Actually, Highway Builders, Roads Don’t Pay For Themselves

Cumulative Net Difference Between Spending on Highways and Highway “User Revenues”
Since 1947, American highways have run up a deficit bigger than $600 billion, in 2005 dollars. Source: ##http://www.uspirg.org/home/reports/report-archives/transportation/transportation2/do-roads-pay-for-themselves-setting-the-record-straight-on-transportation-funding##U.S. PIRG##

You’ve heard it a thousand times from the highway lobby: Roads pay for themselves through “user fees” — a.k.a. gas taxes and tolls — whereas transit is a drain on the taxpayer. They use this argument to push for new roads, instead of transit, as fiscally prudent investments.

The myth of the self-financed road meets its match today in the form of a new report from the U.S. Public Interest Research Group: “Do Roads Pay For Themselves?” The answer is a resounding “no.” All told, the authors calculate that road construction has sucked $600 billion out of America’s public purse since the dawn of the interstate system.

The Myth of the User Fee

First, let’s dispense with the idea that the gas tax – the primary source of financing for federal transportation projects – is a user fee.

“If you go to a state park and pay the fee to get in there, that’s a user fee,” report author Dan Smith, U.S. PIRG’s transportation associate, told Streetsblog. “If you’re driving down the road and you have to pay the toll for driving on that specific road, that’s a user fee.”

But people also pay gas taxes to fill up their lawnmowers. And those lawnmowers don’t usually end up on the highway. Just because you fill your tank doesn’t mean you ever drive on the roads funded by the gas tax you pay.

The Catch-22

Then there’s the huge contradiction underpinning the core arguments for highway expansion. Do new roads cut congestion, or do they “pay for themselves”? Highway lobbyists try to have it both ways, but the truth is that neither of these propositions hold water.

Highway expansions are often justified as projects that relieve traffic and, believe it or not, reduce pollution. So if a highway widening achieved its stated aims, it would cut congestion and fuel consumption, which would mean fewer gas tax dollars and roads that don’t pay for even a fraction of their construction costs. However, we know that new highway capacity doesn’t actually reduce driving – it induces more driving.

The additional traffic created by expanding highways does generate more gas tax revenue, but still not enough to come close to covering the costs of new roads.

U.S. PIRG cites the Pew Charitable Trusts’ SubsidyScope project, which found that “user fees paid for only 51 percent of highway costs, down 10 percent over the course of a single decade.”

Even if gas taxes were the direct user payment they’re made out to be, no one seems to have much appetite for making sure they actually pay for the infrastructure needs in this country. Gas taxes haven’t risen to accommodate more fuel efficient cars or even for plain old inflation. Nor have they compensated for the fact that driving is declining, meaning less gas consumption (but, puzzlingly, not less road-building).

The federal gas tax hasn’t gone up since 1993.

The Highway Funding System as a Subsidy for Driving

The argument that drivers pay for roads might be somewhat more credible if they weren’t taking money away from other public funding streams. Gasoline is exempt from sales taxes in 37 states and the District of Columbia. So rather than paying into the general revenues for the state, motorists are paying into an already narrowly prescribed pot of funding, which highway advocates want to see prescribed even more narrowly to exclude transit and bike/pedestrian projects.

In New Jersey, the savings on the sales tax exceeds the gas tax drivers have to pay. In that way, the government actually provides a financial incentive to purchase gas and drive. And since gas taxes are fixed and sales taxes are percentages of the purchase price, more and more states could end up with this perverse subsidy as gas prices rise.

Image: ##http://www.soundecoadventure.com/AnchWhit/TollBooths2.html##Sound Eco Adventures##
Photo: ##http://www.soundecoadventure.com/AnchWhit/TollBooths2.html##Sound Eco Adventures##

What About Tolls?

Tolls are, indeed, an honest-to-goodness user fee, charging drivers directly for the road they’re driving on. But the overwhelming majority of roads are not funded by tolls. Local streets don’t have tolls. Rural highways don’t often have them. And tolls don’t come close to covering the costs of roads. According to U.S. PIRG, “In the 1950s, experts estimated that no more than 9,000 miles of highway (compared with the more than 3 million miles of highway in existence at that time) could support themselves with tolls.”

Founding Fathers

The report goes into ancient history (the Hoover administration), investigating the original intent of the gas tax at both the state and federal levels, and debunking the myth that they were always intended to pay only for highways. Indeed, federal gas taxes originated in the 1930s and were dedicated exclusively for highways only for a 17-year period, starting in 1956, covering the construction of the interstate highway system. Since 1973, the gas tax has been used for a variety of transportation programs and has even been used, on occasion, to pay down the deficit.

External Costs

And now the obvious: You can’t measure all the costs of driving with the price of asphalt. The U.S. PIRG report gives a laundry list of external costs associated with driving, including:

Photo:
Photo:##http://farm3.static.flickr.com/2581/3868301165_fe39dd4bf5.jpg##ret0dd/Flickr##
  • Changes in the risk of accidents, including injuries to non-drivers and damages to property.
  • Environmental and public health impacts, including smog, greenhouse gases, water pollution from highway runoff, and the impacts on wildlife and outdoor enthusiasts.
  • National security and economic implications of protecting access to foreign oil.
  • Increased pressure on those without cars.
  • Quality of life and the impact of roads on active transportation, such as walking and biking.
  • Car-centric development patterns, sprawl, and the resulting infrastructure costs for the expansion of water, sewer, and other services.

The report cites one study that finds that, just to pay for roads, user fees need to be 20 to 70 cents higher, and another study that finds that, to pay for external costs like these, we’d have to add another $2.10 a gallon.

The Cost of the Myths

“Road advocates use these myths about the gas tax being this user fee and that highways pay for themselves to get preferential treatment, and to get a larger chunk of the dedicated fund,” says Smith of U.S. PIRG. “Advocates of any type of policy would like a dedicated fund, because it is a stable source of funding.”

The myths associated with road financing put all other forms of transportation at a disadvantage, said Smith. “Conservatives say all other transit is social policy and should come from the general fund.”

