Friday, February 24th, 2012
Harvard economist Ed Glaeser wrote a Bloomberg column with his prescription for US transportation. Among his recommendations is to de-federalize transportation spending, saying:
Most forms of transport infrastructure overwhelmingly serve the residents of a single state. Yet the federal government has played an outsized role in funding transportation for 50 years. Whenever the person paying isn’t the person who benefits, there will always be a push for more largesse and little check on spending efficiency. Would Detroit’s People Mover have ever been built if the people of Detroit had to pay for it? We should move toward a system in which states and localities take more responsibility for the infrastructure that serves their citizens.
Yonah Freemark responded to this and others commentators voicing similar views on his blog. He has a contrary take:
The argument goes something like this: The federal government, because of its national power and ability to collect revenues from the fuel taxes it administers, is a wasteful spender and it chooses to invest in projects that are inappropriate enough that they wouldn’t be financed by local governments if they were in charge.
Here’s the thing: The large majority of decisions on transportation spending with federal dollars is already made at the state and local levels. And state and local governments already contribute huge sums to the operation, maintenance, and expansion of their transportation programs.
I’d like to examine one aspect of this, namely the idea of whether or not devolving transportation spending to the state level would reduce wasteful spending on boondoggles. I see no reason to believe that it would.
We see one example of this in Indiana. Indiana leased its Toll Road for $3.9 billion to financing a highway construction program called Major Moves. While this has made use of federal dollars, a huge pot of locally raised funds in the form of this lease was put to work.
So how did the state spend the money? When Gov. Daniels took office, he blew the whistle on the past practice of the state transport department to promise projects that had no chance of being delivered because the state didn’t have the money. The result was the toll road lease that would actually pay for most of the projects the state had on the books.
Here’s the interesting thing, though: despite an extensive project prioritization process, INDOT and Daniels didn’t cancel any major project that was sitting in INDOT’s list. I-69? Check. US 231? Check. Ohio River Bridges? Check. Hoosier Heartland Corridor? Check. US 31 upgrades? Check. I-465 widenings? Check.
I’m not going to claim these are all boondoggles or pick on any particular project. But I do find it interesting that not one big project was judged not worth doing. (There was an outer beltway proposal for Indianapolis that Daniels withdrew, but this wasn’t a pre-existing project. It was effectively a trial balloon Daniels proposed and then withdrew after some local opposition). Is there really nothing on INDOT’s list that should have just plain bitten the dust? I find this particularly remarkable in light of Daniels fiscal conservatism bona fides. He’s a genuine lean government guy, not just a talker.
This leads me to my general view on proposed highway projects: There is no highway boondoggle big enough that even the most fiscally conservative governor is willing to kill it on cost efficiency grounds.
I’m not aware of any highway example analogous to Gov. Chris Christie’s ARC transit tunnel cancellation. I’ve heard of projects collapsing because of public opposition. But never because a governor simply judged it was too financially imprudent, as Christie did with the ARC tunnel.
Given that most states seems to suffer from the same problem as the federal government – namely that they are collections of disparate regions that have a huge incentive to try to maximize their take from the overall spending pie – it seems unlikely that by devolving to the state level we would make any material dent in boondoggle spending. Maybe the worst of the worst – say the notorious “Bridge to Nowhere” in Alaska – may die, but those would be exceptions.
If we devolved to the local/regional level, things might be better. But unfortunately localities do not have the legal powers necessary to take are of their own business in most cases, and states seem very unlikely to give it to them. Also, localities do pay for things like stadiums and convention centers mostly out of their own pocket. We all knows these type of investments have been judged poor by virtually every independent academic study. Glaeser himself has criticized them. So even devolving to the local level probably wouldn’t solve anything.
There may be good reasons for devolving transport funding from the federal to the state or local level, but eliminating boondoggles isn’t one of them.