When Georgia voters rejected a sales tax to fund transportation projects like roads and bridges in July 2012, we were left with few alternatives. Robert Poole’s recent presentation has us thinking that the alternatives will hurt lower-income workers more than others.
The federal fuel tax collected on the sale of fuel is used to fund transportation projects. Higher fuel efficiency has reduced the amount of tax collected. Hybrid vehicles may double or triple the gas mileage for an operator so the amount of money collected for the fuel tax is reduced by that same amount. Alternative fuel vehicles may not contribute to the fuel tax at all. This funding mechanism can no longer support the expense of transportation projects so we have to find some alternatives.
Robert Poole at the GPPF
Robert Poole is a senior fellow at the Georgia Public Policy Foundation (GPPF) and co-founder of the Reason Institute where he serves at the Director of Transportation Policy. He’s advised the Reagan, H.W. Bush, Clinton and W. Bush administrations and remains a leader in transportation issues. In a recent GPPF presentation, he laid out the following concerns:
1. Funds from the fuel tax go into the Highway Trust Fund. That fund has been bailed out by Congress when money received isn’t enough to pay for projects. We shouldn’t expect any more bailouts because the US federal government has too many other debts to pay – we’re broke.
The result will be a shift from funding transportation projects in bits and pieces when there’s money in the trust fund to financing projects. Railroad, utility, toll road, airport and other projects are typically financed – the entire project is planned and divided into pieces. This allows the revenue from the first construction phase to fund additional phases until the project is completed.
2. We’re going to shift from a fuel tax to a tax on miles driven. Transponders in our vehicles, like the Peach Pass, will bill us for miles driven on certain roads or we may see many more tolls collected to pay for construction and maintenance of our roads and bridges.
3. We’re going to shift to public-private partnerships (PPPs) that allow private funding of public roads. These business-driven models for transportation projects will take a more holistic look at projects based on their operation and life cycle costs rather than just looking at the initial cost as we do now. There is a huge amount of North American and Australian capital available for these projects and they represent new opportunities for American companies since PPPs are not yet common in the United States. For American drivers, PPPs probably mean many more roads that we will pay to use.
The Effect on Lower-Income Workers
The real estate around our business centers, like downtown areas, is typically very expensive – at least in those places where you’d want to live. This often means the people upon whom we rely to provide supporting services (an army of janitors, restaurant workers and others) live far away from where they work. They can’t afford to live closer to work so they spend much more time in their cars and pay much more for transportation costs than those who can afford to live closer to their work.
Large metro areas like Atlanta still need to reconcile the cost of transportation with planning issues. We use zoning to create neighborhoods with houses that are all the same size and cost. More diversity of house sizes and sale prices in our neighborhoods (especially starter homes closer to business centers) will allow us to grow more competitive. The time we would otherwise spend in our cars could be invested in education, community service, family activities and other things that greatly enrich our society.
While the efficiency of mass transit is popular topic, it’s not a substitute for living close(r) to work. If we’re segregated by income through our zoning ordinances and development patterns, we still have to invest significant amounts of our time and money in transportation – the investment would just be in mass transit systems rather than our cars or carpools.
This is a difficult topic because it’s tied to so many other issues. That’s why we think you should consider getting involved with your own local policy group like the GPPF. Their next event on February 19th will feature Randal O’Toole of the Cato Institute talking about… housing!