Modern Transportation Funding and User-Pays Principle

Abstract

Shrinking gas tax purchasing power has resulted in a growing dependence on sales taxes dedicated to local transportation to fund California roadway and transit projects. However, these new funding strategies stray from the traditional user-pays principle embodied in the gas tax and long espoused by FHWA as the fairest way to finance highway projects. After the funding sources of the Presidio Parkway (an ongoing public–private partnership project in San Francisco, California, that uses availability payments) were analyzed, it was found that federal and state gas taxes were still the largest source of funding at 53%, while federal support, tolls, and sales taxes contributed 23%, 16%, and 8%, respectively. An analysis of users of the facility, in the form of commuters who use private cars and bus transit to access downtown from the surrounding San Francisco and North Bay areas, revealed that individual contributions through a host of transportation taxes and fees were minuscule when compared with the annual availability payments received by the concessionaire. Commuters’ average annual contribution to the new facility was found to range from $3 to $29, which was orders of magnitude less than the $548 annual contribution that calculations showed would be required if the project were to be supported solely by tolls. These findings highlighted the trend in current highway construction financing strategies that subsidized commuters who were unwilling to pay the full cost of transportation infrastructure with broad-based taxes collected regardless of benefits accrued to the individual.