User-Pay and Mode-Neutrality – Inconsistent? Responding to Bob Poole

The recently released NTPP report has started to generate discussion, including articles in The New York Times, The Minneapolis Star-Tribune, and in the Journal of Commerce. The coverage has generally been favorable, but if everyone agrees where is the fun in that?

Bob Poole at the Reason Foundation, for example, agrees with NTPP’s proposed performance-based approach and that great reforms are necessary. But he also says that that the NTPP principles of “user - pay” and “mode neutrality” and inconsistent with one another. Jeff Davis of Transportation Weekly spoke of the same “conundrum” when he asked a question of the Finance Commission at a press conference releasing their report.

A charge of “inconsistency” is rarely just that – people will often overlook inconsistencies if it suits their intended outcomes. The real issue is that Reason and others do not like it when user fees are collected from highway users but spent on other forms of transportation.

On the face of it this might seem like a reasonable complaint. If highway user fees are being spent on “other” modes of transportation, we will under invest in highways relative to their use. This will lead to insufficient highway capacity and poorly maintained roads, while “alternative” modes receive overinvestment unrelated to their use.

There are two fatal flaws with this kind of thinking. First is that it assumes that different modes of transportation operate independently from one another. Second is that it assumes that highway users pay something approaching the full costs of their transportation. Both assumptions are clearly incorrect.

All modes of transportation interact with and depend on one another. Highway users, being the primary mode in the U.S., benefit from the use of other modes because it frees up capacity. And transit users typically do not have subway stations in their living rooms – they must access these stations using roads or sidewalks (which are typically provided as part of road construction). Moreover, the vast majority of public transportation users in the U.S. ride buses, and these run on roads and highways.

This leads to the second flaw. It could be argued that because transit systems, sidewalks, and bicycles are all subsidized through government revenues that are not strict user fees, these systems are not paying for themselves. But this argument only works if highway users are actually paying something approaching the full cost of their transportation, which they are not. They are not paying the congestion, environmental, energy or safety costs, much less the full cost of maintaining the highway system. Moreover, now that the U.S. Government owns General Motors, many highway users are being subsidized even more.

Perhaps, someday, we will charge highway user fees that approximate true marginal cost. When that day comes, perhaps it might be useful to discuss user-pay consistency across all modes. But we are a long way from that. Until we get there we will never have a cohesive and comprehensive transportation system unless we break down the modal silos and start considering the network.

-Joshua Schank