Commentary

Some Good News on Highways and Bridges

A lot of the push for increased federal transportation funding has been generated over the years by projections from the Federal Highway Administration and two national commissions, based largely on numbers from FHWA’s biennial Conditions & Performance report. The latest C&P report, 2013 Status of the Nation’s Highways Bridges, and Transit Conditions and Performance, was released late in February and contains some welcome good news. Not only have highway and bridge conditions continued to improve, but total federal, state, and local highway and bridge capital spending has finally reached a level sufficient to maintain current conditions, if present spending levels are maintained. Improving both conditions and performance (i.e., eliminating the backlog of deficient bridges and achieving significantly reduced congestion) will still require increased investment—but not as much as estimated in previous reports.

First let’s look at the numbers. Because of the time it takes to collect and analyze the data and run FHWA’s models, there’s a several-year lag between the data used in the C&P report and the year it comes out. This 2013 report relies on 2010 data. Total U.S. highway and bridge capital spending in 2010 was $88.3 billion in regular funding plus $11.9 billion in stimulus (Recovery Act) money. The report’s new estimate of the annual amount needed to maintain current conditions and performance is $65.3 billion to $86.3 billion. As far as I know, this is the first time in the history of the C& P report that actual capital spending exceeded what FHWA estimates as needed to keep things from getting worse. That is very good news. (The reason for the range in the estimated annual investment is that two different projections of annual growth in vehicle miles of travel—VMT—were used). I discuss below why I think the lower estimate is the better one.

What accounts for this major change? First, highway construction costs have come down, FHWA reports, by 18% between 2008 and 2010, so each billion dollars goes further than it used to. Second, for the 30-year projection on which annual investment needs are based, the expected rate of growth in VMT is lower than what FHWA has used before, reflecting the apparent maxing out of VMT per capita, meaning that future VMT growth will be driven by some combination of population growth (personal travel) and economic growth (goods-movement).

And as noted in a Reason Foundation report by David Hartgen last year, U.S. highways and bridges are not “crumbling.” As the C&P report documents, highway capital spending increased by 36.6% in real (inflation-adjusted) terms between 2000 and 2010. And that has led to significant improvements. For example, on the entire federal-aid highway system, the percentage of pavements with “good” ride quality increased from 42.8% in 2000 to 50.6% in 2010. And on the more important subset defined as the National Highway System, the fraction “good” went from 48% in 2000 to 60% in 2010. Structurally deficient bridges on the NHS decreased from 6% in 2000 to 5.1% in 2010. The report includes a lot more data along these lines, including a 21.6 decrease in the annual number of highway fatalities.

But the highway system still includes very serious congestion in urban areas and on some long-distance Interstates. What will it take to improve things? FHWA models a number of scenarios, but I will limit this discussion to the overall highway system, not the subsets like NHS. Two different “Improve” scenarios are employed: one based on implementing all improvements with a benefit/cost ratio of 1.0 or greater and the other requiring a higher B/C threshold of 1.5 or greater. Both were run for the two different estimates of annual VMT growth: 1.36% and 1.85%. Given political funding realities, the B/C of 1.5 is a more realistic threshold, and as I explain below, the lower VMT growth rate is far more defensible. So for that set of model runs, the average annual highway and bridge capital investment is estimated at $93.9 billion. That compares with the actual (not including stimulus funds) total in 2010 of $88.3 billion. That is an increase of just $5.6 billion. For once we have a projection of needed investment that is within the realm of actually being possible!

Now let’s get back to the estimated VMT growth rate. The higher one is based on a set of forecasts provided to FHWA by state DOTs. The lower one is FHWA’s own estimate, which FHWA says is “based on a continuation of regional trends over the last 15 years.” Even that low estimate is being trashed by anti-highway groups like PIRG and Streetsblog USA. Their material routinely conflates the widely acknowledged peaking of VMT per capita with an alleged halt in total VMT growth. But there are good reasons to expect that continued economic and population growth will lead to continued growth in total VMT—albeit at a lower rate than in the 1960s through 1990s. A rigorous analysis by Starr McMullen and Nathan Eckstein of Oregon State University found a strong causal relationship between economic growth and VMT growth (Transportation Research Record No. 2297, 2012, pp. 21-28). A VMT forecasting model developed by DOT’s Volpe Center in 2011estimated VMT growth rates state by state, for light vehicles and heavy vehicles. I used their approach in my 2013 Reason policy study “Interstate 2.0.” My state numbers (unweighted by population) averaged 1.19% for light (personal) vehicles and 2.53% for heavy vehicles (trucks), and since light vehicles account for nearly 90% of total VMT, the weighted average was 1.33%—very close to the C&P report’s 1.36%.

