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Saturday, April 16, 2011

Some Facts About Infrastructure

“If you put the federal government in charge of the Sahara Desert, in 5 years there'd be a shortage of sand.” — Milton Friedman

This morning, while watching a panel of economic “experts” on Fox News talking about Obama’s proposed spending and the current cost of gasoline, the subject of debate turned to infrastructure investment. Most of the panel members had a fair understanding of how infrastructure — specifically transportation — sending works.

But, as usual to be “fair and balanced” there was an arrogant, bone-headed liberal “Democratic strategist” on the panel who did not know the median from the shoulder. She continually spouted out her ignorance over the comments of other panel members by saying she believed a higher federal gasoline tax would be good for the economy as it would rebuild our roads and bridges along with creating jobs.

She was mouthing Obama’s usual talking points about infrastructure creating jobs — just like the Stimulus package did not do. This pinhead liberal thought that by the federal government collecting a higher tax on a gallon of gasoline the economy would grow and our transportation infrastructure would be refurbished. Of course when she was challenged she immediately became sultry and blurted out “why are you constantly picking on President Obama”

As a former highway engineer for the California Division of Highways (now Caltrans) I know something about how highways and bridges are built and funded. First of all to all of you liberal knuckleheads infrastructure projects are not designed and funded to create jobs. They are built to provide a value to the public, the people who are paying for them, i.e. the bridge to nowhere. This is one of the reason many bridges and highways are toll roads, the user pays. If the financial analysis of the project deems there will not be enough users over a certain period to pay off the cost of the bonds the project will not go forward. No pay, no build.

As for creating jobs I know of no engineer who would design a project for the purpose of creating a job, even for himself. If this were the case we would still be building roads with mules and wheelbarrows rather than D-8s, belly dumps and slipform pavers. When infrastructure projects or buildings are built the engineer or architect designs the project based on the use of the latest construction techniques and labor saving technology. They don’t design based on how many jobs will be created by the project. If they could design it so one or two people could build they would do so. Labor is the largest cost factor of any infrastructure project.

Now let’s take a look at why and how transportation and other infrastructure projects are paid for and why the federal government is does not directly (and should not) build roads and bridges, except on federal land or Indian reservations. For the sake brevity I will not go back to the Roman’s Appian Way, The National Pike, the Lincoln Highway (our first transcontinental highway) or Route 66. I have already written a photographic essay of Route 66 that is available in 17 parts on line by clicking here. As for the Lincoln Highway I will be writing publishing a photographic essay of this great national road in November. One last note on the National Pike: The fist sections were pioneered and surveyed by none other than George Washington. Those were the days when a surveyor and general (both jobs requiring leadership) could become President, rather than fast talking community organizers.

Until the end of the Second World War most roads and bridges were financed and built by the states. There were exceptions as stated above for projects on federal lands, i.e. national parks and Indian reservations. During the Great Depression the CCC (a topic for another essay) built some roads as a part of a make work program with the most notable being the Blue Ridge Parkway (one of the most beautiful drives in this great county) through the Appalachian Mountains.

After the WWII our nation was turning to rubber tires. Auto production was increasing on a yearly basis and trucks were slowly replacing rail as he preferred method of shipment. Does anyone remember Dinah Shores theme song, “See the USA in you Chevrolet”, well I do and it inspired all of us to get out there and see our great nation. In fact my first new car was 1954 Chevy Bel Air — but that’s a tale for another time.

In 1937 our first modern dual carriage divided highway, the PennsylvaniaPennsylvania_Turnpike_1942_LOC Turnpike wad started. The “Tunnel Highway” as it was called because of the many tunnels along the route was and still is a toll road operated by the Pennsylvania Turnpike Commission (PTC) and its original length of 359 miles connected New Jersey with Ohio in one continuous ribbon of concrete with no traffic lights, stop signs of intersection crossing. The super highway was molded after the German Autobahns constructed by the NAZIs in the 1930s. Due to WWII no further super highways were built due to the shortage of construction engineers, concrete and steel. This soon changed after the war ended.

