The Oregonian‘s four-part story about Oregon’s slowly collapsing highway bridges points to a fundamental problem: we raise lots of revenue through transportation taxes, but there is no requirement that those funds be spent on maintenance.
Between 1986 and 1999, revenues collected from state gas taxes and truck weight-mile taxes increased 156 percent, federal gas tax revenues spent in Oregon increased 73 percent, while inflation rose only 57 percent. With this increase in revenue proper maintenance should have been a priority, but it wasn’t. The problem is the lack of property rights to bridges. Because no one actually owns them, there are poor incentives for maintaining them.
The quickest solution is to create property rights by commercializing the highway system. Oregon could allow private firms to own or operate large portions of the system. The operators will have high incentives to maintain them properly and the financial means to do so through the electronic collection of user fees, or tolls. We could then abolish the twenty-four cent per gallon state gas tax so motorists only pay for services once.
Commercialization is already happening elsewhere. Highway 407 Express Toll Route in Toronto was sold several years ago for approximately $2 billion U.S. dollars. Private companies have recently built new toll roads in California, Texas and Florida.
Consumers benefit twice through commercialization: first when private investors purchase the facility, bringing much-needed revenue into the system, and again when toll revenue is re-invested to ensure that those facilities are properly maintained.
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