With a Republican majority in the House, the myth that roads pay for themselves will again be enlisted to prioritize highways over transit, as the GOP begins shaping a transportation agenda around “getting back to basics” and cutting spending, especially for transit.

“We want to make sure that those falsehoods are not a part of this debate,” said Smith. “People will think twice before saying roads pay for themselves when the numbers say they don’t.”

  • gecko

    Might also consider the something like $45 billion annual US subsidy of oil.

  • gecko

    This Jan 3, 2010 Scientific American article gives a picture of the future of cars:

    Driving to the Future: Can China–and the World–Afford 2 Billion Cars?
    http://www.scientificamerican.com/article.cfm?id=china-driving-to-the-future-of-two-billon-cars

  • gecko

    Car owners as victims in a system that has locked out much better options, or currently believe in the big lie that no other acceptable options exist (like cigarette smokers that can’t quit), is perhaps acceptable.

    Car owners as having some sort of moral authority is absolutely absurd.

  • It’s one thing to point out that gas taxes don’t cover the costs for highways, but it also misses an even bigger subsidy. Even if State and Federal gas taxes were raised to cover all expenditures, those expenditures are only for State and Federally operated highways, these are interstate highways, US highways, and state routes. Some state and US routes are local streets of course, but the gas tax money doesn’t go to the rest of the local road network. In urban areas, that’s all the residential streets, alleys, collector streets, and even many major arterials.

    That’s a huge amount of pavement that’s paid for almost entirely out of local property and sales taxes, which has no sort of “user fee” applied to it at all. Yes, local roads serve many other purposes that highways (especially limited-access routes) don’t, but the cost of accommodating cars via smooth pavement, good drainage, wider roads, parking lanes, etc. is a huge cost above and beyond what’s needed for things like utility lines, trash collection, air and light access, bicycles, etc. Since these roads are funded locally, their costs aren’t accounted for in the gas tax/Trust Fund numbers like they should be. I don’t know if there even is a way to find the total costs of building and maintaining the local road network since it doesn’t seem like those statistics are aggregated.

  • Shek Baker

    Wait a sec.

    “However, we know that new highway capacity doesn’t actually reduce driving – it induces more driving.”

    “Gas taxes haven’t risen to accommodate more fuel efficient cars or even for plain old inflation. Nor have they compensated for the fact that driving is declining, meaning less gas consumption (but, puzzlingly, not less road-building).”

    How can we have less driving and more road building, when road building induces driving? Is congestion caused by road building somehow not offset by the overall decline in miles driven?

  • “How can we have less driving and more road building, when road building induces driving?”

    I think the prediction is premature, but some people say we are entering a period when driving declines because of demographic factors: the population is aging, and older people drive less. So far, the decline in driving can be explained by the current recession, and we will see if it continues after the recession ends.

    Nevertheless, building more roads does induce more driving. With any given demographic mix, there is more driving if we build more roads than if we do not. To test whether it is true that more roads induce more driving, you need to correct for demographic changes.

  • Doug

    gecko: No offense to you or anyone else who reads Scientific American, but that magazine hasn’t written anything with content in a gazillion years. I’m pretty sure they research their articles exclusively using Google.

  • J:Lai

    Good point regarding local roads. The maintenance of these roads, including pavement upkeep, snow removal, and traffic signals and signs are all subsidies for car drivers who use them. The only user fee associated with local roads are parking fees, which are typically very small or non-existent.

    Regarding the trends in driving, adding road capacity tends to increase total miles travelled in a static analysis (holding other factors constant), but over time changing demographic, economic, and technological factors may dominate.

  • gecko

    #7 Doug, “gecko: No offense to you or anyone else who reads Scientific American, but that magazine hasn’t written anything with content in a gazillion years. I’m pretty sure they research their articles exclusively using Google.”

    No offense but that is a really silly comment.

  • garyg

    Yawn. We’ve been over this again and again. Yes, roads are subsidized. But the subsidy per unit of travel is trivial — on the order of 1 cent per passenger-mile. Transit subsidies, in contrast, are enormous — on the order of 40-100 cents per passenger-mile.

    Tell you what. I’ll agree to give up my trivial road subsidy if you’ll agree to give up your enormous transit subsidy.

  • Will you also give up your gas subsidies, parking subsidies, air pollution externalization, and water pollution and flooding/runoff externalization?

    Even though passenger-mile statistics are very misleading because of different average lengths of trips on transit vs. driving, the fact of the matter is that even a very low subsidy “rate” for roads and highways is still an enormous amount of money, money that we don’t have, and which dwarfs what we pay in total dollars for transit.

    So even if a lot of the actual costs of driving are born by the driver, we as a country are going bankrupt trying to service that way of life.

  • garyg

    Will you also give up your gas subsidies, parking subsidies, air pollution externalization, and water pollution and flooding/runoff externalization?

    As long as mass transit users give up all their other subsidies too, sure. You are aware that transit is also subsidized in the form of unpriced negative externalities, right? These negative externalities are additional subsidies to transit, over and above the enormous direct subsidizes I mentioned in my last comment.

    If you really want to eliminate subsidies and internalize the costs of all negative externalities of our transportation system, fine. But you better understand that this would cause the price of bus and train tickets to skyrocket. Elimiminating direct subsidies alone would mean that bus and train tickets would have to triple in price. Internalizing pollution costs and other negative externalities would raise the price even more. The market for mass transit, which is already tiny, would collapse.

  • Yes transit has unpriced negative externalities too, but not nearly to the extent of car driving. Air and noise pollution can be a problem with buses, much less so for electric trolleybuses or streetcars, light rail, heavy rail, etc. Transit in general doesn’t create any of the runoff or water pollution issues with excessive amounts of pavement. Transit also creates many more positive externalities too. That’s how many streetcar companies funded extensions. They extended lines into land they owned and sold it off at a profit because the transit line made it so much more valuable. Land values continue to be much higher around transit lines or stations, yet that value is no longer captured by the transit company, but by private land owners and to a lesser extent the municipality through taxes on that property.

