Study: Highways Don’t Pay for Themselves

As debate over the merit of congestion pricing rages on throughout LA County, a new report by the Texas Department of Transportation, hardly a hotbed of anti-car radicalism, throws cold water on one of the leading arguments against road pricing: that the roads where Metro wishes to place variable tolls are already paid for by gas taxes.

While the specific numbers would doubtless be different because Texas has a different gas tax than California and a different amount of traffic density; the study shows such a wide disparity in the funds generated by a road project increased fees and the cost of a project that it’s hard to imagine any road project producing the funds to justify the cost of building it.

For example:

Applying this methodology, revealed that no road pays for itself in gas taxes and fees. For example, in Houston, the 15 miles of SH 99 from I-10 to US 290 will cost $1 billion to build and maintain over its lifetime, while only generating $162 million in gas taxes. That gives a tax gap ratio of .16, \ which means that the real gas tax rate people would need to pay on this segment of road to completely pay for it would be $2.22 per gallon. This is just one example, but there is not one road in Texas that pays for itself based on the tax system of today. Some roads pay for about half their true cost, but most roads we have analyzed pay for considerably less.

Of course, the ramifications of this study go beyond just congestion pricing.  Thanks to the Texas DOT, transit advocates have the perfect counter to any argument that transit is some sort of affront to the free market because of the subsidies it receives.

Photo: Third Ape 23/Flickr 

8 thoughts on Study: Highways Don’t Pay for Themselves

  1. First, not having read the study, that quote looks like a poor form of analysis of how gas taxes pay for a highway – the taxes from gasoline are collected prior to highway construction. Any taxes “generated” by the highway would normally be considered sources of revenue for the construction of other highways, and for maintenance of existing highways.

    Second, Texas is the experiencing a blitz to privatize toll collection on its public highways, induced by Goldman Sachs and a large Spanish conglomerate. The same impetus that led to the boneheaded decision to put gates up at MTA platforms in L.A., and hand the contractor to collect tolls a 10-year contract – that same impetus is what is pushing this current move to charge tolls on Texas’ highways. Think tank goons who write studies like this get their access and funding from people who will benefit from this giveaway of a juicy toll collection contract.

    There is bullshit spread all around this topic. This analysis of a highway’s true cost, based on the quote above, looks a little flawed. Further, the motivation to give toll collection on public highways to private firms drives a lot of think tank writing on this topic – and should be looked at warily.

  2. The deal in Texas is that most major arterial roadways in older urban areas (where most people live) are actually constitutionally ineligible for the state gas tax (can only be spent on projects in the state highway system, which means a route shield of some sort). Thus, the .84 of missing gas tax revenue for that highway is being paid by drivers in the central part of Houston, when they drive on streets that don’t get any gas tax dollars (funded by city/county general funds, for the most part).

    See my blog for more, category “Funding of Transportation”.

  3. You guys are a tough crowd! I’m writing form an LA public library so I won’t have a chance to read your website M1EK until I get home, but I will read it later.

    Brayj, I’m well aware of the issue of road privatization and have fought against such projects when they’re proposed in my area, and yes, you can attack the methodology; but let’s look at the bigger picture. A state DOT, and not one from Vermont or Massachusetts, did a study that shows that road projects are heavily subsidized. This wasn’t a transit union, a hippy blogger or a cyclist; it was transportation engineers from one of the most oil-happy states in the union. I think that makes its findings more significant when we find ourselves in arguments with the defenders of car culture.

  4. My favorite analysis of the cost of the private car network is one done about New York City, wherein the author used several methods to calculate the subsidies and user fees for car use. He ended up with a compelling profile: users of the private car network get more from the public than they give no matter how you analyze it.

    When I find the link, I’ll post it here.

  5. To me the big deal about this report is that there is this belief that roads are paid for by the gas tax and user fees. Which this shows just isn’t the whole story. And this is the story that the anti-transit folks need to hear.

  6. There are many ancillary costs not added to the totals, to my knowledge. Among them, in inner-city areas (here in Montreal, inner-city does not mean poverty, it means high and values, as it should in a noprmal Western society): A highway replaces buildings. These buildings would pay property taxes, create jobs, etc.

  7. I think what is missing from this study is more the public good, untaxable, and largely untraceable that is provided by a good road network. Whether you drive to the store or not, your food prices are lower because the roads are good, and the police can arrest more drug dealers and keep your neighborhood safer because those roads are good. This surely can’t account for all of the difference, but its surely worth keeping in mind.

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