When Dwight Eisenhower was a young Army Lt. Coronel he was a participant in the U.S. Army's first Transcontinental Motor Convoy across the United States on the historic Lincoln Highway, which was the first road across America. The highly publicized 1919 convoy was intended, in part, to dramatize the need for better main highways and continued federal aid. The convoy left the Ellipse south of the White House in Washington D.C. on July 7, 1919, and headed for Gettysburg, Pennsylvania. From there, it followed the Lincoln Highway to San Francisco. Bridges cracked and were rebuilt, vehicles became stuck in mud, and equipment broke, but the convoy was greeted warmly by communities across the country. The convoy reached San Francisco on September 6, 1919.

Dwight D. Eisenhower's experience as a member of the first 1919 Transcontinental Convoy on the Lincoln Highway and his appreciation for the German Autobahn system he gained during World War II led him to initiate support for the Federal Aid Highway Act of 1956 and the establishment of the Interstate Highway System.

The Federal-Aid Highway Act of 1956, popularly known as the National Interstate and Defense Highways Act (Public Law 84-627), was enacted on June 29, 1956, when Dwight D. Eisenhower signed the bill into law. With an original authorization of 25 billion dollars for the construction of 41,000 miles (66,000 km) of the Interstate Highway System supposedly over a 20-year period, it was the largest public works project in American history through that time.

The money for the Interstate Highway and Defense Highways was handled in a Highway Trust Fund that paid for 90 percent of highway construction costs with the states required to pay the remaining 10 percent. It was expected that the money would be generated through new taxes on fuel, automobiles, trucks, and tires. As a matter of practice, the Federal portion of the cost of the Interstate Highway System has been paid for by taxes on gasoline and diesel fuel.

Eisenhower argued for the highways for the purpose of national defense. In the event of an ground invasion by a foreign power, the U.S. Army would need good highways to be able to transport troops across the country efficiently. Following completion of the highways the cross-country journey 600px-I-5.svgthat took the convoy two months in 1919 was cut down to two weeks. For this reason all Interstate Highways were built to a strict set of federal standards developed by the Bureau of Public Roads and the American Association of State Highway and Transportation Officials (AASHTO) Bridge clearances were set to a minimum of 16 feet to allow for military vehicles to pass freely. A note of interest is that the copyright and trade mark for common interstate highway shield is held by AASHTO.

In some states these standards were exceeded, but never reduced if federal funding was to be gained. I know this because I assisted in the design, surveying and construction two sections of Interstates in California (I-10 and I 405) during my tenure with the California Division of Highways. I can still remember the signs at the beginning and end of each project stating that the project was funded with 90% federal funding.

During the debate prior to passing the Federal Aid Highway Act the main argument against the passage of the Act was the lack of any means of funding the proposed $25 billion dollars Eisenhower had requested of Congress. You see in those days Congress used to worry over where the money would come from before they appropriated it. It was not until Rep. Hale Boggs (D-LA) Acting on a suggestion by Secretary of Treasury George Humphrey, included a provision that credited a revenue from highway user taxes to a Highway Trust Fund to be used for the highway program. The final bill cleared the House by a vote of 38-19 and the Senate by 89-1. Over the years this trust fund has been raped by various administrations beginning with Lyndon Johnson to finance his Vietnam War.

Biographer Stephen E. Ambrose (of Band of Brothers Fame) stated, "Of all his domestic programs, Eisenhower's favorite by far was the Interstate System." Eisenhower's 1963 memoir, Mandate for Change 1953-1956, explained why: “More than any single action by the government since the end of the war, this one would change the face of America. Its impact on the American economy — the jobs it would produce in manufacturing and construction, the rural areas it would open up — was beyond calculation. Ike was right on target with this one.

The next 50 years would be filled with unexpected engineering challenges, unanticipated controversies, and unforeseen funding difficulties. Nevertheless, the president's view would prove correct. The interstate system, and the Federal-State partnership that built it, changed the face of America.

As a rational conservative I can find no fault with the Interstate Highway Act. One of the enumerated powers stated in Section I, Article 8 of the Constitution give Congress the power to; establish post offices and post roads. The Constitutionality of the Federal Aid Highway Act of 1956 was never in question, only the means of its funding was and that was solved by the establishment of the Highway Trust Fund, which was to be financed from a national tax of gasoline and diesel fuel or $03.00 per gallon. In essence the user pays. Even a hard core Libertarian has to see this as Constitutional.

As stated above over the years Congress has played games with the Highway Trust Fund as have states with similar trust funds by tapping the HTF to balance the budget and outing he money in the general fund. As an example California was a major offender in this until the passage of a few propositions that mandated that no more could the legislature rob the HTF for social programs.