    You’re right that transit fares would have to go up by 3-4x on average to achieve 100% fare box recovery. However, as I mentioned before, driving subsidies are not just highway subsidies. Removing negative externalities from the equation for simplicity, a Federal gas tax hike of $0.50-1.00 would be more than enough to fix the solvency of the Highway Trust Fund and get on some of the deferred maintenance to the highway network as well. That’s not a huge deal in the overall cost of driving. The issue that local roads still aren’t paid for is a more difficult one to address, since cost figures for that don’t seem to exist, so I’ll just leave that out for now.

    There’s things like the war in Iraq too though. A year ago the total was about $700 billion in direct costs. That’s $2,770 per vehicle in the country. If you use the $3 trillion number of not only the direct but indirect costs (interest on debt financing, inability to use that money for other internal needs, economic instability created by the war causing oil price spikes, etc.) that’s $11,800 per vehicle. Wars aside, there’s also military protection of oil supplies. In 2005 the US military spent $3.70 per barrel to protect oil shipments from Colombia. All these things add up.

    However, let’s also look at the issue of parking. Transit is the most beneficial where parking is in limited supply. Parking in downtown Chicago is, if you’re very lucky, $10/day. It’s more typically in the $20-30/day range. A full-fare trip on the CTA is $2.25, and the CTA has a mandated 50% fare box recovery, so they’d only have to double their fares to have no subsidy. In that case, a day’s travel is still less than the cost of $10/day parking.

    Even out in the suburbs those parking spaces aren’t free either. It’s been estimated that all the parking spaces in the United States (and that’s only privately owned surface lots and whatever spaces might be visible on the top deck of a parking garage, nor does it include street parking), are worth more than all the cars in the country. The average parking space worth about $10,000 in pavement and land, and nearly 3x as many parking spaces as there are cars. But no, we don’t subsidize driving very much.

    So to say that eliminating all subsidies for driving and transit would lead to the death of transit is very dubious. You can’t compare the unsubsidized cost of transit with the subsidized cost of driving. Is highway spending a big part of the subsidy to driving? Maybe not, but there’s so many things that add up that transit will still remain competitive in a level playing field. After all, transit systems were all private and profitable companies before the government started subsidizing paved roads.

  • garyg

    Yes transit has unpriced negative externalities too, but not nearly to the extent of car driving.

    Please substantiate this assertion with an empirical analysis of the unpriced negative externalities of transit and car driving. I have never seen an analysis suggesting that the negative externality costs of driving are even remotely close to the direct subsidy costs of mass transit.

    Transit in general doesn’t create any of the runoff or water pollution issues with excessive amounts of pavement.

    Buses run on pavement, just like cars. And trains run on rails laid on concrete or other impermeable surfaces. In any case, again, I have never seen any analysis suggesting that “runoff or water pollution” costs are anything more than negligible in comparison to the costs of direct subsidies to transit. If you think you have an analysis showing that this is a substantial cost, please present it.

    Transit also creates many more positive externalities too.

    So does car travel. It saves an enormous amount of time compared to using buses and trains, for example, which has huge social and economic benefits.

    You’re right that transit fares would have to go up by 3-4x on average to achieve 100% fare box recovery.

    Yes, indeed. What do you think would happen to the market for buses and trains if people had to pay 3-4 times what they pay now to use them?

    The issue that local roads still aren’t paid for is a more difficult one to address, since cost figures for that don’t seem to exist, so I’ll just leave that out for now.

    Sorry, but local roads are another distraction. Even if all local government spending on local roads were 100% subsidized, the subsidy per passenger-mile would still be negligible in comparison to mass transit subsidies.

    There’s things like the war in Iraq too though. A year ago the total was about $700 billion in direct costs. That’s $2,770 per vehicle in the country.

    Huh? What is supposed to be the meaning of dividing the cost of Iraq by the number of vehicles in the country? What on earth do you think that number is supposed to represent in terms of transportation economics?

  • garyg

    However, let’s also look at the issue of parking. Transit is the most beneficial where parking is in limited supply. Parking in downtown Chicago is, if you’re very lucky, $10/day. It’s more typically in the $20-30/day range. A full-fare trip on the CTA is $2.25, and the CTA has a mandated 50% fare box recovery, so they’d only have to double their fares to have no subsidy. In that case, a day’s travel is still less than the cost of $10/day parking.

    And your point is….? Thanks to its enormous subsidies, using transit is definitely much cheaper than running a car. In most cities, you can buy an unlimited-use monthly transit pass for just a small fraction of the monthly cost of owning and operating an automobile. The fact that car travel is so overwhelmingly dominant despite its higher costs illustrates just how much more benefit it provides to people than buses and trains. Driving is simply faster, more comfortable, more private, more convenient, more flexible and more practical for the vast majority of people’s urban travel needs than using transit, and that’s why driving has become so popular despite its much higher costs.

    Even out in the suburbs those parking spaces aren’t free either. It’s been estimated that all the parking spaces in the United States (and that’s only privately owned surface lots and whatever spaces might be visible on the top deck of a parking garage, nor does it include street parking), are worth more than all the cars in the country. The average parking space worth about $10,000 in pavement and land, and nearly 3x as many parking spaces as there are cars. But no, we don’t subsidize driving very much.

    Yet another nonsequitur. A parking COST is not at all the same thing as a parking SUBSIDY. If you’re claiming that car users receive a significant subsidy in the form of parking subsidies, then produce your evidence and argument to that effect.

  • The Iraq war is a war to try to stabilize an oil producing area of the world so we can continue to buy oil from them.

    Also, you’re asking me to provide studies/statistics while at the same time using terms like “negligible” or “remotely close”. I’m also dismayed that you’re turning my arguments into something different. I said that “transit has unpriced negative externalities too, but not nearly to the extent of car driving.” That has nothing to do with how much transit is subsidized.

    Finally, you made a classic flawed argument about cars saving time. They only save time if you’re driving farther distances where transit is not well-suited. For someone living in a dense urban area that’s walkable and with good transit, a car will in many cases not save them any time, especially if they need to search for a parking space. The average commute time has held steady for centuries at about a half hour. The difference is the distances have changed. In the 18th century people walked about a mile to a mile and a half. With streetcars people could live 5-10 miles away, and with cars that distance has ballooned to 20-30 miles. It hasn’t saved any time, people just use it up by going farther.

