California Has a Transportation Spending Problem, Not a Transportation Revenue Problem
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California Has a Transportation Spending Problem, Not a Transportation Revenue Problem

Caltrans needs an overhaul but vehicle owners don't need a new tax

The latest brilliant idea out of Sacramento is a ballot initiative asking California voters to more than double the vehicle license fee. The increase would cost the average California car owner around an extra $100 per year.
The initiative is being called the “California Road Repairs Act of 2014.” State transportation leaders who are pushing it claim that “California is facing a transportation funding crisis” and say the state is in desperate need of more money to repair its roads.
It might strike you as odd that only one year after California voters approved nearly $7 billion per year in new taxes, and just months after Sacramento trumpeted state budget surpluses, that the only way to deal with state transportation needs is yet another tax hike.
California has a transportation spending problem, not a transportation funding problem. Consider these basic facts about California’s transportation system and spending. Between 2007 and 2009, the latest year for which we have data, and during the Great Recession mind you, total transportation spending per highway mile in California increased a whopping 49 percent. So the notion that funding is falling and we have a crisis is just false.
California spends 4.7 times as much per mile of state-controlled highway as the national average. More specifically, for every $1 Texas spends on its highways, California spends $5.80. For every $1 Michigan spends on its highways, California spends $3. According to Reason Foundation’s annual ranking of the performance of state highway systems, California ranks 47th for highway conditions, while Michigan ranks 30th and Texas 11th. So while spending a lot less per mile, those states are able to have much better road conditions. In fact, over the last 20 years, California’s highway system and road conditions made the least amount of progress among all 50 states.
California spends more to get less. Dealing with that problem should be a much higher priority than raising taxes. If Caltrans could become as efficient and cost-effective as Michigan’s department of transportation, for example, that would increase the amount of funds for road maintenance by five times as much as the proposed tax hike.
To achieve that, however, requires a lot of change. First, Caltrans needs to be overhauled. There is arguably more fat and wasteful spending at Caltrans than there is in any other state agency, which is saying a lot. Spending 4.7 times the national average per mile (in exchange for one of the poorest-ranked transportation systems in the county, no less) means a lot of bad decisions about spending are being made. Far too many dollars are being used for Caltrans staff and overhead costs. For every mile of highway it controls, California spent $77,000 on administration costs. That’s taxpayer money that never makes it to fill potholes, repair bridges or widen roads.
Second, the legislation governing transportation projects needs to be overhauled. Caltrans is burdened by dozens of laws that drive up the costs of road work – from contracting restrictions to wage and labor rule mandates to unreasonable environmental review processes. Simply comparing what policies help the most efficient states keep costs down would be a great place to start.
Third, start trying to save money. States like Florida, Virginia and Massachusetts have saved billions of dollars by privatizing road maintenance. California is saving nearly half a billion dollars by privatizing the reconstruction of the Presidio Parkway in San Francisco, but in spite of that project’s success, state leaders have rejected the process that led to it and the idea of further privatization. They apparently prefer the more expensive ways of doing projects.
None of these reforms are easy or quick, but with some hard work over the next few years California could get a lot more bang for its transportation dollars. And that would be a much better deal than a new car tax both for improving the roads and for taxpayers.
Dr. Adrian Moore is a transportation economist and vice president of policy at the Reason Foundation. This column originally ran in the Orange County Register.