Build it and they will come.

Frequently, when an existing road is proposed to be widened, the anti-widening folks will often make the following argument: "Yes, the road is clogged now, but if we expand it, it'll eventually become congested again, so let's not build it."

This just doesn't strike me as a good argument in a country with a growing population. Yes, the road might become congested again, in fact, it probably will. However, it'll become congested while carrying significantly more people. This means that new jobs will be created, new office parks, new shopping centers, movie theaters, etc. will be built.

Here on the east coast, we have Interstate 95, which runs parallel to Route 1. Route 1 is an old road: in New England, it is the old Boston Post Road, which is older than the United States. In the 1950s, when I-95 was built, I'm sure that Route 1 was very crowded. Of course, I-95 is often a standstill today, but that doesn't mean we should have never built I-95. If it had never been built, Route 1 certainly wouldn't be carrying all the cars that I-95 carries today, but the entire region would be much less developed, meaning that thee were fewer jobs, fewer houses, and fewer cars.

You may think that is a good thing. However, since we have a growing population (our birth rate is about replacement level, but we have many immigrants), we need to accommodate this growing population by building the infrastructure necessary. And we need a growing population to fund social security and other ponzi-esque pension schemes.

Who Should Pay for Metro North?

The Metro North Railroad takes commuters from Connecticut, Westchester and Long Island to Manhattan (and intermediate points).

The railroad is currently in the process of buying new railroad cars for the New Haven line (which goes from New Haven, Connecticut into New York, plus a few additional spur lines). These new Kawasaki railroad cars are being paid for by both Connecticut and New York state, with Connecticut picking up 65% of the tab and New York taking on 35% of the cost. This ratio was worked out by the number of riders from each state.

However, I think that this is a totally unfair division of costs. In the United States, if you work in one state and work in another, you pay income tax to the state where you work. Then, when you file your taxes, you get a credit for those taxes. So if your home state has a lower rate than the state you work in, you will wind up paying nothing in income tax to your home state. This is the case with Connecticut and New York. New York's income tax rates are higher, so Connecticut natives who work in New York pay taxes to New York. For those New Yorkers that work in Connecticut, they pay income taxes to Connecticut, and then since New York taxes are higher, they make up the difference by paying New York the additional amount.

Many more people commute into Manhattan from Connecticut than commute out of Manhattan to Connecticut. While there are some commuters from Fairfield county to Westchester and vice-versa, I would imagine most of these people drive.

My question is, even if Connecticut residents make up 65% of the passengers (or 65% of the passenger miles or whatever metric they used based on ridership), why should it foot 65% of the bill? Most of the Connecticut residents riding the train pay nothing to Connecticut in income taxes! Shouldn't the split be done instead on commuter destination?

Suppose Connecticut cut its funding. The railroads would be no fun to ride. People would either move out of Connecticut (but from an economy perspective the loss is minimal: they didn't work here) or find jobs in Connecticut that they could drive to. This would boost tax revenues (plus add in the fact that we aren't spending money on the railroad).

Since New York gets a big tax bonus by having better commuter trains (which makes commuting easier, which means more commuters), shouldn't it pay for the trains? It just seems odd that Connecticut would spend lots of money so rich people could commute to another state and end up paying nothing in income taxes to Connecticut.

Isn't it also a bit odd that Metro North is subsidized at all in the first place? Yeah, I know, highways are subisidized too. I don't like that, and I don't like this subsidy any better. This is a subsidy so mainly wealthy can take the train to work: in 1998, the average commuter earned nearly $100,000. Why exactly are we subsidizing the entire railroad? And if you say that there are poor people who can't afford the tickets, couldn't we figure out some way to give just the income qualified people a discount?

Gasoline Taxes and Road Building

While I'm all for low taxes, I believe that gasoline taxes and tolls on highways can be perfectly reasonable, provided, however, that there are some constraints to them.

