Build America Fund” to fix a deficiency in the Highway Trust Fund. Yet the proposed fund, supported by a tax increase on all transportation fuels (to be collected from wholesalers and thereby hidden from consumers), while well intentioned, is doomed to the same shortcomings as the Highway Trust Fund. Put simply, it shares the same basic disease as its ancestor: an overreliance on gas taxes.
If more than 60 years of experience with the Highway Trust Fund has taught us anything, it’s that when a gas tax is employed as the exclusive mechanism for apportioning the expense of maintaining roadways, vital construction and maintenance will be left undone. A gas tax simply does not effectively account for improvements in vehicle efficiency, nor the move to alternative powertrains. There are fundamental distortions inherent in a gas tax/trust fund approach that guarantee funding insufficiency.
Fortunately, policymakers now have a menu of options at their disposal that embrace both modern technology and the cornerstone of conservative principle — personal responsibility. Personal responsibility is vital because, as a threshold matter, a conservative approach to infrastructure investment must be premised on the notion that users of infrastructure should pay for that infrastructure.
To this end, an “all of the above” funding approach that accounts for, and assesses fees on, all sorts of different externalities is the safest course. For instance, a vehicle-miles-traveled charge, dynamic tolling, and weight/distance fees all could be effectively employed to ensure that vehicles (or at least heavy trucks) are paying for the toll they exert on our infrastructure. Effectively accounting for this damage is vital because it allows us to price for it. And now, unlike in 1956, technology can help us do it.
In particular, a vehicle-miles-traveled system accounting for the weight of heavy trucks is an effective option. In one study, the National Surface Transportation Infrastructure Financing Commission characterized the VMT as the most viable long-term option for funding maintenance of the nation’s roadways because it sends a clear message about the cost of using infrastructure and consistently spurs efficient use and investment.
Here’s how it would work: Via onboard devices, vehicles would be assessed a dynamic charge based on the distance traveled and the type of road used. For instance, empty trucks on resilient roads and easy-to-fix roads would pay less for their trips than heavy trucks on costly-to-fix roads. The distinction makes sense, since repaving busy urban arteries is more disruptive and costs more than fixing less vital ancillary routes. Some states, like Oregon, have already embraced this approach to positive effect.
Of course, shifting away from the current gas tax model all at once is likely inadvisable since vehicles will need to be retrofitted with sensors. Thus, there remains a place for a gas tax as Congress considers future infrastructure funding. However, with the deployment of more efficient and zero emissions vehicles, reliance upon a gas tax needs to be curtailed and new alternatives embraced. The time for those alternatives is now.
America’s 21st-century infrastructure should not be held back by a 20th-century approach to supporting it.
Image credit: Trong Nguyen