Industry Research

New Report Advocates Innovative State Transportation Funding

LCT Staff
Posted on January 15, 2009

WASHINGTON, D.C. — States are at the forefront of operating and maintaining our nation’s transportation assets but increasingly need to develop innovative funding and financing strategies to achieve this task, according to a new report issued today by the National Governors Association Center for Best Practices (NGA Center).

The report, Innovative State Transportation Funding and Financing: Policy Options for States, outlines the challenges states face in funding transportation needs, and details a number of near - and longer-term policy solutions that states can examine.

The nation's highways, roads, bridges, and transit systems currently are funded by an array of revenue sources, including fuel taxes, vehicle user fees, transit fares, impact fees, bonds, property and sales taxes, and general funds. However the total annual investment in surface transportation falls dramatically short of the amount needed to maintain the current system, let alone improve the status of the nation's transportation infrastructure.

“The challenges are stark, ever-present and are being exacerbated by the current economic downturn,” said NGA Chair Pennsylvania Gov. Ed Rendell. “A number of reports have cited the national transportation infrastructure need at between $225 billion and $340 billion annually to maintain and enhance our system, but the U.S. currently spends only $85-90 billion annually, less than half the amount required.”

“I'm pleased to see the NGA continue to emphasize new financing and partnership opportunities as a potentially critical component of our nation's transportation future. Governors and state leaders are leading the transformation in how America funds transportation by embracing innovative financing and procurement opportunities that allow them to improve incentives, leverage public funds and emphasize customers by partnering with the private sector. These efforts should be supported at the federal level by giving states more options to use federally-backed transportation loans, private activity bonds, and by removing restrictions on tolling, providing states greater flexibility to implement electronic road pricing among other policy changes,” said U.S. Transportation Secretary Mary E. Peters.

The report draws on state, local and international best practice examples presented at the June 2008 NGA State Summit on Innovative Transportation Funding and Financing held in Washington, D.C. and delves into financing and funding strategies states can and are pursuing at the state level under current federal policy. The policy options discussed include:

Debt finance options that leverage private investment; Tolling, congestion pricing, vehicle miles traveled fees, and other user fees; Public-private partnerships for both new and existing transportation facilities; Freight-specific financing; and, Increasing or indexing motor fuel taxes.

While near-term funding for transportation projects has been discussed as part of a federal economic stimulus package, this report specifically highlights near- and longer-term policy options states can employ to systemically and comprehensively address transportation revenue and finance gaps.

As states look to address transportation needs in a difficult fiscal climate, the NGA Center will continue to provide information to states through the 2008-2009 NGA Chair’s Initiative Strengthening our Infrastructure for a Sustainable Future, launched by Governor Rendell.

Source: National Governors Association

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