States Are Stepping Up on Transportation Policy

August 6, 2013

The July 23 hearing on the Highway Trust Fund made it painfully clear that neither the government witnesses nor any of the participating members of the House Committee on Transportation and Infrastructure had any clue as to how to pay for the hundreds of billions of dollars that transportation boosters say are needed to fund the next reauthorization, says Ken Orski, a public policy consultant and former principal of the Urban Mobility Corporation.

  • A six-year transportation bill would require roughly $320 billion ($53 billion per year) to maintain current spending levels.
  • Trust Fund revenue and interest over the same period are expected to bring in only $240 billion, according to the Congressional Budget Office.
  • This would leave an unfunded shortfall of $80 billion.
  • Even a stop-gap one-year bill would require an extra $15 billion and increasing amounts in subsequent years to prevent future shortfalls if spending was maintained at the 2013 levels.

Neither the House and Senate members nor the witnesses have thought of suggesting what is perhaps the most obvious solution to the impending funding crisis: Let individual states bring their transportation facilities up to a state of good repair with locally raised revenue, supplemented with their regular federal-aid highway funds.

  • As for large-scale reconstruction and system expansion projects that are beyond the states' fiscal capacity to fund on a pay-as-you-go basis, let them be financed with long-term credit and private investment capital.
  • While this might limit new investment to credit-worthy projects (i.e., those that generate revenue or are backed by dedicated taxes), a vast majority of transportation megaprojects already fall in that category.

A growing number of states aren't waiting for the financially troubled federal government to come to the rescue with new money. They are taking matters into their own hands and taking control of their infrastructure agendas.

  • A recent survey identified as many as 20 "Can-Do" states. In addition, eight states are financing big-ticket highway and bridge projects with long-term credit and private financing without direct federal funding.
  • Indeed, except for mass transit projects there are no major transportation facilities under construction or on the drawing board today whose completion hinges on federal appropriations.

Source: Ken Orski, "Are We Ignoring the Obvious Solution to the Transportation Funding Crisis?" Infrastructure USA, July 29, 2013.

 

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