Paying to Go

This is not a post about being polite and making a purchase when you take advantage of a convenience store's restroom. It's about paying for the roads we commute on, and this post will barely scratch the surface.

There are two popular patterns for funding highways. The argument for building and maintaining them out of general taxes and gasoline taxes is that the benefits are general; and to the extent that road costs are incurred without general benefit, a tax on fuel restores the balance. The arguments for toll roads are a little more complicated: one idea is that roads should be paid for directly by those who derive immediate gain; another is that costs can be reduced by financing construction based on future direct cash revenue rather than on the public credit.

These patterns are not opposites. In fact, they are very close to the same thing. Each assumes the economic value of road construction, an assumption more than borne out by the experience of the last 60 years. Both recognize the long-term benefits of road investment, so that costs are amortized over 30, 40, even 50 years.

There is one important distinction obvious to most of us every day: The public road philosophy is, at least insofar as general taxes, is "whether or not you pay, you go." The toll road mantra is "pay or don't go." We feel that distinction to a degree that exceeds its practical importance. A consequence of the first is that a slacker will take advantage. A consequence of the second is that a larger public gain will be lost because someone can't afford a 50-cent toll. Probably neither consequence is significant.

That's not to say there are not long-term effects of how we fund (or perhaps do not fund) roads. I'll talk about some of those effects in future posts.