Don't upgrade the nation's decaying transportation system by boosting gas taxes, but charge drivers directly for using specific roads at specific times -- and use that money to fix those roads. That would not only help reduce traffic jams and be fairer to consumers, but also avoid political decisions in distributing tax revenues, testified Cornell's Rick Geddes before a congressional committee Jan. 15.
Geddes, associate professor of policy analysis and management in the College of Human Ecology, is part of the 12-member National Surface Transportation Policy and Revenue Study Commission, which released its report Jan. 15. The commission called for boosting federal gasoline taxes by as much as 40 cents a gallon over five years to help upgrade the nation's aging and increasingly congested transportation system.
Geddes was one of three members, however, who issued dissenting opinions.
Rather than raise revenue through taxes, Geddes testified before the U.S. House of Representatives' Committee on Transportation and Infrastructure, "The policy approach I recommend instead places increased reliance on market forces to allocate resources to where they are most needed." He suggested that existing technologies be used to charge users directly for their road use, without costly delays at tolls. "As most economists recognize, the ability to charge users directly for their use of a good or service is a critical precursor to fundamental policy change."
Geddes, who served as a senior staff economist in the Bush administration on the President's Council of Economic Advisers, is the only academic on the commission.
"The direct pricing of road services allows customers to face the full, true cost of using a particular road. ... When consumers face that cost, they will take it into account in their decisions about when and how to use the road," he said.
Instead of using political mechanisms to tax and redistribute funds, Geddes also calls for allowing the money raised to be managed by the private sector. "Indeed, billions of dollars in private capital stands ready to fund U.S. infrastructure now," he said in his testimony.
"The recommendations in the majority report would place additional restrictions on the use of private capital in the funding of U.S. transportation infrastructure," Geddes concluded. "There is no policy justification for such restrictions, and they should not be adopted. Rather, all possible steps should be taken to encourage private investment in our nation's infrastructure."
The commission was formed by Congress in 2005 to study the future needs of the nation's surface transportation system, which includes roads, mass-transit systems, ports and rail lines -- as well to recommend funding options.