The Recovery Rides Coach, Ctd

A reader writes:

Your reader claimed, "Fuel taxes only pay for a part of the costs of the roads that the buses use – the amount is debatable but it's under 50%." That uneducated guess of 50% is wrong. Gasoline taxes subsidize other modes of travel. Here (PDF) is a 2004 Department of Transportation study that outlines how users of the highway system paid significantly greater to the Treasury than their cost during the 1994-2000 period studied. Of course, all other transit methods were the net beneficiaries. Also, highways are a real public good, as your bus story showed. Consider that:

Recently the DOT examined net federal subsidies from 1990 to 2002 and found that highways and transit are worlds apart. For every thousand passenger miles, transit got $118 in subsidy. What kind of subsidy did highways get? Negative $2. In other words, highway users paid in more than they got back. Look at total dollar amounts of subsidy and the story is the same. Urban transit drained Uncle Sam's coffers by an average of more than $5 billion per year. Meanwhile, our highway system actually replenished those coffers by more than $7 billion per year.

Update: Another writes:

The DOT report covers only federal spending. I don't have any figures, but using that data alone to dismiss the overall claim that roads are subsidized beyond the revenue of gas taxes is pretty weak.

Update: Another:

I'm glad that a reader pointed out that the 2004 DOT study only covered federal spending, and not state and local funding. Citing a 2003 Brookings Institution study, Transportation Alternatives magazine states that "the gas tax pays for only about a third of the cost of the road system. This has major implications for mass transit funding, which is so often criticized for 'not paying for itself.'"

Update: One more for the uber-wonks:

I'm the reader who originally wrote, "Fuel taxes only pay for a part of the costs of the roads that the buses use – the amount is debatable but it's under 50%," which another reader objected to, but which two updates support. The most direct numbers I'm aware of actually come from the Texas DOT, generally a pro-roads organization. In the summer of 2008, they wrote in a blog post (which has since been taken down, but which was quoted by several transportation-reform organizations):

Until recently, when TxDOT built or expanded a road, no methodology existed to determine the extent to which this work would be paid off through revenues. The Asset Value Index was developed to compare the full 40-year life-cycle costs to the revenues attributable to a given road corridor or section. The shorthand version calculates how much gasoline is consumed on a roadway and how much gas tax revenue that generates.

The Asset Value Index is the ratio of the total expected revenues divided by the total expected costs. If the ratio is 0.60, the road will produce revenues to meet 60 percent of its costs; it would be “paid for” only if the ratio were 1.00, when the revenues met 100 percent of costs. Another way of describing this is to do a “tax gap” analysis, which shows how much the state fuel tax would have to be on that given corridor for the ratio for revenues to match costs.

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.

Update: One more for the non-wonks:

Your reader claims that "highways are a real public good, as your bus story showed." This is a common claim, but totally false. Roads are not public goods. A public good is both non-rival and non-excludable. Non-rival means that one person's use does not come at the expense of another person's use. Anyone who's ever driven during rush hour can tell you that roads are definitely not non-rival goods. Non-excludable means that people can't be prevented from using it. This is clearly not true of roads, as the existence of toll roads and toll highways can attest.

It's more accurate to say that highways are publicly provided goods.

Wiki examples of public goods:

defense and law enforcement (including the system of property rights), public fireworks, lighthouses, clean air and other environmental goods, and information goods, such as software development, authorship, and invention.