California's Highways: The Next Step
April 2, 2004
by Professor Peter Gordon, School of Policy, Planning,
When it comes to the nation's nearly 4-million miles of roads and
highways, two contradictory messages are concurrently competing
for our attention. First, system performance is widely criticized
and its adequacy is questioned. Second, proposed transportation
spending authorization now before Congress (six-year reauthorization)
is thought by many to be extravagant. When reasonable people articulate
both views, we are at an impasse. This paper will suggest a way
that Californians can move forward. At this writing, the political
sides in Washington DC are debating a range of transportation funding
proposals, priced from $256 billion to $375 billion. Perhaps in
a heavily politicized system, where gasoline taxes are paid by
users to all levels of government, with most dollars making a complicated
return trip to states, MPOs, counties and cities, there is nothing
anomalous about the political gridlock. Nevertheless, it is important
to consider whether and how we could do better.
What do we know?
Simple economic theory suggests that there is a choice between
adding to capacity vs. better managing what we already have. The
best management is widely agreed to be direct pricing and the most
sensible direct pricing is time-of-day pricing, whereby users are
charged the opportunity cost of their consumption. Use a crowded
facility and the costs all around go up.
technologies reduce the transactions costs of variable toll collection,
making it more feasible than ever. In contrast, the current practice
of relying on fuel taxes to support most roads and highways means
that users pay about the same, no matter where or when they travel.
Incentives to place lower valued trips at lower valued times and
places are muted.
The fuel tax as a revenue source has also been
criticized because more energy-efficient autos mean lower highway
revenues even as highway use does not necessarily fall.
also know that politicians prefer adding to road capacity over
economic management of the roads; large construction projects are
thought to "create jobs", whereas pricing is seen
as "inequitable". Left largely unexamined is not only
the degree of inefficiency but also the possible regressivity
of the build-over-pricing approach - especially in light of how
projects are typically financed and implemented. The other important
fact is that in most US cities, there are significant numbers
of non-work trips on the roads during the peak periods. About
half of all 6-9am trips are nonwork and about two-thirds of all
4-7pm trips are nonwork. A portion of these would switch to non-peak
travel with sufficient incentive. Time-of-day pricing that allows
drivers self-select based on their personal assessment of each
trip's value is the only way to have so many trips be allocated