The detractors of the Interstate system argue that “A significant side effect of the Interstate Highway Act was the direct subsidization of the suburban highway system, making commutes between urban centers to suburbs much quicker, furthering the flight of citizens and businesses and divestment from inner cities, and compounding vehicle pollution and excessive petroleum use problems. Growth of the suburbs has also led to a continual cycle of widening these highways, digging them up to be completely rebuilt, and then widening them again — a continual "money pit" for tax funds, with the widenings and re-buildings costing far more than the original highways did.”

“The bypass or loop routes of the Interstate Highway System have become unintended, but nearly universal, conduits for both residential and business growth in the suburbs. Besides many widenings and rebuildings, for some cities, there have been requirements for very costly new bypasses and loops outside of the original ones. This fact of urban growth around the bypasses has been particularly salient in these metropolitan areas: Atlanta, Baltimore, Boston, Chicago, Cincinnati, Cleveland, Dallas, Denver, Fort Worth, Houston, Indianapolis, Jacksonville, Kansas City, Los Angeles, Memphis, Minneapolis — St. Paul, Nashville, Portland, Richmond, Salt Lake City, San Antonio, San Diego, San Francisco, Seattle, St. Louis, Tampa, and Washington, D.C.”

In my view this is environmentalist poppycock. Yes, the construction of the Interstate system allowed Americans freer access to their nation and to make more choices as to where they wanted to live. At one time in California during the construction of the interstates the housing developers wouldHW-100308-D010 follow right behind the bulldozers and the slipform pavers. This is Orange County, along with many other communities in our nation came to be, communities that were safe and added trillions to our economy. I guess the myopic environmentalists wanted us to live in 100 story apartments stacked in the inner city like the Japanese or the Europeans. I guess the progressives figure it would be easier to manage us if we lived in rabbit warren housing in crowded urban ghettos. This was Jerry Brown’s vision for America when he first became the governor of California and one of he reason I left the Division of Highways.

So how does the funding work? First each state is responsible for their transportation infrastructure and it’s is up the taxpayers of that state to determine how much they want to be taxed to pay for that infrastructure. This is usually done by the legislators they elect, but sometimes through state-wide ballot propositions. The uniform federal gas tax is 18.4 cents per gallon.

In California the tax on a gallon of gasoline or diesel fuel is $0.18 per gallon plus a 7½ cent sales tax and 1.2 cent UST (environmental tax) on the total purchase made at the pump. So, if you purchase 10 gallons of gasoline at $3.00 per gallon the final price at the pump would be ($30.00 + $1.84+$1.80+$0.12) x 0.075 or $36.29 or an effective tax of $0.69 per gallon or 21%. This number is computed into the price shown at the pump so when you see a price of $3.62 per gallon for regular the oil company is getting $3.00 of that money the rest is going to government. The lowest gas tax in the nation is in Alaska at 8 cents per gallon and the highest in Wisconsin at 32.1 cents per gallon. So the next time you fill your tank ask yourself if your state or local government is spending that 69 cents prudently. One more phenomenon in states that have additional sales taxes on a gallon of gasoline or diesel fuel the high the price of oil and gasoline he money the state rakes in. Click here to see what the gas taxes are in other states.

How is this money spent? Normally it works like this. When you and millions of other drivers and truckers fill up your tank the state collects all of the taxes imposes on the fuel. The state then takes its portion and puts it into either a HTF or the general fund. They then send the federal portion to the Department of Transportation which is supposed to put the monies into the federal HTF. The DOT then sends some of the money back to each state based on the states need for construction. No monies from the HTF are allocated to maintenance — that is totally the states responsibility. These federal monies, minus the dollars the DOT skims from the top to support their bloated bureaucracy of some 58,000 workers and 85 different subsidy programs including AMTRAK, urban transit and high speed rail. According to the CATO Institute in 2010 the DOT budget was $91 billion dollars or about $770 for every U.S. household.

The federal government plays a large role in transportation policy through subsidy programs for state governments and a growing array of regulatory mandates. Modern federal highway aid to the states began in 1916. Then the interstate highway system was launched in 1956 and federal involvement in transportation has been growing ever since.

