NCPA - National Center for Policy Analysis

Privatizing Roads Will Improve America's Roads

February 1, 2013

For many years, the federal government has owned and managed most roads in the United States with some modicum of success, despite traffic congestion and pot holes. More recently, the cost of maintaining roads has risen and fuel tax receipts have fallen, leading to the need for a new, more sustainable model for America's roads, says David Levinson of the Reason Foundation.

  • Current gas tax receipts will not provide enough revenue for the government to continue maintaining America's existing infrastructure.
  • The organizations that built Eisenhower's road system are no longer properly suited to maintain them.
  • The best solution to crumbling roads and miniscule infrastructure appropriations is to allow a variety of ownership structures to assume responsibility for maintaining and expanding roads.

Levinson explores various ownership models, ranging from municipal- or state-ownership to mutual- and investor-ownership. Each of the new structures will distance the road system from political influence and instead focus on offering users more value. It will also allow the various models to raise capital and finance new construction and maintenance through the sale of bonds.

  • Regulated utilities have already been successful in many important sectors, including telecommunication -- where almost all utilities are investor-owned -- and in water and wastewater utilities, where 20 percent and 10 percent of each sector, respectively, is investor-owned.
  • Different ownership structures have allowed New Zealand to recognize large efficiency gains without sacrificing service levels by separating management from governance and service delivery from policy.
  • Many of Australia's roads are managed through competitive road enterprises with great success.

New road enterprises in America should be granted the ability to charge user fees in place of relying on general funds. Various methods are effective at supporting a pay-for-use system including vehicle-miles-traveled charges, weight-distance charges and electronic tolling.

This would create new avenues for revenue and funding, ensure quality of service for users and improve administrative efficiency. Testing the new models will invariably involve a learning curve that will witness some successes and some failures. By adopting the perspective that each state is a policy lab that can experiment with these new enterprises, the sum of all the experiments may lead to a more effective overall system of public road management.

Source: David Levinson, "Enterprising Roads: Improving the Governance of America's Highways," Reason Foundation, January 2013.


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