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A Better Way to Pay for Our Infrastructure Fixes?

In this article from The Fiscal Times, Rob Garver discusses long-term solutions for funding transportation infrastructure improvements, particularly through the collection of user-based fees like tolls.

 

A Better Way to Pay for Our Infrastructure Fixes?

By Rob GarverThe Fiscal Times

May 21, 2015

A day after the Senate voted for the 33rd short-term extension of the Highway Trust Fund, a study of how the Unites States pays for its infrastructure argues, in effect, that there’s got to be a better way.

The study, by a trio of highly regarded experts working with the Brookings Institution’s Hamilton Project, proposes that over the long term, that better way might be to take infrastructure funding out of the hands of government officials — particularly federal officials — and largely automate it though the collection of user fees like road tolls and transit fares.

Titled “Financing U.S. Transportation Infrastructure in the 21st Century,” the paper was written by Roger C. Altman, the founder & executive chairman of the investment bank Evercore, Aaron Klein, the director of the Bipartisan Policy Center’s Financial Regulatory Reform Initiative, and Alan B. Krueger, the Bendheim Professor of Economics and Public Affairs at Princeton University.

In addition to a number of near-term changes intended to modernize the federal gasoline tax and improve how the government funds infrastructure projects and allocates the resources of, for instance, the Army Corps of Engineers, the authors also look toward a future where much of the revenue needed to improve and maintain the country’s transportation infrastructure is raised almost automatically by charging users of that infrastructure.

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“User fees are an efficient way to fund infrastructure investment,” they write, “and the means of collecting fees from users and beneficiaries will change with the evolution of transportation technology.”

In some areas, the case for a user fee is clear. Users of a high-speed toll road pay for the benefit of faster travel. Passengers on high-speed rail support the system through ticket purchases.

The authors propose federal funding for research into new ways of collecting user fees, including systems that would make existing transponder-based wireless toll collection systems, such as the EZ Pass in the Northeast and Midwest, and Florida’s SunPass, interoperable nationwide. They also call for research into different methods of collecting user fees from drivers, including smartphone app-based systems that could work in ways similar to the current transponders.

The authors note, though, that not everyone who benefits from new infrastructure investment pays for it. A store owner, for example, whose supplies are delivered more efficiently, and who sees customer traffic increase when roads are improved, does not directly pay for that benefit.

They suggest a system under which the estimated property tax revenue increases expected to be generated by infrastructure improvements gets dedicated, in advance, to servicing the debt incurred while building those projects.

It’s true, the authors note, that most user fees, including tolls and the gas tax, have a regressive element to them. A wealthy person pays a smaller portion of his or her income to drive on a toll road than a poor person does to make the same trip. However, they also argue that the benefits of improved infrastructure are progressively distributed, assuming individuals all benefit by the same amount. Additionally, the jobs created by infrastructure projects tend to be middle-income jobs.

Given that there’s widespread agreement on the benefits of infrastructure investment, the authors also propose a national platform for pooled procurement to lower costs and a National Infrastructure Strategy Commission that would help plan and coordinate projects and maximize the country’s returns on its investments.

Read more: http://www.thefiscaltimes.com/2015/05/21/Better-Way-Pay-Our-Infrastructure-Fixes

 

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