Principle and Power in Federal Transportation

The Republican majority in the federal House of Representatives laid down the gauntlet last week in what is shaping up to be a dramatic fight over the future of transportation in the United States. The Transportation and Infrastructure Committee passed their bill along partisan lines, while the House Ways and Means Committee ousted transit funding entirely from the Highway Trust Fund.

These proposals have instigated strong reactions. Transportation Secretary Ray Lahood, a moderate Republican, called it "the worst transportation bill I’ve ever seen during 35 years of public service.” Federal Transit Administrator Peter Rogoff considers it “a huge step backward.” The New York Times and Los Angeles Times issued scathing and unequivocal editorial rebukes.

Whether or not this bill makes it through the full House in its current form, or through a compromise with the much more bipartisan Senate, it's at least serving the useful purpose of drawing widespread public attention to a clear decision before the American public. In the interest of paying attention, I've cobbled together a few principles that have generally been used to evaluate federal transportation policy. I believe they are all sensible, even if they do not fit together as neatly as one would like.
 
User Pays, User Benefits

What makes the marketplace, in general, such an effective tool for allocating resources is the alignment between the costs of a decision and the benefits accrued to the decision-maker. If you buy the stick of gum, you get to chew it. If you want gum, you have to pay for it. Because of this linkage, each of us is able to perform hundreds of tiny cost-benefit analyses everyday, using our own preferences and brainpower, to maximize quality of life and minimize waste. In the aggregate, goods and services are shifted to where they are used most effectively.

Because of monopolistic tendencies, transportation infrastructure cannot be fully handed over to the private market. However, at least since the Federal-Aid Highway Act of 1956, officials have tried to emulate its logic by requiring infrastructure to be paid for directly by those who benefit from it, and in proportion to the benefit they receive. A user fee sends a price signal to the consumer, empowering each person to decide what travel is worth to them, while also sending an investment signal to the government provider, allowing it to allocate more funds when more maintenance and capacity is necessary.

The gas tax, the primary user fee feeding the Highway Trust Fund, has been imperfect. You pay a fixed amount per gallon, whether 100% or 0% of the miles driven are on federally-funded roadways. Hybrid vehicles pay much less than automobiles with traditional combustion engines for the same product, and electric vehicles pay nothing at all. For these reasons and more, transportation analysts are in hot pursuit of a more comprehensive VMT fee. But, for now, the gas tax is the best we’ve got.

The House transportation bill has been criticized from across the political spectrum for breaking the User Pays, User Benefits precedent. The bill expects to make up for a $50 billion revenue shortfall by selling leasing rights for oil extraction in Alaska and off-shore, a move the Competitive Enterprise Institute has labeled “drilling for roads.” Even if (big if), enough money is eventually generated by this scheme, getting the horse back into the barn of a closed fiscal loop will be very difficult politically.

Transportation analyst Alan Pisarski cautioned:

"The loss of the user pays principle would further diminish the trust fund and the whole concept of a balanced relationship between spending and use."

Internalize Social Costs

If we want individuals to be able to set national priorities by making hundreds of tiny cost-benefit analyses throughout the day, then each person ought to be shouldering the true costs attributed to their actions. The fact is that, more than any other mode of travel, driving imposes costs that are not paid by the driver. The Freakonomics guys put it this way:

"What are the negative externalities of driving? To name just three: congestion, carbon emissions and traffic accidents. Every time Arthur gets in a car, it becomes more likely that Zelda — and millions of others — will suffer in each of those areas."

They estimate these costs to be about 10 cents a mile, or the equivalent of a $2/gallon gas tax. As a point of reference, the federal gas tax has stood at 18.4 cents/gallon since 1993. (If you happen to believe that global climate change is an international hoax perpetrated by scientists, then you can feel free to shave 13 cents off their gas tax estimate). On top of this, some other costs forced upon non-users are non-residential parking, air quality, stormwater runoff, and noise and aesthetics. Obviously, reaching an agreement on the exact price of all of these values is difficult, but intangible costs are real.

