Commentary: Road taxes needed, but benefits claim overblown

After decades of shameful neglect of California’s vital transportation network, Gov. Jerry Brown and the Legislature last year enacted a multi-billion-dollar package of new fees and fuel taxes.

It was the right thing to do, and if it merits any criticism, it is that it took too long and may fall short of meeting the needs for repair and rehabilitation of roads, streets, highways and other transportation facilities.

Nevertheless, the California Republican Party is trying to place a repeal measure on the November ballot, hoping to capitalize on polls showing that Californians don’t much cotton to paying higher taxes to drive.

Its real motivation is hoping that opposition to gas taxes will boost turnout of Republicans and anti-tax independents and help the GOP defend several congressional seats that Democrats hope to capture.

The coalition that backs the new transportation financing scheme – Brown, construction contractors and their unions, business interests and local governments, primarily – is worried that the repeal measure will make the ballot and could pass.

Some members of the coalition, therefore, commissioned a study entitled “The Economic Impacts of Senate Bill 1 on California,” referring to the legislative measure that authorized the new taxes.

Not surprisingly, the supposedly objective study found nothing but economic wonderfulness if the transportation funds are collected and spent.

“The transportation investment…will support at least $182.6 billion in increased economic activity and benefits for California residents and businesses over the next 10 years, averaging $18.3 billion per year,” it declares.

“As the investment increases during this period, SB 1 will support an additional 682,029 job-years throughout all sectors of the state’s economy, over the 10 years. This translates to an average of 68,203 jobs each year. A sustained increase in California highway, street, bridge and transit investment will reduce costs for users of the transportation system, provide broad economic benefits to communities across the state and improve the quality of infrastructure.”

One is surprised that the author of the study, an economist for the American Road and Transportation Builders Association, didn’t also claim that it would cure psoriasis and bring world peace.

Collecting more money from motorists and spending it on transportation improvements is the right thing to do because it needs to be done. Ginning up an overblown, self-serving economic “analysis” undermines the integrity of the act.

It’s on a par with the phony “studies” of economic benefit that cheerleaders for sports arenas, the bullet train and other big ticket public works projects wave around in hopes of generating more public support.

Two points about the new transportation study demonstrate its dubious validity.

The first is that the numbers cited sound great, but in fact are pretty small potatoes, even if true.

An additional $18.3 billion in economic activity and 68,203 jobs each year are minuscule in relationship to a $2.6 trillion economy and 15-plus million jobs in that economy; much less than 1 percent gains.

The second point is that those gains are probably illusionary since they, like those cited in other such reports, ignore the economic flip side.

The transportation program will take $5-plus billion out of the pockets of motorists each year. That’s money that won’t be spent on groceries, housing, utilities, new cars and other forms of consumer spending, so any honest economic impact study would take those lesser expenditures into account and probably show more or less a net wash.

Again, taxing motorists and spending the money on transportation improvements is the right thing to do. Claiming overblown economic benefits is the wrong thing to do.