Progressive Voices

The message from Department of Transportation bureaucrats and elected officials deep in the transportation policy game has been the same for some time now - "send more money." With a prominent study groups known as the 21^st Century Transportation Study Committee set to recommend the same next month, the message demands closer scrutiny.

Before we reach deeper into our pockets during these difficult economic times, however, current road expenditure priorities need reforming and transportation's inefficient administration needs to clean up its act.

But there is a need for more revenue in some quarters. Our public transportation systems are woefully underfunded at a time when it is clear that uncertainty over gas prices, an economy in trouble and growing concerns over global warming are motivating people to search out transportation options other than single-occupant driving. Our rail freight system is a shadow of what it could be. It should be taking far more road destroying trucks off our highways. Many of our rural roads and bridges are safety hazards. Our state's strange penchant for building roads without sidewalks is an antiquation from poorer times.

A Question of Priorities

Everyone, it would seem, wants their loop. Fayetteville is the next town in line. Greensboro is incensed.

Are these loops affordable? Will the benefits justify their cost? The cost of these loops is steep - anywhere from $6 billion to $10 billion between now and 2050. The question is: will we want these loops in 2050? Are they part of a plan to provide sustainable connectivity for North Carolina, or a recipe for further gridlock? The latter seems more probable.

There is nothing natural about the sprawl we are seeing in our urban development. It is a function of conscious planning decisions that owe a great deal to our road-building policy. Mobility problems? Build a loop. Never mind that it opens up new areas to low density development. So much for infill and the possibility of the need to build and maintain fewer lane miles.

The inability or distaste among policy makers and their advisers (such as the 21st Century Transportation Committee) to fully address the question of how and what decisions are made as to what projects get built and in what order has profound implications for how transportation finance is viewed. At the first meeting of the 21st Century Transportation Committee in late 2007, DOT representatives argued that there was a $65 billion shortfall over the next twenty years or so. The number has been rarely challenged since. The reason? The projects and the process by which they are chosen have not been fundamentally challenged.

The "Prioritization Committee" of the 21st Century Transportation Committee has recommended that the status quo method of selecting and funding projects be essentially preserved. There are a few "reforms" at the margins. Highlights include a proposal for a new program to pump in an extra $120 million per year to expand capacity on our busiest roads (a "Congestion Reduction" program - that does not even mention public transportation); approval of high occupancy toll lanes (free lanes for high occupancy vehicles; pay lanes for single occupant drivers of luxury sedans or others with money to burn) and the removal of interstate re-surfacing costs from the calculations of the so-called Highway Trust Fund "equity formula." This reform may benefit some regions disproportionately, most likely rural regions, but no cost estimates have yet surfaced.

Before we go hunting for more money for roads, the "equity formula" must be more fundamentally reformed. The formula allocates mostly construction dollars to seven regions on a blend of three criteria: 25% of the dollars are allocated based on miles yet to be built for high capacity highways specified in the 1989 Trust Fund bill (no questions allowed on whether these roads are required or as necessary as other projects), 25% are allocated on a geographic basis (equal dollars per region) and the remaining 50% are allocated based on population share. The result is that regions like Durham and Wake County receive the lowest per capita spending in the state despite the obvious need for higher spending in the fast growing region.

The current process by which projects are chosen and prioritized borders on the bizarre and must be changed before more money is siphoned off for roads. At the moment, Division Engineers (i.e. the engineer-managers of each of North Carolina's 14 transportation divisions or regions) draw up a wish list of projects based on representations from local mayors, county commissioners, Metropolitan Planning Organizations and local Chambers of Commerce. Citizenry are rarely organized well enough to have much of an effect on the drafting of this list. The Board of Transportation then horse trades on the competing lists within the funding guidelines set out by the 1989 Highway Trust Fund legislation.

Meanwhile, regional approaches based on strategic long-term plans tend to get marginalized in the political battle to get individual projects into the first three years of a seven-year priority list known as the "Transportation Improvement Plan" or TIP. The first three years are coveted because they are the only ones actually "costed" out and most likely to be funded.

It is a system where everyone is blameless yet everyone is to be blamed. The system sets up incentives to behave in certain ways. An insider culture of cronyism and log-rolling with the odd whiff of corruption and election finances greasing-the-wheels has emerged. Broader discussion about land use and sustainability (in terms of congestion, finances and environmental) gets lost in the shuffle.

Add in a DOT that has for years performed below par and it is clear that there is much room for stretching how our current dollars are spent.

The Chorus for More Revenue and the VMT Tax

And yet the insiders want more money for roads. Those waiting and begging for more state money for public transportation, commuter rail and rail freight capacity know that as long as the road beast needs feeding, the likelihood that their calls will be satisfied diminishes.

The result is that now transportation advocates of all stripes are joining the chorus for "more money, please!" The latest revenue candidate recommended by the 21^st Century Transportation Committee is a "vehicles-miles traveled" tax (VMT). The old candidates, lifting the cap on the gas tax, and raising vehicle sales taxes and tag fees are also being re-aired.

In these droopy economic times the revenue hole next year in the General Fund could well be well north of $2 billion. There will not be enough tax increases to fill this hole. Transportation will join the queue with everyone else - health, education, social services, and law enforcement - in wanting more revenue.

In such an environment, any cuts must be fair.  North Carolina must preserve programs for the neediest and the most vital services. Save where you can. Cut some of the rest. That goes for transportation, too.

It is this economic context, along with the current waste and dubious prioritization process that makes the calls for a VMT tax tough to swallow. In theory, the idea is sound. The gas tax is not quite on its last legs, but it is close. The first sales of electronic cars in any quantities will hasten its demise. A new foundational revenue source is needed.

This fundamental concept justifying the VMT tax - as a replacement for the gas tax - is getting lost in the current debate. Right now it is regarded as just another means to get more money. The calls for a VMT come absent a plan for it to replace the gas tax over time.

It is extremely doubtful that VMT tax would have made any impact on public debate (or the 21^st Century Transportation Study Committee) if the legislature had not acted a couple of years back to cap the gas tax at 29.9 cents per gallon.  Increasingly fuel efficient vehicles, high gas prices and shrinking vehicle use are hurting gas tax revenue, to be sure. But the real culprit right now is the 29.9 cent cap. It will cost the transportation budget $600 million by next summer. It is quite possible that the General Assembly will let the cap lapse now that gas prices have temporarily declined.

If ever there was a time to re-visit the prioritization process in a fundamental way, it is surely 2009.  There is no reason why transportation should be exempt from the internal housekeeping that other areas of the budget will have to face. Let's do that first before reaching for a state VMT tax.

Decentralize and Getting the Priorities Right

The scramble for more dollars at the state level should be diffused some by giving local governments more responsibility and freedom to plan, build and maintain their own local transportation infrastructure.

If local governments do more, the General Assembly needs to give them the taxation authority to do it. Don't automatically reach for the sales tax. Aim for fairer and more appropriate transportation revenue sources that actually encourage more compact and sustainable development by assessing on the basis of use, such as vehicle utility fees (fees assessed on real property based on the traffic it generates).

Let's put the money where the congestion is, where safety concerns are greatest and cancel the excessive, non-urgent road projects that dominate the intra-state highway program. Let's spend more on public transportation, less on new loops - use transportation policy as a foe of sprawl and future road expense, not an enabler.

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This entry was posted on Sunday, November 30th, 2008 at 8:59 pm and is filed under Progressive Voices. You can follow any responses to this entry through the RSS 2.0 feed.