Photo Credit: Steven Vance/Flickr Creative Commons License
With deficit reduction still the watchword in public policy and with federal spending on a downward slope, states and regions are exploring different ways to fund programs and public works like transportation infrastructure. Traditionally, highways and roads are mostly paid for through the Highway Trust Fund which was designed to draw on gas taxes paid by motorists. However, from time to time as the fund runs dry, the Congress tops it off with money from general revenue. Although some economists dispute this, deficit financed highway construction is generally considered to be less than optimal public policy.
As part of the Hamilton Project’s 15 Ways to Rethink the Federal Budget, Jack Basso and Tyler Duvall discuss the potential solution offered by ‘user fees’—in other words, charging road users directly for the use of certain highways. Sometimes called ‘congestion pricing’, the main advantage of this proposal is that it succeeds in both raising revenue to reduce the deficit and reducing traffic congestion and the negative effects associated with it. The pair estimates that a federal user fee could raise $312 billion over the next decade, money that could be used not just for deficit reduction but also to invest in smarter infrastructure projects like expanding and improving transit systems that would help mitigate congestion even further.
User fees are often politically unpopular, at least in the beginning. Motorists naturally resent being obliged to pay for something that they previously used ‘for free’. The truth of course is that building and maintaining highways has never been free and the congestion that plagues so much of the highway system costs motorists directly in wasted time and wasted fuel as well as harming the environment. Proponents of user fees argue that the cost of road use should be borne by road users and that if the cost was reflected by the price, many would reconsider whether and when to make their journey by car.
Basso and Duvall point to the example of Singapore, a city of 5 million that occupies only 250 square miles of land. Despite their population density, Singapore’s use of electronic road pricing has delivered both increased revenue and free flow speeds on its major roadways. As the traditional funding mechanism for surface transportation infrastructure becomes increasingly inadequate, perhaps user fees are the sort of innovative method that policy makers should consider to pay for transportation infrastructure.
