Road Infrastructure 101, part two – Who pays

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Bill’s latest post highlights the nature of educated and well-meaning folks’ lack of real data to back up certain opinions when it comes to transportation networks, costs, and funding. In my previous entry, I bored everyone to death (including myself) by rattling off a bunch of road statistics, from lane miles to VMT by vehicle type. The main takeaways for me were: 1) the majority of pavement in the ground is local streets and roads, and 2) individual users make up the vast majority of statewide road use. Keep these in mind as we explore the current funding mechanisms for MnDOT and cities across the Land of 11,842 Lakes.

This article is reposted from TCDP media partner Streets.MN. Check out the links below for other recent Streets.MN stories:

I’ll admit, digging into this information is no small feat, and on the surface it would seem MnDOT basically covers its expenses with user fees. Glancing at the MnDOT budget overview, direct user fees (page 17) were pretty close to non-multi-modal expenditures (page 12) in 2012. But MnDOT isn’t the only one paying to build, maintain, operate, and police them – about 50% of our pavement is wholly controlled by local municipalities.

I had to go back to 2010 find detailed data from all government levels to make a fair comparison. Local highway expenditures and revenue sources are reported each year and include all municipal street and road costs (according to the instructions provided by the FHWA), broken down by city, county, and township. This gives us insight to how much is spent on roads from property taxes, general fund appropriations, local debt, and much more. A detailed look at MnDOT’s 2010 revenue and expenses can be found here[pdf].

I’ll spare readers the task of looking at numbers and tables (if you want my data to peer review, let me know in the comments!). When you boil out the total MN road spending by revenue source and split them by user-paid/subsidized, you get:

Only one pie chart this time, sorry folks.

Blue shaded areas represent user fees, while red/orange come from other sources. Here’s the only number that matters: 46.5%. 46.5% of all MN street and road spending is covered by user fees.

But wait! As Bill’s relatives point out, transit (and other modes) are stealing road user fees to pay for their operation and construction! This is… partially true – as of 2012, 40% of the MN motor vehicle sales tax[pdf] (MVST) is taken out to support statewide transit systems (the vast majority goes to Metro Transit), and roughly 24% (2011) of the federal gas tax went to support multi-modal system distribution. Many just stop the line of reasoning there and assume it explains the shortfall. In reality, if that money was redirected back to highway spending, user fees bump up marginally, only covering 51.1% of the total system costs (again, 2010 only). [For reference, annualizing Blue Line construction costs over 30 years and adding it to 2012 operations costs yields just over 14% in farebox recovery for our single LRT line]

Of course, this is only direct costs of roads. It’s not difficult to identify costs associated with our transportation network outside building, patching, plowing, and lighting:

Indirect Costs

Opportunity Costs

  • Taxable land value under highways and streets
  • Value of transportation spending to other government functions or deficit/debt reduction
  • Value of energy used for transportation to other economy-wide functions

External Costs

  • Environmental and municipal costs of rain and snow runoff from streets
  • Social cost of carbon (CO2) [if you believe in a ~$45 per metric ton CO2 as I do, MN drivers cost society roughly $967 million just in tailpipe emissions, to say nothing of the CO2 emitted in oil production, concrete/pavement production, etc]
  • Non-CO2 GHG emission social costs
  • Traffic noise (impacting both property values and mental health of nearby residents)
  • Congestion – in this I personally only include congestion incurred by freight and other businesses where time lost actually impacts cost or revenue structures

Deaths/Injuries

  • 395 killed, 29,314 injured on MN roads in 2012[pdf]
  • Early deaths due to vehicle emissions – estimated at 55,000 2005 nationwide

These numbers are very difficult to quantify (and I have a difficult time with monetary costs of death and injury), especially at a city or state level, and will therefore have much higher uncertainty. I am confident, however, that these values are non-zero and significant enough to alter how we view different modes of transportation, their costs, and who currently pays for them.

Of course, trains, buses, bikes, and even walking all have some level of external costs. Trains run on electricity (mostly), buses burn diesel, bikes require paved trails and lanes, feet require sidewalks. People die on trains, cyclists have sometimes injured pedestrians, and all modes take up varying amount of build-able land while emitting noise and vibration. Our challenge is to pragmatically and holistically evaluate these costs when deciding what investments in transportation (and associated land-uses) we make – something I’ll try to (briefly) lay out in the final post.

This post is the second in a three part series on MN road infrastructure, use, and funding. Part I can be read here, check back for the finale over the next week.