The Cumulative Difference Between Public Spending on Highways and How Much Drivers Pay to Use Them

The Frontier Group/U.S. PIRG

There are good reasons to believe that the methodology of “Who Pays for Roads?” if anything considerably understates the subsidies to private vehicle operation. It doesn’t examine the hidden subsidies associated with the free public provision of on-street parking, or the costs imposed by nearly universal off-street parking requirements, which drive up the price of commercial and residential development. It also ignores the indirect costs that come to auto and non-auto users alike from the increased travel times and travel distances that result from subsidized auto-oriented sprawl. And it also doesn’t look at how the subsidies for new capacity in some places undermine the viability of older communities.

These facts cast new light on the widely agreed-upon belief that increasing the gas tax is politically impossible: What the reaction to this hike really signals is that drivers don’t value the road system highly enough to pay for the cost of keeping it in operation and maintaining it. Drivers will make use of roads, especially new ones, but only if the cost of construction is subsidized by others.

The conventional wisdom of road finance is that there is a shortfall of revenue—that the country needs more money to pay for maintenance and repair and for new construction. But the huge subsidy to car use has another equally important implication: because user fees are set too low, and because, in essence, people are being paid to drive more, there is excess demand for the road system. If roads were priced to recover even the cost of maintenance, driving would be noticeably more expensive, and people would have much stronger incentives to drive less, and to use other forms of transportation, such as transit and cycling. The fact that user fees are too low not only means that there isn’t enough revenue, but that demand is too high. One value of higher user fees would be that they would discourage excessive use of the roads, lessen wear and tear, and in many cases obviate the need for costly construction projects.

And these subsidies to car travel have important spillovers that affect other aspects of the transportation system. There’s a good argument to be made that part of the reason that subsidies to transit are as large as they are is that motorists are being paid to not use the transit system, in the form of artificially low prices for road use and parking.

There’s another layer to this point about roads not paying for themselves: Most of these calculations are done on a highly aggregated basis, and look at the total revenue for the road system and the total cost of maintaining the road system. What the study doesn’t explore is whether particular elements of the road system pay for themselves or not.