Highways Are Heavily Subsidized

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Highways Are Heavily Subsidized

Supporters of transit are often challenged to explain why the public should subsidize buses and trains when they don’t subsidize roads, which are paid for by gas taxes.  Bicycle advocates occasionally hear the criticism that cyclists don’t belong on the roads because they don’t pay the gas tax (ignoring the fact that most cyclists also own and drive cars) and are using the roads for free.

So, is this true?  Do highways pay for themselves through gas taxes, tolls, and user fees while transit and bike accommodations only exist on the shoulders of the taxpayers?

Absolutely not:

Since 1947, researchers have found that the amount of money spent on highways, roads and streets has exceeded the funds raised from gas taxes and other user fees by $600 billion, “representing a massive transfer of general government funds to highways.” In fact, as of 2007, fees charged to motorists covered only about half the cost of building and maintaining the country’s roads. The rest is financed with other taxes and bonds.

In fact, the Highway Trust Fund – the federal fund that pays for road building and maintenance – has been bankrupt since 2008, kept alive with an infusion of $34 billion in general-fund revenue and debt.

This is not to say that there’s a problem with this.  Public infrastructure should be paid for with public funds, regardless of what specific tax they’re tied to.  But it does open up the debate to consider which modes are more appropriate for which areas and more deserving for funding.  If everything is subsidized – and, clearly, it is – the discussion should be which modes allow for the most mobility and most efficient system in a given area.  Transit, bike infrastructure, rail, and so forth still won’t always be the answer, but I bet you they will rise to the top more often than not.  And it forces highway advocates to explain, for example, why its better to spend millions widening highways to relieve rush hour traffic congestion when additional buses might do the same job at a better return on the investment.

13 thoughts on “Highways Are Heavily Subsidized

  1. I found this web site for the American Association of State Highway and Transportation Offices: http://www.interstate50th.org/. It has a lot of information about the history of the highway system and some suggestions on what we should be thinking about to improve it in the future.

    The site includes a report on the economic impact of the interstate highway system: http://www.interstate50th.org/docs/techmemo2.pdf. In an analysis of the aggregate study data, the report concludes that the interstate highway system has had a positive impact on economic performance in the United States since 1956, although it has also contributed to urban sprawl.

    Specifically regarding the Virginia I-81 Corridor, the study notes “there was about an 18% increase in manufacturing employment between 1971 and 2000 in the corridor.” So the highways are associated with economic gains.

    One problem now is with congestion in urban areas. The report suggests studies are needed to assess the economic impact of this. For example, do employers have to pay higher wages to employees in order for them to afford the transportation costs of living there? (Of course the answer is yes, but studies quantifying the impact are needed.)

    At any rate, the information on this web site shows the important role and responsibility of the federal government in providing transportation solutions. Highways, it seems reasonable to argue, will never be self-supporting and will always require subsidies. Yet they are an enabler of business enterprise and even personal freedom, to the extent that one regards mobility as a factor of personal freedom. (I do.)

    It’s cheaper for me to get in my car and drive to New York City than it is to buy an airplane ticket. I can decide to take a trip at my whim instead of arranging it too far in advance (as I would have to do to get the best price for airline tickets). Having to drive to Lynchburg or Clifton Forge for Amtrak service does not seem worth it. I experienced slow service, riddled with long delays, when traveling to the Northeast Corridor last year.

    I would love for rail service to improve. I could accept the delay of having to stop at many stations along the way in exchange for a good price and for trains that run reliably. This would probably have to be accomplished through federal subsidy, however. Would there be a net economic payoff, as there has been with the interstate highway system? Not as much, would be my guess. The rail system cannot be as flexible as the interstate highway system, at least not without significant investment (we probably can’t afford).

    Cycling transportation solutions are different from rail and highways. They are not mass transportation solutions. They are lifestyle solutions, and they should be promoted as such. In a society that is largely sedentary, in which obesity rates are rising and young people are beginning to suffer strokes, cyclists can show people that there are ways of exercising that are fun.

    Better motorist education is needed to inform people about the rights of cyclists. Some videos and commercials modeling proper behavior on the part of cyclists and motorists could go a long way toward ensuring that we “share the road” with respect. More bike lanes would be awesome, and it would probably encourage new riders. It would be expensive, however. Some modest goals of expanding bike lanes among a few key public routes might be a place to start. Maybe you are working on this, Jeremy?

