National Academies Press: OpenBook

Critical Issues in Transportation 2019 (2018)

Chapter: Funding and Finance

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Page 21
Suggested Citation:"Funding and Finance." National Academies of Sciences, Engineering, and Medicine. 2018. Critical Issues in Transportation 2019. Washington, DC: The National Academies Press. doi: 10.17226/25314.
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Page 21
Page 22
Suggested Citation:"Funding and Finance." National Academies of Sciences, Engineering, and Medicine. 2018. Critical Issues in Transportation 2019. Washington, DC: The National Academies Press. doi: 10.17226/25314.
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Page 22

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environmental damage, and neighborhood opposition. How much can shared transportation services, personal bicycles, and electric scooters substitute for growth in single-occupant auto trips, many of which are less than three miles? How can new capacity be added, where justified, while incorporating expected benefits from technology, pricing, and other strategies, and also responding to environmental concerns of additional road capacity and traffic? 43. With constrained budgets, public officials must always weigh trade-offs between investing in new facilities and providing adequate funding for the maintenance of existing facilities. How can support be developed at the federal, state, and local levels to give greater weight to investing in system preservation and maintenance? How can decision makers be convinced to invest in longer-lasting facilities and systems when initial costs may be higher, even though life-cycle costs are lower? 44. Advanced materials and construction techniques and improved maintenance strategies are needed to cost-effectively enhance infrastructure performance over its full life cycle. How can such innovations be developed, proven, and moved into practice more quickly? Which areas of research and analysis on materials, construction, and maintenance have the most promise to improve life-cycle infrastructure performance and how can that performance best be demonstrated? Part of the challenge is overcoming the inherent caution of infrastructure managers responsible for assets with long service lives, who are hesitant to use new materials and techniques without extensive field testing. What are the barriers to and opportunities for moving promising approaches into practice more quickly through certification or warranties based on accelerated testing done by third parties? Funding and Finance For generations, user-fee funding has provided a steady and, at times, ample source of funding for highways, bridges, airports, ports, and public transportation,109 but this reliable mechanism has become imperiled by an aversion to raising taxes of any kind at the federal level. User-fee funding has many efficiency, efficacy, and equity merits, but despite the majority of the public supporting paying motor fuel taxes if the funds are dedicated to maintaining roads and highways,110 elected federal officials have been reluctant to raise these taxes to account for inflation, declining revenues as fuel economy improves, and growing demand. The unwillingness to increase federal motor fuel taxes has caused Congress to increase reliance on general tax revenues to support surface transportation and to shift more responsibility for highways, including those serving interstate transportation, to the states. Congress has resisted airport owner and operator requests to increase passenger facility charges to expand terminal and gate capacity and enhance competition. Shortfalls in revenue from aviation ticket taxes constrain budgets for air traffic control.111 Inland marine transport moves low-cost shipments of bulk products and helps sustain agricultural exports, yet user-fee revenues to the Inland Waterways Trust Fund are well below the levels required to sustain and operate the system.112 Motor fuel taxes have been the principal user fee providing federal support for highways and transit, but they are becoming less reliable as fuel economy improves.113 As a result of revenue shortfalls, jurisdictions are turning to less efficient and less equitable sources, such as sales taxes.114 Highway, transit, airport, and port officials are also increasingly reliant on public–private partnerships that depend on tolls or future government funding from a source, as well as profit for investors. Tolls, the ultimate user fee, encourage efficient system use, but they are not always feasible for low-traffic critical issues in transportation 2019 21

network links, and they also raise equity concerns. Charging for highway use by the mile can be done efficiently and accurately because of advances in technology, and might one day be a replacement for motor fuel taxes, but the practice raises privacy concerns that must be resolved.115 The U.S. economy cannot function without its transportation networks, but paying for the public infrastructure it depends on raises many vexing questions and vigorous debate, and so far there is no consensus on how to proceed at the national level. 45. Given declining federal support and the growing share of capital funding by states and local governments, what can be done to better articulate the rationale for federal funding for transportation systems and services and how can the federal share be determined for facilities serving interstate travel and other different contexts in which it might apply? What are the most cost-effective, cost-beneficial, and equitable ways to pay for the federal share of transportation? 46. The majority of the public has consistently supported an increase in the motor fuel taxes if the funds are dedicated to maintenance.116 The motor carrier industry voiced support in early 2018 for a 20 cent increase in motor fuel taxes to help fund the highway system,117 as did the U.S. Chamber of Commerce.118 AAA has also endorsed a fuel tax increase to pay for highways.119 Most states have raised their motor fuel taxes since 1993, the last time that federal fuel taxes were raised for transportation.120 How can political support be found for raising the federal motor fuel taxes or introducing alternative user fees to provide public infrastructure that serves interstate travel? What are the consequences of the trend away from user-fee funding and how can states and the nation as a whole steer toward more efficient, effective, sustainable, and equitable forms of user-fee funding for transportation services and systems in the future? How can funding be sustained for modes such as public transportation and inland waterways that cannot rely wholly on user fees? 47. The merits of motor fuel taxes as the main source of user fees weakens as vehicles become more fuel efficient and some alternatively fueled vehicles pay no fees at all for highway use. As vehicle energy efficiency improves, resulting in less fuel tax revenue, and as alternatively fueled vehicles become more common, further depleting revenue, how can states and the federal government respond? Can user fees be expanded and extended? Can other, more promising funding approaches be pursued? Mileage-based user fees (MBUFs) could serve as a replacement for, or supplement to, the fuel taxes relied on for highway infrastructure,121 and multiple pilot programs of this concept are under way around the country. In concept, MBUFs could be adjusted to charge premiums for driving on congested roads during high-demand time periods and base fees on vehicle fuel economy. Barriers to feasibility include concerns about the cybersecurity of billing records showing the details of trips and administrative costs that exceed those of motor fuel taxes. What version of an MBUF best protects privacy, allocates resources according to demand, minimizes administrative expenses, and could gain public and political acceptance? trb | transportation research board22 Renewing the National Commitment to the Interstate Highway System A Foundation for the Future

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TRB has released Critical Issues in Transportation 2019. In this report, which is updated periodically by the TRB Executive Committee, a series of challenging questions are posed to explore issues and opportunities that may arise 10 to 20 years into the future. These questions, 63 in all, have been organized into 12 topic areas and provide a way to frame future areas of research, policy analysis, and debate. Critical issues identified in this report deserve attention because of transportation’s central role in serving individuals and society. This document serves to sharpen society's collective understanding of transportation and its ramifications, while informing decisions by individual citizens and officials in both the public and private sectors. The issues have been identified and documented from a U.S. perspective, and are also common across developed nations.

Download the executive overview, Critical Issues in Transportation: Policy Snapshot and or visit www.TRB.org/criticalissues from your mobile device.

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