Tag: "infrastructure"

How Gas-related Taxes have Created Unfunded Liabilities in Construction

As any responsible steward of income can probably state that any reduction in income must be met with a reduction in spending and likewise any increase in spending must be validated by an increase in available income, lest the reality of debt or re-appropriation of disposable funds becomes your only choice. The gas tax debacle that looms over our heads is an example of how this simple yet universal lesson in finance is often lost upon the government.

Due to its lack of popularity among both citizens and politicians alike, the federal gas tax which was progressively rising throughout the 20th century finally hit a wall in 1993 at $0.18, from which it hasn’t moved since. Curiously, the 1993 increase in the gas tax was not even fully utilized to improve the highway systems as 2.5 cents per gallon were dedicated towards paying down federal debt…  As we’ll see later, states were not behind this trend of cross-funding. When coupled with inflation, this stagnation of the federal-gas tax and a simultaneous reduction in the amount of gas spent per mile — with the introduction of more fuel efficient cars — has effectively minimized revenues upon which the government was dependent to fully fund the Highway Trust Fund. However this simple lack of resources is not the only reason Congress is supporting bailing out the fund.

Spending priorities are determined more by politicians appeasing special interests than local needs or consumer choices. And the federal regulatory burden delays projects and smothers state and private-sector innovation.

― Emily J. Goff, a policy analyst at the Heritage Foundation

While the simple reality that solutions offered by the federal government will rarely not have an adverse effect on some Americans, what Goff describes is only the tip of the iceberg:

The beneficiaries of these local activities take from, but do not contribute to, the Highway Trust Fund. Better for New York and New Jersey to fund their subways, Oregon its bike paths and Maryland its trails.

What is the validity behind these assertions? Here are some numbers and figures for your consideration:

  • New Jersey is currently allocating 95% ($516 million) of its gas tax revenue towards paying off the $1 billion it has in interest on debt
  • New York currently uses 70% ($1.4 billion) of this revenue to pay off debt on past construction projects
  • Oregon will have to spend over 35% of its gas tax revenue ($200 million) per year to fulfill interest payments on bonds purchased
  • The state of Washington allocates 11.18 cents of tax revenue per gallon towards paying down its own debt payments
  • There are even states like Texas, where 25% of the total state tax funds go towards funding completely unrelated endeavors, such as education

Given the magnitude of the fund’s present day debt, it becomes clear that these are not simply isolated incidents and hence, this not necessarily a problem that is unique to the federal government. The gas tax represents a failure of policymakers, not only the simple failure of neglecting to index taxes to inflation but the failure to create a non-regressive tax while exercising responsible stewardship over its revenues.

-Santiago Bello is a research associate at the National Center for Policy Analysis

Dec 17, 2014 | 1 comment | by

Developing a Local Free Market Transportation Policy

In my previous blog post we examined how to create a national free-market transportation policy. This posting will examine how to create a similar policy on the local level. Unlike the federal and state levels, the make-up of local government varies by location. While major cities, close-in suburbs, and some small towns tend to be under Democratic rule, other suburbs, exurbs and the remainder of small towns tend to be under Republican rule. While Republicans are most likely to adopt free market reforms, moderate Democrats can be convinced to adopt such reforms as well.

Municipalities should focus on funding local assets. A local asset is any transportation infrastructure that serves residents of a city or region. For highways, cities should focus on funding minor arterials and local streets. Regional governments may still fund some freeway and major arterials if these systems move people throughout the region. For passenger railroads and airports, governments may provide some funding if the assets serve a major regional purpose, but such systems are better funded at the national and state level. While freight rail is better funded at the national or state level, regional coordination is important. Local governments are the best units to fund transit systems, although governments should insist on a farebox recovery rate of 50% and a professionally-operated system. Local governments are the best unit to fund bicycling and walking. However, governments should spend transportation resources on bicycling and walking used for transportation purposes not recreational purposes. Recreational uses should be funded by the park/general budget.

How should such a system be funded? We detailed the user-pay/user-benefit argument for highways, aviation and freight rail in the national post and the principle of mileage based user fees (MBUF) in the local post. Transit is best funded by a combination of farebox revenue, value capture and sponsorships. These funding mechanisms typically struggle to provide half of the funds for transit, often because service is priced too low. A better option is charging the full market rate for transit service and offering vouchers for low-income riders. Well-operated transit systems should be able to receive a minimum of 50% of operating expenses from tickets, value-capture and sponsorships. Bicycling and walking are the most challenging modes to fund. Ideally, a city will enact some form of small charge for bicyclists such as a tire fee. While such a sum raises only a small amount of funds it retains the user-pay/user-benefit principal. Using general funds on non-motorized transport may be necessary and is acceptable as long as significant numbers of commuters bike or walk.

