The Economist - 19_25 April 2014

The Economist April 19th 2014 United States 29InfrastructureHighways to hellCHICAGOA harsh winter and tight budgets mean lots ofpotholesONLY the drunk, they say, drive in astraight line in Chicago. The sober zigzagto avoid falling into the city’s axlebreakingpotholes. This year the craters,caused by continual freezing and thawing,are worse than ever, and the spring thawhas brought three times the usual numberofcomplaints from citizens.As winter retreats, holes in roads andbudgets are being revealed—especially inmidwestern states, which were hit hard bythe polar vortex. Those states with moneyhave made emergency appropriations forrepairs; those without will have to cutsummer programmes. This means notmowing the grass in parks or picking up litter.It also means delaying resurfacing ofhighways or fixing guard rails, and puttingoffcapital spending.Looking after America’s roads is a persistentheadache. Although $91 billion isspent on them every year, that is nowherenear enough to keep the country’s 4.1mmiles (6.6m km) of public roadways ingood nick. The Federal Highway Administrationestimates that $170 billion in capitalinvestment is needed every year. Last yeara report from a civil-engineering groupsaid that 32% of America’s major roadswere in poor or mediocre condition. Mainroads through cities were in worst shape:almost half the miles travelled over urbaninterstates in 2013 were a bumpy ride. RayLaHood, a former transport secretary,thinks the roads are probably in the worstshape they have ever been.You shook me all night longHighway finance comes from two mainsources: cities and states, and the federalHighway Trust Fund (HTF). The HTFspends $46 billion a year and is funded bya tax of 18.4 cents on each gallon of petrol.But revenues are declining: the youngdrive a bit less and cars burn fuel more efficiently.Since American voters hate energytaxes, the petrol tax has not increased since1993 and its purchasing power has declined.Adjusted for inflation, it is nowworth only 11.5 cents. Had it been indexedto inflation 20 years ago (says the Centrefor American Progress, a leftish thinktank),it would now be 29 cents a gallon.The transport department reckons thehighway fund will dip below $4 billion inJuly. That is the minimum the administrationsays it needs to help states meet dayto-dayexpenses. The American Associationof State Highway and TransportationDirty deeds done dirt cheapOfficials says Congress must come up with$15 billion-17 billion to keep the fund solventnext year. It could either patch up thefund with another tranche of money—as ithas done in the past—or refinance it by raisingthe petrol tax and linking this to inflation.So far, it has done neither. Options arenarrow: a Gallup poll last year found thattwo-thirds of Americans opposed a rise inthe federal petrol tax for any reason.States also levy their own taxes, andsome, such as Michigan, have been able toincrease their road budgets. Massachusetts,together with Maryland and Wyoming,has managed to put up its petrol tax.Pennsylvania has imposed a tax on petrolwholesalers, which—officials seem tohope—may be less visible at the pump. InOhio toll-revenue bonds have been issued.In Missouri a 1% increase in the sales tax forten years has been proposed, though itmay not become law. (A state representativeremarked sardonically that 40% ofMissourians would oppose a new taxevenif it was being used “to construct the landingpad for the second coming ofChrist”.)Other states, however, cannot copewithout a large federal infusion. This maybe because they have lots of roads and notmany people to tax, or because their financesare shaky, like Rhode Island’s. Intestimony to Congress in March, Rhode Island’sdirector of transport said that if historicalfunding levels were not restored,and even with increased local investment,the state would be “managing the declineof its infrastructure”. Sue Minter, the deputysecretary of Vermont’s transport department,warned that “project delays will becomecancellations”.The HTF will probably be patched up;this is, after all, an election year. But statesare worried. In Arkansas ten projectsworth $60m—such as two bridge replacementsin Pulaski County, round Little Rock,and the widening of north-south Route63—have been taken off a list scheduled forfunding this April. In Colorado plans toadd a third lane to the I-25 between Denverand Fort Collins are in doubt, as the $1 billionproject needs federal support.Some states wonder whether tollingmight raise revenue for new roads. Illinoisrecently won planning approval for a $1.3billion toll road to Indiana. Forty-twostates and the District of Columbia nowhave some sort of tolling authority. Theseare increasingly popular ways of financingnew roads, although the slight decline indriving, and an unwillingness to pay highfees, have threatened this model in somecases. The Intercounty Connector, built toease congestion in the suburbsofWashington,DC, costs $8 for a round trip and hasfailed to meet traffic projections.Moreover, federal law does not allowtolling on existing interstates. The US TollingCoalition, a lobby group of buildingcompanies and contractors, would likeCongress to give more states the chance.But a new anti-toll lobby called the Alliancefor Toll-Free Interstates (mostly composedof shipping companies) wants toprevent it, and any change in federal lawwill be fiercely tussled over.Some argue that America needs to borrowmore to pay for better infrastructure.This is already happening. The new $3.9billion Tappan Zee bridge over the Hudsonriver in New York is financed with bondsthat will be paid for by tolls. A $2.5 billionproject, the North Tarrant Expressway inFort Worth, Texas, borrowed $531m from afederal fund known asTIFIA (the TransportationInfrastructure Finance and InnovationAct), set up in 1998 to provide loans orlines of credit for improvements to “eligibletransportation surfaces”.Down payment bluesLoans must still be repaid, whether fromtolls or taxes. Yet citizens seem to be morewilling to stump up for local roads throughlocal initiatives, whether higher taxes orvehicle-registration fees. Ken Orski, a transportanalyst, points out that on electionday in 2013 70% of ballot measures to increaseor extend funding for surface transportwere approved. Last year, voters inArkansas agreed to a half-cent increase inthe sales tax for highway improvements.The way ahead, perhaps? 7