The nation’s growing debt and deficits are increasingly impacting the nation’s ability to build, upgrade and maintain transportation infrastructure. A new Reason Foundation study argues that it is time make transportation funding less reliant on the whims of a gridlocked Congress by shifting to direct user-fees and better utilizing long-term financing and private capital for megaprojects.
“If you look at our outdated air traffic control system or our aging Interstate highways, you’ll see Congress has long struggled to provide reliable funding streams for infrastructure projects,” said Robert Poole, director of transportation at Reason Foundation and the study’s author. “Additionally, the United States is one of the few developed countries that makes relatively little use of revenue-based financing for its transportation infrastructure. These factors make effective long-term infrastructure planning extremely difficult. Fortunately, there are numerous practical changes we can implement to rebuild and reinvigorate our infrastructure within the current economic climate.”
The Reason Foundation study proposes a series of tax, regulatory and organizational changes to modernize America’s airports, air traffic control system, highways, bridges and ports by making them more self-sustaining.
For airports and air traffic control, the study recommends separating the Air Traffic Organization from the Federal Aviation Administration, giving it the power to issue revenue bonds backed by the revenue from air traffic control fees and charges. It also calls for phasing out Airport Improvement Program grants for commercial airports, allowing them to self-fund via local airport passenger facility charges.
For surface transportation, the report advises shifting federal transit funding to the general fund and local governments, permitting all federal gas tax revenues to be spent on highways and bridges. It also recommends lifting the federal ban on tolling Interstate highways when they require reconstruction and suggests exempting highway and transit projects from the Davis-Bacon Act to lower construction costs.
To improve the country’s ports, the Reason Foundation study makes the case for abolishing the Harbor Maintenance Tax and the waterways diesel tax, replacing them with harbor and waterways user charges, paid directly to the operator of each facility. The existing Harbor Maintenance Trust Fund and the Inland Waterways Trust Fund would be eliminated.
“Major changes to federal policies are needed to successfully modernize U.S. infrastructure,” Poole said. “Congress should empower states and the private sector to meet the needs for capital investments in transportation infrastructure and remove regulatory barriers so these assets can become self-supporting.”
The full study, "Funding Important Transportation Infrastructure In a Fiscally Constrained Environment," is online here and here (.pdf).
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Robert Poole, Director of Transportation, Reason Foundation, (310) 292-2386
Chris Mitchell, Director of Communications, Reason Foundation, (310) 367-6109