New taxes Aren’t Necessary to Improve Our Roads

The article below ran at the newly-relaunched NMPolitics.net which is managed by the indefatigable Heath Haussamen. We are thrilled to have Heath back at the helm of NMPolitics.net. Check out the site for more content provided by the Rio Grande Foundation and other political and policy voices from across the political spectrum.

During the 2015 legislative session various proposals were put forth, ostensibly with the goal of improving New Mexico’s roads. One proposal by Senate Finance Committee Chairman John Arthur-Smith would have increased the State’s gas tax by fully 10 cents per-gallon while tying future increases to inflation.

Smith’s plan, if passed, would have represented a 59 percent increase in New Mexico’s gas tax (from 17 to 27 cents per-gallon). It is one thing to claim that we need to spend more on infrastructure and to raise revenues accordingly. It is another thing entirely to claim, as Smith did in an opinion piece, that spending an “additional $140 million annually for road jobs” will be an economic boon.

Before we hike taxes and spend another $140 million on roads, it is important to ask whether New Mexico needs more money for roads in the first place. That is an open question. Certainly, anyone who drives around New Mexico has their “pet” pothole, bottleneck, or bumpy road that they wish could be addressed, but relative to other states, New Mexico’s roads are pretty good.

According to the Reason Foundation’s (Reason is a free market organization that does a great deal of work on infrastructure issues) latest national analysis, New Mexico’s highway system ranked 7th among the 50 states for performance and cost-effectiveness. Each of our neighbors scored lower. New Mexico’s best marks came in maintenance disbursements per mile (1st), capital-bridge disbursements per mile (6th), and rural arterial pavement condition (6th).

Of course, our roads can always be better, but that doesn’t necessarily require higher taxes. We could use the resources we have more efficiently. The simplest way to make our road budget go further would be to eliminate New Mexico’s “Davis-Bacon” law which artificially raises labor costs on public works projects. The House passed a reduction in those rates during the 2015 session. It should eliminate “prevailing wage” laws entirely and allow construction workers to be paid market wages.

A report done by Ohio’s Legislature found that eliminating a similar provision on school construction in that state led to a 10.7 percent reduction in the total cost of each school. Similar savings would likely be experienced by paying market wages on roads as well. Eliminating New Mexico’s “prevailing wage” would give us 15 percent more road construction and maintenance.

This is the “low-hanging-fruit” of better roads (and potentially schools) in New Mexico.

Putting the Rail Runner out of its misery is admittedly more of a challenge, but it is equally necessary. The Rail Runner diverts approximately $50 million annually (between operating and infrastructure expenses) away from roads to a train that forms a miniscule portion of our State’s transportation network in terms of trips taken. Shutting down the train immediately could return nearly $25 million to the road fund. Far from being a radical position, Clifford Winston, a transportation expert with the center-left Brookings Institute recently recommended just such a course of action.

Unfortunately, the infrastructure expenses are “sunk” costs, but making the hard choices now will ensure that further operating costs are not incurred. After all, rails, engines, and train cars must be replaced at some point.

Lastly, it is time for New Mexico policymakers to embrace private sector involvement in the provision of infrastructure. Many “turnpikes” especially in the Eastern United States were built and maintained privately. Private companies manage roads in the Washington, DC suburbs and in Southern California to name just two areas that have seen private investment ameliorate overwhelmed transportation systems. New Mexico’s Legislature should at least set up a framework for greater private sector involvement in infrastructure provision through “Public Private Partnership” legislation.

Leveraging private dollars for transportation projects can help state and federal tax dollars go further, thus giving motorists more and better roads for the dollar.

The Legislature may meet for a special session to discuss infrastructure, specifically the capital outlay bill that failed at the end of the session. Repealing New Mexico’s “prevailing wage” law would immediately allow for more needed projects to be built in our state.

We all benefit from high quality infrastructure even if we never get behind the wheel of a car. New Mexico’s roads are pretty good, certainly not in a “crisis” necessitating a massive tax hike, but there are things we can do to make sure the dollars we invest actually improve mobility.

Paul Gessing is the President of New Mexico’s Rio Grande Foundation. The Rio Grande Foundation is an independent, non-partisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility.