Financial Burden
The state cannot afford to maintain all the roads it currently has—our road system is financially insolvent. This project will cost approx. $500M. Could we instead invest in financially productive projects that grow our economy? Read below to learn about the financial implications of our road system on New Mexicans.
Free highways: a long-term liability trap
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The federal government is expected to pay for about 85% of this highway expansion project. Sounds like a good deal, right?
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But... highways are not assets, they are long-term liabilities that we will need to maintain indefinitely.
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Most of us wouldn't accept a free private jet if it meant we had to pay for ongoing maintenance and operation costs, like gas. But unlike a plane, the state cannot simply pick up the highway and sell it to the next state.
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The state has overburdened itself with long-term liabilities we can't possibly keep up with. This is why so many of our roads are in such terrible conditions.
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Before we can fix the crumbling roads we currently depend on, we have to stop making the problem worse.
How much will this project cost?
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The highway expansion through the city's center will cost $300-$500 Million.
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The state is already $750 Million in road construction debt.
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This would be acceptable if the highway generated additional wealth that could not just pay for itself but benefit the state and local economies... sadly highways don't pay for themselves.
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It's the exact opposite: highways are wealth sinks draining wealth away from local communities and the state.
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It is a common myth that "users pay for roads" through the gas tax, sales and registration taxes, etc. The truth is, these only cover 42% of the cost of roads with the majority of the cost falling on the overall population through property, income, and sales taxes.
Click to enlarge. Albuquerque road conditions.
Case study: Albuquerque's roadway system
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​Albuquerque has 4,616 lane miles of paved roads, or enough to pave a 2-lane road from Albuquerque to Boston!
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The cost to maintain these roads is $116 million/year, but the City's street services budget is only $8.3 million/year!
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This is why we never have money to fix the roads we already have, much less improve them.
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We acquired most of these roads through decades of new suburban developments with developers taking on the initial capital cost and the city getting them "for free", without understanding the long-term liability we got ourselves into.
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We need to stop this cycle at both the city and state highways levels. We need to stop making the problem worse.
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So, how do we get out of this financial hole?
We cannot afford to expand our infrastructure, but we can use what we have better! The solution to almost all our transportation woes is multimodality, which works for the same reasons as its financial counterpart, the diversified investment portfolio. When the only transportation option is driving, induced demand quickly makes it so that we keep expanding our roads indefinitely. But the same mechanism of induced demand can be the solution: if we transform our existing roadways into convenient and safe multimodal corridors we will all have and make different choices. This is more space efficient, reduces congestion, benefits all road users including vehicles, and benefits our local economy making these streets truly wealth builders rather than wealth sinks. This is the opportunity cost of this project: the resources used for expansion could have been allocated to other projects with potentially greater benefits.