    Also, time savings are not recouped by the government at all. If the government pays for a new highway overpass to save motorists time at a busy intersection, what does the government get for that? Nothing. They spend millions of dollars to build it, thinking that they’ll get some return out of the investment. The cost/benefit analysis can give tens of millions of dollars in benefits through “time savings” that makes the project look like a no-brainer. Unfortunately, those time savings don’t bring in tax revenues or increased economic development, it just encourages people to drive farther out, wearing down more of the infrastructure and requiring more to be built.

  • Parking costs ARE the same as parking subsidies when there’s no charge to use the parking. Zoning regulations mandate parking minimums that must be supplied, which increases the cost of housing and goods and services, whether the patron uses that parking space or not. Should store owners and housing developers be allowed to charge whatever they want for parking, even if it’s $0? Sure. But if they elect not to, it’s still a subsidy to driving, even if it’s not a government subsidy, unless they give people a discount for not using the parking.

    Also, my point about downtown parking prices shows that even if transit subsidies were eliminated, it’s still cheaper than the FULL COST OF DRIVING WHICH INCLUDES PARKING TOO.

    Is transit the best choice for everyone? Of course not. Is driving the best choice for everyone then? No. Transit is very important for the social AND economic health of many cities. Even in Los Angeles, the car capital of the USA, 16% of households don’t have access to a car, in San Francisco it’s 28%. Many major cities seem to be around 20-30% carless, and in New York City it’s over 50%. Yet they still need to get to work and to the store to participate in the economy. If they can’t then there won’t be anyone to pay for that “evil transit subsidy” anyway.

  • Tjon

    @J:Lai

    I wouldn’t even say that parking fees are a user fee for roads: they’re more a user fee for the parking space itself.

  • gecko

    Fun with numbers on car-related expenditures:

    $ 200,000,000,000 Insurance (US; annual)
    $ 850,000,000,000 Credit (US; annual)
    $ 45,000,000,000 Oil Industry Subsidies (US; annual)
    $ 13,000,000,000 Congestion (NYC Only; annual)
    $ 150,000,000,000 Road Accidents (US; annual; NYS is $19 billion)

    $4,000,000,000,000 Iraq War (Total; US; Stiglitz update)

    $ 850,000,000,000 Credit (US)

    $30,000,000,000,000 Climate Change this century (total)
    (A ridiculously low estimate)

  • garyg

    The Iraq war is a war to try to stabilize an oil producing area of the world so we can continue to buy oil from them.

    That claim is very controversial. Different people believe in all sorts of different reasons for the Iraq War. In any case, so what? What is Cost of Iraq divided by Number of Vehicles in America supposed to MEAN in terms of transportation economics? Why not number of buses? Or number of people? You don’t seem to have any clear point here.

    Also, you’re asking me to provide studies/statistics while at the same time using terms like “negligible” or “remotely close”.

    You’re the one who is claiming that the negative externality costs of driving are significant relative to the enormous subsidy costs of transit. It’s up to you to support that claim with evidence. Simply listing what you imagine to be significant costs without providing any data to support your claim is worthless. It’s just wishful thinking on your part.

    I’m also dismayed that you’re turning my arguments into something different. I said that “transit has unpriced negative externalities too, but not nearly to the extent of car driving.” That has nothing to do with how much transit is subsidized.

    Huh? What is your point in bringing up negative externalities in the first place if not that they are a form of subsidy? Why else do you think they are relevant?

    Finally, you made a classic flawed argument about cars saving time. They only save time if you’re driving farther distances where transit is not well-suited. For someone living in a dense urban area that’s walkable and with good transit, a car will in many cases not save them any time, especially if they need to search for a parking space.

    This is irrelevant. Most people do not live in dense urban areas that are walkable and with good transit. They live in low-density urban areas which are difficult to serve with transit. But your claim is most likely false even for most trips in dense urban areas with good transit. Even for most trips in Manhattan, the densest and most transit-rich urban area in the country, wealthier people tend to use taxis, car services or their own private cars, because even in Manhattan cars are generally faster, more comfortable, more convenient, etc. than buses and the subway.

    The average commute time has held steady for centuries at about a half hour.

    The average commute by mass transit takes about twice as long as the average commute by car. New York has both the largest share of commutes by transit, and the longest average commute time in the country. And commuting is where transit is at its MOST competitive with cars on travel times, because rush hour is when roads tend to be most congested and transit services tend to run most frequently. Outside rush hour, transit is even less competitive on travel time with cars. If you seriously think you can sell people on the claim that transit is FASTER than driving, good luck.

  • garyg

    Parking costs ARE the same as parking subsidies when there’s no charge to use the parking.

    But the (unsubstantiated) numbers you gave are about costs, not subsidies.

    Zoning regulations mandate parking minimums that must be supplied, which increases the cost of housing and goods and services, whether the patron uses that parking space or not. Should store owners and housing developers be allowed to charge whatever they want for parking, even if it’s $0? Sure. But if they elect not to, it’s still a subsidy to driving, even if it’s not a government subsidy, unless they give people a discount for not using the parking.

    Another confused statement. Businesses are free to charge their customers for use of parking whether they provide it voluntarily or to comply with a regulation. You are conflating two different issues: regulated parking minimums and bundled vs. separately priced parking.

    I agree that “free” (bundled) parking is a subsidy to drivers, albeit a tiny one, but only in the sense that “free” use of a shopping cart or “free” grocery bagging or supermarket loyalty cards are subsidies. It’s not a government mandate, it’s a business decision by a private company. In most areas, it simply makes more sense to absorb the cost of parking into overall prices than to deal with the expense and hassle of pricing it separately. Unless you are proposing a law that would force businesses to charge their customers a separate fee for parking, I’m not sure what you think should be done about this.

    Also, my point about downtown parking prices shows that even if transit subsidies were eliminated, it’s still cheaper than the FULL COST OF DRIVING WHICH INCLUDES PARKING TOO.

