User Fees are Not Wacky Spendthrift Ideas

There has been a lot of attention paid recently around Washington to how to pay for transportation improvements.

The U.S. Chamber of Commerce has been an important player in this and they should be; the business community is heavily invested (if you will) in how well our transportation system works.  Their president, Thomas Donahue, made an important speech earlier this week on a range of economic issues and when he touched on transportation he said that the users should pay.  Makes sense, I think.

capital domeAlso earlier this week Virginia Gov. Bob McDonnell, who has been under heavy pressure to do something to increase investment in the Commonwealth’s transportation infrastructure, announced a plan that would eliminate the gas tax and substitute an increased sales tax.  Reaction is mixed, but I was interested to hear Republicans interviewed say they are reluctant to embrace this because they feel users should pay.

What is interesting about all this is that two of the more noted conservative institutions in the country, the U.S. Chamber and Virginia Republicans (many of them anyway, the governor is a Republican after all) are publicly embracing a user fee approach to finance infrastructure.  And (without passing judgment on the governor’s specific plan as I am not intimately familiar with it) I agree with them.  Indeed, all those places all over the world we like to point to as being ahead of us in investing in infrastructure use some sort of user fee approach.  Whether in the form of a straight fee or a fuel tax or whatever, the principle of user pays makes sense and, if the levels are set correctly, it works.

This has been the crux of our argument on the PFC for years now.  The PFC is not a federal tax, it is not a federal ANYTHING, except a federal limit on the ability of a community to set a user fee to pay for its own aviation infrastructure.  The PFC, as important thinkers like Bob Poole of the Reason Foundation have argued for years, is the best conservative approach to financing airport infrastructure.  It is paid by users, it is not filtered through Washington or a state capital, it is tied to specific projects, stakeholders and the community must be consulted, and it has an expiration date.  If you gave a conservative a blank sheet of paper and asked him or her to draw up a perfect infrastructure financing scheme my bet is it would look just like this.  And such an approach would benefit the airlines too, that is why airlines all over the world have pushed for such a model.

These are not wacky spendthrift ideas.  They are solidly conservative and prudent and right for these economic and political times.