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Vol. 17, No. 3; May/June 2006

May/June 2006

Thinking About the Future of the Highway Program

As we celebrate the 50th anniversary of the Interstate Highway System and embark upon a major reassessment of its future this year, we must not fail to take note of two emerging trends that may fundamentally affect the way we shall go about developing, financing and operating new highway facilities in the future. The first trend is a growing acceptance of tolls and variable road pricing as a means of augmenting existing highway revenue, financing new infrastructure and managing highway demand; The second trend is the private sector's increased interest and willingness to assume an active role in the financing, construction and operation of toll roads.

For the immediate and near-term future, tolls look like the most practical and logical way to supplement the eroding value of the gas tax. Electronic toll collection technology, already embraced by a majority of toll road authorities, has eliminated the chief practical objection to tolls. By the end of this decade, "open-road tolling" is expected to become near-universal.

My first conclusion is that tolling has reached the tipping point. From here on out it will play an ever growing importance in future highway investment decisions. Indeed, it is quite conceivable - even likely- that variably priced toll lanes will constitute the bulk of all future additions to this nation's highway capacity.

My second conclusion is that we may be on the verge of a fundamental change in our approach to financing new highway infrastructure- an approach where private capital rather than tax dollars become the chief source of financing capacity expansion. Private investment, in turn, could lead to a new generation of market-driven, utility-type operating entities that would offer a high level of service and customer responsiveness.


Is There a Future for Urban Rail in America?

Every now and then we receive a communication from our readers that we find worthy of sharing with our audience. Such is the case with the following commentary by Jeffrey M. Zupan, Senior Fellow at New York's Regional Plan Association and formerly its Chief Planner.

Jeff Zupan, may be right in claiming that the demand for rail investment will continue unabated. However, we believe that the New Starts program will tend to produce diminishing returns. A good indication that the nation may, in fact, be running out of cost-effective rail transit investments is that all but one of the projects currently in preliminary engineering have been rated only as "medium" (third-highest rating on a five-point scale) by the Federal Transit Administration. While the 12 projects "pending," "proposed" or "considered" for full funding in the latest (FY 2007) New Starts report would appear assured of completion, only time will tell how many of the 243 projects declared by Congress as "eligible" for preliminary engineering will survive the Federal Transit Administration's new, more stringent project evaluation criteria and/or find enough support to raise the local share of funding.

We join Jeff in hoping that future debate about urban rail transit will avoid some of the rhetorical excesses and exaggerated claims that have characterized recent rail referenda. We are encouraged by FTA's resolve to bring a more rigorous approach to the project selection process, as evidenced by its decision not to recommend any project that does not achieve a rating of at least "medium" for cost-effectiveness. ...Like the Interstate Highway System, the New Starts program was the right initiative for its time. But, having come this far, the federal rail investment program should undergo the same critical reassessment (including possible changes in its financing) as is being done to its highway counterpart.


A Contrarian View of Sprawl

Sprawl has been blamed for everything, from gobbling farmland and creating a bland and vacuous suburbia to promoting obesity and global warming.  Now comes Robert Bruegman, professor of art history, architecture and urban planning at the University of Illinois at Chicago, with a refreshingly contrarian view. In his new book, "Sprawl: A Compact History (University of Chicago Press, 2005) Bruegman argues that the phenomenon of sprawl, i.e. metropolitan decentralization, is as old as urbanization itself. In a recent event sponsored by the Progressive Policy Institute, the think tank of the middle-of-the road Democratic Leadership Council, Bruegman engaged in a spirited debate with Bruce Katz, Director of Metropolitan Policy at the Brookings Institution. Urban dispersal has given people mobility, privacy and choice and has been unjustly vilified, argued Bruegman. Stopping sprawl is "ludicrous" agreed Katz, but we have tilted too much toward dispersal. Government policies distort the housing market, limiting choice and pushing people out in search of affordable housing. The debate took place against a backdrop of newly released census data that reveals accelerating urban decentralization across the country.


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