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Jerry Wilson
Jerry WilsonChief Editor at Complete Auto Guide
James Golden
James GoldenFounder and CEO
Murray Rowden
Murray RowdenAmericas Managing Director & Global Head of Infrastructure at Turner & Townsend
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Even though millions of Americans aren’t going many places these days due to COVID-19, quality roads and highways are essential to the broader U.S. economy. Most consumer goods travel along the nation’s highways, and investing to improve roads has historically boosted economic growth. Especially during pandemic-related economic setbacks, such infrastructure investment could create much-needed jobs and help people financially. For example, poor road conditions translate directly into higher car repair and maintenance costs along with a harder time finding cheap car insurance for consumers.

While state and local governments spend more than $186 billion each year on road maintenance and operations, new analysis from MoneyGeek suggests taxpayers are not necessarily getting their money’s worth. At best, they are getting just enough road investment to maintain the current condition of roads.

We analyzed how much each state spends on roads relative to road quality and found no correlation between spending per vehicle mile — a measure of how much usage roads get — and a state’s overall rating of “road roughness.”

For example, Hawaii has some of the worst roads (and is in the top five most dangerous states for distracted driving) though the state pays more per vehicle mile on road construction on repair than most other states. On the other end of the spectrum, Wyoming, considered one of the most dangerous states for winter driving, has better roads despite spending only $5.60 per vehicle mile.

Who Pays For Roads?

Three-quarters of spending to maintain and fix roads and highways comes from state and local governments. According to the Urban Institute, states spend an average of 8%, and localities spend about 4% of their budgets on roads. The rate of investment has not changed much over time. In 1977, 8% of state and local budgets combined went toward roads and highways compared with 6% in 2017.

Through the Highway Trust Fund (HTF), the federal government provides grants to states to maintain and improve the Interstate Highway System. Funded by transportation-related taxes such as gasoline and diesel taxes, the HTF spends more than it raises in revenue. According to some estimates, the fund raised $43 billion in revenue yet spent more than $50 billion in 2020. According to Congressional Budget Office projections, the fund, which has relied on transfers from general tax funds since 2008, is projected to be depleted by 2021.

Main Findings

Moneygeek analyzed overall road quality and the investment levels per lane mile in every state and found that more spending on roads did not necessarily lead to better road quality. The road roughness index is the weighted average value of the observed measurements of the international roughness index (IRI) for the state. The Federal Highway Administration indicates that an IRI measure of less than 95 indicates a road in good condition, between 95 and 170 is acceptable and greater than 170 is poor condition. For example, California's roughness index score of 150 means that the state's road conditions are borderline acceptable as an average. In fact 38% of California’s roads are classified as in poor condition.

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Relationship Between State Spending And Road Conditions

Analysis of all 50 states shows that states spend proportionately to the vehicle miles traveled; however, there are exceptions. Texas, New York and Pennsylvania all spend proportionately more than the vehicle miles traveled, and California spends proportionately less. Regardless of how much money they spend on road conditions, states are using available funds to maintain, not fix or improve, crumbling roads.

After adjusting for vehicle miles, there is no correlation between spending and road conditions. If states were working to improve their roads, the worse the roads, the more the state would be spending (in order to fix them). Additionally, tax-friendly states don’t have the worst roads. They are trying to keep roads in working order just as states with higher taxes are.

Expert Panel: The Economic Impact of Road Improvements and Neglect

  1. How is highway improvement usually funded?

    The funding for interstate highway improvements come from three major sources, with state and local governments accounting for about 75% of the funds and the federal government (Highway Trust Fund) making up the remaining 25%.

    While those federal funds from the Highway Trust Fund are typically distributed in the form of grants, the trust primarily receives its funding from the current fuel tax rate of 18.4 cents per gallon of gas that motorists have been paying at the pump since 1993.

    In the case of state and local government funding, the sources also stem from a variety of tax revenues such as gas taxes, income taxes and others, all varying by state and locality.

  2. What is the impact of investment in road improvement? What are the implications when states do not invest in such improvements?

    The impact of investing in roadway improvements is significant. Roadways are the gateway to and connector of everyone to everything within the American economy. Road improvements provide less congestion, faster and safer access to destinations and fewer direct costs to American taxpayers. In short, improved infrastructure is a stimulant to economic growth and activity.

    For those states and localities lacking the necessary funding or commitment to improving roadway infrastructure, economic growth is typically stifled, as infrastructure is a key metric and driving factor for business and industry growth. Infrastructure was quoted as a driving factor in Amazon's decision to select their second headquarter location.

    The roads sector is critical for local, national and international transportation of goods and services. More than ever, roads are essential in supporting economic growth, enabling socially distant travel and connecting communities.

    As is the case in Florida, some governments have seen reduced traffic volumes as a good time to advance highway maintenance contracts. But other states have found that the dramatically reduced volume of motorists on the roads has resulted in fewer dollars being spent at the pumps and fewer gas taxes being generated for infrastructure maintenance and new projects.

    The North Carolina Department of Transportation (NCDOT) has had to reduce the number of planned construction projects by nearly 100 for the next fiscal year. This is a drop in spending from over $2 billion to about $670 million. The announcement represents a significant business loss for construction companies specializing in transportation projects and other NCDOT contract works.

  3. How do poor roads impact drivers?

    Absolutely. Poor roadway conditions within our local communities create additional delays and expenses for our fire, emergency and police first responders. They are absolutely a critical factor in life-or-death situations. There's no question that a relatively smooth and distress-free roadway surface would provide a faster and safer route to carry out emergency services than a rough-riding roadway riddled with patches and potholes.