    And I replied that your point is meaningless. Yes, using transit is cheaper than using a car. I agree. The fact that people still overwhelmingly choose cars DESPITE their much higher cost illustrates how much people prefer them to buses and trains.

    You seem to have lost track of the basic issue here. The post was about subsidies to car users. I agree that car users are subsidized. But those subsidies are only a tiny fraction of the subsidies provided to transit users. Transit users are making out like bandits compared to drivers. If you want to get rid of subsidies, fine. But doing so would hurt transit much, much more than it would hurt driving.

  • garyg

    To try and inform this discussion with some serious academic analysis, here are some estimates of the total subsidies (direct subsidies plus unpriced negative externalities) for cars and mass transit, from Mark Delucchi of the Institute of Transportation Studies at UC Davis:

    External costs and subsidies for different passenger-transport modes, in cents per passenger-mile:

    Gasoline Auto: 3 to 18 (best estimate: 4.3)

    Transit Bus: 33 to 57 (best estimate: 40)

    Light Rail: 27 to 109

    Heavy Rail 17 to 53

    Source: http://www.its.ucdavis.edu/publications/2000/UCD-ITS-RP-00-08.pdf

  • gecko

    Here’s some more fun with numbers regarding getting some place quicker in a car.

    Now the average income income in the US is something like $40,000 per year and the average cost of a new car is something like $20,000.

    An average person buying an average new car has to spend the equivalent of one-half year in that car before that person actually gets somewhere.

  • I haven’t lost track of it at all, the argument just shows that while transit subsidies are easy to see, subsidies to driving are not. That doesn’t mean they don’t exist. You can look at any one element and say “this driving subsidy doesn’t add up to much,” but there’s so many of them that they do add up to a lot.

    I do apologize for the miscommunication regarding parking cost versus subsidy. When I said cost I was referring to the cost of building/maintaining the parking space as being a subsidy when there’s no charge to use it.

    Anyway, related to that, a subsidy by a private business is still a subsidy. It doesn’t have to be from the government, and you can’t just hand-wave it away as irrelevant because of that.

    I would challenge you to provide statistics that compare subsidies per trip, rather than per passenger mile. Using passenger miles artificially inflates the transit subsidy (or artificially deflates the driving subsidy) because the number of miles per trip is much lower for transit.

  • Kyle

    @ garyg – Your breakdown actually proves your own point. If you recognize that car commuting takes more miles by interstate (20 miles, my old commute) vs. a 3 mile trip on a light rail system (my current commute), the savings are obvious.

    Car: 86
    light rail: 81

    Yes, both are subsidized, but then when the total factors are equated (parking, pollution, etc) I think the winner is clear.

    In cities such as NYC where bridges and tunnels are everywhere, and expensive to build/maintain, you’re going to be on the higher end of the scale. You’re also going to be on the lower side for transit subsidy because of how well used the systems are.

    Also, because many of these modes travel less distance than roads, the potential for cars to be making further trips is greater.

    In addition, if you have 20,000 people using a train line and 40,000 people making the trip by the adjacent freeway, the sheer number of people using the freeway makes the per-unit cost go down (since so many people are commuting by car). So, per person it is low, but the entire cost for that facility that is doing the same job as the transit line might actually be higher than the transit line.

  • garyg

    Anyway, related to that, a subsidy by a private business is still a subsidy.

    So what? A private “subsidy” like “free” parking is simply an outcome of the market. Just like “free” use of grocery carts, or “free” use of store restrooms. The problem with government subsidies is that they distort the market and reduce economic efficiency. The massive government subsidies to transit encourage massive overconsumption of transit in the urban transportation market. The tiny government subsidies to car users have almost no effect on the market, because they are so small both in absolute terms and as a share of user costs. Again, if you want to get rid of subsidies, fine. But doing so would reduce transit use far more than it would reduce automobile use.

    I would challenge you to provide statistics that compare subsidies per trip, rather than per passenger mile. Using passenger miles artificially inflates the transit subsidy (or artificially deflates the driving subsidy) because the number of miles per trip is much lower for transit.

    Another argument that makes no sense. I’m not sure “artificially inflates/deflates” is even supposed to mean. Long trips cost more than short ones. That means long trips provide more benefit than short trips. If they didn’t, people wouldn’t be willing to pay the higher costs of longer trips. Therefore, transportation cost-benefit analysis must include trip distance. You can’t meaningfully measure transportation benefit simply by counting trips, as if all trips provide equal benefit regardless of how much people are willing to pay for them. That’s why passenger-mile (or passenger-km) is the standard metric of transportation benefit.

  • garyg

    Your breakdown actually proves your own point.

    I agree. It does prove my point. Are you sure that’s what you intended to say?

    If you recognize that car commuting takes more miles by interstate (20 miles, my old commute) vs. a 3 mile trip on a light rail system (my current commute), the savings are obvious. Car: 86 light rail: 81

    I have no idea how you came up with those numbers or what they’re supposed to mean. Delucchi concluded that light rail is subsidized at an enormously higher rate than gasoline autos. A 10-mile trip by car is subsidized to the tune of about 43 cents (best estimate). The same trip by light rail is subsidized between $2.70 and $10.90. Light rail is a colossal waste of money. That’s why there’s so little of it, and why it’s never going to be anything more than a tiny component of our transportation system.

  • Narby

    Let’s see. Roads are paid for from taxes or fees on the people. Without roads, there would be no economic activity to tax, so by definition roads pay for themselves, by whatever roundabout means at hand. Any argument that roads are “subsidized” by someone misses the point that there isn’t anyone or any economic activity that is not entirely dependent on roads to exist.

    People have voted with their accelerator foot that they like roads and private means of transport. Forcing the people into other transport means, however that force is applied, is still government force.

    No thank you.

  • (also posted on GGW, for those who read that blog, so apologies if you’re reading this twice)

    I think the numbers cited in the study cited are a bit high, given what I’ve read elsewhere. I don’t remember the source offhand, but I’ve seen numbers putting total road spending in the US closer to the $200 billion neighborhood. There have also been university studies elsewhere suggesting that drivers still pay the vast majority of the costs of driving. The one I’m most familiar with was a University of Minnesota study suggesting that Twin Cities drivers pay 84% of the total costs of driving in the Twin Cities metro.