 

Dec 01, 2014 | 1 comment | by

Concept of Induced Demand Twisted to Promote Environmental Agenda

The concept of induced demand where widening highways increases the number of cars that use those highways is true. However, some smart growth groups are twisting the concept just to validate a goal. Just because more people will use widened highways, improving highways is not always bad policy. In fact widening highways is often the best solution.

Economic researchers have noted the many benefits from highway construction: enhanced economic activity, reduced travel time in the short-run, decreased greenhouse gas emissions in the short-term, improved safety, etc. State Department of Transportations are very aware of induced demand; in most cases they choose to widen the highway because the economic benefits outweigh the increase in additional traffic. Furthermore, highways can be widened without inducing demand by using pricing or tolling.

Robert Cervero of the University of California-Berkeley proved induced demand was rule on selected California highways. But after Cervero’s research there was a proliferation of studies claiming induced demand where the phenomenon was not happening. The problem was so severe that Cervero wrote a paper pointing out some of the research flaws in these subsequent papers. Yet despite a thorough review and a detailed explanation of what is and what is not induced demand, many of the same groups are making many of the same claims. Streetsblog was up in arms last month with the news that a new freeway in Dallas will not decrease the number of lane miles that are congested. A smart growth ally uncovered the project’s environmental impact statement and because area leaders are not talking to the media, Streetsblog is convinced there is some grand cover-up not seen in Texas since the Kennedy assassination.

Let’s take a look and see what the EIS actually says. It details that between 2013 and 2035 traffic speeds on the corridor are going to increase by two miles per hour and that congestion is going to decrease by 7.1%. Considering Texas’ rapid population growth, decreasing congestion is a significant improvement. And the project has many other benefits. The new highway will provide a fixed reliable guideway for express buses and provide a non-congested alternative to emergency vehicles; with the new lanes buses will not be sitting in traffic. These new lanes will make buses more dependable, increasing bus ridership and likely increasing bus options for commuters, something environmental groups should support. The roadway will increase economic development and tax revenues in the city of Dallas. Further, because it is a tollroad, real induced demand will be limited. In fact one way that traffic on I-30, I-35E and I-45 would really decrease is if the new road were free. Why? Because people are more likely to divert to free roads than toll roads and more likely to take additional trips on these roads.

Does Streetsblog really want more free roads? It seems unlikely. Rather some groups have decided that transit expansion is good and any roadway expansion — free roads, tolled roads, priced roads — is bad. If that is your viewpoint, why let the facts concerning induced demand vs. non-induced demand and their relationship to good public policy interfere?

Nov 10, 2014 | Leave a Comment | by

Fighting Global Warming Will Cost $4 Trillion +

A new report from the Global Commission on the Economy and Climate reports that fighting global warming will cost $4 trillion over 15 years. However, the report also says:

  • Countries will spend an extra $90 trillion on infrastructure.
  • Countries will enact policies to reduce their carbon footprints.

Expanding each participating country’s infrastructure, halt deforestation, regulate carbon dioxide emissions, land use reforms and reducing fossil fuel subsides is just the start of a much larger economic cost than just $4 trillion that the report claims would be the cost to fight global warming.

Sep 17, 2014 | 1 comment | by

Economic Benefits of TransCanada Keystone Pipeline System

According to a study by Southern Methodist University’s Maguire Energy Institute, there are substantial economic benefits with the TransCanada Keystone Pipeline System.

Phase III of the Keystone Pipeline System, known as the Gulf Coast Project. The Gulf Coast Pipeline Project is a 485-mile (780-kilometre), 36-inch crude oil pipeline from Cushing, Oklahoma to Nederland, Texas.

An examination of per capita income growth in the Gulf Coast Project counties between 2000 and 2012:

  • Six of the eight affected counties in Oklahoma recorded faster per capita income growth than the state average of 65 percent.
  • 11 of the 16 counties in Texas posted per capita income growth higher than the state average.

