San Diego’s budget crisis has it considering cutting its planned road-repair spending from $259 million to $83 million in the next fiscal year.
Business groups often point to a healthy road system being necessary for the flow of commerce, from imports at the Port of San Diego heading out across the U.S. to roads leading to mom-and-pop restaurants.
Budget woes and a smaller workforce were cited by the city as a reason for the cut. It isn’t a done deal yet with some ideas still being kicked around: using more in-house workers to save money (instead of outside contractors), lease-revenue bonds and other debt financing.
Economists in Austria and Russia in 2022 produced a highly cited study that argued the cost of transporting goods, volumes of trade and a region’s economic well-being largely depend on the condition of roads.
Question: Should San Diego slash its road-repair budget next fiscal year?
Economists
Caroline Freund, UC San Diego School of Global Policy and Strategy
NO: Slashing the road-maintenance budget will lead to higher costs in the future. Costs of bad roads include accidents and delays, and in the long run, costs end up far greater if infrastructure needs to be replaced. Cutting the budget by two-thirds is way too much, given the state of our roads. Reducing road repair is not just bad economics, it is bad politics. Voters hate bad roads; while improvements are visible.
Kelly Cunningham, San Diego Institute for Economic Research
NO: Taxes to use roads are imposed for infrastructure maintenance, but much of the money generated is spent on other purposes. California has by far the nation’s highest taxes charged on cars and trucks, but the second worst roads. Costs should actually be lower from “economies of scale” with more use generated by vehicle per mile. Significant gas tax revenues are transferred to the general fund, where money is spent covering for other government expenses.
Alan Gin, University of San Diego
NO: Strong infrastructure is important to a healthy economy, and that includes roads. Deteriorating roads hurt businesses by causing damage to vehicles, increasing transportation costs and times, and hurting the ability of customers to reach the businesses. Slashing the budget for road repairs would hurt the local economy, and that could in turn reduce tax receipts. Some of the ideas for reducing costs and improving efficiency, such as relying on in-house personnel to do the work, would be helpful.
James Hamilton, UC San Diego
NO: The city spent $5.1 billion last year, which is $2.3 billion more than it did 10 years ago. The growth in spending came not because the city is doing a better job of providing basic services, but because of mission creep on new programs that have failed to achieve their goals. The solution to the city’s deficit is to start with the categories that have seen the biggest increase in spending and pare those back one by one.
Norm Miller, University of San Diego
NO: The quality of life in a city is very much dependent on the crime rates, road quality, water quality and sewer system. Poorly maintained roads become a “tax” via extra vehicle and tire repairs, but it is easy to literally kick road and sewer repair down the road. Perhaps we should divert some of the new tourist taxes to roads and infrastructure while maintaining our police and fire staffing?
David Ely, San Diego State University
NO: It is understandable that spending on road repairs will be impacted by the city’s current budget situation. But roads in disrepair raise safety concerns and increase costs beyond those directly paid by governments responsible for road maintenance. Residents and businesses face higher costs related to longer travel times and increased vehicle maintenance and insurance costs. Recognizing these motorists costs should lead to an outcome where the reduction in spending on road repair is less drastic.
Ray Major, economist
NO: In fact, absolutely not. One of the main responsibilities of the city is to maintain the infrastructure its 1.3 million citizens use on a daily basis. This is why we pay taxes. One possible solution is to slash the bloated personnel budget and eliminate some of the 13,000 highly compensated employees working at the city. The savings could then be used to pay for the services that taxpayers desperately need – like road repair.
Executives
Phil Blair, Manpower
YES: But “slash” is a bit harsh. Leadership is all about balancing options. When funds are limited then choices need to be made. Public safety continues to be the priority to residents followed by street maintenance. Roads are probably the most used budget item by the most people in the city’s budget. It needs to take its fair share of cuts but not be slashed. San Diegans need to rethink their of a sales tax increase it they want to continue to demand more services.
Gary London, London Moeder Advisors
NO: This is a soft “no” only because bad roads have forced me to purchase sturdier vehicles at a cost far exceeding my share of taxes to simply repair the roads. I have no special insight into what services to cut. I look to responsible policy makers for that. But clearly the emphasis in a fiscally tight era must be on the provision of basic health and safety services, and a moratorium on other programs.
Chris Van Gorder, Scripps Health
NO: Roads not in good repair are an economic and safety issue. We need well-maintained roads for people to go to work, for goods to be transported and for emergency vehicles. And we need roads in good shape if all that driving is to be done safely. To neglect roads is to endanger lives. Accidents caused by poorly maintained roads pose a liability risk for the city, potentially costing it more than repairs would have.
Jamie Moraga, Franklin Revere
NO: San Diego’s roads are in dire condition after years of deferred maintenance; drastically cutting the road-repair budget now would be a serious mistake. Although the city faces a significant deficit, slashing essential road maintenance is shortsighted. Instead, the city should target waste and inefficiencies elsewhere. Well-maintained roads are vital for residents, businesses and tourists alike and are a core function of government. This isn’t the line item to cut. We need a properly funded maintenance plan for our streets.
Bob Rauch, R.A. Rauch & Associates
YES: San Diego should prioritize essential road repairs over new projects to prevent worsening infrastructure. Seeking federal aid and exploring public-private partnerships could offset costs. While balancing the budget is crucial, long-term neglect may lead to higher expenses later. Investing strategically can preserve roads while maintaining financial stability.
Austin Neudecker, Weave Growth
YES: Properly maintained roads are vital for commerce, safety and economic health. But with San Diego’s budget shrinking due to declining tourism revenue and tariff impacts, cuts are necessary. The road repair budget is inflated due to overreliance on outside contractors and an under-resourced internal team. Redirecting existing funds to properly equip and staff the city’s workforce, then holding them able for performance, could preserve our infrastructure needs at a lower cost.
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