Funding Highways: States Can Do It

July 21, 2015
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Congress faces a deadline at the end of July to extend federal highway funding. Policymakers are likely to cobble together a short-term fix for the funding gap in the Highway Trust Fund (HTF), rather than enacting a permanent solution.

Annual HTF spending is projected to be $53 billion and rising in coming years, while HTF revenues will be $40 billion. That leaves an annual funding gap of at least $13 billion. A good permanent fix would be to cut federal spending by $13 billion to match the revenues. State governments could fill the gap with their own funding, efficiency improvements, or privatization.

That straightforward decentralization solution is not popular with highway lobby groups, and it is usually not mentioned as an option by reporters. A recent Washington PostWonkblog column is typical. It examined road quality and potholes in the states, and then concluded that more federal money was needed.

The Post published my letter in response to Wonkblog on Saturday:

The article noted that some states (such as California) have many car-damaging potholes, while others (such as Florida) have very few. It said that “we haven’t been putting enough money into the Highway Trust Fund.”

Actually, the data reveal that California ought to be learning lessons from Florida on how to spend existing funds more efficiently. The fact that some states have much better highways than others shows that states can solve their own highway problems — without the top-down federal actions suggested in the article.

Here are some of the details from the original Wonkblog story:

… 28 percent of the nation’s major roadways—interstates, freeways, and major arterial roadways in urban areas—are in “poor” condition.

[Other than D.C.] … the worst roads are in California where 51 percent of the highways are rated poor. Rhode Island, New Jersey and Michigan all have “poor” ratings of 40 percent or more. Dang.

And while everybody loves to make fun of Florida, the Sunshine State actually has the smallest percentage of bad roads in the nation—only 7 percent. Nevada, Missouri, Minnesota and Arkansas round out the top 5.

Note that Florida is a warm and sunny, while Minnesota is cold and snowy, yet they both have very good roads. Meanwhile, California is warm and sunny, while Michigan is cold and snowy, yet they both have very poor roads. Wonkblog correctly notes, “I might have expected weather and latitude to play a big role in road quality, but that doesn’t seem to be the case here.”

So far so good, but then Wonkblog jumps to his predetermined solution, and completely ignores the implication of the data he had just presented. He says, “One main reason why our roads are in such bad shape is that we haven’t been putting enough money into the Highway Trust Fund to keep up with infrastructure needs.”

According to Wonkblog’s own chart, only 10 percent of the roads in Minnesota are in “poor” condition, while 51 percent in California are poor. Thus, bad roads are clearly a state-level failing. Wonkblog immediately grabs for the magic wand of more federal funding, but he might have asked what it is that states like Minnesota are doing right with the existing funding.  

The other weird thing about Wonkblog’s conclusion is that he says, “we haven’t been putting enough money into” the HTF. But, of course, it is spending that might affect road quality, not the revenues “into” the fund. If you look at HTF spending, it has remained high in recent years because Congress has filled it with general fund revenues, as I chart here.

In sum, there are apparently dramatic differences in road quality between the states. That may stem from differences in state funding, state efficiency, and state competence, but seemingly not climate conditions. All the states have the ability by themselves to have high quality roads, but some states it appears have important road-investment lessons to learn from the others.

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