HighLight Heading
July 2006
Research Conference Coverage
Transportation finance, congestion, and equity: policy perspectives
Who benefits most from transportation planning and financing, and who bears the burden of taxation? According to Michael Iacono from the Humphrey Institute of Public Affairs, “Mounting pressure to adopt congestion relief policy appears to direct benefits of new spending toward well-off suburban commuters.” In his presentation, Iacono argued that low-income individuals not only receive few benefits from transportation finance and congestion policies, but may also be paying disproportionately for the benefits to wealthier individuals.
Iacono began his presentation with some conventional wisdom in transportation planning and financing in Minnesota and specifically the Twin Cities: urban traffic congestion is bad and getting worse. Further, the phrase “Something must be done” is common and frequent among citizens and planners.
To combat the dilemma of increasing congestion, Iacono illustrated three options: create more roads, more transit, or more roads and transit. He argued that unfortunately, “Conventional wisdom is silent on the issue of equity.”
Another assumption is made that regressive taxes for transportation produce an uneven distribution of costs and benefits. Iacono defined equity as it applies to transportation planning and financing as vertical equity, or the ability of users in different economic circumstances to pay. Therefore, when significant money is invested to relieve congestion during peak rush hours, the benefits are disproportionately felt by those using the high-volume roads at those times, namely higher-income suburban users.
Iacono presented evidence for this argument by mapping patterns of highway development and road financing juxtaposed with suburban sprawl. As high-income users migrated from the city into farther suburbs, the demand for investment in routes with moderate to heavy peaking characteristics increased. As a result, these new investments did little to benefit lower-income urban users and much more to benefit higher-income suburban travelers.
To combat the equity problem in the Twin Cities, Iacono recommended financing based on facility use—for example, toll charges. This form of tax will shift the financing burden to direct users and lead to a more equal distribution of costs and benefits in transportation financing.