Richard Bose is a Strong Towns member from St. Louis, MO, who blogs at NextSTL. This post was originally published on NextSTL and is reprinted here with permission. It has been lightly edited for style and to be suitable for a national audience.
In this post, Bose argues for a “No” vote on a Missouri ballot measure which would increase the state’s gasoline tax by 2.5 cents a year over four consecutive years, leading to a total increase of 10 cents. Opposing this measure might seem counterintuitive to many of our readers. After all, we have argued that implicit subsidies for driving—one of which is a failure to tax drivers enough to cover the social costs they incur—are a central reason for insolvent development patterns. Why not make drivers pay more?
Bose’s response is one that won’t be unfamiliar to Strong Towns readers: because this ballot measure is a band-aid that only allows Missouri to put off reckoning with the out-of-control infrastructure binge it (like every state) has been on for decades. Our founder and president, Charles Marohn, has said much the same. The way we finance infrastructure and select projects to build is fundamentally broken, and there’s a very real risk that pumping more money into a broken system without corresponding reforms will just lead us to spend ourselves further and further into insolvency, by building ever more pavement that doesn’t generate real economic returns.
Read Bose’s argument here and tell us what you think in the comments. If you’re not in Missouri, is your state facing something similar, or has it in the past?
More money to perpetuate a broken system is why I urge you to vote no on Prop D. More funding without reform will continue the damage our transportation policies and spending have done to our communities big and small.
Prop D would increase the fuel tax by 2.5 cents a year for four years, totaling 10 cents. Per the Missouri Constitution, the revenue raised by the fuel tax may only be spent on the costs of collecting the tax, the Missouri State Highway Patrol, and roads and bridges. It also creates the Emergency State Freight Bottleneck Fund. More details at Ballotpedia.
I’ll concede this is better than the rejected 0.75% sales tax proposed in 2014. It made no sense that someone buying a pair of shoes should pay for roads while someone driving across the state wouldn’t pay any more. A fuel tax increase will also capture revenue from non-Missouri residents buying fuel in the state.
It’s also better than issuing debt. Debt service on road bonds cost $280M in 2016. Instead of raising the fuel tax in the past, we taxed the future by issuing bonds last decade. Paying it back plus interest and fees is crowding out current spending.
And it’s better than shifting general revenue or other accounting gimmicks, which the Federal government is doing instead of raising its fuel tax (unchanged since 1993). Another concern is what the Missouri Legislature might do if this fails. They could shift general revenue to roads or cut tax credit programs (some of which, like the Historic Tax Credits, lessen the pressure to build more infrastructure), or who knows.
This proposition contains no reforms to mitigate the damage our current approach does, nor does it avoid returning to the same state we find ourselves in now. We’ve seen how the system has spread out our communities, undermining already built places, depressing property values, driving up costs both to the public and private sectors.
Necessitating more driving and rendering less and less practical other cheaper options has crowded out spending on other household needs. We’ve made ourselves house poor as a community, wherein the cost to maintain more and more infrastructure per household prevents us from doing other things. Even worse, much of the wealth spent on fuel, vehicles, etc. leaves towns, regions, and the state. Our current system has encouraged, even mandated one mode of transportation and more vehicle miles traveled to lead one’s life.
No Accounting for Inflation
The last time the state fuel tax was raised in 1996, indexing the tax to account for inflation wasn’t included. Over time, that 17 cents has been eroded. Raising it to 27 cents doesn’t even make up for inflation to 2018 dollars ($17 in 1996 is $27.80 today) let alone when fully implemented in 2022. And that inflation rate is just the Consumer Price Index. The construction price index is up 109% from 1993–2017, versus 68% for the consumer price index. Proposition D doesn’t include accounting for inflation either, so it will be eroded over time again. While drivers have enjoyed fuel tax cuts over the years via inflation, St. Louis transit riders have not.
Antiquated Local Allocation Formula
Per state statute, 30% of the revenue from fuel taxes goes to counties and cities, 15% to each. Does the allocation make sense today? Should need or return on investment be considered? Do the restrictions on the money make sense today? The city allocation is based on population, and the county allocation is based on miles of county roads and land valuation outside of incorporated areas. Here is a list of the predicted allocation courtesy of safermo.com, the main proponent of the proposition. For cities it amounts to $15.73 per resident per year when fully implemented. Note the disconnect: a city that sees more than average use from nonresidents is shortchanged. A county with lots of residents in unincorporated areas is shortchanged. St. Louis County has over 320,000 residents in unincorporated areas. That’s over $5M missed out on under this tax increase (and $8.5M under the current tax).
Build, Build, Build
If you view this tax increase as making government bigger, the government was already made bigger by the road building—now the bill is coming due. Since the last fuel tax increase in 1996, Missouri has added 6,200 lane miles to the state system. Absent strong feedback mechanisms and a priority placed on return on investment, we’ve built more and more. I understand the morality of providing access and not cutting people off from the outside world, but building 4-lane roads and luxury features like flyovers without considering whether the economic activity they enable can pay for them is beyond meeting that basic principle. We’ve added liabilities and under-prioritized maintenance, digging the hole bigger. Perhaps, given the magnitude of the maintenance backlog, the vast majority of funding will go to maintenance, but I’m skeptical given that even in these tight times, MoDOT has undertaken expansion projects like a flyover at MO-141 and I-44 and an additional lane on I-64 in west St. Louis County. Prop D makes no provision to raise the bar whether or not a new or expanded road project happens.
