U.S. highway system badly in need of repair

Apart from the threat to public safety, crumbling roadways and bridges are taking a toll on the nation's economy. About three-quarters of the $8.4 trillion worth of commodities delivered each year nationwide is carried by trucks; delays in that supply chain reduce the productivity of American businesses. At the same time motorists spend 3.7 billion hours a year stuck in traffic at a cost of $63 billion in wasted time and fuel costs, according to TRIP.

Funding for road building and repair is also being squeezed by the shrinking Highway Trust Fund, which gets most of its revenues from a federal tax on gasoline and diesel fuel. When first established in 1956, the 3-cent-a-gallon tax represented about 10 percent of the cost of a gallon of gasoline.

The current tax, which hasn’t been raised since 1993, is 18.4 cents a gallon, about 6 percent of the pump price. Two years ago, Congress proposed raising the tax by 4 cents a gallon, but the measure died when the White House threatened to veto any highway spending bill that included a tax increase.

As recently as 2000, the highway trust fund had a balance of nearly $23 billion. By last year, that had shrunk to $6 billion. By 2009, the Congressional Budget Office estimates the fund will come up short by $1.7 billion, and the deficit will rise to $8.1 billion by 2010.

Funding at the state level also has failed to keep up with the increased cost of repair and new construction. Though federal highways are financed in large part by the federal government, additional funding comes from state and local governments. Traditionally, state governments have raised those funds with “user fees” such as auto registration fees and state gasoline taxes, according to Moretti of TRIP.

“In the last decade those increases dramatically decreased,” he said. “Many legislators decided to oppose any increase in taxation, and they lumped user fees in with general taxes.”

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Since most state gasoline taxes are levied based on volume, not price, revenues have not increased even as the price of gasoline has risen sharply. As high pump prices promote conservation, lower sales volumes of gasoline mean even less money to support road repair.

With public funds drying up, some states have turned to private investors to maintain existing highways and build new ones. Faced with a $1.8 billion shortfall for road improvements, Indiana last year signed a $3.85 billion, 75-year lease with private investors to maintain the state turnpike and collect tolls. Two years ago, the city of Chicago signed a $1.83 billion lease to privatize its Skyway commuter bridge. In New Jersey, lawmakers are debating a proposal to sell a 49 percent stake in the New Jersey Turnpike and Garden State Parkway.

Critics of these deals say they’ve been overly generous to the for-profit companies involved. In April, the Texas Legislature passed a two-year moratorium on privatizing roads in response to public criticism of the deals.

In any case, privatization can only work for the relatively few, high-traffic projects that can turn a profit.

“It’s not the answer for connecting Wyoming with Chicago and funding a nationwide network,” said Kavinoky of the Chamber of Commerce. “Privatization is project financing. It’s not systemic funding.”

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