Driving for Dollars:
How the Politics of Finance Has Shaped the California Highway System
Final Report
Principal Investigator: Brian D. Taylor
Associate Professor of Urban Planning
Director, Institute of Transportation Studies
UCLA School of Public Policy and Social Research
3250 Public Policy Building
Los Angeles, CA 90095-1656
Telephone (310) 825-7442
Telefax (310) 206-5566
Email: btaylor@ucla.edu
Funded by a University of California Transportation Center research grant (year 12): 1999-2000
DISCLAIMER
The contents of this report reflect the views of the authors, who are responsible for the facts and the accuracy of the information presented herein. This document is disseminated under the sponsorship of the Department of Transportation, University Transportation Centers Program, in the interest of information exchange. The U.S. Government assumes no liability for the contents or use thereof.
Acknowledgments
The research on which this report is based was carried out for the University of California Transportation Center (UCTC). Funding for the Center comes in equal parts from the U.S. Department of Transportation and the California Department of Transportation (Caltrans). The University of California also provides support though the reduction of overhead charges and the donated time of many faculty, students, and administrative staff. The researchers of the UCTC are grateful for all of this support.
This research examined the role fiscal politics has played in shaping the development and deployment of the freeway systems within and between U.S. cities. A clear understanding of how the politics of public finance has shaped the development of transportation systems is crucial if we are to effectively manage and develop transportation infrastructure in the future. This research relied on a combination of historical, quantitative, and qualitative methodologies to explore three questions: (1) How do current urban freeway systems differ from the early plans developed for such highways by cities? (2) What role did the politics of finance play in shaping the planning and deployment of metropolitan freeway systems? And (3) what implications do the recent shifts away from user fee-based highway finance have for the future of freeways in cities?
Overview
Understanding the reasons behind fiscal policy decisions has long been a key to understanding public policy decision-making, and the field of transportation is no exception. At the end of the 20th century, decisions over transportation finance are leaving a legislative domain influenced by policy analysis and are being placed more and more in the hands of the voters themselves. Increasingly, voters are being presented with project-specific transportation bond and sales tax proposals for approval or rejection. The advent of such plebiscitary approaches to public finance is the culmination of nearly a century of the increasing fiscalization of transportation policy. They show with increasingly clarity how the politics of transportation finance are driving the design and the practice of transportation planning, and this tendency is particularly evident in the case of metropolitan freeway development.
This research examined the history of metropolitan freeway development in the U.S., with an emphasis on California. The particular focus of this inquiry was on the crucial role of fiscal politics in shaping the development of the system. We find that political considerations over finance directly shaped the design and deployment of freeways both within and between cities. Specifically, the political negotiations over the development of a highway finance program at the state and federal levels in the middle-third of the 20th Century, directly led to changes in the scale, design, and routing of freeways.
Our examination of the political struggles over alternative finance proposals during the early years of the highway program allowed us to consider why some proposals were dropped or abandoned, while others were adopted. For example, the struggle in 1947 over Senate Bill number 5 involved a protracted debate over whether to replace the state’s largely counter-productive unladen vehicle weight tax with a gross vehicle weight-based mileage tax. The trucking industry successfully opposed this provision on the grounds that it would devastate a financially-struggling industry. Damage to highways and the costs of maintaining them are undoubtedly higher as a result, and both the arguments and the tactics used so effectively by the trucking industry in 1947 have continued to be employed by trucking interests to block heavy vehicle finance reform in the subsequent five decades.
Research Approach
Our research was guided by three primary research questions which touch on issues of program finance and system design. First, why was a user fee (the gasoline tax) chosen in the 1920s to be the cornerstone of the state’s highway finance program, and why has there been a tendency in more recent years to shift away from taxes on motorists to more general finance instruments such as sales taxes to finance transportation investments? Second, in contrast to the case of the fuel tax, why has the state been unable to adopt an effective, equitable system of heavy vehicle fees? And, third, why, until quite recently, were metropolitan freeways developed in California without explicit connections to adjacent land uses, links to public transit systems, or special facilities for trucks, despite calls for such features in early metropolitan freeway plans?
To answer these questions we considered the interplay of federal, state, and local actors, and found that, under federal guidance, the states clearly took the lead. To conduct our investigation, we analyzed archival materials, such as urban highway plans for cities around the U.S., and we examined legislative transcripts mostly at the federal level and in California. We also reviewed and analyzed key administrative data pertaining to the highway program. Finally, we examined newspaper accounts of key debates and decisions, and reviewed other histories and reports that touched on this research.
Principal Findings
Finding 1: California and many other states embraced a user-fee based transportation finance system in the 1920s on both equity and efficiency grounds; this contrasts sharply with the recent shifts to non-user-based finance instruments.
In developing a comprehensive state highway program in the 1920s, policymakers in California chose in 1923 a user-based finance instrument -- the gas tax -- rather than some other instrument of highway finance. The reasons for adopting a pseudo-user-fee system were many: (1) the rough equivalency of gas consumption to road usage, (2) the extremely low cost of administration, (3) the fact that the tax is relatively hidden in the price of gasoline, (4) the fact that it is paid in relatively small increments, (5) the ability to collect the tax from out-of-state motorists using state highways, and (6) the tax’s ability to produce a phenomenal amount of revenue over a relatively short period of time. However, the principal reason for the gas tax’s adoption appears to be its ability to mimic the behavior of a direct toll on motor vehicle travel. It is a near-direct toll on the users of highways, the parties thought to benefit the most from constructing and maintaining the highway system, and therefore it meshed quite well with established user-benefit principles of public finance. It was also imminently feasible—as opposed to the impracticable but much more direct alternative of placing toll facilities on all state highways.
