Most of the U.S. infrastructure community cheered when the bipartisan infrastructure law, the Infrastructure Investment and Jobs Act (IIJA), was enacted in 2021. After all, this country has a lot of deferred maintenance across many infrastructure sectors. In transportation, there’s a long list of obsolete bridges, obsolete bottlenecked interchanges, and overloaded freeways in fast-growing cities and states. What’s not to like about funding those types of projects?
Let me begin with the early-January 2023 announcement that the long-delayed Brent Spence Bridge project between Cincinnati, Ohio, and Covington, Kentucky, will receive $1.6 billion in federal grant funding. This long-needed project had been held up for a decade or more due to opposition to tolling on the Kentucky side of the border. Now there will be no tolls, and federal taxpayers are picking up half of the project’s likely $3.2 billion cost.
By contrast, many other major bridge replacement megaprojects are going forward with some combination of toll-based financing and regular state funding and federal fuel tax money—such as the Calcasieu River I-10 bridge in Louisiana, the I-10 Mobile Bay bridge in Alabama, and the new Houston Ship Channel bridge. All three of these projects feature toll financing, along with some regular state and federal fuel-tax funding.
The difference between these bridges and Brent Spence is that the customers of these bridges will understand that major bridges are very costly and that under our users-pay/users-benefit highway funding system, highway and bridge users are generally expected to pay for what they use.
So who is actually paying for the Brent Spence Bridge project? The $1.6 billion comes from two new federal grant programs: the Bridge Program and the MEGA Program. Both were created by the infrastructure law. The funding for both of these projects is essentially new general fund money that is borrowed, adding that amount to the national debt. So the bridge will eventually be paid for by the grandchildren of today’s taxpayers. In practical terms, funding the project this way gives the bridge’s users the impression that the new bridge is free.
Slightly less bad is the legislatively-revamped Major Bridges Program in Pennsylvania. Until local courts and then the state legislature intervened, those replacement bridges were to have been financed based on toll revenues, so those who benefitted from the replacements would have been paying most of the costs. But with the Pennsylvania Department of Transportation having to shift to availability payments for this megaproject, those actually paying for the new bridges will be highway users across the state, who will be deprived of other needed highway improvements that could’ve been made in the amounts now to be diverted to the Interstate bridge replacements.
Avoiding users-pay/users-benefit when it comes to new bridges is only the latest chapter in the shift away from the sound principle (basic to other utilities like electricity and water systems) that users/customers should pay the capital and operating costs of the infrastructure needed to provide the amounts of service they demand.
In my 2018 book, Rethinking America’s Highways, written mostly in 2016, I pulled together average monthly household utility bills and compared them with the average household’s monthly total for gas taxes (both federal and state). Those 2013-era utility bills typically ranged from $71 for water to $107 for electricity. When I showed a table with those costs to audiences during my book tour, I asked them to guess the monthly highway use bill they pay in gas taxes. Nobody guessed the then-correct answer: $46, not including any tolls. My point was that hardly any drivers understand how little they pay for roads and bridges. Surveys find that many people think gas taxes are based on a percentage of the price of gas (i.e., a sales tax), but neither the federal fuel tax nor any state gas taxes bear any relation to the underlying cost of the fuel.
Congress has contributed to people’s lack of appreciation for the full cost of highways. Up until 2008, the annual spending of the federal highway program was met solely by the amount raised in federal highway user taxes. That is why at the federal level, highways were not subsidized. But in the 2015 Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users law, or SAFETEA-LU, reauthorization, Congress built in very optimistic projections of revenue and spending.
When the revenue fell below projections in 2008, did Congress cut back the planned spending? Nope, Congress found a grab-bag of pay-fors to maintain planned spending levels. Basically, Congress allocated general-fund money to top-up the Highway Trust Fund each year and has been doing so ever since. Because the federal budget has been in deficit every year since the Clinton administration, all the non-user-tax money being spent by the Federal Highway Administration—so far totaling $275.5 billion, according to Jeff Davis of the Eno Center for Transportation—has been borrowed from our grandchildren.
And that means highways, rather than being paid for by their users, are increasingly subsidized by federal taxpayers or their grandchildren. The average voter thinks a new bridge costing $3 billion is outrageous, largely because she has no idea how little of the capital and operating cost she is actually paying for.
The modest trend of the last 20 years toward greater use of tolls and toll financing is a small step in the right direction—toward being honest with drivers and truckers about what roads and bridges actually cost. Federal programs like Bridge and MEGA represent reversals of this virtuous trend toward getting people to see the full costs of building and maintaining transportation infrastructure. Revenue-financed public-private partnerships move us in the right direction by ensuring that the tolls cover not only the initial construction but also guaranteed ongoing maintenance.
As long as drivers believe highways and bridges cost far less than they actually do, new toll and public-private partnership projects will likely continue to be few and far between in the United States. Transportation officials and the P3 community need to work harder on explaining the true costs of building and maintaining highways and bridges to opinion leaders and policymakers.
A version of this column first appeared in Public Works Financing.