Earlier in this series, we indicated the need for Congress and the administration to reaffirm their commitment to our nation’s infrastructure. What should the new shape of this role be, and how should it reflect the changing paradigm of our transportation system?
The first component of the solution is crucial: a revamped federal budget policy, beginning with a long-due tax increase on transportation infrastructure. President Reagan did this in 1983 with his Nickel for America package.
Secondly, antiquated federal distribution formulas that return at least 90 percent of federal taxes to the 50 states need to be replaced with targeted block grants to multistate trade corridors. In today’s global economy, the regional, national and international implications of infrastructure investment defy state lines. Mobility needs of the 21st century are increasingly defined by international border crossings, rural/urban trade corridors and metropolitan gateways.
Historically, the primary purpose of America’s transportation network has been intranational mobility, connecting our cities and fueling westward expansion. Think of the Erie Canal, the transcontinental rail lines and the interstate highway system.
Today, however, we expect a lot more out of that same infrastructure. Consider the tri-national West Coast corridor. As the nexus of APEC (Asia Pacific Economic Cooperation) and NAFTA (North American Free Trade Agreement), the region — rather than its individual states — is most fairly able to determine how to invest in the infrastructure that supports our national economy.
Reduction in trade barriers to imports from China — coupled with the pending completion of that nation’s massive infrastructure program — will soon heighten the velocity of trade to the United States. Within the next five to 11 years, container traffic through West Coast ports is projected to double.
Since most freight moves via truck, a lot more 18-wheelers will be accompanying you on Interstate 5. Already, the drive through the narrow stretch near Centralia can require a harrowing maneuver through a line of trucks throwing a wall of rain onto your windshield. Double those trucks, and you’ll be clutching your steering wheel with white knuckles.
Washington state is using part of the recent state gas tax increase to fund the expansion of half that 40-mile choke point. Who should pick up the rest of the tab? The good folks of Lewis County can hardly be expected to fork over hundreds of millions of dollars to expand a freeway that connects Canada to Mexico.
This brings us to the equity dilemma accompanying global trade. Regional economist Glenn Pascall notes, “Despite the national benefits of trade, a disproportionate burden has fallen on geographic locales that site critical facilities.” Coastal states — from the Eastern Seaboard to the Katrina-ravaged Gulf Coast to our own West Coast — house the bulk of infrastructure critical to international trade and national security.
Trade involves an intricate web of beneficiaries — from foreign trade partners to the neighborhood Costco and Wal-Mart — which should bear an appropriate proportion of the costs.
This notion, called use-based financing, works well for utilities, which charge variable fees based on time of day. In addition, the commercial air industry utilizes public authorities to build the basic airport infrastructure, which private airlines use with variable gate and landing fees. The idea is simple: The more you use, the more you pay. It’s time the rest of the transportation sector catches on.
The West Coast is beginning to. California leads the nation in implementing High Occupancy Toll (HOT) lanes, which allow single-occupant vehicles to use a premium lane for a variable fee. Meanwhile, Oregon and Washington are building toll bridges and planning new toll facilities.
Use-based financing can help strengthen West Coast ports, but the model must be applied both smartly and regionally. Maritime commerce already assesses tens of billions of dollars in federal customs and container fees, which are either spent on unrelated purposes or benefit some but not all ports.
We need to consolidate these funds into a dedicated “Maritime Infrastructure and Security Trust Fund” — similar to the Highway Trust Fund for surface transportation. The difference would be targeted regional disbursement as opposed to the nonstrategic, 50-state return formula of the Highway Trust Fund. Offsetting the immediate effect, which could exacerbate the budget deficit, the increased trade in the long run will help balance the budget and boost the economy.
In addition to the shippers and carriers who profit from trade, part of the costs should be borne by countries whose prosperity depends on access to U.S. markets. Potential direct or indirect Chinese investment in West Coast infrastructure has been raised in a dialogue between the West Coast Corridor Coalition and regional Chinese leaders. America’s relationship with our soon-to-be-largest trading partner is only as strong as the infrastructure that facilitates our two-way trade.
American problem solvers are preoccupied with the trade and budget deficits. Soon, perhaps they will realize that addressing the third deficit — infrastructure — could be key to solving the other two.
BRUCE AGNEW is director and JESSICA CANTELON is a writer for Discovery Institute’s Cascadia Center, a nonprofit public policy center based in Seattle.