Recently, the Texas Department of Transportation, a.k.a. "TXDOT," republished a three year old study which confirms what most of us have known all along: our system of roadways costs us plenty!
These highways and byways not only cost us in the form of lost time due to traffic congestion and personal injury. They're not only costly because of increased dependence on foreign oil and inefficient land use patterns. It's not just the fact that auto-centrism is the largest single cause of environmental pollution and decreased productivity.
No; we've finally had an avidly pro-pavement D.O.T. publicly admit that the most basic form of societal cost - the capital requirements for design, construction and maintenance of these facilities - far exceeds the total tax receipts allocated toward these highway systems!
In fact, the subsidy ratio (or, in the case of roads, the "Asset Value Index") for TXDOT's infrastructure makes Amtrak's taxpayer-supported needs absolutely pale in comparison! It is estimated that gasoline taxes would need to be six times higher than they are today just to bring revenue in line with expenditures.
In other words, the average cost of one gallon of gasoline in Dallas would instantly jump from today's approximate of $2.50 (for regular grade) to an outrageous $4.35!
Even then, there are several assumptions being made, chief among them the idea that folks would be willing to pay any amount just to get another fix of petrol. But, that assumption was blown to bits the last time gas hit four dollars! It's as if our transportation "leaders" had never heard of the price elasticity of demand!
Still worse economically is the concept of "green" automobiles. Lower the need for petroleum products through hybrid technology (or eliminate it with all-electric cars) and see what happens to our highway budgets! Yet, many in Austin and Washington continue to pretend that, since people "love" to drive, everything in our power needs to be done to maintain the rubber-and-concrete status quo.
So, what else can be done?
Are our elected officials correct when they intimate that nothing else can be done?
Conversely, is it possible to develop a completely different approach to the game whilst maintaining public support?
I sincerely believe I know the answer! Unfortunately, things will need to get a lot worse before they begin to get any better, 'cause governments tend to address symptoms over root causes.
In the meantime, read it and weep!
So far, the current study hasn't been posted to the internet; however, the original blurb can be accessed at this U.R.L.:
http://www.keeptexasmoving.com/index.php/enews/57?theme=print
...and a Houston article regarding TXDOT's work can be found at:
http://www.houstontomorrow.org/livability/story/txdot-no-road-pays-for-itself/
I transcribed the following from the "Keep Texas Moving 'e-Newsletter'." No attempts were made to correct grammatical errors.
Published by the Government and Business Enterprises Division at the Texas Department of Transportation
20 November 2009 issue
Article title: "Do Roads Pay for Themselves?"
A major feature in the public debate about toll roads has been the issue of when or whether a road has been "paid for." To better understand this discussion, it is helpful to ask two questions:
1. What is a traveler paying for when he or she pays state gas tax at the pump?
State motor fuel tax is collected from all over the state and goes into a single pool of revenue - about one quarter of which goes to fund education, and about three-quarters of which goes to the state’s highway fund, where it is spent on transportation uses and some non-transportation functions of government.
Then the state receives federal funds as the state’s share of the federal fuel tax; about 70 cents of every gas tax dollar Texans send to Washington comes back for road use.
The significant point here is that historically the fuel tax paid in any locality of the state is unrelated to the road projects in that locality. Every fuel taxpayer in the state paid something for any given road - which leads to the next issue.
2. When is a given road actually "paid for?"
Just like your car, it never is. You may have paid the note, but maintenance and fuel costs go on as long as you own the vehicle. Once a road is built, maintenance and rehabilitation costs last its entire life, generally about 40 years.
The decision to build a road is a permanent commitment to the traveling public. Not only will a road be built, but it must also be routinely maintained and reconstructed when necessary, meaning no road is ever truly "paid for."
Until recently, when TxDOT built or expanded a road, no methodology existed to determine the extent to which this work would be paid off through revenues.
The Asset Value Index, was developed to compare the full 40-year life-cycle costs to the revenues attributable to a given road corridor or section. The shorthand version calculates how much gasoline is consumed on a roadway and how much gas tax revenue that generates.
The Asset Value Index is the ratio of the total expected revenues divided by the total expected costs. If the ratio is 0.60, the road will produce revenues to meet 60 percent of its costs; it would be "paid for" only if the ratio were 1.00, when the revenues met 100 percent of costs. Another way of describing this is to do a "tax gap" analysis, which shows how much the state fuel tax would have to be on that given corridor for the ratio for revenues to match costs.
Applying this methodology, revealed that no road pays for itself in gas taxes and fees. For example, in Houston, the 15 miles of SH 99 from I-10 to US 290 will cost $1 billion to build and maintain over its lifetime, while only generating $162 million in gas taxes. That gives a tax gap ratio of .16, which means that the real gas tax rate people would need to pay on this segment of road to completely pay for it would be $2.22 per gallon.
This is just one example, but there is not one road in Texas that pays for itself based on the tax system of today. Some roads pay for about half their true cost, but most roads we have analyzed pay for considerably less.
To conclude, in the SH 99 example, since the traffic volume for that road doesn't generate enough fuel tax revenue to pay for it, revenues from other parts of the state must be used to build and maintain this corridor segment. The same is true across the state, meaning that, as revealed by the tax gap analysis, overall revenues are not sufficient to meet the state's transportation needs.
-30-
Posted
12-06-2009 2:18 PM
by
Garl B. Latham