David Levinson, Chair, Richard P. Braun/Center for Transportation Studies
University of Minnesota
How should we devise and pay for
a competitive transportation system?
A Civic Caucus
Focus on Competitiveness
Interview August 7, 2014
John Adams, Pat Davies,
Sallie Kemper, David Levinson, Dan Loritz (chair), Dana Schroeder,
Clarence Shallbetter. By phone: Dave Broden (vice chair), Audrey Clay,
Janis Clay, Paul Gilje (coordinator).
Minnesota does not need
new transportation projects in order to be competitive, according to
David Levinson of the University of Minnesota. There are some
bottlenecks that could be addressed, he says, but the primary problem
is that we've been spending too much on new capital projects and not
enough on operating and maintaining the existing system of federal,
state and local highways and roads.
User-fee revenues for highways, mainly
gas-tax revenues, have been declining in recent years because of fewer
trips, more fuel-efficient cars and political resistance at both the
federal and state levels to raising the gas tax, he says. Also, a
large share of federal Highway Trust Fund revenues have been diverted
to pay for transit capital projects, although transit serves only
about two percent of all trips nationally.
The solutions Levinson suggests include the
Use a dual approach to solving problems like traffic congestion:
getting people to behave differently, while also finding
Use more bonding, rather than pay-as-you-go, for highway
Spin off the Minnesota Department of Transportation (MnDOT) into
a publicly owned public utility that would rely solely on user fees
to fund roads and transit.
Move highways to full-cost pricing, using gas taxes, electronic
toll collection and mileage-based user fees.
Charge transit riders the full fares and subsidize people who
can't afford them out of general revenues.
Implement a weight-distance tax on heavy vehicles.
Raise the diesel tax by one cent per gallon to help strengthen
Reduce the number of paved rural roads in Minnesota by half.
David Levinson is
professor of Civil Engineering (since 1999)and holds the Richard P.
Braun/Center for Transportation Studies (CTS) Chair in Transportation
Engineering at the University of Minnesota. His current research
focuses on understanding the process of network growth, evaluating
transportation technology and policy, and modeling travel behavior. He
teaches courses in Transportation Policy, Planning and Deployment;
Transportation Systems Analysis; Transportation and Land Use;
Transportation Economics; and Transportation Engineering.
He is the director of the Nexus research
group, exploring issues related to networks, economics, and urban
systems and Principal Investigator of the Accessibility Observatory.
Before joining the University of Minnesota,
he worked as a transportation planner, developing integrated
transportation/land-use models used in Montgomery County, Maryland. He
was awarded the 1995 Tiebout Prize in Regional Science.
Levinson has a B.S. from the Georgia
Institute of Technology, an M.S. from the
University of Maryland, and a Ph.D. in
Engineering from the University of California, Berkeley. His
dissertation, "On Whom the Toll Falls," focuses on local
decision-making for the financing and management of roads.
The federal government
has been spending more money contributing to highway funding than it's
been taking in for a few years. Levinson noted that Congress just
passed a patch to highway funding to extend its solvency until May
2015. The question is, he said, what happens after that. The federal
question has been in the news for the last few weeks.
The state highway funding issue has been
discussed over the last year, including during the 2014 legislative
session. A proposal called
which the transportation lobbies have been supporting, would raise and
spend additional money for transportation.
There are local-level transportation funding
issues, as well. Local funding, Levinson said, tends to come from
general-revenue, mainly from property taxes. Unlike federal money and
most state money, it's not user-fee based. He said there would be a
tax competition battle if cities were allowed to raise money by
imposing gas taxes at the local level. That competition is not as bad
at the state level, he said, because states are bigger and don't have
as many border issues as at the local level.
There is a tension between funding vs.
financing. Levinson said the funding question is how we're going
to pay for transportation and the financing question is whether we pay
now or later. He said traditionally in the U.S., we've been
pay-as-you-go at the federal level, while the states have combined
pay-as-you-go with some bonding.
Gas tax money comes into the highway trust
fund, he said, and is spent immediately to build things that will last
30, 40, or 60 years. "If something's going to last 60 years, shouldn't
future generations pay something towards its construction?" he asked.
"We don't pay for houses or cars out-of-pocket, so why are we paying
for other capital expenses out-of-pocket?"
Levinson noted that there are deficits at
the federal level, which is somewhat like bonding. At the state level,
there is some bonding, but there's no systematic approach to choose
which projects are financed through bonding.
There is tension among modes: transit,
highway, and, to a lesser extent, walking and biking. Levinson
noted that more people walk than take transit and walking and biking
infrastructure is much less expensive than that for highways and
Transit has consumed 20 to 25 percent of
federal capital spending over the last four decades, although transit
serves only about two percent of all trips nationally. Levinson
said there is tension over the question of whether the Highway Trust
Fund, which is paid for by highway users, is benefitting highway users
when it's allocated for transit. Part of the reason the Highway Trust
fund doesn't have enough money, he said, is because some highway user
fees have been dedicated to pay for transit.