Roads cost money to build and maintain, and therefore, I think it's fair that the people that actually use the roads pay for their use. If someone has managed to position their life so they can walk to work and walk to the stores they need, why should they have to pay taxes so I can drive a car? However, the collary should also be true: if I drive, why should the gas taxes and tolls go to items other than those that are necessary to maintain the road?

I favor congestion-based tolls. These would be tolls that would be charged only during peak periods: by peak periods, I mean only those times when traffic moves less than the speed limit. As I wrote in a previous blog entry, these tolls would be set at such a rate so that enough people were deterred from using the road until the speed limit could then be attained. I believe this would be a more sensible allocation of a limited resource than to force everyone to sit in a traffic jam.

Now, if the congestion-based tolls are throwing out so much money that no other funding for roads is needed, this would tell me that the road infrastructure is woefully inadequate. The excess funds should be used to build more roads. The objective with congestion-based tolls isn't to raise revenue, it's simply to reallocate resources to those willing to pay for them.

Regular tolls are fine, as long as the toll can be collected efficiently. I hate having to wait 20 minutes to pay $1 for a toll. Gasoline taxes and various property taxes on cars are also acceptable, so long as these funds are not diverted to other sources.

So whatever gasoline taxes and tolls would have to be to maintain the road system is where I think the taxes should be set. However, there's one slight problem here. If a small state, such as Rhode Island, needed to have higher taxes than the neighboring states (perhaps because of more miles driven by its residents, more miles per car, or whatever), this could cause locals to cross state lines when making purchases. Taxes need to be high enough to cover costs, but not so high that people start finding alternative fuel sources in other states. States like these would probably have to revert to more tolls. Traffic fines should also be used solely for the road system.

The cost of the road system are construction costs, repair, snowplowing, traffic police salaries, and the cost for emergency rescue personnel for the portion that they deal with automobile accidents.

So would this make gas taxes higher or lower?

Currently, gasoline is taxed at $0.184 per gallon by the federal government, and then the states add their own taxes. This brings in about $30 billion to $40 billion per year, according to various estimates. The most recent highway bill signed by Bush had $286.4 billion in spending over six years, which right there is more than the gas taxes collected. This would indicate that the gas taxes aren't enough to fund federal transportation spending. Add to the fact that much of the $0.184 collected is block granted back to the states, and it looks like the federal gas tax is woefully short of where it should be. The highway bill was also filled with lots of local projects, not for the interstate highway system. The bridge to nowhere in Alaska is only the most ridiculous example.

Republicans and Democrats alike call for tax holidays of the gas tax. I guess my question would be: during this time, would you still build and repair roads, have police and fire units, etc? If so, then who's going to pay for it all if not the drivers. If I set up my life so that I don't need to drive, why should my income taxes go up to pay so people can drive?

At the same time, gas taxes shouldn't be thought of as a piggy bank to fund other non-road related projects.

There's a few other things I haven't mentioned. Pollution. In my above proposal, there's no allocation for pollution. I would definitely favor some sort of duty on pollution to encourage people to reduce their own. Charge each car based on the amount of particulates per mile times the number of miles driven; this will encourage people to get cars that pollute less. I don't really care if the car is a hybrid or runs on ehanol. Base it on the output. I never understood why there should be tax breaks for hybrids. Why not tax breaks for really fuel efficient cars, most of which happen to be hybrids. But what if someone else came up with a different way? Like reducing the number of cylinders in use when on a highway.

Public transportation. Many governments seem to think that drivers should pay for public transportation, because for every guy on the railroad, he's not on the road. However, if we were going to have a closed system, in which gas taxes and tolls and fines pay for roads and highways, then why should the drivers pay for the railroad riders? Yeah, they reduce congestion. So what. If a factory were to build worker housing next to the factory, should the owner get the same tax break because he's reducing congestion as well? Or if a company allows its employees to work from home or have flex commuting, should they get a tax break? Well, they sort of would, because under my proposal congestion wouldn't happen often: except when there was a wreck, there should be little congestion due to peak tolls.

