Funding the Transportation System

I was reading this morning’s Washington Post, which carried an article on page A2 about congressional plans to slash investment on highway and transit programs.  The article also mentioned identified needs in the U.S. for investment in those modes, and in aviation as well (full disclosure, there was a reference to a report last year by a group convened by the University of Virginia’s Miller Center and co-chaired by former Transportation Secretaries Norm Mineta and Sam Skinner and consisting of 80 experts – I was one of the 80).

Regardless of what you think about how we raise and invest funds for transportation in this country, try this little exercise.

First, if you were starting right now with a blank sheet of paper to design a system, ask yourself whether you would design the one we have now.   For both aviation and surface transportation, the answer must be a resounding NO!

You wouldn’t design a system that relied on taxing a product (gasoline) that drivers are working hard to use less of and cars being built are consuming less of.  You also would probably not design a system in which so much of the money flows through Washington.  You’d probably rely more on public-private partnerships, tolling, and other such methods.  Perhaps a vehicle miles traveled system.  But we have the system we have, and there seems a lack of political will to change it.

On the aviation side, we have a federal program that is based on the base fare of a ticket.  Airlines, though, have moved to ancillary fees which are not subject to the ticket tax; a move that seems permanent.  On top of that and making matters much, much,  worse, federal law prohibits airports from raising the funds necessary to build and maintain their own facilities.  This is a law that was passed when Nixon was president and the federal government told airlines where they could fly and how much they could charge.  I repeat, this system was enshrined when RICHARD NIXON WAS PRESIDENT.  It was designed even before that unfortunate moment when leisure suits were fashionable (I owned a really sweet light blue one!)  We still had some troops in Vietnam.  Back when we had wage and price controls (how did THAT work out?!)  I could go on.  You would NEVER design such a system if you were starting today from scratch, and almost every honest airline executive would, in private, tell you the same thing.

Let that sink in:  the system by which we regulate the economic lives of your community’s airport was designed when Richard Nixon was president!!!!!!!  Maybe this is one he delegated to Spiro Agnew?

Second, ask yourself what our global competitors are doing.  I have been convinced since I worked in state government a quarter century ago that we live in a global economy and our competitors are not just across the street but on the other side of the world.  It was just announced today that Dubai is investing almost $8 billion in airport infrastructure.  China is building dozens of new airports and airports all over Asia outshine ours by a considerable degree.  This is critical; as businesses increasingly have the choice to locate anywhere in the world they would like and as the cost and ease of transportation figures more heavily in those decisions, we are stuck in the horse and buggy age while our competitors are owning and building the 21st century.

If you are honest, I doubt you could ask yourself these two questions and come up with a different answer.    We are getting our asses kicked, and we are the ones doing the kicking.  This is a self-inflicted wound and as long as government policy makes methods used to finance airport infrastructure all over the world illegal, we will keep getting our asses kicked.

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One thought on “Funding the Transportation System

  1. Greg:

    Yes. Reliance on fuel taxes to fund highways and transit (and a small part of aviation) is the equivalent of using cigarette taxes to fund schools–you rely on a revenue source that you hope goes away.

    I hope ACI-NA takes Mr. Calio up on his offer and we all meet to design a new aviation policy. Whether the Doug Parkers of the industry (“we don’t need NextGen because we are a mature industry”) will rule the day or Southwest and JetBlue (busy equipping for their congested hubs) will be an interesting one to watch.

    We share your frustration.

    Steve Van Beek

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