  2. Thanks for your comments, Jill. I think your points are all on the mark – highways, rail, cycling, pedestrian, etc., all meet different kinds of mobility needs. Rail is a good solution for intercity travel and freight, cycling is good for short urban trips, highway is good rural connection, demand response, etc.

    The point with this post and, I think, with the study, is an analytical and political one; that is, in the discussion of mode choice and transportation policy, there has often been an underlying assumption that highways “pay for themselves” through the gas tax. Meanwhile, transit is “subsidized” since fares generally account for a small portion of revenue, pedestrian and cycling infrastructure is “subsidized” since they don’t pay gas taxes. The discussion of which modes to invest in at particular points has therefore been distorted, with the distortion almost always leading to new road projects – additional lanes to relieve congestion, new roads to bypass congestion, and so forth. What this study shows is that the gas tax falls far short of actually paying for the construction and maintenance of highways and that they are subsidized by general tax revenues in the exactly the same was that other transportation infrastructure is.

    I think this is entirely proper. I don’t have a problem with highways being subsidized, because I don’t think of it as subsidy (just as I don’t think public transit, rail, bike lanes, etc. as being subsidized). I think of it as proper investment in mobility. However, once you accept that all transportation infrastructure is subsidized, then policy can do a better job of analyzing what modes in which situations are the most effective use of public funds. My guess is that, in a very general sense, this will lead away from road-building to deal with congestion issues, for example, and towards transit expansion. It will lead to more walkable and bikeable communities and fewer cul-de-sacs and disconnected neighborhoods. It will lead to more freight moving onto rail and the construction of intermodal centers rather than expanded and continued investment in highways. Again, this is my general guess, though specific cases may very well call for more highways, fewer bike lanes, no rail, etc., etc., etc.

    To your last question: We are working diligently on expanding bike routes and on-road accommodations throughout the Roanoke and New River Valley. The City has added roughly 5 miles of on-road accommodations in the last year, for example, and the regional Bicycle Advisory Committee met just this morning to discuss improvements to Bike Route 76 and connections to the Blue Ridge Parkway.,

  3. Jeremy,

    Thanks for shining some light on this issue. Transportation, in general, is a “derived demand.” This means that usually transportation is a means to some other economically or personally productive end. There may be a few who have a “joy of driving” and drive for its own sake and pleasure, but mostly those who use any transportation services are trying to get somewhere in order to do something.

    The first commentator is correct that the interstates open up markets, cut time to market and in general have positive economic spillovers that are not captured in the “gas tax.” That logic shouldn’t stop at the interstates; likewise public transit has positive spillovers in the form of youth, who don’t own a car, getting to a part time job; adults, who would otherwise be on public assistance, getting and maintaining a job; and visitors who may have flown in and not rented a car getting from place to place. In the last year I did the latter in a personal visit to the Twin Cities and a separate personal visit to the Bay area exclusively using public transportation or being a pedestrian while I was on the ground as a tourist. And, bicycling is likely to have significant public health and reduced emissions positive spillovers.

    So this gets us back to your original point. All forms of transportation are subsidized, and all forms probably have positive economic and productivity spillovers. Hopefully the public discussion can take all of this into account on a case by case basis. Unfortunately, in our politically charged present, it is more tempting for people to be dogmatic rather than think through trade-offs.

  4. Thanks, Jeremy and Mark for your comments. I would love to see more investment in alternative forms of transportation, not only as a matter of economic stimulation (which has been proven as a potential outcome with the interstate highway system, as cited in my post above) but also as a way to improve community health and quality of life.

  5. I think you make a good distinction, Jill. Highways (and, to an extent, rail) should have their economic impacts measured in macro sorts of ways – the ability for industries to get products to market, speed of freight, connectivity between different kinds of economic centers – industrial, technological, financial, etc. Alternative modes – bike, pedestrian, transit – are generally about community building, quality of life, environmental quality, etc. These work in tandem, I think – Portland is both a bike-friendly city as well as an area with a lot of technology companies and higher learning.

    My interest in promoting sustainable transportation Roanoke is as much about making the area an attractive place to live, to attract and maintain a creative, active, tech-savvy workforce, as it is about clean air and smart investment in transportation infrastructure.

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