    A potentially interesting sidebar for this would be to determine, at least in metropolitan areas (since it really wouldn’t apply in rural areas), the percentage of street costs that could be attributed to vehicle use versus bike/pedestrian use and transit use. I bring this up since most urban streets are for use by more than just vehicles, so attributing the total cost of those streets to drivers is a bit off.

  • David

    In terms of paying for themselves, you left out any analysis of growth due to road constructions, increased tax revenue from increased property values, new construction, etc.

    You’ve missed out on a lot in your argument.

  • Gene

    The problem with the report is that it was done by PIRG, which is viewed as a D shop. Has no cred with the political class, even if true. Immediately discounted by both the right and left. Sorry for the dash of cold water. Policies are not made on facts, but on perceptions and sound bites of nine seconds. And how it impacts your core supporters or funders. Not saying it wasn’t good work, but coming from PIRG kills it.

  • gecko

    Subsidy Scope
    An Initiative of The Pew Charitable Trusts

    Analysis Finds Shifting Trends in Highway Funding: User Fees Make Up Decreasing Share
    http://subsidyscope.org/transportation/highways/funding/

  • Private subsidies are not market outcomes when the market was dictated by the government in the first place. There is no free market for transportation in this country. By requiring parking, the government distorted the market. Businesses couldn’t choose to provide no parking and advertise a discount. Developers can’t build low-rent apartments without parking spaces. Walkable urbanism, let alone transit oriented urbanism, is illegal in most of the country. That’s no market outcome.

    You blatantly lie saying that transit subsidies are higher than driving subsidies in absolute terms. We spend only 1/4 as much on transit as we do on highways per year. Thanks for trying though.

    Also, massive overconsumption of transit in the urban market? What planet are you living on? Even within cities transit ridership is pretty low, let alone in the suburbs or rural areas. Ridership of 25% of the population is very very good, beaten only by areas in and around New York City and Washington DC. 25% is not “massive overconsumption.” The massive overconsumption that’s happening is with the road network. What do you hear about when people talk about congestion? 99% of the time it’s not transit or sidewalks, it’s roads and highways.

    I can’t believe someone would actually think that just because a long trip is more expensive that it therefore provides more benefit. A longer trip for the same purpose has less benefit because not only are you wasting more time, but it’s also costing you more directly.

  • garyg

    Private subsidies are not market outcomes when the market was dictated by the government in the first place.

    The government does not dictate the market. Businesses are free to charge their customers a separate fee for parking, just as they are free to charge their customers a separate fee for using a grocery cart, or bagging groceries, or using their restroom, or whatever else it may be. Businesses usually CHOOSE to bundle parking and these other services because it simply makes more sense economically than pricing them separately.

    There is no free market for transportation in this country. By requiring parking, the government distorted the market.

    We’ve been over this. Yes, minimum parking requirements distort the market, though only in cases where the required minimum is larger than the amount of parking that the market would provide anyway. But the magnitude of this distortion is TINY. It is utterly inconsequential in comparison to the enormous distortion caused by the massive government subsidies provided to transit.

    You blatantly lie saying that transit subsidies are higher than driving subsidies in absolute terms.

    More nonsense. Delucchi estimates that subsidies to transit users are around 10 to 50 times higher than subsidies to car users in cents per passenger-mile. As a share of total costs, the disparity is even greater. Subsidies to car users represent at most just a few percent of total costs. Subsidies to transit users represent 70-80% of total costs. There is simply no comparison. Transit users are making out like bandits.

    Also, massive overconsumption of transit in the urban market? What planet are you living on? Even within cities transit ridership is pretty low, let alone in the suburbs or rural areas.

    Yes, transit ridership is pretty low DESPITE the fact that the government pays around 70-80% of the costs of transit and transit users pay only 20-30%. That shows just how unpopular transit is. In the absence of that enormous government subsidy, transit ridership would be even lower. In all probability, much, much lower. As I said, if fares were tripled or more, the already-tiny market for transit would collapse.

    I can’t believe someone would actually think that just because a long trip is more expensive that it therefore provides more benefit.

    I can’t believe someone would actually think people are generally willing to pay much more without getting anything in return. Why on earth do you think people are willing to pay the higher costs of a 30-mile commute if they would get the same benefit from a 1-mile commute? Your claim that the benefit of travel is independent of trip distance is utterly nonsensical and flies in the face of fundamental economic principles of the relationship between price and demand.

  • It makes more sense to bundle the price of parking because everyone else required to provide it too. We can’t know how much the market would choose to provide since they haven’t been able to make that choice. Parking minimums have been mandated for so many decades that they’re assumed to be legit, but there’s no evidence at all that the amount mandated by zoning is anywhere close to what would be provided if there was choice. The distortion is NOT tiny.

    You DID lie about transit subsidies being higher. You said “in ABSOLUTE” terms as well as relative terms. In relative terms, yes they are higher than driving subsidies. But $45 billion for transit in ABSOLUTE terms is just 1/4 of the $180 billion spent per year on highways.

    You keep saying that transit ridership would collapse if subsidies were eliminated. Yet you continue to ignore my points that show how transit is still competitive with driving, even subsidized driving, when you include the cost of parking. So even if fares tripled, people would still use it because it’s still cheaper than parking. This all assumes driving stays subsidized as it is now. But if you add in the extra $1 per gallon to fix the Highway Trust Fund, another $0.25 per gallon for wars, $0.25 per gallon for military protection, $0.25 per gallon in tax breaks to oil companies, and proper pricing for on-street and surface lot parking, then transit still makes sense for people.

  • Some nice back and forth going here, as would be expected. I’m really curious, as well, about the breakdown of local streets. I’m not even sure it’s possible as it’s my understanding that my property taxes simply get thrown into the general state fund.

    In Michigan, cities get funded per “major road” they have designated as such. But, a lot of local street construction is accomplished through other funding (fed/state/local/grants)attached to storm-water pipes and/or a developments.

