Why U.S. Infrastructure Is Too Expensive: Localities Have Too Little Control

American infrastructure incentives are badly misaligned, according to an article by Noah Smith, published in May for Bloomberg.

Following up on that story for Strong Towns, Charles Marohn argues that until we fix the incentives for infrastructure, "throwing more money at this system is simply pouring good money after bad." Marohn starts with the example of a policy that provides federal funding based on lane miles of highways, and programs that pay for around 90 percent of new construction but only 50 percent of maintenance. Marohn reasons that these incentives don't push projects to be well-managed and cost-efficient, nor built with the goal to endure.

To fix these types of misalignments, Marohn outlines a plan in four parts. He argues that localities should be given tools and encouraged to raise their own funding for these projects, so that they will be incentivized not to impress federal services whose rules and mandates have to be made broad enough to serve the whole country but, instead, built to serve their own local needs.

To reward planning for the long-term, Marohn says, "[t]he only tool I would take off the table -- or at least constrain -- is debt. Cities should have the ability to take on cash flow take and make strategic investments with debt, but they should not be able to live beyond their means today -- intentionally or not -- at the expense of future generations." He goes on to suggest that funding should be tied to very specific initiatives, like a toll or sales tax to pay for specific maintenance. Lastly, he suggests tying the design, construction, and warranty for projects into a single contract so contractors are motivated to create lasting success instead of just passing the buck.