The new government must find ways to reduce spending. For example, the cost to maintain roads is grossly inflated because of politics. The DOH wants to pave as many miles of roads each year as possible so that every politician can brag about what he has provided to his district. In order to pave as many miles as possible the DOH uses the minimum amount of asphalt to save on costs. However, using more asphalt will actually reduce long term costs.
Repaving a road requires that warning signs be erected and cones be placed to redirect traffic. Then, the old pavement must be removed and the lines be repainted until the new pavement in laid. Then the base coat is laid and rolled. Then the lines must be re-painted. Once the final coat is applied then the sensors must be replaced. After this is done, the lines must be repainted and the cones and the signs removed. The actual asphalt is a small portion of the total cost of repaving a highway.
If repaving a road costs $1,000,000 per mile of road the actual cost could be broken down as follows:
Setup $ 200,000
Asphalt – 2” thick 100,000
Total $ 1,000,000
If using two inches of asphalt results in a road life of two years then the repaving costs $500,000 per mile per year. However, if using 4” of asphalt extends the life of the paving to four years then the only cost that would change would be the cost of the asphalt. It would increase from $100,000 to $200,000. This means that the total cost to pave one mile of road would be $1,100,000. If doubling the amount of asphalt doubles the life of the road from 2 years to 4 years then the cost per mile drops from $500,000 per year to $275,000 per year. This is a 45% savings!
Another problem with the current system is that the Federal government pays for 75% of the cost of major construction projects like bridges. This results in an inefficient allocation of resources and waste. For example, if the state is spending $500,000 every other year to resurface a bridge it will calculate whether it is cheaper to build a new bridge or to continue to repair the old one. If a new bridge will cost $20,000,000 then the state should conclude that it is cheaper to continue repairing the bridge because the $20,000,000 could be invested at 5% to give a return of $1,000,000 per year. The interest earned each year will repair two bridges and the state would still have the $20,000,000! However, when the Federal government pays for 75% of the cost the bridge actually only costs the state $5,000,000. In this case, the state will be better off replacing the bridge. This makes absolutely no sense! Under my proposal, the Federal Government would no longer be allowed to tax gasoline and use this money to bribe the states. Only the states would be allowed to collect gasoline taxes.