State of Texas Pipeline Impacts

Total Economic Activity $3,638,561,905
Labor Income $1,696,054,834
Employment 26,924
Total Taxes $144,992,343
Indirect Business Taxes $112,533,584
Direct Business Taxes $32,458,759

 

State of Oklahoma Pipeline Impacts

Total Economic Activity $2,143,364,856
Labor Income $1,041,174,418
Employment 15,852
Total Taxes $72,384,852
Indirect Business Taxes $50,339,639
Direct Business Taxes $22,045,213

The Gulf Coast Project has the initial capacity to transport 700,000 barrels per day from storage tanks in Cushing to Gulf Coast refineries. With the expected completion of the Houston Lateral project in the fourth quarter of 2014, this number is expected to rise to 830,000 barrels per day adding $5.8 billion in new economic activity to Texas and Oklahoma.

The fourth and final phase of the Keystone pipeline system is known as Keystone XL. The Keystone XL Pipeline is a proposed 1,179-mile (1,897 km), 36-inch-diameter crude oil pipeline beginning in Hardisty, Alberta and extending south to Steele City, Nebraska. This pipeline is a critical infrastructure project for the energy security of the United States and for strengthening the American economy. The Keystone XL pipeline would have the capacity to transport 830,000 barrels of oil per day to Gulf Coast and Midwest refineries.

Approving the estimated $5.3 billion Keystone XL project would create approximately 9,000 construction jobs. When combined with the southern portion of the Keystone pipeline (the Gulf Coast Project), it is estimated that the total $7 billion pipeline would create:

  • 13,000 construction and 7,000 manufacturing jobs
  • Add $20 billion to U.S. GDP
  • Add $5 billion in taxes revenue to local counties
  • Create an additional 42,000 direct and indirect jobs
Jul 02, 2014 | 1 comment | by

Solar Roads: Driving to the Future

If Back to the Future is any indication of our real future, we won’t need roads. As cool as it would be to have flying cars, our world is stranded with realistic ideas. This is why a couple from Idaho has designed a solar roadway that does more than just support our infrastructure.

The idea of a road paved with solar panels has been kicked around for years, but no one has been able to efficiently create a proper alternative to current roads. These Hexagonal Solar panels are linked to create a network that;

  • Absorb sunlight to produce energy through means of the built in solar panels to provide electricity for homes and businesses.
  • Can replace power lines as the main means of transporting electricity throughout cities.
  • Withstand 250,000 pounds. Currently, the Federal weight limit for heavy vehicles is 80,000 pounds.
  • Utilizes LED technology to illuminate roadways and safety lines. Considering a study done in the United Kingdom, LED marker illumination can reduce nighttime accidents by 70%.
  • Has the ability to melt ice and snow using heat generated from stored electricity. On average there are 467 deaths due to icy conditions each year.
  • Also can change shapes, creating additional handicap spots if all remaining are taken.

Smart roadways are a natural technological step in the advancement of infrastructure, and can be considered a priority in advancing cities. The team that created the tiles is beginning with a parking lot as the initial public trial, and then will move on to bigger projects. The Federal Highway Administration has acknowledged the product and guided them in establishing the ability and store and move storm water through the tiles.

According to their Indiegogo, they are attempting to stay away from large investors as a way to keep jobs in America, which is similar to the strategy, piloted Elon Musk and Tesla. While this project is revolutionary, it is important to keep in mind the economic risks with a new technology. In order to advance, the environmental and economic risks must be weighed effectively and allowed to expand to the market naturally. This blogs’ current advice would be to;

  • Work with toll companies to create a private grid that can expand the technology, while allowing the company to sell off the power generated by the tiles.
  • Remain unsubsidized by the government, and instead work with American companies such as Google and Tesla to keep jobs in the United States.
  • Attempt to rework the tiles as roof shingles, in order to reduce the amount of upkeep involved in roads and allow consumers to purchase them independently. Roadways are generally government expenditures, and it would leave no access to independent homes aside from driveways and patios.

Keeping renewable energy in the hands of the private sector is an important task going forward if renewable and sustainable technologies are to continue advancing.

May 21, 2014 | 3 comments | by

Solar Roads: Driving to the Future

If Back to the Future is any indication of our real future, we won’t need roads. As cool as it would be to have flying cars, our world is stranded with realistic ideas. This is why a couple from Idaho has designed a solar roadway that does more than just support our infrastructure.

