On Nov. 8 we vote on Initiative 912, a measure to repeal increases in the gasoline tax. If the initiative passes, we’ll get lower taxes but worse roads. Lower taxes sounds fine, but none of us want to see our already crummy transportation system deteriorate further.
On the surface, choosing between better roads and higher taxes seems like a tough decision. Let’s make the decision easier by running it through a simple economic analysis.
First the costs. I-912 will roll back a 3-cent-per-gallon increase in the gas tax put in place in July, and cancel another 6.5 cents of tax hikes scheduled for the next several years. How much does 9.5 cents per gallon mean for a typical driver?
The average car in Washington is driven about 12,000 miles per year and gets 17 miles to the gallon, which adds up to a little over 700 gallons a year. These numbers are from the vote-no side Web site, but they seem reasonable enough. Seven hundred gallons a year at 9.5 cents per gallon translates to a tax of $1.30 a week.
“Keep Washington Rolling” – the vote-no group I’m citing – claims the cost is 41 cents a week, in a big, bold display on the front page of its Web site. Apparently, they’re only including the 3 cents of the tax that went into effect this last July. But, the initiative is about the whole package, not just the first installment. At best, the vote-no guys are being disingenuous. The right number is $1.30 a week.
Less than a buck and a half a week doesn’t seem like a lot. But how do the benefits compare?
Figuring out the economic value of better roads is easy in some ways, but hard in others. The hard part is valuing safety.
If we don’t spend more on our transportation system, then when the Big One hits and the bridges go down, the TV pictures of dead bodies are going to show our friends and neighbors. That’s going to be even harder to watch than the tragedy in New Orleans.
What dollar value should we place on avoiding a couple of hundred deaths that might happen right now while you’re reading the paper – or which might happen 50 years from now?
I don’t know what the right number is. I do know that replacing the Boulder Creek bridge on the Mount Baker highway and the Dry Creek bridge near Sunnyside, not to mention the 520 bridge and the Alaskan Way viaduct in Seattle, suddenly seems very prudent. Since these issues are hard to quantify, let’s just remember that these are worth something, and turn to the easy part.
The benefit of better transportation that’s easy to tag with a dollar figure is the economic value of the time you and I save by having better roads, bridges and ferries. Economists have a standard way of valuing time: the economic value of an extra hour is your hourly wage rate. (If you’re retired or a homemaker or a student, you probably want to think of what you’d earn if you were working.) As a nice, round number, let’s use the average Washington state wage of $15 an hour.
Twelve thousand miles a year is roughly 240 miles a week. At 60 mph, that’s four hours a week driving, or a little over half an hour a day in the car.
I know, I know – if most of your driving is anywhere between Everett and Tacoma anywhere near peak commuting hours, the idea of averaging 60 mph probably has you rolling on the floor laughing. But let’s go with it, anyhow.
One more piece of math. At $15 an hour you need to save five minutes a week in the car to cover your extra gas tax. (If your driving is typically slower, maybe it’s a couple of minutes more.) We’re talking about a minute or two a day. If we don’t increase spending on transportation, you and I are going to find ourselves spending a lot more than an extra minute or two on the roads.
Never mind the hard safety calculations; the easy time-saved calculations will do. It’s a no-brainer. Vote no on I-912.
Dick Startz is Castor Professor of Economics and Davis Distinguished Scholar at the University of Washington. He can be reached at econcol@u.washington.edu.
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