Sometimes the User Pays, User Benefits principle and the Internalize Social Costs principle are presented as mutually exclusive, as if the gas tax can either be only a user fee or a tax. But it can certainly be both, as long as the funds generated are used to benefit the user as well as offset the costs imposed by the user. There are many ways to offset the costs, spending on transit historically being the most significant.

The Safe Routes to School Program is a good example of an internalization of social costs. There's nothing inherently unsafe about children walking to school, at least since humans neutralized threats from large predators. However, the presence of automobile travel introduces a new threat that either endangers schoolchildren or forces them to shift over to more costly modes. That's why it makes sense for each driver to chip in about a dollar a year to offset this impact. The House transportation bill would eliminate Safe Routes to School, along with all other programs dedicated to walking and bicycling.

Scale to Geographic Range of Impact

Two hundred years after Hamilton and Jefferson argued over federalism, the debate between state and federal power in the United States has never been adequately resolved. At least in theory, the answer to this question for transportation can be determined empirically: the scale of governmental authority over a system ought to match the geographic range of impact from the system. This was essentially the conclusion reached in 1987 by the (now defunct) U.S. Advisory Commission on Intergovernmental Relations:

“This concept of the geographic range of highway benefits is a key test to determine which unit of government should bear responsibility for highway finance.”

According to this test, the entire transportation network can be teased apart, from federal interstate and intercity rail to neighborhood roads and trails, and responsibility assigned to the scale of government that matches the particular component. Grey areas can be smoothed out by cost-sharing ratios or various kinds of block grants passed between governments.

The ACIR was right to focus on the geographic scale of the network, but they were wrong in a few ways. First, actually sorting infrastructure by scale is hard to do. They considered the Interstate Highway System the classic case of national interest, but, in reality, many interstate trips made within metropolitan areas will never cross a state line. Motorists use the interstates for commuting, bypassing congested local roads, and various other daily tasks. If the federal role in transportation were selectively limited to highways alone, it would introduce a host of distortions into the regional and local systems, forcing them to accommodate an inefficient overemphasis on driving. The federal government, in this case, would have the responsibility of offsetting its own impacts.

Secondly, they only considered the geographic range of benefits, without considering the geographic range of costs. Air pollution drifts across state lines, all U.S. citizens share the costs of treating crash victims through insurance premiums and medicare/medicaid, and carbon emissions are global. There is certainly a federal interest in keeping these costs down.

The House bill is being sold as a further step toward devolution of federal control to the states, but no spatial evidence has been provided for why the current balance should be shifted in that direction. Scale changes over time. A small metropolitan area may have once had a transportation network that could easily be contained within a state boundary, but the emergence of megapolitan areas might necessitate passing government oversight up the ladder to some degree.

Fix it First

The lifetime costs of infrastructure should be accounted for in the original decision to build. In other words, maintenance takes precedence over new construction, and federal funding formulas ought to appropriately prioritize it. This is simply a manifestation of the broader principle: live within your means. Deferral of maintenance is exactly the same thing as taking on debt. The interest rate may start out low, but it is ratcheted upward exponentially by the bank of physics. And physics cannot be bailed out.

A 2011 Report by Smart Growth America showed that states spent 57% of their federal appropriations on building new roads, while simultaneously accruing a backlog of maintenance on existing bridges and highways. The same organization calls the House transportation bill, unlike its equivalent in the Senate, still short of the mark in resolving this.

Provide Accessibility over Mobility

It’s not about the journey; it’s about the destination. Most of us travel in order to achieve a purpose that has nothing to do with transportation: visit your parents for dinner, work at the office, see Yellowstone, deliver a package to a customer. The old paradigm of transportation planning held that maximizing mobility was the primary purpose of the system, and the metric of success was defined in terms of vehicle miles traveled. But mobility is just one means to an end. The ultimate goal of transportation is to empower humans to meet their own goals by connecting where they are with where they want to be.

The paradigm shift from mobility to accessibility brings multimodal travel options and the interconnections between transportation and land use into sharper focus.Todd Litman says:

"An efficient transport system is multi-modal, encouraging travelers to use each mode for what it does best: walking and cycling for short trips, ridesharing and public transport for travel on congested urban corridors, and automobile travel when it is truly most efficient overall, taking into account all impacts."

