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Transport Subsidies Lead to Bad Decisions

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Don OltmanndOutlined below are my answers to the questions shown.  I addressed the others in another post.Would you cast a fairly wide net in capturing costs?  i.e. would you try to capture environmental and health costs directly with the user fees/taxes?User fees should capture all the costs associated with a commercial type activity, whether it is run by private enterprise or a government enterprise fund.  They should include the incremental environmental and medical costs associated with the activity.  They should also include other ancillary costs, e.g. gasoline should include the cost of the U.S. Naval presence in the Middle East that is devoted to keeping the oil sea lanes open.Would you try to get the user fee to be exactly proportional to the cost or would "what the market will bear" be the guide?If the activity is a not for profit operated for the benefit of society, i.e. highways, airways, transit systems, etc., because private enterprise cannot make money on it or government won't permit it, user fees should be sufficient to recover the cost of the facilities, including local property taxes, environmental impact fees, etc.  A commercial activity, i.e. airplanes, buses, trucks, trains etc., should pay user fees, usually embedded in fuel taxes, that are commensurate with the shared cost of using any common facilities.  The facilities should pay local property taxes, etc. if they are not otherwise captured in the user fees.      How would you apply eminent domain to a parallel start-up, private venture toll road or airport?  Would you charge a fee to compensate those who wind up near the wake of the road, railroad or airport?Utilities in most states use eminent domain to obtain the easements necessary to construct power lines, gas lines, water lines, etc.  They have to make a convenience and necessity case for the rights of way to the regulators.  The largest electric and gas utilities in the U.S. are investor owned.The same concept would apply to anyone that wants to build a private toll road, airport, etc.  In fact, it applies in Texas, were toll roads are sprouting like weeds.The Pennsylvania Turnpike, New Jersey Turnpike, etc., as well as Texas' toll roads were built by quasi government bodies, usually an authority set-up build and operate the toll facility.  They are responsible for financing, building, and operating the facility.  They are usually independent of the sponsoring state government(s), except the state guarantee's the authority's bonds, and usually has representatives on the oversight board.  It also enables the authority to issue tax free municipal and authority bonds.  Taxpayers only get stuck with the cost of these projects if they are financed with general obligation bonds, as opposed to revenue bonds, which would be rare for a toll road, bridge, etc., and the issuer defaults on the interest or principal of the bonds.    Interestingly, the original stretch of the Pennsylvania Turnpike was built on a right of way constructed in large part by the New York Central Railroad.  Management of the Central, I have forgotten the year, was ticked off at the Pennsylvania Railroad, and it decided to build a competing rail line through southern Pennsylvania.  Much of the right of way was graded and, if I remember correctly, some of the tunnels, which later became the accident prone tunnels on the PA Turnpike, were bored in preparation for the rail line.  Ultimately, peace was made and the NYC abandoned the project.   I spent decades in the electric utility business.  When I began my career the company was a regulated monopoly.  It had no meaningful competition.  As a result, it was the epitome of inefficiency.  But in 2000 deregulation and competition came to Texas.  It had dramatic impacts on the company and its customers.  They were too numerous to discuss here, but one statistic is telling.  Employment dropped from more than 17,250 employees to less than 10,000.  And the lights did not flicker.  Competition forced management to become more efficient.  The unnecessary employees were a hidden tax on the company's customers.  Their pockets were picked daily to support the company's inefficiencies.  And in doing so the customers lost a bit of their freedom to decide how to spend their money.  This is exactly what subsidizing transportation does.  It robs the people who don't or cannot use it of their freedom to decide how to spend their dollars.
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