Report Highlights Alternative Funding, Financing Options for States

AASHTO Journal, 7 February 2014

States have access to many different funding and financing options in order to better meet their transportation investment needs, according to a recently released report sponsored by the Associated Equipment Distributors.

“Although federal transportation funding, particularly the Highway Trust Fund, has increased since the 1950s, its real value has declined significantly in recent years,” according to the report, which was prepared by the College of William & Mary’s Thomas Jefferson Program in Public Policy. “Federal funds account for a significant portion of transportation investment, with states responsible for almost half of transportation infrastructure revenues. In an era of tight federal budgets and growing debt, states will likely have to shoulder more of the burden.”

The report suggests that states diversify funding sources to stabilize their revenue streams by focusing on user fee based mechanisms, and accompany implementation efforts with educational initiatives.

In addition, the report says states should consider increasing and indexing fuel taxes; working toward implementing a vehicle miles traveled fee; enacting electronic tolling for efficiency; applying/establishing sales taxes on fuel and other transportation-related sales; raising fees on registration, licensing, titling, and permitting; and possibly dedicating general fund money to transportation projects.

In addition, the report said careful use of other financing mechanisms could also be helpful. Those mechanisms include state revolving funds and state infrastructure banks, public-private partnerships, and bonds.

“There’s a crisis, but there are also solutions,” said AED Vice President of Government Affairs Christian Klein said in a statement. “We hope transportation supporters around the country will pick up the ball and use this new information to help their federal, state, and local officials see there are many fiscally-responsible paths forward for road, bridge, and transit investment.”

The 171-page report is available here. A brochure summarizing the report is available here.

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