Today, the interstate highway system is long complete and federal financing has become an increasingly inefficient way to modernize America's highways. Federal spending is often misallocated to low-value activities, and the regulations that go hand-in-hand with federal aid stifle innovation and boost highway costs.

The Department of Transportation's Federal Highway Administration spent about $52 billion in fiscal 2010, of which about $11 billion is from the 2009 economic stimulus bill. FHWA's budget mainly consists of grants to state governments, and FHWA programs are primarily funded from taxes on gasoline and other fuels. This is an extremely inefficient way to return money to states that was envisioned in the original 1956 Interstate Highway Act. It opens the doors for every Congressman or Senator to tack on earmarks to their various districts or states ending up with boondoggle projects like the bridge to nowhere or the Big Dig.

The original theory for the federal HTF was that the feds would take the money derived from the federal gas tax from the richer states (donor states) with more people and vehicles would parcel it back with less populated states (recipient states) to finance their portions of Interstate highway system. As an example California (a donor state) would give 100% of the federal gas tax they collected to the Federal Highway Administration for the HTF. The FHWA would then parcel out the dollars to Arizona (a less populous state) to finance 90% of their Interstate program. The reasoning behind this was that while the people of California were getting less back from the FHWA they were enjoying the benefits of Arizona’s interstate highways. This was saving them time, fuel and shipping costs. A system all Americans accepted as fair and equitable while the Interstate System was being built.

Upon completion of the Interstate System and the establishment of the DOT in 1966 things began changing. More money was going to fuel a bureaucracy with an unending appetite for new programs and subsidies. Eventfully we were given programs like the 1991 Intermodal Surface Transportation Efficiency Act (ISTEA) and in 1998 TEA-21 with its 1,850 earmarks for local pork projects. It also expands federal regulatory controls over local affairs, such as environmental, safety, and urban planning activities. These programs allocated billions to pork barrel projects, studies and the creation of larger bureaucratic organizations with tons of regulations, many which imposed further burdens on the states. To this date many of the projects dreamed of in these two acts have not been completed or even started. Bureaucratic wrangling and environmentalists have stalled or totally blocked many of these projects.

Today, even states cannot effectively fund transportation infrastructure projects. They have used their gas tax revenues to build massive agencies employing thousands of unneeded people doing the work well done by the private sector. This is why so many local cities and counties have established metropolitan planning organizations (MPOs) and gone to the construction of toll roads and bridges as has Orange and Riverside counties in California.

These MPOs are highly efficient transportation agencies with very low overhead that utilizes the private sector for most of their planning, engineering and construction. They take a portion of the state and federal funds and apply those to a local measure tax and plan and build transportation infrastructure needed and wanted by the taxpayers of the county. They are also very accountable and have a track record of success.

In Orange County four toll roads were constructed in the past 15 years. These roads were financed with bonds that are being paid off through the collection of user fees. Once again if you don’t drive the toll road you don’t pay. These toll roads relieve the congestion on the local freeways and improve the commute time for many motorists and is the reason they have been successful. With the use of Fastrack (EZ-Pass) technology you can zip through the toll stations at 70 miles per hour at ease. These roads take us back the original concept of the Pennsylvania and other privately funded turnpikes. They are efficient and cost-effective.

A word about so called “shovel ready” projects the bonehead progressives like to tout. So what is a shovel ready project? It’s a project with the design completed, right-of-way acquired, permits in hand, cost estimates done, financing in place and construction bids in.

One of the purposes of Obama’s stimulus package was to get so called shovel ready projects underway. Would someone tell me what agency or municipality spends money for the planning, design, right-of-way acquisition and permitting of a project to put in the ice box until someone comes up with the money? You pinheaded liberals it doesn’t work that way. Projects are set in motion when there is a known source of funding. Studies and preliminary planning may be done from existing funds, but these are done for the purpose of obtaining funding and environmental approvals, not to bring shovels to the site. The average transportation infrastructure project takes from 5 to 10 years to get the shovel ready stage — this includes widenings. Once again this is a terrible use of the taxpayers’ dollars.

From this essay it might sound like I am not a fan of the Interstate Highway program as it was originally intended. On the contrary I believe it was one of the greatest achievements of our nation and ranks right up there with the atomic bomb and the space program. The benefits derived from all three to our national economy, defense and scientific knowledge have yet to be totally tallied

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