Transit usage is higher in certain areas,
Levinson said, noting that 40 percent of work trips to downtown
Minneapolis are on transit. But regionally, transit in the Twin Cities
accounts for only five percent of all work trips.
A very small share of people uses transit on
a daily basis. That leads to the question of whether highway user
fees should be used for transit, Levinson said. He noted that transit
ridership has only increased a little bit over the last few years.
There is tension between moving freight and
moving passengers. Passengers have more clout than freight,
because passengers can vote, which is why the discussion is more
focused on moving people, Levinson said. Recently, he said, there's
been a significant increase in Minnesota in rail shipments of oil and
natural gas from North Dakota. "The capacity utilization has gotten
very high," he said, "which means there's not much slack in the
He noted the delays caused by these
shipments have caused almost daily on the North Star commuter train,
which runs between Big Lake and downtown Minneapolis. The already low
North Star ridership faces higher travel times due to the increasing
conflict with freight use of the same rail track, he said. The
technical solution is to build more track, but cost is an issue.
We should attempt to solve problems by using
the dual approach of getting people to behave differently, while also
finding technological solutions. Levinson gave the example of
reducing air pollution. One approach would be to reduce the number of
miles driven, while another would be to reduce the emissions per mile
from each car. And, in another example, he said a technological
approach to reducing congestion would be the use of automatic cars,
because they could drive closer together than is possible today. A
behavioral approach would be to use road pricing to reduce demand.
"There's no reason we couldn't do both of those things," he said.
Minnesota does not need new transportation
projects in order to be competitive. Levinson said there are some
bottlenecks that could be addressed, but the primary problem is that
we've been spending too much on new capital projects and not enough on
operating and maintaining the existing system. "What we need," he
said, "are better road conditions and, to a lesser extent, better
bridge conditions, since bridges have recently gotten a large infusion
We don't repair the roads frequently enough,
so the road conditions are poor. Levinson said the problem is, in
large part, the federal vs. state vs. local tension. "The federal
government likes funding capital and doesn't fund operating expenses,"
he said. "The state has a ribbon-cutting problem. Politicians like to
cut ribbons and you cut ribbons on new projects. You can maybe cut
ribbons on replacement projects, but it's not sexy to cut ribbons on
repair projects." As a result, he said, there is a tendency to do more
capital-intensive things and not to spend as much on operations and
maintenance as we should. "Keeping things in good condition now saves
us money downstream," he said. "This is a long-term vs. short-term
Lack of spending on repair is especially a
problem on local streets, he said. There are at least four levels of
government involved in transportation: federal, state, county and
local. "That's several layers too many," he said. Some states don't
have municipal road systems and maintenance departments. "We have 192
cities in the metro area and they can't all be experts at this," he
said. "Why do we have so many levels of government involved in roads?"
Air transportation connectivity is very good
in the Twin Cities and the state, because we have a hub airport.
"The downside of having a hub airport is that Delta has a bit of
monopoly power, so the prices are higher than in other places,"
Levinson said. It'd be good to bring in more airlines, he said.
He believes the current MSP airport is
appropriately sized for the level of demand and that we don't need a
second airport. We don't need to replace the current airport anytime
in the next 40 or 50 years, he said.
People are driving fewer miles than in the
early 2000s, mostly because of fewer trips, not shorter trips.
Levinson said the decline in vehicle-miles can be partly explained
because there is a lower labor-force participation rate than in the
1990s and because people are ordering more things online today.The
trend toward fewer miles driven and better fuel economy has caused a
consistent decline in gas tax revenues.
There is discussion of moving away from the
gas tax to charging fees on a per-mile basis. This may happen as
more and more cars become electric, Levinson said. If the per-mile
fees become acceptable, he surmised, it might also be possible to
differentiate fees depending on the time of day, which could affect
The solution to the problem of getting
agricultural products from field to market and to processing
facilities is to add one cent to the diesel tax to help strengthen
rural roads. Levinson said that during spring thaw, the soil
around roads is muddy and weaker. Load restrictions require trucks to
haul at half weight, or five tons per axle on local rural roads. That
creates a cost for the trucking industry during about eight weeks of
the year, he said. The solution is not spring load restrictions, but
raising money through the diesel tax for strengthening local roads.
Load restrictions also affect some suburban roads, which impacts the
An interviewer pointed out that moving
agricultural products on low-quality roads during harvest season, from
August through November, is also an issue. Levinson said there have
been proposals to upgrade rural roads, but that's difficult, because
there are so many of them. "If we had half as many rural roads, we
could spend our money better on reinforcing the ones that are used
more," he said. He noted that Minnesota has paved a lot of its rural
roads and should probably look at selective depaving and gravelization,
so there would be half as many paved roads in the rural system.
"Obviously, it's going to be controversial, but the alternative is to
pay higher taxes," he said.
One interviewer commented that building
roads to handle harvest time is like building a church for Easter
Spin off the Minnesota Department of
Transportation (MnDOT) into a publicly owned public utility that would
rely solely on user fees to fund roads and transit.
