Silver State highway problems merely reflect the nature of
government
By Steven
Miller
BusinessNevada
What’s the real
source of Nevada’s road construction and maintenance problems?
While few elected political leaders question the economic importance
of roads and highways, the reality remains that governments,
whether state or federal, are notoriously negligent in keeping
up with road needs.
Some important clues why can be discerned from a new book produced
by two Deloitte & Touche public-sector experts. States of
Transition: Tackling Government’s Toughest Policy and
Management Challenges, was published last year.
Authors William Eggers and Robert Campbell write that “traditional
highway transportation funding sources” no longer “keep pace
with increased demand.” One reason, they note, is that, “In
the 1980s … [Federal Highway Trust Fund] expenditures began to
fall relative to revenues.” In short, although the federal gas
tax was producing revenues, those revenues were remaining in
the federal treasury and not being spent.
Another reason they cite is the impact of inflation. “Without being
indexed to inflation or the direct cost of fuel, the bying
power of the 18.4 cents has declined, effectively dropping 8
percent in the last seven years.”
Yet a third reason cited is that “Federal law … encourages
financially constrained planning because projects generally
cannot be pursued unless and until federal funding is
available. States are constrained by this “pay-as-you-go”
approach; it hampers their ability to do effective long-term
planning for new projects.”
A fourth factor listed: “New projects may also fall to the bottom of
the priority list. New projects often require funding from
multiple authorizing authorieties, each of which may be
dealing with a different political situation.”
A fifth: “Budget shortfalls also undermine the ability of states to
maintain existing facilities properly, leading to deferred
maintenance. This shortens the useful lifespan of roads …
necessitating expenditures of 6 to 20 times the maintenance
costs for rehabilitation or reconstruction.”
Notice that of the five reasons that the Deloitte & Touche authors
list for why state governments do not keep highways
well-maintained, all five turn out to stem directly from
inefficiencies that are chronic to the institution of
government.
Specifically,
1)
Between 1980 and 1995, government had the funds but simply
didn’t use them;
2)
Government at the federal level constantly inflates the U.S.
money supply, thus itself destroying the buying power of its
own gas tax revenues;
3)
Government regulations, even if arguably necessary, hobble
states’ efforts to plan effectively for the long-term;
4)
Government agencies regularly fail to implement needed highway
construction and maintenance projects simply because politics
sets other priorities;
5)
Governments, both state and federal, chronically spend
virtually all available revenues during boom times without
establishing adequate reserves. Then, when the business cycle
contracts and revenues drop, those same governments,
complaining they cannot meet their current program
obligations, cancel or postpone scheduled and needed highway
maintenance and construction.
So the pattern is clear: Most current road and highway
infrastructure problems in Nevada and the nation flow directly
out of the fact that those transportation elements are part,
not of the much more efficient and service-oriented private
sector economy, but, instead, the frequently dysfunctional and
politicized government sector.
The logical implication is that genuine long-term solutions to
Nevada’s transportation needs would require leaving behind
this present system and moving instead to the public-private
partnership models increasingly being used around the world.
While such an idea will no doubt sound radical to some ears, turning
to the private sector is most likely the only way that the
necessary funds can ever be raised.
According to the Federal Highway Administration’s most recent
Conditions and Performance Report, annual capital investment
in U.S. highways is currently at $68 billion—which is $6
billion under what is needed to simply maintain the
condition of those highways and bridges. And actually
improving the system, so it can cope with increases in
auto and truck travel, says the FHA, would require another
$51 billion annually.
It is because the existing state and federal fuel tax and highway
trust fund system fails to fill this funding gap, the Reason
Foundation’s Robert Poole told Congress last week, that states
are increasingly turning to investor-owned companies.
In exchange for long-term licenses to operate toll-roads, such
companies will finance, design, build, operate, modernize and
maintain highway projects.
This model, noted Poole, “built most of the postwar toll motorway
systems in France, Italy, Portugal, and Spain.” Today it is
also being used in Australia, Argentina, Brazil, Britain,
Canada, Chile, Germany, Greece, Ireland, Norway, Eastern
Europe and increasingly throughout the U.S.
It’s a model Nevada is ripe for.
<747 words>
Steven Miller is editor of BusinessNevada and policy director
for the Nevada Policy Research Institute
