Last year I gave a workshop in Fayetteville, Arkansas, after which I had a private meeting with a number of the area’s mayors and other dignitaries. During the meeting – which was mostly about local policy – one of the mayors told the group a really depressing story.
It seems that officials in his city, in an effort to be responsible public stewards, put together a 20 year transportation plan detailing all of the projects that they felt needed to be done. They took this list to taxpayers and, in some sort of binding referendum process, got it approved. For the next two decades, they should have the money – as well as the responsibility – to build a bunch of stroads, interchanges and new lanes, stuff that – after our three hour workshop – looked really, really undesirable.
Be careful what you wish for.
I finished my undergraduate work 20 years ago in 1995. At that point, the internet was so new that I had a book which listed website addresses. It was almost two inches thick and it simply split up websites into topics and then listed each URL. Essentially, I owned a static book that did what Yahoo!, which incorporated that year, would soon be doing somewhat dynamically online. Sound ridiculous? If so, you could just Ask Jeeves, although even he would not have predicted what was coming for technology.
We accept that there is a big difference between the pace of change in technology and infrastructure. Yet, while we are accustomed to rapid change in technology – no thoughtful person would commit today to purchasing a new iPhone every other year for the next two decades – we also seem to accept no change – ZERO – when it comes to infrastructure. When considering roads and bridges, sidewalks and transit systems, there is a general consensus among policymakers and advocates that the only responsible approach is one that commits today to massive investments decades from now.
With the size of the investments needed, there really isn’t another way, Chuck.
The $11 billion question that no one can answer.
Back in 2009, the Minnesota Department of Transportation released a 20-year transportation plan that revealed a $50 billion revenue shortfall. For some context, revenue projections at the time were just $15 billion while the needed improvements were projected to cost $65 billion. As I said at the time, $50 billion is an insanely large amount of money.
In fact, it was so insane that it couldn’t be sold politically. Thus a MnDOT Transportation Advisory Committee was established that – by some mathematical alchemy – was able to whittle that number down to $21 billion by abandoning hopes for a “world class” transportation system and moving to what they described as “Increment added to baseline to maintain current performance for the next 20 years.”
Considering that this still more than doubles our current projected spending means we’re still talking about an insanely large amount of money. This is probably why:
[Minnesota Governor Mark] Dayton lopped the number in half for his proposal, but even that was tough for some to swallow.
So is $10.5 billion the magic number?
Of course not. Nobody knows what the number is. And nobody can know. Construction costs have consistently increased faster than inflation, a trend that can’t continue indefinitely. Two of the largest factors impacting cost – the cost of transportation and the cost of asphalt cement – are derivations of an oil price that has done this over the last 20 years.
How can we make a projection spanning multiple decades with that kind of volatility? We can’t with any type of rigor or honesty.
And that’s on the cost side. What about projecting the demand side? Every assumption of every DOT is that traffic growth will continue, despite a decade-long trend the other direction. And even if you believe this is a recession-related anomaly (note: the recession ended 5+ years ago), you must also believe that enough Millenials and affluent immigrants are going to suddenly become interested in suburban housing to backfill all of the excess capacity we have from downsizing baby boomers.
Our transportation officials want us to place massive – insanely massive – bets on the future based solely on their ability to look backwards.
Looking into the unknown
Pause here and consider yourself seeking a job that paid a decent wage so you could live a good life. You are targeting $65,000, which is your estimate of the cost of a good life. When you get into the job market, you have to adjust to the reality that you’re probably only going to make $36,000. That’s a substantial adjustment, but you continue on only to discover that, in the end, the number will be closer to $27,000. At what point do you deeply question your underlying assumptions about what a “good life” entails?
Maybe there are other ways to achieve a good life that you’re not considering.
We’re locked into a transportation system that requires us to lie to ourselves about what we can know about the future and then spend huge amounts to support that lie. When we underestimate our needs, it confirms our bias for building more. When we overestimate, we can explain it away – if we are ever asked to, which we hardly ever are – by citing factors beyond our control (oil price, recession, fickle humans, etc…). This is a dumb system.
And it’s not just Minnesota. In fact, we’re not even close to dysfunctional when compared to the insane asylum that is America’s state DOTs. Here’s what’s going on in New Jersey, where they are having a similar conversation about increasing transportation taxes to provide a “stable” funding source:
Many believe raising the state’s 14.5-cent gas tax, the current source of revenue for the trust fund, is the likeliest solution going forward. And Christie, a Republican, has yet to rule that out as an option.
New Jersey’s gas tax hasn’t been increased in more than two decades, and it is the second-lowest in the nation. With no increase, beginning July 1, all of the revenue raised from the gas tax will go to paying off only the fund’s debt.
That’s right; instead of dealing with their funding problems years ago, they borrowed themselves into oblivion to the point where ALL OF THE REVENUE from their current gas tax is committed to paying debt on past projects. Game. Set. Match. There is no gas tax increase that fixes that mess.
Committing to spending billions on our current approach to transportation is not courageous; it is cowardly. It will take far more courage to stand up, admit that we don’t know what we’re doing – that we’ve actually had it wrong for some time – and chart a new course, one that uses real data and feedback (not politics) to discern spending priorities.
If you’re interested in what a new course would look like, I’ve outlined my plan in my Kindle book, A World Class Transportation System. In the meantime, whenever you’re given a number for how much needs to be spent on transportation in the coming decades, understand you are being lied to, albeit perhaps unintentionally by people who are lying to themselves.