    Also, for fun, I’ve done some very lazy math trying to calculate the average speed per mode-share after all activities are considered. Meaning, for example, one must calculate the time spent to earn money to pay for one’s automobile. It’s sort of silly, but an interesting thought experiment. The short-link to the results: http://bit.ly/hu0joB

    The result for car-ownership: AVG 6mph

  • I think it was Thoreau who figured that it was quicker to walk from the city to Walden Pond than to earn the money required for a train trip. It’s an interesting take on the situation.

    The local road issue is a very difficult one to crack, since the cost for those gets thrown into the tax blender. Storm sewers can be very expensive too, and they are mostly for draining roads.

    What tends to get lost in the discussion is just how expensive roads really are. Since most of them aren’t directly paid for in any way by users, there’s no discussion about fare box recovery for roads. Nevertheless, it costs about $200,000-500,000 per mile to repave a typical road. Of course it’s higher in urban areas when you factor in curb and gutter reconstruction or adjusting utility covers. Bridges are massively expensive. A simple overpass costs millions of dollars all by itself.

    The big disconnect is what we’re actually getting for all these projects now. The low-hanging fruit of good road and highway projects was pretty well all picked by the mid 1970s. Now we’re spending billions of dollars just to save a few minutes, or even just seconds of time, to get somewhere that’s not even worth going to. We’re long into the zone of diminishing returns on more highway expansion. It could even be argued that we’ve gone into negative returns, especially in regions that aren’t growing but continue to build more roads and highways that only serve to shift the existing population rather than accommodate real growth.

  • Mark P

    “Some nice back and forth going here, as would be expected.”

    I disagree. This arguing over which mode receives the bigger subsidy still doesn’t answer the question of what we do with the 30 percent of the population that doesn’t drive.

    Well? It is better that this population be mobile, so they can vote, hold jobs, go to school, and generally participate in society. For these reasons, public transportation should be considered a service, just like police and fire protection, public works, or the library. Everyone benefits. How do you think people get to their service jobs at fast food establishments and discount stores?

    Not only should public transit be improved and expanded, but I think it should be free.
    Reason 1: It’ll never pay for itself. I’d rather see a free and full bus, than 10 people riding with 20 bucks in the fare box.
    Reason 2: Transit fares are regressive. Poor people take the bus. Asking them to pay for the crappy, unreliable service they receive is downright cruel.

    I think that most of the bus riders would rather drive if given the means and the choice; a 3 hour, 4 transfer bus ride to a minimum wage job ain’t a pleasant life.

  • garyg

    It makes more sense to bundle the price of parking because everyone else required to provide it too. We can’t know how much the market would choose to provide since they haven’t been able to make that choice. Parking minimums have been mandated for so many decades that they’re assumed to be legit, but there’s no evidence at all that the amount mandated by zoning is anywhere close to what would be provided if there was choice. The distortion is NOT tiny.

    You’re simply making up facts out of thin air. The distortion IS TINY. Even if ALL “free” parking were counted as a market-distorting subsidy, the value would be on the order of 5 cents per passenger-mile, which is trivial in comparison to the enormous subsidies provided to transit. But in reality the market price of most “free” parking is zero anyway, because the costs to businesses of pricing it separately would outweigh the benefits. That’s why they choose to bundle it instead, just as they bundle all sorts of other products and services they provide to their customers.

    You DID lie about transit subsidies being higher. You said “in ABSOLUTE” terms as well as relative terms.

    No, I did NOT “lie.” ABSOLUTE cost means the cost in dollars and cents. Relative cost means the cost as a share of total (or user) costs. The absolute value of subsidies to automobile users is estimated by Delucchi at about 4 cents per passenger-mile. This is vastly smaller than the absolute value of subsidies to transit users. That is why Delucchi concludes in his paper: “the total subsidy to transit greatly exceeds the total subsidy to auto use, per passenger mile, in both ABSOLUTE terms and relative to the prices users currently pay.”

    You keep saying that transit ridership would collapse if subsidies were eliminated. Yet you continue to ignore my points that show how transit is still competitive with driving, even subsidized driving, when you include the cost of parking.

    You have produced NO EVIDENCE WHATSOEVER to suggest that subsidies for driving are even remotely close to subsidies for transit use. The estimates I cited from Delucchi include both direct subsidies and indirect subsidies for parking, pollution, congestion, accidents and the other irrelevancies you keep mentioning. As I keep telling you, after accounting for all of these costs, subsidies to transit users vastly exceed subsidies to automobile users. There is simply no comparison.

  • garyg

    What tends to get lost in the discussion is just how expensive roads really are.

    This nonsense yet again. The relevant number is not COST but SUBSIDY. Studies from both academics and the government have repeatedly concluded that the value of road subsidies is on the order of ONE CENT PER PASSENGER-MILE. This is utterly trivial in comparison to the enormous subsidies provided to transit buses and trains. See my earlier comments for the numbers.

  • Absolute cost means the total actual amount. $45 billion versus $180 billion. Absolute is, by definition, not relative. Per-passenger-mile statistics are relative.

    And you are arguing in circles again. My point about transit ridership as it relates to fares has nothing to do with the level of subsidy. I was simply challenging your assertion that a tripling of transit fares would cause ridership to collapse. That has nothing to do with the amount of subsidizing for either mode.

    Delucchi doesn’t even explain how he arrived at his number for parking. Even so, with more parking spaces in this country than there are vehicles, with estimates of anywhere from 2-4 times as many parking spaces per vehicle in fact, all the parking spaces in the country are worth more than all the cars in the country, yet 99% of parking spaces are free to use. That by itself means that the cost of owning a car should be double what it is.

    And cost is very relevant. Stop saying something is nonsense just because you disagree with it. Subsidy is relevant too, but the cost of all these roads and highways, whether they’re subsidized or not, represent a huge expense. They divert money that could be used for more productive things like schools, libraries, police and fire protection, or better sidewalks and lighting, you know, things that actually make a community a better place to live and work in.