The idea of a road paved with solar panels has been kicked around for years, but no one has been able to efficiently create a proper alternative to current roads. These Hexagonal Solar panels are linked to create a network that;

  • Absorb sunlight to produce energy through means of the built in solar panels to provide electricity for homes and businesses.
  • Can replace power lines as the main means of transporting electricity throughout cities.
  • Withstand 250,000 pounds. Currently, the Federal weight limit for heavy vehicles is 80,000 pounds.
  • Utilizes LED technology to illuminate roadways and safety lines. Considering a study done in the United Kingdom, LED marker illumination can reduce nighttime accidents by 70%.
  • Has the ability to melt ice and snow using heat generated from stored electricity. On average there are 467 deaths due to icy conditions each year.
  • Also can change shapes, creating additional handicap spots if all remaining are taken.

Smart roadways are a natural technological step in the advancement of infrastructure, and can be considered a priority in advancing cities. The team that created the tiles is beginning with a parking lot as the initial public trial, and then will move on to bigger projects. The Federal Highway Administration has acknowledged the product and guided them in establishing the ability and store and move storm water through the tiles.

According to their Indiegogo, they are attempting to stay away from large investors as a way to keep jobs in America, which is similar to the strategy, piloted Elon Musk and Tesla. While this project is revolutionary, it is important to keep in mind the economic risks with a new technology. In order to advance, the environmental and economic risks must be weighed effectively and allowed to expand to the market naturally. This blogs’ current advice would be to;

  • Work with toll companies to create a private grid that can expand the technology, while allowing the company to sell off the power generated by the tiles.
  • Remain unsubsidized by the government, and instead work with American companies such as Google and Tesla to keep jobs in the United States.
  • Attempt to rework the tiles as roof shingles, in order to reduce the amount of upkeep involved in roads and allow consumers to purchase them independently. Roadways are generally government expenditures, and it would leave no access to independent homes aside from driveways and patios.

Keeping renewable energy in the hands of the private sector is an important task going forward if renewable and sustainable technologies are to continue advancing.

May 12, 2014 | 1 comment | by

Real Water Markets: Another Leadership Imperative

Political and economic freedom plus the rule of law and free enterprise yields the prosperity that we enjoy, and its absence explains why most of the world lags so far behind us. Its absence also explains why some sectors of our economy lag so far behind the rest. We use our resources more wisely than most of the rest of the world because market-determined prices guide most of our resource use decisions.

Changing market prices are a powerful information and incentive system. That system has an impressive track record because every price is the result of a serious, continuous, money-where-your-mouth-is indirect conversation about priorities and costs. It involves the entire population, so it harnesses much more information than the central planning alternative, which is just guesswork by a handful of over-extended public officials spending someone else’s money. Central planning has an awful track record, not just for economic inefficiency and poverty, but for creeping tyranny.

Market-determined prices will address Texas’ water management challenges more effectively than our current system of limited markets and central planning. Willing buyer — willing seller exchange of privately-owned water rights will tell us what each basin’s lowest value water uses are worth. Until we know what price existing users would sell water for, we cannot tell which potential water projects are wise investments. Price differences between water basins tell us if inter-basin transfers make economic sense, and tell us what restrictions on inter-basin transfers cost. The same price information is an essential element of water conservation planning.

Texas surface water law allows water rights’ exchanges, but transfers are over- regulated. For example, water rights holders cannot change water uses without state permission. Water rights are just revocable permission to use state water; a factor that undermines exchange, investment in water-related infrastructure, and promotes wasteful use-it-or-lose-it usage. Let’s hope for the wisdom and leadership to fix that before our drought and recent referendum push us to waste billions of dollars and the environmental disaster of unnecessarily flooding thousands of acres under new reservoirs.

Texas groundwater law has not even come that far. Many groundwater basins have long since reached the point where recharge can no longer keep up with unlimited pumping, which means that efficient use requires quantified pumping rights and a price system. Only the Edwards Aquifer area of South Central Texas has quantified pumping rights, but even there, water users cannot trade directly. Much of the Edwards Aquifer permitted pumping is locked into historic and mostly low water uses. Those are very expensive restrictions. How expensive? Only a system of market-determined prices can reveal the true amount.

The legal infrastructure needed to foster market-determined surface- and ground- water prices will have to incorporate numerous geologic, hydrologic, and historic use details that are beyond the scope of this commentary. But nothing about issues like third-party claims, drought management, and environmental values preclude the government from severely curtailing its costly micro-management of water use. Getting there is just a matter of leadership; selling the correct, limited government policies to a general public interested in freedom-based new ideas.

Mar 24, 2014 | Leave a Comment | by
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