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Numbers in the text and tables may not add up to totals because of rounding. |
The federal government provides about $20 billion a year in grants to states for highways--about one-quarter of the total amount spent on roads each year by all levels of government. Most of the federal money is raised through taxes on motor fuels. States, in financing their road-building programs, also rely heavily on motor fuel taxes and on fees paid by highway users. But revenues from those user taxes and fees are insufficient to build as many new roadways as transportation officials would like. As a result, they have been exploring innovative ways of financing such projects. This study, which was prepared by the Congressional Budget Office (CBO) in response to a request by the Senate Committee on Environment and Public Works, reviews several approaches to augment traditional sources of funding. The analysis covers changes in rules governing federal aid, state infrastructure banks, federal credit assistance, and private-sector financing of roads.
Elizabeth Pinkston of CBO's Natural Resources and Commerce Division wrote the study under the supervision of Jan Paul Acton and Elliot Schwartz. Nabeel Alsalam, Clare Doherty, Peter Fontaine, Douglas Hamilton, Arlene Holen, Pearl Richardson, Robin Seiler, and Paul Van de Water of CBO all contributed helpful comments. Many members of the staff of the Federal Highway Administration (FHWA) provided information and explanations of technical matters. The author is particularly grateful to Max Inman, David Seltzer, Lucinda Eagle, Bryan Grote, and Larry Dwyer of FHWA, who reviewed drafts and offered valuable advice. Several state and local transportation officials also made useful suggestions; they include Jon Bloom, Norman Foster, Adeel Lari, Christopher Mann, Frank Smith, and Constance Sorrell. In addition, the author wishes to thank J. Richard Aronson, Stewart Butler, Randall Eberts, David Ehrlich, and David Klinges for their careful reviews and comments.
Leah Mazade edited the manuscript, and Melissa Burman provided editorial assistance. Rae Wiseman typed the final draft. Kathryn Quattrone and Martina Wojak-Piotrow prepared the study for publication. Laurie Brown prepared the electronic version for CBO's World Wide Web site.
June E. O'Neill
Director
January 1998
TWO - RELAXING RESTRICTIONS ON FEDERAL AID
THREE - STATE INFRASTRUCTURE BANKS
FOUR - FEDERAL CREDIT ASSISTANCE
FIVE - PRIVATE-SECTOR PARTICIPATION
APPENDIXES
A - Highway Financing: Sources
and Trends
B - The Matching-Share Requirement
| TABLES | |
| 1. | Potential Sources of Financing for Highways |
| 2. | Funding Authorized by Title I of the 1991 Intermodal Surface Transportation Efficiency Act, 1992-1997 |
| 3. | Innovative Financing Tools Used by the States Under the Innovative Financing Initiatives of the Federal Highway Administration, April 1994 to July 1996 |
| 4. | Sponsors and Features of Highway Financing |
| 5. | Motivation, Contributions, and Risks of Partners in Public/Private Ventures in Highway Financing |
| A-1. | Types of Revenue Used for Highway Financing, 1994 |
| A-2. | Revenues Flowing to the Highway Trust Fund, 1995 |
| A-3. | Disposition of Revenues from State Highway Users, 1995 |
| A-4. | Revenues Available for Repaying State Highway Bonds |
| A-5. | Sources of State Financing for Highways, 1995 |
| A-6. | Sources of Local Financing for Highways, 1994 |
| BOXES | |
| 1. | Highway User Taxes and the Highway Trust Fund |
| 2. | Proposals for Devolution |
| 3. | Types of Financial Assistance SIBs Can Offer |
| 4. | Federal Infrastructure Financing Institution |