  • garyg

    This arguing over which mode receives the bigger subsidy still doesn’t answer the question of what we do with the 30 percent of the population that doesn’t drive. Well? It is better that this population be mobile, so they can vote, hold jobs, go to school, and generally participate in society. For these reasons, public transportation should be considered a service, just like police and fire protection, public works, or the library. Everyone benefits.

    Just because a person “doesn’t drive” doesn’t mean he doesn’t use automobiles. People drive cars in which other people ride as passengers all the time. So the fact, if it is a fact, that 30% of the population doesn’t drive does not mean that 30% of the population is dependent on public transportation for mobility. The fact that mass transit accounts for only about 1% of total passenger-miles of travel illustrates just how small the need for it is.

    If your goal is to ensure adequate mobility for people who do not have general access to car transportation, the more efficient policy would be to provide them with a means-tested general transportation credit that they can use in whatever way works best for them – bus tickets, taxi rides, a bicycle, van service, a motorcycle, a small car, or whatever else it may be. Why should taxpayers pay vast sums of money for transit so that wealthy New York bankers or affluent urban professionals can enjoy massively-subsidized rides to work?

  • garyg

    Absolute cost means the total actual amount.

    No, absolute means ABSOLUTE, not “total.” I understand what the word means. Delucchi understands what the word means. You obviously do not.

    My point about transit ridership as it relates to fares has nothing to do with the level of subsidy. I was simply challenging your assertion that a tripling of transit fares would cause ridership to collapse.

    Again, you have offered NO EVIDENCE WHATSOEVER to support this assertion. It is a fundamental economic principle that when you increase the price of something, demand tends to fall. And the larger the increase in price, the larger the fall in demand. Tripling or quadrupling the price of bus and train tickets would almost certainly cause a dramatic fall in demand.

    Delucchi doesn’t even explain how he arrived at his number for parking.

    He states that he is using a “a high-end estimate that counts the cost of all unpriced parking as a subsidy” even though he believes that most unpriced parking is NOT a subsidy. Even though Delucchi bends over backwards to use subsidy estimates as favorable as possible to transit he still concludes that transit subsidies vastly exceed automobile subsidies. Again, if you seriously believe you have an analysis that challenges this conclusion, produce it. You have offered nothing except wishful thinking and made-up numbers.

  • Saying he uses some “high end estimate” means nothing. It could just as easily be made up.

    And I most certainly did show how tripling fares wouldn’t affect transit ridership. It’s when the major cost factor is parking, not the trip itself. In commuting trips to downtown areas, parking is the major cost, and transit still beats that.

  • garyg

    Saying he uses some “high end estimate” means nothing. It could just as easily be made up.

    Mark Delucchi is a distinguished transportation economist at the Institute of Transportation Studies at UC Davis and a member of the National Academy of Sciences’ Transportation Research Board. It seems rather unlikely that he “made it up.” He probably got the figure from Donald Shoup. In their book “The Full Costs and Benefits of Transportation,” Delucchi and his coauthors report that if all “free” off-street parking is counted as a subsidy, estimates of its value generally range from 2 to 5 cents per passenger-mile. Which does indeed mean that 5 cents is a “high end estimate.”

    You’re really just flailing now with all this silly nitpicking, because you simply cannot refute the basic finding that under any remotely realistic accounting, subsidies to transit users vastly exceed subsidies to automobile users per passenger-mile of travel. I have repeatedly asked you to provide a serious empirical analysis that contradicts this conclusion if you think it is incorrect, but you haven’t been able to come up with anything.

    And I most certainly did show how tripling fares wouldn’t affect transit ridership. It’s when the major cost factor is parking, not the trip itself. In commuting trips to downtown areas, parking is the major cost, and transit still beats that.

    Apparently, you live in some bizarro alternate world in which all trips are “commuting trips to downtown areas” for which “parking is the major cost.” Back here in the real world, such trips are only a tiny fraction of all trips. So even if your (completely unsubstantiated) figures are correct for such trips, they would do absolutely nothing to support your claim that “tripling fares wouldn’t affect transit ridership.” That claim is simply preposterous on its face.

  • I’m reminded by how in online evolution/creation debates, every biologist who mentions a gap in the evolutionary record is suddenly the world’s greatest living scientist and a brave man to tell the truth about evilution, and every biologist who says evolution still happened is just some nobody with an axe to grind.

    The only difference is that the creationists I know don’t use sockpuppets.

  • garyg

    Hilarious, Alon. So you think Delucchi is the transportation research equivalent of a creationist, do you?

  • Tjon

    Notably absent from the discussion (though understandably so) is the higher long-term costs associated with environmental destruction from widespread automobile use (as opposed to public transportation), both from immediate construction (a highway with the same passenger throughput as a double-tracked railway has a much wider ROW) and from the gradual rise in CO2 emissions.

  • wycx

    You seem to have lost track of the basic issue here. The post was about subsidies to car users. I agree that car users are subsidized. But those subsidies are only a tiny fraction of the subsidies provided to transit users. Transit users are making out like bandits compared to drivers. If you want to get rid of subsidies, fine. But doing so would hurt transit much, much more than it would hurt driving.

    Hmmm. If driving is so insensitive to subsidy, how about we take that “small-in-$-per-mile-but-large-in-total-$-amount” subsidy and put it into transit? Win-win, no?

    Drivers can finally say they pay their own way, and the transit system gets improved for potential use by everyone.

  • garyg

    Notably absent from the discussion (though understandably so) is the higher long-term costs associated with environmental destruction from widespread automobile use

    Delucchi’s estimates include the costs of air and water pollution. Including those costs, as well as the costs of other negative externalities, plus the costs of direct subsidies, Delucchi concludes that transit use is subsidized at a vastly higher rate than automobile use.

    Hmmm. If driving is so insensitive to subsidy, how about we take that “small-in-$-per-mile-but-large-in-total-$-amount” subsidy and put it into transit? Win-win, no? Drivers can finally say they pay their own way, and the transit system gets improved for potential use by everyone.

    Huh? If drivers should pay their own way, why shouldn’t transit users also pay their own way? Why should transit users get even higher subsidies than they get already?

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