For Transportation Infrastructure, Focus on Demand and Return-on-investment
Mary Peters, former U.S. Secretary of Transportation, June, 2011
The Puget Sound Business Journal published this column on June 3, 2011.
America’s current surface transportation programs labor under the burden of policy approaches designed more than a half-century ago. We are living with the result: we deal every day with increasingly lengthy daily commutes and growing gridlock that costs American businesses billions each year.
The Interstate Highway System was authorized in the mid-1950s, funded by fuel taxes that were periodically increased by Congress as the cost to complete the system was defined. At the time, fuel taxes were a reasonable proxy for users to pay for the system.
Following essential completion of the interstate system in the late 1970s and early 1980s our citizens and businesses enjoyed one of the world’s preeminent transportation systems – one that provided the American people a strong return on investment and fueled economic growth.
In the ensuing years, Congress added numerous other special programs and earmarked projects, expanding from 10 earmarks in the early 1980s to over 6,000 and $24 billion in the 2005 SAFETEA-LU bill. That bill also gave us the now infamous ‘Bridge to Nowhere’.
Not surprisingly, the American people lost confidence in the federal program and have been unwilling to support higher gas taxes to expand it – there has been no increase in the federal tax of 18.4 cents per gallon for gasoline since 1993. Americans routinely reject new national taxes and new debt for transportation projects even as they increasingly rank transportation failures as among the most problematic in their lives. It is not that they don’t want better commutes and more reliable travel – they have just no confidence in the government’s ability to deliver better results.
There is, however, a transformational opportunity in America today to discard the transportation policies and programs of the 20th century and to embrace those that will serve our nation well into this century. If we successfully make that transformation it will help our economy recover and our nation thrive.
It is not just about how much we spend on transportation, but how we invest in transportation. In truth, it is an eminently solvable problem – congestion and delay do not have to be a fact of life. If we make the right investments – investments based on demand and return-on-investment, we can significantly improve the operation and performance of our highways.
In some of America’s largest cities, we are witnessing the introduction of technology, time-of-day road pricing and private capital. Right here in Seattle we are seeing some of that innovation at work with rebuilding the 520 floating bridge, funded in part by tolls.
Cities like Miami, Minneapolis and San Francisco have projects to implement demand-based, time-of-day pricing. SR 91 in Southern California has employed this effective tool for a number of years, obtaining 40% greater through-put than the adjacent unpriced lanes.
These trends could not be happening at a more critical time for state and local governments. The past few years have been among the most fiscally difficult years for state and local governments. Unlike the federal government, states cannot just vote to increase the deficit and most have requirements to balance their budgets annually.
Transportation remains an attractive investment – a solid asset class with real value that produces a steady revenue stream. Long-term, I believe the trends are quite clear. The private sector can and must play a major role in modernizing America’s transportation infrastructure from our roads and bridges to our subways and seaports and the air traffic control system.
The objective of reform is not simply financial sustainability. By transferring risks of these projects we can reduce skyrocketing costs, accelerate project delivery timeframes that are crippling projects across the country, and provide direct incentives for operators to reduce congestion, manage assets on a life-cycle basis, and be directly accountable to customers as opposed to politicians.
There is no question in my mind that the next great transportation mission for the federal government should be to implement policy reforms that hit at the heart of our transportation challenges. Increasing funding alone – the preferred choice of many – will do very little to improve our nation’s transportation systems.
Without the direct participation of business and policy leaders, however, there is little hope of reversing the obvious problems that plague our transportation system today. If the usual players make the decisions about how we fund and operate our transportation systems, there will only be more of the same.
Our country simply cannot afford a lack of interest on our part. We must join together to fight for relief from inefficiency, congestion and delay and demand rational transportation policies.
Mary Peters is a former U.S. Secretary of Transportation. She keynoted Washington Policy Center’s 2011 Transportation Policy Conference in Bellevue on Tuesday, May 10th.