No Choice

Over at TNR, Rob Puentes laments the end of the Pennsylvania plan to toll I-80. Meanwhile, the Post reports on the transportation funding disaster in the Washington metro area, revealing that Maryland might not be able to make good on its commitment to Metro. We’re talking about the defunding of Metro, which has been the foundation of high value development projects in suburban Maryland, while Maryland’s highways are among the most congested in the nation, going into a summer in which gas prices are likely to rise above $3 a gallon.

I’ve gone on and on about how foolish it is to forgo the use of congestion tolls or charges. It’s really foolish, and it leads to a lot of waste and inefficiency.

But the issue is more significant than one of relative efficiency, at this point. Government finances, and the local, state, and federal level, are in very bad shape. The federal government is facing a debt level unlike any the country has seen since the Second World War. And a number of important variables look far worse than they did in the years after the war — expected growth rates, demographic profile, the term structure of the debt, and so on. It is going to be very difficult to fix this mess.

Meanwhile, state governments are trying desperately to close cyclical budget holes, but looming over the horizon is a major crisis of funding of state pensions. The off-books liabilities associated with pension costs are often 100% or more of the value of outstanding bond holdings.

And the rub is, state and local governments have not used the debt binges of the past two or three decades to invest in the care, maintenance, and upgrading of critical infrastructure. Those needs have largely gone unaddressed, even as utilization has increased.

The bottom line is this: we can no longer afford to not tax important negative externalities. We can no longer afford to not do the stuff we really ought to have been doing in the first place. The options we have are to ratchet up current taxes with bad incentive effects and diminishing returns, or to cut spending on important priorities, or both. But cutting back on education spending and infrastructure investment while increasing taxes on income will squeeze growth, making the task of closing these financial holes harder.

Or we can bite the bullet, suck it up, and start charging an appropriate amount for valuable public infrastructure. We can stop giving away space on roads and parking spots for free, costing everyone a lot of wasted time. We can stop letting companies foul the air and slow-cook the earth with no negative impact to their bottom line. And then we just might have enough dough to keep critical infrastructure running. We might even be able to invest in a new and better infrastructure capacity.

I get that these policies aren’t popular. If they were popular, they’d have been adopted already. But they’re the best available policies. If we refuse to use them, things will just get crappier. And we ought to have the courage and the sense to quit whining and go for it.

Comments

  1. Froggie says:

    The I-80 case, IMO, was a case of Pennsylvania being greedy and wanting to use I-80 as a cash cow. That’s not the way to go about doing business, IMO. Believe me, I understand the point about needing to fund transportation infrastructure, but for two counterpoints, first consider that I-80 (as with most Interstate mileage) was paid for via gas taxes (all the issues with non-transportation-based taxes paying for highways is mainly at the local and county level…recent transfers to shore up the HTF notwithstanding, it doesn’t occur at the Federal level).

    But the second, and bigger, counterpoint relates to the cash cow comment from earlier. This is where the bulk of the oppositon came from, not to mention it being against the Federal law that allowed pilot cases of tolling previously-free Interstates. Siphoning off I-80 tolls for projects in regions far away from where I-80 travels does not benefit the areas along I-80, and is arguably a “transfer of wealth”. At least with the Turnpike tolls, one could make the argument that the Turnpike travels through the Pittsburgh and Philly metro areas. Not so with I-80 (which is about 60 miles from Pittsburgh and over 100 miles from Philly).

    I’ve maintained from the get-go that if Pennsylvania had applied for I-80 tolls to ONLY BE USED on I-80, as allowed by Federal law, it would have received more support and been approved long ago. True it wouldn’t have been the big bucks that the state gambled on (and lost). But it would have freed up some gas tax money for PennDOT to apply elsewhere.

  2. jim says:

    This whole thing seems odd to me. PA’s request has been in to DOT for a very long time, now: didn’t they originally submit it during the last administration? DOT has laboured long and hard and come back with they can’t do it because it’s illegal. How come it took so long to find this out? Why wasn’t the original request sent back within a week or two with a polite note pointing out that it contravened this or that section?

    It seems clear the law ought to be changed, though.

    We’ve discussed previously a VMT tax. But the technology isn’t there yet. Even were the technology to be developed, there would be major rollout issues (and costs). On top of which the ACLU raises real privacy issues. Tolling major roads achieves much of the effect of a VMT tax. The technology to do so exists and is even in place in a number of states. Rollout is a question of expanding existing E-Z Pass and similar programs and deploying detectors. It’s clear the Federal Government has the authority to toll Interstates and US Highways. If tolling is limited to these, most of the privacy concerns go away (nothing forces you to drive on these roads).

    Perhaps the delayed rejection of PA’s request will start the needed discussion.

  3. Conservatives periodically like to make a big deal about how taxing something means you’ll get less of it.

    So what the hey, let’s give ‘em what they say they want. We really could use less congestion on our highways, less carbon dioxide in our atmosphere, etc. So let’s tax it, toll it, whatever.