In recent decades, however, there has been a noticeable shift from user-based to non-user-based finance instruments in California. This shift is partly a product of two factors: (1) a structural weakness inherent in reliance on a flat-fee instrument of taxation that cannot automatically respond to inflation, increasing vehicle fuel efficiency, and changing highway needs, and (2) the recent tendency of elected officials and the public to see transportation taxes not as user fees but rather as just another set of general taxes and therefore the site of partisan struggles over taxation.
In response to these developments, and the continued escalation of transportation needs, California governments have turned to non-user based instruments such as general obligation bonds and supplemental county sales taxes that make up an increasing share of overall transportation revenues. In the 1996-97 fiscal year alone, supplemental county sales taxes raised $400 million for highway projects, nearly twenty-five percent of the revenues raised during the same period by the state motor fuels taxes.
The shift to non-user-based transportation instruments, largely because of the relative political ease of enacting such measures, represents a profound shift away from the state’s earlier user-based finance commitment. While sales tax measures have proven successful at raising revenues in the near-term, the lack of any relationship to transportation use or need appears to have long-term negative implications for the efficiency of resource utilization, the effectiveness of service provision, and the equity of the finance burdens borne by different segments of the public.
Finding 2: Despite numerous attempts over the years, California been unable to fully implement an effective, equitable system of heavy vehicle fees.
While California largely succeeded in its effort to establish a relatively effective and equitable motor fuels tax, the state’s experience with heavy vehicle fees is another matter. The failure of the comprehensive multi-year effort leading up to Senate Bill Number 5 in 1947, and its proposal for a system of graduated truck weight-mileage fees to replace the system of fees based on unladen vehicle weight, is a telling example of the central role the trucking and other key industries have played in defining the highway finance agenda in California.
Despite some encouraging changes to the truck weight fee schedule in the past few years, for most of the 20th Century, California had what could reasonably be described as the worst possible system of truck taxation. It was injurious to the highway system because it encouraged truckers to overload their vehicles, thereby damaging the highways, and it was inequitable because it penalized low-mileage low weight truckers who are forced to cross-subsidize high-mileage, high-weight truckers. Despite some recent improvements to California’s antiquated truck fee system, a commericial vehicle fee system that more closely tracked the costs that various configurations of trucks impose on the road system would clearly be in the financial interest of both taxpayers (and many truckers).
Finding 3: The politics of highway finance helps to explain why metropolitan freeway systems today reflect early plans for inter-city highways rather than early plans for metropolitan highways.
The freeway systems envisioned in the early urban transportation plans bear little resemblance to the systems that were eventually built in cities around the U.S. The original plans, primarily drafted by local planners and traffic engineers, called for denser networks of smaller-scale facilities that would be designed so as to maximize their coordination both with the existing street systems and adjoining land use development. Such plans frequently included explicit links to public transit systems and special facilities for trucks. By contrast, the system that was built consists of a sparse distribution of large, high-capacity roadways built to facilitate high-speed inter-city travel while maximizing the safety of motorists. Such early metropolitan plans are remarkably similar to many current plans to modify and improve existing freeways in cities.
Negotiations over freeway finance significantly determined the scale, routing, and influence of freeways in California cities. To secure funding for their ambitious metropolitan highway plans to accommodate burgeoning automobile use, cities ceded control over the planning, development, and operation of urban freeways to state departments of transportation. The most salient features of modern metropolitan freeways -- their scale, routing, and network density -- were altered more during the weeks and months of negotiations to secure funding for freeways in California’s Collier-Burns Highway Act of 1947 and the Federal Highway Act of 1956, than by the years and decades of freeway planning that preceded and followed these negotiations.
Project Outcomes
1. Articles and Reports
Brown, Jeffrey. 2001. “Reconsider the Gas Tax: Paying for What You Get,” Access.
19: 10-15.
Taylor, Brian D. 2000. “When Finance Leads Planning: Urban Planning, Highway Planning, and Metropolitan Freeways,” Journal of Planning Education and Research. 20(2): 196-214.
2. Public Presentations
Taylor, Brian D. 2002. "The Impact of Finance on Freeway Design," at The Art of
Designing Bridges and Freeways Symposium, Berkeley, California, September.
Society for American City and Regional Planning History, Philadelphia, November.
Brown, Jeffrey. 2001. “A Tale of Two Visions: Harland Bartholomew, Robert Moses, and the Development of the American Freeway,”at the 43rd Annual Conference of the Association of Collegiate Schools of Planning, Cleveland, November.
Taylor, Brian D. 2000. “Statewide Transportation Planning: Lessons from California and Other Large States,” at California Transportation Futures: Symposium on Forces Shaping Mobility Strategies, Sacramento, California, December.
Taylor, Brian D. 1999. “Interstate Freeways and Local Travel: Lessons from the Early Plans for Freeways in Cities,”at Inter-Regional Travel and Local Development: A Symposium on the Transportation-Land Use-Air Quality Connection, Lake Arrowhead, California, October.