Proponents like the Governor cite that Missouri has the 7th largest state road system in the country as justification for more funding. It begs the question: Why do we have the 7th largest system? [Editor: For context, it should be noted that Missouri is only the 18th most populous state.] Does it make sense today? Perhaps some roads should be shrunk or degraded considering how little they’re used and how little economic activity they enable. Maybe some or all of the minor roads should be bequeathed to counties to tax, spend, and maintain (or not) as they see fit. The state could be a partner in that, providing expertise and (small %) matching funding. But with the locality more on the hook, maybe that luxury flyover doesn’t make as much sense considering the local capacity to build and maintain over the long-term.
No Accounting for Long-term Liabilities
The predictable maintenance and replacement costs of our road system weren’t planned for. It’s analogous to a pension system where nothing has been saved yet promises have been made. We’re aware of how daunting our underfunded pension systems are. Our infrastructure promises (not just roads and bridges) are of the same magnitude and should garner commensurate concern. Imagine if money had been set aside over the years in an endowment to cover those predictable costs. If this had been done in the past we’d be in better financial shape today, though it would have meant building less or taxing more. Neither of those is desirable, but both are more responsible than leveraging the asset today while kicking the can on the liability to the future. I-70 needs to be rebuilt? No problem: the endowment has been built up (plus investment earnings) over the years to cover it.
Weak Feedback Mechanisms
Weak feedback mechanisms have led to our over-built and over-used system. Our roads are under-priced; thus, they are used more than they otherwise would be. We build more; it induces more demand; repeat. The fuel tax helps, though fuel economy doesn’t scale with vehicle weight, which functions as a subsidy for heavy vehicles. An 80,000 pound vehicle might consume 5 times the fuel per mile as a 4,000 pound one, but it does hundreds of times the damage. In either case, if the prices paid don’t cover the costs, that’s insolvency. Tolls would provide more direct feedback. The idea has come up in the effort to rebuild I-70.
Entitlement Program or Platform for Economic Activity
Some of both, of course. A good road moves people and goods between productive places. A good street is a platform for building wealth for adjacent land uses. When designed well, they both provide great returns. Where we get into trouble is trying to do both. The in-between, the stroad, fails at both. With a stroad, adjacent land uses aren’t productive enough to cover the costs of the infrastructure serving it due to lots of land needed to provide enough off street parking for the near 100% of patrons who arrive by car. The spreading-out makes our communities more fragile, more house-poor. Moving a lot of people and goods is stymied by too many points of conflict and intersections. These environments are unsafe to boot. MoDOT built and maintains a lot of the stroads in communities across the state.
As I said above, the value of providing access to people is important to the vast majority of Missourians. On the other hand, we’ve fostered with much government action the expectation that longer and longer trip distances within places should come with no consequence, even though driving further to the same (in the sense of economic activity) jobs, shopping, entertainment, etc. comes at a high price—economic, physical and mental health, environmental, etc.—for everyone. The cost to build and maintain the infrastructure to enable all this extra travel, and the wealth leaving communities and even the state, are drags on the state and local economy.
Despite those negatives, enabling long local trips (by car) is a concern for the state of Missouri. Many are now dependent on it because our land use and transportation infrastructure choices leave no other practical options.
Opposition to the idea of users paying for more of their transportation costs is understandable where there are no substitutes available or scaling back gasoline use is impractical. A tight household budget, already strained by the costs of spread-out development patterns, can’t handle it. It’s like the sticker shock that comes when we propose tolling that actually pays for the road or bridge.
But the closer we can get to charging based on miles driven and the weight of the vehicle the better. With more accurate pricing and the feedback it provides, we’ll see more efficient use, less congestion, roads that last longer, and fewer lane-miles “needed.”
The Poison Pill
There’s a poison pill in Prop D. The Emergency State Freight Bottleneck Fund would be a mechanism to shift general revenue to pay for road and bridge building, thus further mis-pricing their use. Projects must meet all of the following conditions:
The project is a road improvement project with an estimated construction cost of at least $50M.
The project is required to alleviate a delay of 20 minutes or more during peak traffic hours that impacts freight and the distribution of goods.
The project is required to reduce serious motor vehicle crashes causing fatalities or disabilities.
The project is featured on the 2014 state freight plan. (Project List in Appendix G Page 401)
The project is set to receive 35% of funds from sources besides the state road fund and general fund revenue.
It’s tough to tell which projects would met all those criteria, but there’s certainly plenty above $50M in the 2014 Freight Plan list, including billions to rebuild I-70 and I-44.
It’s Not Enough
When fully implemented, the Prop D tax increase ($288M for the road fund) doesn’t cover the needs identified by the 21st Century Missouri Transportation System Task Force of $825M annually (Report). Whether that amount is truly needed is debatable of course (I doubt shrinking any part of the system was considered, nor changes to land use policy so we get more out of what we have already built), but given the wide margin made wider by inflation, this is quite inadequate. The federal matching funds may make up some of the gap, though the federal gas tax situation isn’t any better. A bigger tax increase would probably be less likely to pass, so if Prop D passes we’ll be paying some more but not enough more. With or without Prop D, in the absence of reform, the disconnect between what we’re paying and our expectations will continue.
About the Author
A nextSTL contributor since 2011, Richard Bose is an Electrical Engineer by profession. He earned a BA in Physics and Economics and an MSEE from Washington University in St. Louis. Richard is a transplant from Central Illinois and has called St. Louis home since 1998. He can be found on Twitter @Stlunite and contacted at email@example.com.