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Reason Foundation

Surface Transportation Innovations #11

Topics include: the potential of FAST lanes, Texas' congestion reduction plans, TRB committee on future of fuel taxes, ULEVs in HOT lanes, and other features.

Robert Poole
September 1, 2003

In this issue:

FAST Lanes Could Stimulate $58-85 Billion in New Investment

Rep. Mark Kennedy's FAST Lanes legislation, cosponsored by Rep. Adam Smith (D, WA) and Sen. Wayne Allard (R, CO) has attracted considerable interest in the context of the pending legislation to reauthorize the federal surface transportation program. A Wall Street Journal editorial several months ago presented it as the alternative to an increase in fuel taxes, angering many members of the highway coalition but cheering taxpayer groups and the White House, who oppose any increase. But nobody has had any idea how much of the $128 billion gap (between the White House's six-year reauthorization proposal and that of the House Transportation & Infrastructure Committee) a FAST Lanes program would cover.

To provide that information, our friends at Fluor commissioned me to do a brief quantitative study, which we presented to Rep. Kennedy at a meeting in his office on September 4th. He released the results in his speech at the annual convention of the American Association of State Highway & Transportation Officials on September 8th. My analysis estimated that if every state took full advantage of the legislation, and added congestion-relief toll lanes on every route-mile of "severely congested" Interstate, the gross investment in these lanes would be between $58 billion and $84 billion. But because my analysis also suggested that likely toll revenues would cover only 50 to 60 percent of this cost (with the rest coming from conventional gas-tax funds), the net addition to the highway stock due to the new toll financing would be in the $28-50 billion range. That's a long way from $128 billion, but it's not chicken feed.

Several other findings are worth noting. The vast majority of all "severely congested" Interstate miles are in urban areas, where construction costs are 10-12 times as high, per lane-mile, as on rural Interstates (and in some cases more than 20 times as high). Some of those rural projects (possibly as truck toll lanes) would likely be self-supporting from tolls. And the degree of toll support for the costly urban projects could be increased considerably if they were developed as part of a whole network of tolled, congestion-relief lanes that included already existing HOV lanes converted to electronic tolling. That was the approach outlined by Ken Orski and me in Reason's February 2003 HOT Networks policy paper.

You can download the FAST Lanes study here.


TxDOT, Business Group Propose Real Congestion Reduction

If you've looked at any long-range transportation plans recently, whether from a large metropolitan planning organization or a state DOT, you've probably been as dismayed as I've been by their dismal news on traffic congestion. In nearly every case, if they make any projections at all, they tell us how much worse congestion is going to be 20 years from now, after they've invested billions to make the transportation system better.

Why is this? Part of it is philosophical, I think: if you really buy the premise that it's both futile and wrong to attempt to "build our way out of congestion," then you don't make reducing congestion the top priority in your plan. But another reason is the federal mandate that all such plans be "fiscally constrained"-i.e., they must plan only projects they can demonstrate can be built with known, available sources of funds. And since adding urban expressway capacity is very expensive (see previous story), there really isn't enough conventional funding to do very much about massive congestion, as our urban areas continue to grow.

That's what makes a recent Texas DOT effort so impressive-and encouraging. TxDOT and the Governor's Business Council's Transportation Committee studied what to do about congestion, starting not with the amount of funds available but rather with the goal of actually reducing congestion. Researchers from the Texas Transportation Institute (TTI) developed a model that projects congestion over the next 25 years in the state's urban areas. If present trends continue, its total cost to drivers would be $182 billion. To keep congestion from getting any worse than it is today would cost $179 billion over that time period. That's $39 billion more than the $140 billion expected to be available from conventional funding sources.

But the study did not stop there. It modeled several congestion-reduction targets, and ended up recommending the goal of a travel time index of 1.15, i.e, that trips at rush hour should take no more than 15% longer than at other times. (Houston is now at 1.38 and Dallas/Fort Worth is at 1.33.) The model then calculated the additional investment needed to produce that reduction in congestion. To achieve 1.15 in the principal urban areas would take $78 billion more than is expected to be available (twice as much of an addition as it would take to maintain the status quo).

There is nothing magic about a travel time index of 1.15, though the report concluded that the overall benefits (time saving, fuel savings, and increased efficiency to business and commerce) would be over $500 billion, compared with the $218 billion invested in the highway system. As Alan Pisarski, who was a consultant on the project, points out, "The reality is we can choose to solve the problem of congestion by examining the costs and benefits of alternative actions. We may then choose to take no action, but we cannot make believe that no positive action was possible."

They do think big in Texas. And maybe, if this report is taken seriously, they will show the rest of us a new way to deal with traffic congestion. You can download this long report here.


TRB Exploring Alternatives to Fuel Taxes

In the last issue, I discussed the pending crisis in highway funding, as continued increases in fuel economy (and alternative fuels) lead to ever-shrinking amounts paid in fuel taxes per mile driven. I'm pleased to tell you that the Transportation Research Board is addressing this vitally important issue. It has created a Committee for a Study of the Long-Term Viability of Fuel Taxes for Transportation Finance to oversee a two-year effort to evaluate options for a long-term transition to sources other than fuel taxes.

I am honored to have been selected as a member of this TRB committee. Chaired by Rudolph Penner of the Urban Institute (a former director of the Congressional Budget Office and AEI resident scholar), its members will include David Forkenbrock (whose work on a GPS-based tolling system I discussed last issue), Martin Wachs of the Institute of Transportation Studies at UC Berkeley, former Federal Highway Administrator Tom Larson, and Jim Taylor of Bear, Stearns along with eight others whom I have not yet met. Our first meeting will take place in Washington early in October.


Should ULEVs Get a Free Ride in HOT Lanes?

It sounds like a warm-fuzzy, feel-good proposition. Since most HOV lanes have excess capacity, why not encourage people to go out and buy ultra-low-emission vehicles (ULEVs) by letting them use HOV lanes even with only the driver on board? Four states have recently enacted measures along these lines, even though they conflict with current federal law. But the Bush Administration's SAFETEA proposal would, among other things, grant federal approval of such measures, for vehicles getting 45 mpg or better or which qualify as alternative fuel vehicles.

Short-term, it doesn't make much difference, since eligible vehicles today are a tiny fraction of the fleet. But that's likely to change dramatically over the next decade, running the risk of filling up and congesting HOV lanes. And of even greater concern, the more people entitled to use these lanes, the harder it will be to convert them to HOT lanes.

I addressed this issue in my monthly Public Works Financing column recently, and I'm attaching it to this issue. (If it goes astray, contact the editor here.)


International Conference on Road Pricing

Mark November 20 and 21 on your calendar now. Those are the dates for one of the most ambitious and comprehensive conferences ever on the subject of road pricing. It's being put on by TRB, OECD, Federal Highway Administration, and Florida DOT. The venue is the Sonesta Beach Hotel on Key Biscayne, just a short drive southeast of Miami International Airport.

I've served on the Steering Committee that has planned this conference over the past year, and we've really assembled just about everyone you'd want to hear on what's happening today in road pricing. You can register online, or at least check out the program, by going to the TRB's conference site.


Addenda

Here are several brief follow-ups to previous issues:


Robert Poole is Searle Freedom Trust Transportation Fellow and Director of Transportation Policy


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