The House bill would maintain the current federal funding formulas that reward states for inducing more driving. State A with destinations spread out from each other would be considered more "successful" in providing mobility than State B with dense cores of activity, even if State B actually facilitates more connections between origins and destinations. State A would be apportioned more federal funds.

President Obama's Sustainable Communities Initiative has been a tentative first step toward this more rigorous and robust understanding of transportation. The House transportation bill does not attempt to build upon this discussion in any recognizable way.

Support Household Resilience

Even if the federal government does manage to balance its transportation budget, this achievement would matter little if it has the effect of pushing struggling American families further underwater. There is a broad moral consensus that each individual deserves the opportunity to better oneself through hard work and personal responsibility, but the reality is that holding a job and operating a household are preconditioned upon an affordable and reliable means for getting around.

Americans that live in a place with no options beside driving face constant pressure, what the New America Foundation refers to as the "Energy Trap."

"Every 25 cent jump in the price of gas siphons $90 million a day away from the recovering American economy. Because we have few choices but to commute to work in private cars, we are trapped by high gas prices.

The energy trap is particularly hard on American households. The average family of four making $50,000 a year spends nearly $8000 a year on their cars, maintenance, and fuel combined--more than they pay for taxes or medical care."

It's is important to note that a car-dependent system of transport not only restricts the 9.1% of American households without a vehicle available, but it squeezes those who are able to scramble together the funds to provide personal mobility. Families under pressure are less likely to take risks on their career, and may neglect other important elements of their budget. And one little leak in the hull, maybe a few more dollars at the pump or a "check engine" light, might just sink the ship.

Create jobs

We've come to expect politicians in recent years to tout the job creation potential of their proposals, so it's not surprising that the House transportation bill even includes the word "jobs" in its title. While the primary purpose of federal transportation may be to connect people with their destinations, the bill is also rightfully judged by how the planning, construction, and operation of the sector itself moves money through the economy.

In one sense, all government spending creates jobs (the money has to go somewhere, right?). But not all spending is equally constructive. An analysis of the funds spent on the 2009 American Recovery and Reinvestment Act (ARRA) showed that:

"For every billion dollars spent on public transportation projects, 16,419 job-months were created. A billion dollars spent on highway infrastructure projects created only 8,781 job-months."

This is because ARRA transit projects spent less on land acquisition and raw materials and more on hiring labor with a diverse skill set to operate and maintain the system. Another study came to the same conclusion, only adding that infrastructure for bicycling and pedestrians created even more jobs per dollar spent.

Americans are going to eventually grow tired of empty "jobs, jobs, jobs" platitudes. The operative question is how much stable job creation is generated per dollar spent.

Power

The cynic wonders whether any of this matters.

Any bill will result in winners and losers, at least in the short-term before private interests are able to adapt to new conditions. Many of the largest interests are vested in pushing the transportation system along it's current trajectory. The Center for Responsive Politics has tracked over $13.5 million in campaign donations from the oil and gas industry toward candidates in the 2012 election, almost 9-to-1 going to Republicans. Oil executives, who understand the concept of return on investment, will likely be pleased if they can manage to open up new supply fields, solidify their demand from a car-dependent American populace, and even get a new Keystone XL pipeline thrown in as a cherry on top.

Then there are the voters. Yonah Freemark has shown a strong correlation between density and political affiliation, with Republicans much more likely to live in more sparsely populated congressional districts than Democrats. Constituents who may be accustomed to driving are probably less likely to approve investing in alternatives than those who stand to benefit directly from them (full disclosure: I own a house next to a bus stop). Although there are two major caveats here: some suburbanites live in locations that could potentially become transit-oriented and walkable with further investment, and there are some rural and exurban denizens who like it that way and don't necessarily want to see a new highway drop a big box store in their backyard.

Transportation really should be a pragmatic political arena. There are no deep moral conflicts that transcend the purview of reasonable conversation. Democracy functions best when citizens are able to think carefully about the alternatives before them, and the wake up call from last week may be just in time.