And contrary to PIRG and other anti-highway folks, total VMT has begun growing again, increasing 0.6% last year as the economy finally emerges from the worst recession since the Great Depression. And that increase has been showing up in data collected and reported by INRIX. Its 2013 “Traffic Scorecard Report,” released March 5th, found that traffic congestion increased by 6% in 2013, with the largest increases in metro areas whose economies are doing the best (e.g., booming San Francisco up 13% and Austin up 9%). These congestion increases are a leading indicator that VMT growth is resuming.

This article also appears in Robert Poole’s Surface Transportation News #125.

Robert Poole is director of transportation policy and Searle Freedom Trust Transportation Fellow at Reason Foundation. Poole, an MIT-trained engineer, has advised the Ronald Reagan, the George H.W. Bush, the Clinton, and the George W. Bush administrations.

Surface Transportation

In the field of surface transportation, Poole has advised the Federal Highway Administration, the Federal Transit Administration, the White House Office of Policy Development, National Economic Council, Government Accountability Office, and state DOTs in numerous states.

Poole's 1988 policy paper proposing privately financed toll lanes to relieve congestion directly inspired California's landmark private tollway law (AB 680), which authorized four pilot toll projects including the successful 91 Express Lanes in Orange County. More than 20 other states and the federal government have since enacted similar public-private partnership legislation. In 1993, Poole oversaw a study that coined the term HOT (high-occupancy toll) Lanes, a term which has become widely accepted since.

California Gov. Pete Wilson appointed Poole to the California's Commission on Transportation Investment and he also served on the Caltrans Privatization Advisory Steering Committee, where he helped oversee the implementation of AB 680.

From 2003 to 2005, he was a member of the Transportation Research Board's special committee on the long-term viability of the fuel tax for highway finance. In 2008 he served as a member of the Texas Study Committee on Private Participation in Toll Roads, appointed by Gov. Rick Perry. In 2009, he was a member of an Expert Review Panel for Washington State DOT, advising on a $1.5 billion toll mega-project. In 2010, he was a member of the transportation transition team for Florida's Governor-elect Rick Scott. He is a member of two TRB standing committees: Congestion Pricing and Managed Lanes.

Aviation

Poole is a member of the Government Accountability Office's National Aviation Studies Advisory Panel and he has testified before the House and Senate's aviation subcommittees on numerous occasions. Following the terrorist attacks of Sept. 11, 2001, Poole consulted the White House Domestic Policy Council and the leadership of the House Transportation & Infrastructure Committee.

He has also advised the Federal Aviation Administration, Office of the Secretary of Transportation, White House Office of Policy Development, National Performance Review, National Economic Council, and the National Civil Aviation Review Commission on aviation issues. Poole is a member of the Critical Infrastructure Council of the Los Angeles Economic Development Corporation and of the Air Traffic Control Association.

Poole was among the first to propose the commercialization of the U.S. air traffic control system, and his work in this field has helped shape proposals for a U.S. air traffic control corporation. A version of his corporation concept was implemented in Canada in 1996 and was more recently endorsed by several former top FAA administrators.

Poole's studies also launched a national debate on airport privatization in the United States. He advised both the FAA and local officials during the 1989-90 controversy over the proposed privatization of Albany (NY) Airport. His policy research on this issue helped inspire Congress' 1996 enactment of the Airport Privatization Pilot Program and the privatization of Indianapolis' airport management under Mayor Steve Goldsmith.

General Background

Robert Poole co-founded the Reason Foundation with Manny Klausner and Tibor Machan in 1978, and served as its president and CEO from then until the end of 2000. He was a member of the Bush-Cheney transition team in 2000. Over the years, he has advised the Reagan, George H.W. Bush, Clinton, and George W. Bush administrations on privatization and transportation policy.

Poole is credited as the first person to use the term "privatization" to refer to the contracting-out of public services and is the author of the first-ever book on privatization, Cutting Back City Hall, published by Universe Books in 1980. He is also editor of the books Instead of Regulation: Alternatives to Federal Regulatory Agencies (Lexington Books, 1981), Defending a Free Society (Lexington Books, 1984), and Unnatural Monopolies (Lexington Books, 1985). He also co-edited the book Free Minds & Free Markets: 25 Years of Reason (Pacific Research Institute, 1993).

Poole has written hundreds of articles, papers, and policy studies on privatization and transportation issues. His popular writings have appeared in national newspapers, including The New York Times, The Wall Street Journal, USA Today, Forbes, and numerous other publications. He has also been a guest on network television programs such as Good Morning America, NBC's Nightly News, ABC's World News Tonight, and the CBS Evening News. Poole writes a monthly column on transportation issues for Public Works Financing.

Poole earned his B.S. and M.S. in mechanical engineering at Massachusetts Institute of Technology (MIT) and did graduate work in operations research at New York University.