Levinson noted that for all of our public utilities, we have user fees
that are proportional to how much we use: electricity, water and
sewer, natural gas, cable, and other forms of telecommunication. "If
people thought of MnDOT as a separate organization from government,
they would say we should pay for transportation in proportion to how
much we use it," he said. "We could do that with gas taxes and, moving
forward, with electronic toll collection and mileage-based user fees."
Because MnDOT is organized as a branch of
government, "it falls into the lump of government," Levinson said.
"When there was a statewide government shutdown, MnDOT shut down with
it, which did not need to happen. This is part of the dysfunction we
have, not just in Minnesota, but everywhere. MnDOT should be a
separate organization that is not in the state's unified budget."
As a public utility, if MnDOT needed a rate
increase for gas taxes, it would go before the Public Utilities
Commission (PUC) and argue for the increase. "You would get more
revenue for transportation and there would be less controversy over
rate increases," he said. "You would take it out of the hands of the
Levinson said the organization could be
owned by shareholders, who would be the people of Minnesota. It would
pay a dividend every year. He noted that the Airports Commission funds
itself from user fees on airlines and passengers.
Transit is subsidized by the public sector
from various general revenues, by highway users and by employers and
is paid for in part by users. If the riders were charged the
full-cost fare, the fares would triple. "If we were to triple the
fares, without changing the cost of other modes, we'd have almost no
users, so the system would cease to exist," Levinson said. "People
have concluded that would be a poor policy outcome."
We should charge transit riders the full
fares and subsidize people who can't afford those fares out of general
revenues. We should be giving money or transit-pass credit to the
users, Levinson said. "If you want to subsidize poor people, subsidize
them directly," he said. "Don't subsidize the provision of the service
We can't move transit to full pricing unless
we move highways to full pricing. Levinson said most European
countries charge more for transportation than the full cost. They use
the funds to supplement general revenues, instead of having general
revenues supplement transportation, he said.
He said the gas tax in the U.S., which is
typically less than 50 cents a gallon (state plus federal), is very
low, compared to around $5.00 a gallon in many European countries.
Some European countries have separated out
the track from the trains and have trains roll over tracks as trucks
run over highways. The problem, Levinson said, is that in the rail
system, the intelligence is in the tracks, but in the trucking system,
the intelligence is in the truck cab. In England, passenger trains are
operated over the national rail system, which is a nonprofit,
quasi-governmental organization. The trains are owned by franchisees,
who run trains over the public tracks.
The U.S. uses many more trains for freight
than in Europe, where they use a lot more trucks than we do, he said.
"In Europe, they put their passengers on the trains and the freight on
trucks and here we do the opposite."
A weight-distance tax would be a good thing.
An interviewer pointed out that highways and bridges are built to
standards that will accommodate heavy vehicles. Oregon uses a
weight-distance tax, Levinson said, and the trucking industry opposes
it. He agreed with the interviewer that such a tax makes sense,
because it begins to allocate the costs to the beneficiaries.
We have spillover benefits in land values
from transportation investments, because we're not charging the users
the full cost. If we charged the users the full cost of
transportation, Levinson said, there would be a lot less spillover in
terms of increased land values associated with transportation. The
best way to deal with the spillover that does occur would be a
land-value tax, he said, which is politically difficult to implement.
There are a variety of other ways to capture the revenue:
transportation utility fees, impact fees on new development, joint
development, air rights, special assessments and tax-increment
financing. All of those are used somewhere, but not all are considered
legal in Minnesota. It would be better to do user fees first, he said.
Capturing some of the excess increment in
land value would be a smart way of creating revenue for
transportation, in the absence of increasing user fees.
The light rail lines in the Twin Cities are
a development game. But it's a two-way development game, Levinson
said, because not only are landowners getting the public to pay for
transportation, but also, almost all of the developments are
subsidized. Almost all development on the Hiawatha Line has been
subsidized and almost all development on the Green Line, to a lesser
extent, has been subsidized. "Somebody is chomping on a cigar from
this game," he said.
There's been a long-term consolidation in
the rail sector, dating back to their founding. The number of
railroads has steadily decreased over time. If the Class I railroads
had their way, there would be a single railroad monopoly in the U.S.,
Levinson said. "All capitalists want to be monopolists." The railroads
have spatial monopoly powers to some extent already. They're going to
exploit this advantage to make as much money as they're legally
allowed to make, he said.
The Civic Caucus
is a non-partisan,
tax-exempt educational organization. The Interview Group
includes persons of varying political persuasions,
reflecting years of leadership in politics and
business. Click here
to see a short personal background of each.
S. Adams, David Broden, Audrey Clay, Janis Clay, Pat Davies, Bill
Frenzel, Paul Gilje (coordinator), Randy Johnson, Sallie Kemper, Ted
Kolderie, Dan Loritz (chair),
Tim McDonald, Bruce Mooty, John Mooty, Jim Olson, Paul Ostrow, Wayne
Popham, Dana Schroeder, Clarence Shallbetter, and Fred Zimmerman