Local Business
Patrick Barkey: Roads need financial help
Of all the arguments raised against Indiana’s innovative Major Moves initiative to finance new road construction, the most persuasive one that I heard voiced goes something like this. It’s great to get $3.8 billion up front from a 75-year lease of the Indiana Toll Road to fund a 10-year new road construction blitz, but what are we going to do for money to fund the next 65 years of transportation needs?
Of course, the initiative’s backers answered that criticism by diverting a portion of the lease payment to a trust fund. But in the larger scheme of things, the point still resonates with me. Major Moves came up on our radar screen for one simple reason — our system of financing the state’s transportation infrastructure is broken. And while the infusion of cash from the Toll Road lease payment is welcome, it doesn’t really address what’s gotten us into trouble in the first place.
A recent Indiana Fiscal Policy Institute briefing spells out the situation in depressing detail. In the last 35 years, vehicle registrations statewide have doubled, and vehicle use — as measured by vehicle miles traveled — has gone up two and a half times. The economy is larger, more affluent, and more geographically dispersed. And it show up on the highways.
That’s not only wearing out roads faster, but its putting constant pressure on governments locally and statewide to build new ones or expand the ones they have. But the funds available to carry out this task have proven inadequate to the task.
It’s not about money, but rather how far that money will go. Of course, we pay for roads through taxes levied on fuel sales, and since those taxes are based on the value rather than the amount of what we pump into our tanks, the tax per gallon has gone up along with the price of gas. It’s one of the least offensive taxes the state has, quietly tucked into our fuel costs, with those who drive the most essentially contributing the most to the support of our roads.
Yet it is not doing the job. When inflation is taken into account, there has only been a 10 percent increase in funds available to support transportation demand that is 150 percent higher than it was in 1970. The problem is exacerbated by the fact that transportation needs are most acute in the urbanized areas of the state where it is most expensive to build. And rather than raise taxes to what it would take, state politicians have unsurprisingly taken the penny-wise, pound-foolish approach of skimping on infrastructure support.
So far this general story could be told for many areas of government — health care, education or prisons — where demand has pressured available public funds. The difference is that without adequate infrastructure support, the private sector growth that forms the base for funding all of our other public needs might not happen.
Raising money for roads will be painful, but it can be much less so if we start thinking more creatively about how to do it. Expensive roads should cost more to use, yet the price I pay for traveling down a new lane of Interstate 465 around Indianapolis that cost hundreds of millions to build, and what I pay to go down an empty country road, are the one and the same — zero.
Technology gives us the ability to change this. You may not know it, but if your cell phone is turned on, your location at any moment can be determined. Can you imagine a world where tiny transponders in our cars reveal what roads we use, and we are billed accordingly? It’s a privacy nightmare, perhaps, unless those aspects are carefully managed. But it gets us closer to paying for what we use, which in turn ensures a balance between demand and supply that is sorely lacking on our public highways.
Patrick Barkey is a professor in the economics department at Ball State University.
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