  4. Are there broader impacts of poor roads on communities or local economies?

    Absolutely. Poor roadway conditions within our local communities create additional delays and expenses for our fire, emergency and police first responders, and are absolutely a critical factor in life-or-death situations. There's no question that a relatively smooth and distress-free roadway surface would provide a faster and safer route to carry out emergency services than a rough-riding roadway riddled with patches and potholes.

    The impact of poor roads on local life and economy, mostly in rural areas, is often underestimated. The world becomes a little smaller, and the people you might interact with or do commerce with are reduced exponentially with every mile you're able or willing to travel less. We are usually pretty spoiled in the U.S. thanks to the world-famous interstate system. However, infrastructure is not something you build once and never have to touch again.

  5. Would COVID-19 Infrastructure spending be an effective economic stimulus?

    I have witnessed several local and state agencies take advantage of lower traffic volumes during the pandemic to provide critical preventive and preservation treatments to local infrastructure. The effort capitalizes on keeping good roadways good, with minimal impact on the motorist. I believe more agencies should double down on this opportunity, and it would prove to be a highly effective economic stimulus.

    Analysis by S&P Global in May 2020, when the U.S. was at the peak of its national shutdown, looked at two economic scenarios — one with infrastructure investment and one without (baseline). Their analysis found that if the U.S. invested $2.1 trillion into public infrastructure spending over a 10-year horizon, it could create 2.3 million jobs by 2024 as the work is being completed, helping millions of unemployed workers displaced by COVID-19. The productivity boost from the infrastructure investment, if done wisely, could add as much as $5.7 trillion to the U.S. over the next decade. The estimated potential real GDP growth over the next 10 years would be lifted to 2.2% from 1.7%.

    Infrastructure investment is the key to supporting vulnerable communities, strengthening the economy in remote areas and maintaining and improving them in densely populated areas. Financial investment will need to be expedited, diversified and consistent to keep society moving and connected for today and in the future.

    Through its indirect effects, infrastructure spending is usually an investment that yields higher returns than it originally cost. It's a very effective tool a government has in times of crisis and high unemployment. The main issues stopping infrastructure spending are usually political and not economical. I tend to think that we could spend a lot more money and probably get a lot more benefit out of each dollar, but this is based on an idealized model or a long-term view of 20 years in the future. In today's political world, there is a lot of pressure to focus on the short term and ignore long-term needs, which can be seen as too expensive or not providing a payoff. The long-term gain here is tremendous and based on a lot of research. The basic problem when we look at infrastructure spending is the fact that there is a huge amount of uncertainty out there.

  6. Is there anything you'd like to add about the relationship between the quality of roads, state budgets and state or local economic indicators?

    I believe the key to a strong economy is a robust infrastructure of safe, long-lasting and maintained roadways. This roadway network would bring confidence to every motorist's doorstep and instill a sense of reliability and pride. The answer to achieving the best collective roadway network on the planet lies in a data-driven maintenance and repair strategy — a strategy that not only encourages communities to leverage preventive, preservation and recycling treatments but rewards and acknowledges this behavior as well. While improving infrastructure is certainly an economic stimulant, there must be a plan and strategy to preserve, maintain and protect this investment.

    Anyone who thinks that good roads and infrastructure are god-given and not one of the United States' greatest achievements should move their eyes to other countries see how the lack of infrastructure keeps them in poverty. You won't be able to jumpstart an economy when a 20-mile trip is a big ordeal. That issue is more common around the world than people are aware. On the other hand, it's also telling how China has used large amounts of their economic gains of the last 15 years on building state-of-the-art infrastructure because they know that will set them up for decades to come. It's almost always a good idea to invest in infrastructure.


James Golden
James GoldenFounder and CEO
Murray Rowden
Murray RowdenAmericas Managing Director & Global Head of Infrastructure at Turner & Townsend
Jerry Wilson
Jerry WilsonChief Editor at Complete Auto Guide

Methodology

MoneyGeek determined how states rank on the condition of their roads and their highway infrastructure spending by comparing the roughness measure of each state's urban and suburban highways as well as state and local (municipal and county) government expenditures on their highway system. We used the metrics below to establish final scores and rankings:

  • Road Roughness Index: We developed a composite roughness score of all major urban roadways in each state by weighting each category of measured pavement roughness and aggregating this information across the entire state system.
  • Percentage Poor vs. Good Condition: We designated each category of measured pavement roughness into larger groupings and compared the number of lane miles across the state by groupings of higher and lower pavement roughness.
  • Capital Outlays per Lane Mile: This value is calculated as the total state expenditure on capital outlays for highways divided by the total lane miles in each state's functional road system.
  • Total Highway Spend: This value is calculated as the total state expenditure on both capital outlays and other expenditures for highways.
About the Author


Deb Gordon is the author of The Health Care Consumer’s Manifesto (Praeger 2020), a book about shopping for health care, based on consumer research she conducted as a senior fellow in the Harvard Kennedy School’s Mossavar-Rahmani Center for Business and Government between 2017 and 2019. Her research and writing have been published in Forbes.com, JAMA Network Open, the Harvard Business Review blog, USA Today, RealClear Politics, TheHill and Managed Care Magazine. Deb previously held health care executive roles in health insurance and health care technology services. Deb is an Aspen Institute Health Innovators Fellow and an Eisenhower Fellow, for which she traveled to Australia, New Zealand and Singapore to explore the role of consumers in high-performing health systems. She was a 2011 Boston Business Journal 40-under-40 honoree and a volunteer in MIT’s Delta V start-up accelerator, the Fierce Healthcare Innovation Awards and in various mentorship programs. She earned a B.A. in bioethics from Brown University and an MBA with distinction from Harvard Business School.


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