Sunday, June 15, 2008

User Fees to Fund Transportation

The idea of the superiority of user fees over taxes as a means of funding public services is widely held by libertarians and others who advocate free-market solutions to community problems. To others, however, user fees are an exotic concept and therefore suspect.

Seeing an article in the opinion pages of the Charlottesville Daily Progress this morning that supports user fees as the best means of financing transportation in Virginia came as an intellectually pleasant surprise. Unfortunately, the article -- by Old Dominion University economist James V. Koch -- does not appear on the Daily Progress web site (or at least it's not easy to find, if it is there). Fortunately, the same article appeared on Saturday in the Daily Press of Newport News, and it does appear on that newspaper's web site.

Under the headline, "For road funding, user fees just make sense," Koch writes:

I don't give it a second thought when I'm asked to pay an entrance fee to enter Yellowstone National Park. After all, the park's resources and facilities must be maintained and there is elemental justice attached to this fee because I'm the person using the park, not someone 1,000 miles away. Similarly, I don't object to paying an admission fee to Old Dominion University basketball games, or paying for a spot to park on campus, even though we all know ODU is a publicly assisted institution. Once again, I use the services and receive the benefits, so why shouldn't I bear most of the cost?

Somehow the fundamental justice associated with user fees gets lost when we begin to talk about how to pay for our roads. Many individuals believe they should not have to pay for the extent to which they drive on public roadways even though they know their own use gradually causes our roads to deteriorate and even though they know these same roads may be essential to their keeping their current jobs, or even to drive to church.

I can understand (though not completely agree with) someone who argues, "I don't even own a car, so I shouldn't pay." While I'd argue every citizen benefits from an efficient road system (even bed-ridden individuals rely upon our road system to deliver their food and medicine), one can understand the argument of an individual who doesn't want to pay for things she chooses not to use.

That's why transportation user fees are so attractive (at least relative to the alternatives). If I'm going to pay for something, I'd like it to be an item that I use and value rather than something I care nothing about. Transportation user fees (tolls, gas taxes) can be avoided completely by someone who chooses not to drive, or avoided partially by someone who decides to drive less, use a more fuel-efficient car, carpool, cyber-commute or use public transportation.
Dr. Koch also points out:
...user fees have other benefits. They'll cause us to drive fewer miles. This will moderate highway congestion, reduce highway deaths, and even dampen carbon-dioxide emissions. We'll be stimulated to purchase more fuel-efficient vehicles. Not such a bad combination! Note that increasing the state's income tax or sales tax, or imposing a grab bag of other taxes, to pay for transportation improvements would yield virtually none of these benefits.
He concludes:
...the real question is how we should pay for repairing our potholes and building the new roads we need. User fees easily are the best way to go. They provide us with incentives to change our behavior (and thereby avoid paying so much) even while they raise revenue. True, user fees (especially gas taxes) don't have lots of political sex appeal, but then legitimate, long-term solutions to tough problems seldom do. It would be a mistake to kid ourselves that somehow we will find a painless solution to our transportation challenges that will magically be paid for by "someone else."

A variety of elected officials seem to be pursuing that strategy. Let's get real. There's no free lunch to be found in the transportation arena. Let's increase user fees and stop digging our transportation hole even deeper.
There's little in Professor Koch's article with which I could disagree. The entire piece should be read by every member of the General Assembly who will be participating in the special session on transportation issues later this month.

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