At a recent North Carolina Department of Transportation committee meeting, my John Locke Foundation colleague Joe Coletti offered this blunt assessment to state policymakers: our system of road financing isn’t sustainable.
“There simply isn’t enough money to do it all,” Coletti told the committee. He observed that the amount of gas taxes collected per mile traveled is lower in inflation-adjusted terms than it was a generation ago. Our cars get more miles to the gallon, for one thing, so a per-gallon tax can’t keep up. And a growing, albeit still small, share of our cars are electric or hybrid vehicles for which the gas tax is obviously inadequate as a means of charging drivers to use government roads.
There’s really no doubt that we will have to move eventually to a system that charges drivers according to mileage and vehicle weight. Such a system should also vary the price according to time and congestion, just as utilities charge more for electricity during peak hours.
Getting from here to there will be tricky, however. Tolling new roads or lanes can be unpopular, at least at first, as policymakers in North Carolina and elsewhere have discovered. For the entire road-and-street system as a whole, a GPS-based mileage charge could get the job done. But it would invite even more public scrutiny.
Of course, no system for funding transportation is free from major challenges. Raising gas and car taxes angers the public, as well. Dipping into general revenues, from sources such as sales and property taxes, may be more salable politically but has the obvious defect of severing the relationship between the cost individuals impose on the road system and the price they pay to use it. It is inequitable and inefficient.
Coletti’s point is not simply that we have a mismatch between tools and tasks. More broadly, we have a mismatch between means and ends. Because North Carolina and other states rely so much on transfers from the federal government, for example, and those federal dollars come with lots of strings, we end up using scarce dollars to build new roads rather than maintaining our existing ones, even though the latter ought to be the higher priority.
And the truth is that while transportation investment can be productive, it isn’t infinitely valuable. No matter how we pay for new roads, some of the ones currently on North Carolina’s wish list are unlikely ever to be built — and we should be okay with that. The extent to which their long-term benefits, expressed as greater mobility or safety or economic development, will exceed their long-term cost is unclear.
Just as most other valuable things do, roads have diminishing marginal utility. When North Carolina built its first true statewide road network in the early decades of the 20th century, the payoff was gigantic. During successive waves of road-building — during the interstate boom, for example, and the belt-and-connector program enacted during the administration of Gov. Jim Martin — the benefits also exceeded the costs, although not by as much.
There are still valuable roads and lanes to build, to be sure, and I’m happy to report that state policymakers have done their part to move such projects forward. North Carolina is spending hundreds of millions more a year on road construction and maintenance than we used to, because state legislators and governors of both parties cooperated to reduce dramatically the transfer of gas and car taxes to non-highway purposes.
But no reform of our financing system, no matter how carefully designed and skillfully marketed, can generate enough revenue to fund all desired roads at a cost that won’t provoke intense opposition from taxpayers. As Colleti put it, “because there is never enough money to do everything that everyone thinks should be done, the state needs to identify the core needs for transportation funding.”
Thus, policymakers must set firm priorities and stick to them. In many cases, the right answer will consist not of “how to” but, simply, “no.”