I have a simple rule for politicians who profess their belief in the primacy of the market economy: Don’t spend taxpayer money to provide a service that competes with the private market.
The federal government does this the time, of course: Once upon a time, private companies provided crop insurance and flood insurance, but these companies eventually gave up competing against a federal government that was willing to heavily subsidize the business with tax dollars.
My hometown of Peoria, Illinois recently built a city-owned fitness center that competes against a couple of dozen similar, privately run facilities. (As if someone actually said, “I wish we had a Gold’s Gym that was run by the government.”) It’s attracted a large membership, in no small part because it, too, gets a government subsidy.
Relatedly, Alabama recently decided to compete against the private sector when it announced that it wanted to build a third bridge over the Intracoastal Waterway to the Gulf Coast, an island with a booming economy and a surfeit of vacation homes mainly owned by non-Alabamans.
The island currently has two bridges: One carries Interstate 59 across the water and is free to use, and the other is the Foley Beach Express, a privately owned and operated bridge that charges a toll. The people who live and vacation on the island—and who happen to be much wealthier than the rest of the state’s residents—would naturally prefer that the government build the new bridge and make it un-tolled. Every other person who lives in the state should fight that sentiment as hard as possible and insist that the private market build a bridge and pay for it with tolls.
The federal government is throwing fewer dollars towards infrastructure every year, and there’s no sign that’s going to change anytime soon. States have been assuming a larger share of infrastructure spending as a result: That’s not necessarily a bad thing, since states have been known to treat federal transportation dollars like manna from heaven. Remember Alaska’s “Bridge to Nowhere,” which was to be financed by the federal government?
Alabama’s budget situation doesn’t afford it the ability to spend freely: Governor Robert Bentley declared a budget emergency in 2012 and just last year he managed to pass a tax increase through the legislature while also enacting $85 million in cuts from the state’s Medicaid budget. That they’ve been forced to do so in the wake of receiving $1 billion from the BP oil spill settlement suggests that the state will likely find itself short of revenue again—maybe as soon as it burns through the BP money.
In a state with decaying roads, substandard schools, an underfunded state pension system, and myriad other problems so pressing that a government utterly dominated by Republicans felt obliged to raise taxes, it is beyond ridiculous that the Alabama is going to spend $30 million it doesn’t have so that the rich out-of-staters don’t have to pay a few bucks or wait in traffic to get to their vacation home.
The antipathy towards tolls that many Republicans reflexively adopt is simply mindless, constituting a complete rejection of the free market worldview that ostensibly guides the party’s principles. In the last decade there have been technological achievements that allow us to take a public good—roads and bridges and turnpikes—and make the users pay to use it by creating a new market. We could easily design such a system so that it charges less for people who drive during less-crowded times or have cars that pollute less, two steps that would allow us to spend billions less on expanding roads or mitigating pollution another way. What could possibly be more small-government than that?
An unholy alliance of populist Republicans and Democrats have kept a lid on expanding tolling at the federal level: Democratic opposition usually centers on the bogeyman of income inequality and Republicans object because they think that gasoline taxes have already paid for the roads and that this somehow constitutes an extra tax.
But gasoline taxes don’t come close to paying for our roads these days, and a smart-toll system would be more progressive than any tax system currently in place, given the commuting patterns of most big cities.
Private investment is a wonderfully efficient way to pay for roads and bridges, and should be the first choice for governments looking to save taxpayer dollars. When the project in question services mainly wealthy residents, many of whom happen to not even be citizens of the government in question, the choice is even easier.
Ike Brannon is a visiting fellow at the Cato Institute.