So in any event, keep road taxes and tolls as high as necessary to maintain and build the roads. Don't expect subsidies, and don't expect to subsidize anyone else...

HOV lanes and People who need to get there fast

Why do traffic jams exist? The answer is either 1) there's an obstruction: a wreck, construction, tree in the road, etc., and thus the capacity of the road is limited [reduced supply]; 2) there are too many cars on the road versus the capacity of the road [increased demand], 3) there's not an obstruction, but there's some event that causes people to slow down to have a look (like a wreck that's been moved off the road so it no longer is blocking traffic).

Most traffic jams result because of the capacity issue. There are simply too many cars for the road (and this often leads to wrecks, which causes further delays). The problem with highways is that the cost is almost always fixed, regardless of the time of day that the road is being used. Roads are funded through gasoline taxes and tolls, and tolls are usually fixed. Furthermore, while the lanes going into the city may be backed up for a few hours each day in the morning, most of the time it's smooth sailing.

Traffic jams cost drivers money in that they can't be doing something else, like working (this is "opportunity cost"). For an unemployed guy driving somewhere, the opportunity cost of sitting in a traffic jam is basically negligible. For a lawyer who sits in a traffic jam, the opportunity cost can be quite high.

Governments have two methods of reducing traffic jams resulting from capacity issues: increase supply or decrease demand. Increasing supply means adding more lanes, or alternate routes: an expensive proposition. States currently have fairly clumsy methods of reducing demand during peak periods: one of the more prevalent methods is to promote carpooling through HOV lanes, adding public transportation with more robust schedules during peak times, etc.

Why not charge drivers a high toll during peak periods? The key would be to have lower tolls outside the peak periods, when there's excess capacity. This would encourage some drivers to shift their work schedules so they'd start and end work during non-peak times (the first to do so would be workers who could shift their hours without a great impact [such as computer programmers]).

In addition to having the toll be reduced (or even eliminated) during non-peak times, there would also have to be a good collection mechanism (probably via electronic devices like EZPass) in place so that drivers wouldn't have to wait to pay a toll, thus negating the benefit of paying the toll in the first place. I believe that the technology to do this exists well enough right now.

Convert the HOV lanes into "pay to drive faster" lanes. This way, poor people could afford to drive, it would just take them longer (but they don't value their time that highly). Meanwhile, people whose time was very valuable could pay to drive in the HOV lanes.

What would the cost of the pay lanes have to be? Well, there would have to be some sort of mechanism to determine the price: at what price does traffic again move at the speed limit? That's where the price should be set.

Roads are a limited resource, and when you have a fixed price (i.e., the gasoline tax or a fixed toll) for a scarce good, you are going to get a shortage of that good (in this case, the good is a lane of pavement as long as your car and four car lengths to the next car). By raising the price of the good, you get rid of the shortage.

While local governments would probably make money by implementing this system, I do not think it should be viewed by municipalities as a way to keep getting lots of money (rather, it should be viewed like fines: attempting to control behavior). With current technology, it would probably be quite easy to reset the price every month for each hour window based on the demand. The price would be set so that at any given time, there would not be a backup (so most of the night, there should probably be no toll).

Many of you might say this would just hurt the poor working man who needs to get to work by a certain time, and why should he be penalized (if free lanes didn't exist next to pay lanes). My answer would be that he could leave earlier when there were no tolls. If he wants to consume a limited resource, he needs to pay for it (at 5:00 AM, roads usually aren't a limited resource, so tolls then could be free). He could carpool with others who wanted to drive during the peak period but could not afford to do so alone. Or he could lobby his employer to shift his working hours. If his employer refused, he might then find alternative employment that did allow for more flexible hours. This would eventually cause employers to have to raise their wages for lower-income people who work normal business hours. It would also provide an incentive for people who had normal working hours to live closer to their employer (or at least not in the same direction as all other commuters).

By having rates that vary according to demand, we'd eliminate the shortages. That's what done in almost every other facet of our lives, so why not with the highways as well?