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Have you ever wondered why California's roads look so run down?
A quick backstory on why:
A quick backstory on why:
During World War II, Eisenhower was stationed in Germany and was impressed by the network of high-speed roads known as the Reichsautobahnen.
After he became president in 1953, Eisenhower was determined to build a similar highway system in the US.
After he became president in 1953, Eisenhower was determined to build a similar highway system in the US.
He passed a new Federal-Aid Highway Act in 1956 to build a 41,000-mile Interstate Highway System in the US.
The Act increased gas tax and directed those funds to the Highway Trust Fund (HTF), which would be non-divertible source of funding to build the highway system
The Act increased gas tax and directed those funds to the Highway Trust Fund (HTF), which would be non-divertible source of funding to build the highway system
However, this alone wasn’t enough. The estimated cost of the Interstate Highway System was $27 billion and the goal was to finish it by 1972.
5 years after President Eisenhower had approved the 1956 Act, President Kennedy approved the Federal-Aid Highway Act of 1961 to generate funds to complete the project.
The Act made the 4-cent gas tax permanent and adjusted other taxes to generate enough funds.
The Act made the 4-cent gas tax permanent and adjusted other taxes to generate enough funds.
Freeway funding appeared set and there was a lot of enthusiasm about it, *especially in California*.
In 1958, California adopted a grandiose 12,241-mile freeway plan. It was a massive endeavor that would help develop both the urban and rural freeways.
In 1958, California adopted a grandiose 12,241-mile freeway plan. It was a massive endeavor that would help develop both the urban and rural freeways.
The state believed the federal and state financial program was enough to complete the planned system by 1980.
However, when we look at the data, it shows that freeway development in California dropped precipitously in the 60s and 70s....
However, when we look at the data, it shows that freeway development in California dropped precipitously in the 60s and 70s....
So what exactly happened?
First, people blamed it on a change in public policy. In March 1975, the Brown Administration announced a shift in priorities from building new freeways to improving existing freeways and expanding public transit.
First, people blamed it on a change in public policy. In March 1975, the Brown Administration announced a shift in priorities from building new freeways to improving existing freeways and expanding public transit.
However, when we look at the chart, the miles constructed started dropping well before 1975 when this announcement was made by the Brown administration.
And if we look at the highway expenditures over that same period, they went up, despite freeway miles constructed going down.
How can we explain the discrepancy? Where was all that money going?
Answer: Looking at the nominal expenditures masks the details.
Answer: Looking at the nominal expenditures masks the details.
The nominal expenditure values do not account for inflation. If we control for inflation, a far different picture emerges.
Expenditures peaked in California in 1961. Then they began a steady 15-year decline until the late 70s.
Expenditures peaked in California in 1961. Then they began a steady 15-year decline until the late 70s.
And on top of that, there was a dramatic rise in construction and maintenance costs. These costs grew much faster than the general rate of inflation during those three decades.
Recall that the late 60s and early 70s were a period of rapid inflation in the US.
Recall that the late 60s and early 70s were a period of rapid inflation in the US.
Highway expenditures in California grew 12.1% per year on average while inflation in the 1970s grew at an average rate of 8. 7%. Even when inflation slowed in the 1980s, urban freeway construction expenditures increased 8x in California.
The cost increases came from 4 places:
The cost increases came from 4 places:
1) Construction and maintenance costs went way up
2) The scope and scale of freeway projects kept ballooning
3) Urban land got more expnesive
4) Environmental concerns increased design standards and caused delays
2) The scope and scale of freeway projects kept ballooning
3) Urban land got more expnesive
4) Environmental concerns increased design standards and caused delays
For all of the above reasons, freeway costs skyrocketed between 1960 and 1990.
An increase in costs is fine if the revenue sources for the funding was able to keep up. But it wasn’t.
An increase in costs is fine if the revenue sources for the funding was able to keep up. But it wasn’t.
Revenue sources (e.g. gas tax) were not indexed to either vehicle travel or inflation.
Moreover, there has been an increase in fuel efficient cars, so growth in gas tax lagged.
When we couple rising costs with dwindling revenue, we end up with shitty infrastructure.
In summary, freeways in California are still relying on funding plans set in the 50s and 60s. Unless California is willing to radically restructure how it finances highway construction, the freeways will continue to deteriorate.
California could do better. But it isn't.
