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78 T R A N S P O RTAT I O N F I N A N C E INSTITUTIONAL FACTORS Departments of Treasury and Labor, the U.S. Environ- INHIBITING INNOVATION mental Protection Agency, and the Office of Management and Budget. As a result, some innovative transportation The innovative finance strategies pursued to date have finance proposals are never fully considered. The follow- been constrained to some extent by the established roles ing are among the issues that face continued resistance and relationships among the various institutions and debate: involved in developing transportation infrastructure in the United States. The parties (federal, state, and local Increasing federal motor fuel taxes; governments and the private sector) have significant Issuing debt at the federal level for transportation experience in working together to construct projects, so purposes; the natural focus of their initial efforts to address trans- Using general fund resources to fund transporta- portation funding gaps is to enhance approaches to pro- tion; ject delivery. Each party can bring something to the table Allocating federal transportation funds on the (more flexible rules, designbuild, nonrecourse financ- basis of need or the level of effort put forth by each ing, etc.), and the outcome can be measured in terms of state to finance its infrastructure; the number of projects advanced or the dollar amount of Limiting the amount of congressional earmarks savings. The challenge facing the transportation com- for specific projects; and munity, however, is not how to build projects more Easing requirements related to environmental, quickly but how to develop sustainable sources of fund- labor, and other social objectives. ing for transportation investment and partnering with relevant stakeholders to address mobility issues. To that Potential strategy: Build strategic coalitions with tra- end, the following discussion attempts to highlight some ditional opponents of innovative finance proposals and of the institutional dynamics that may need to be directly address their issues, such as double taxation addressed before more beneficial change can occur. and urban sprawl. Federal Government Does Not Develop Projects State Departments of Transportation Caught in the Middle With the exception of certain roads on Indian reserva- tions, in national parks, and on other federal lands, the Standards and performance measures for the traditional federal government does not build, own, or operate spe- services provided by state departments of transportation cific projects. Therefore, despite billions of investment, are well defined. In addition, several processes have been there are no federal transportation assets to sell or secu- established to ensure accountability, such as competitive ritize. In addition, the federal government does not ini- bidding and program audits. As the missions of state tiate projects, and it is not considered the logical departments of transportation expand and new services sponsor for private transportation concessions. As a are added (innovative finance, intelligent transportation result, private companies interested in playing a signifi- systems, etc.), similar "institutionalization" must occur. cant role in U.S. transportation finance must pursue The following are issues related to transportation opportunities in several states to find projects of suffi- finance: cient scope and number to justify a major commitment of resources. Negotiating the appropriate level of public subsidy Potential strategy: Assign development responsibility for project financings, for a "megaproject" of national significance, such as Managing noncompete provisions and other poli- truck tollways or North American Free Trade cies designed to facilitate private development of infra- Agreement superhighways, to the federal government. structure, USDOT could outsource most services and would work Developing standards for "best value" procurements, closely with state and local partners. Designing projects to maximize revenue, Selecting which projects are developed in-house and which can or should be done privately, Federal Transportation Policy Is Influenced by Managing various intermediaries (consultants, Many Competing Interests bankers, lawyers, etc.) involved in project financings, Building public involvement and support for inno- Transportation issues affect every individual and business, vative finance initiatives, and so a number of entities effectively have standing when it Facilitating the sale and purchase of public infra- comes to federal transportation policy, including the structure projects.