The National Academies Press

Currently Skimming:

Pages 208-258

The Chapter Skim interface presents what we've algorithmically identified as the most significant single chunk of text within every page in the chapter.
Select key terms on the right to highlight them within pages of the chapter.

From page 208... ... 5Review of Finance Reform Proposals This chapter reviews selected prominent proposals for creating new arrangements to pay for major freight transportation infrastructure projects. The proposals originate with the private sector, government, and independent sources and are responses to the concerns described inChapter 2 about the course of development of transportation infrastructure. Read the entire page →
From page 209... ... Review of Finance Reform Proposals 199 summarizes the types of proposals. The final section identifies criteria for evaluating the proposals. Read the entire page →
From page 210... ... 200 Funding Options for Freight Transportation Projects eration. As noted in Chapter 4, most policy proposals concerning freight infrastructure development involve only incremental changes in the historically established government roles, in particular, expansion of direct federal responsibility for funding and selecting highway and nonhighway freight infrastructure projects, government participation in funding and selecting freight rail infrastructure projects, and concessions for private operation of facilities that are nowpublicly owned. Read the entire page →
From page 211... ... Review of Finance Reform Proposals 201 have been for projects individually designated by Congress. Efforts to institute more formal procedures (that is, competitive or formula grants awarded according to set administrative procedures) Read the entire page →
From page 212... ... 202 Funding Options for Freight Transportation Projects At the state and local government levels, the same questions must be considered in designing finance options: whether the government should be involved, whether it should directly provide and pay for facilities or stimulate action through aid to other parties, what rules should govern grant programs, and whether to rely on user fees or on other sources of funds. However, the range of options that has been put into practice is broader than at the federal level. Read the entire page →
From page 213... ... Review of Finance Reform Proposals 203 REFORMPROPOSALS Each of the diverse collection of finance reform proposals that the committee reviewed is incomplete in some way, addressing only certain aspects of overall finance arrangements. Some refer only to a particular freight mode and most refer only to federal programs. Read the entire page →
From page 214... ... BOX 5-1 Classification Schemes for Federal Freight Policy Proposals GAO (2003) GAO summarized seven proposals for federal freight transportation assistance programs according to how each addressed three elements of planning strategy and three elements of finance strategy: • Elements of planning strategy: – Coordination across jurisdictions and transportationmodes; – Involvement of the private sector: carriers and shippers; and – Data and planning tools. Read the entire page →
From page 215... ... Review of Finance Reform Proposals 205 provisions: new sources of revenue (or sources of credit) andnewarrangements for planning and decision making on project selection. Read the entire page →
From page 216... ... 206 Funding Options for Freight Transportation Projects freight trust fund proposal of the Coalition for America's Gateways and Trade Corridors. The National Surface Transportation Policy and Revenue Study Commission's (NSTPRSC's) Read the entire page →
From page 217... ... Review of Finance Reform Proposals 207 revenues generated by these facilities to subsidize maintenance and improvements at facilities that lack sufficient traffic to be self-supporting from user charges (TRB 2003, 37–38) Read the entire page →
From page 218... ... 208 Funding Options for Freight Transportation Projects public infrastructure investment programs, creating an objective process in place of current practices such as earmarking and formula allocation of funds, which are seen as inefficient. The proposed new institutional structure would at the same time tend to expand federal control over infrastructure spending. Read the entire page →
From page 219... ... Review of Finance Reform Proposals 209 such as the financial crisis that began in 2008, which disrupted all credit markets. • The net effect of the National Infrastructure Corporation would be equivalent to a federal subsidy to local governments for infrastructure spending. Read the entire page →
From page 220... ... 210 Funding Options for Freight Transportation Projects The CBO review did not comment directly on the goal of depoliticizing public-sector infrastructure investment and fee decisions, which is an element of most of the national infrastructure authority proposals. It is reasonable to ask whether removing such decisions from the direct responsibilities of elected officials is politically practical (Orski 2008) Read the entire page →
From page 221... ... Review of Finance Reform Proposals 211 Assistance to Private-Sector Freight Railroads and Terminal Operators Annex 5-1 summarizes proposals for federal assistance to private freight railroads or to private firms constructing intermodal facilities, including a rail investment tax credit and proposals for institutionalized access to federal grants for rail projects. Government assistance to freight railroads has been available, including state aid programs; loans from the federal RRIF program; and grants from the federal Congestion Mitigation and Air Quality program. Read the entire page →
From page 222... ... 212 Funding Options for Freight Transportation Projects the highway capacity that would be necessary to carry expected freight volumes by truck. Rail capacity can be cheaper only if governments are undercharging trucks. Read the entire page →
From page 223... ... Review of Finance Reform Proposals 213 Rate regulation can ameliorate these special situations without creating a need for subsidies. New Local or Project-Specific Revenue Sources and Finance Arrangements Included in this category are proposals to increase reliance on revenue from facility-specific, cost-based fees to pay for publicly provided infrastructure. Read the entire page →
From page 224... ... 214 Funding Options for Freight Transportation Projects construction of individual facilities (TRB 2003, 37–38, 82–85, 132–135) Read the entire page →
From page 225... ... Review of Finance Reform Proposals 215 investment and obviating any need for subsidies to rail and intermodal projects, and could reduce highway agency construction costs. The annex describes these proposals. Read the entire page →
From page 226... ... 216 Funding Options for Freight Transportation Projects part as a consequence of federal requirements for transparent decision making. The committee's charge calls on it to evaluate alternative finance strategies to assess how they would serve the public interest. Read the entire page →
From page 227... ... TA B LE 51 Su m m ar y of Fi n an ce R ef or m P ro po sa lF ea tu re s D ec is io nM ak in g Ru le s: D iv is io n of Re sp on si bi lit ie s: So ur ce s of Fu nd s: U se rF ee s, Pr oc ed ur es fo rP ro je ct Se le ct io n Pr op os al G oa ls Fe de ra l/S ta te /L oc al ,P ri va te Pr ic in g, Su bs id ie s an d B ud ge ts N ew fe de ra l-a id pr og ra m fo r fre ig ht N at io na li nf ra st ru ct ur e au th or ity Fe de ra lly ta xad va nt ag ed bo rro w in g to ac ce le ra te in ve st m en t In cr ea se pu bl ic fre ig ht in fra st ru ct ur e sp en di ng . Read the entire page →
From page 228... ... Fe de ra la ss ist an ce to pr iva te se ct or ra il an d te rm in al op er at or s( in ve st m en tt ax cr ed its or gr an ts ) N ew lo ca lo rp ro je ct -s pe cifi c re ve nu e so ur ce s( e. Read the entire page →
From page 229... ... Review of Finance Reform Proposals 219 and efficient operation of existing facilities. The starting point of proposals from government sources and transportation interest groups tends to be spending needs (generally seen as greater than present revenues can support) Read the entire page →
From page 230... ... TABLE 5-2 Possible Effects of Proposed Finance Reforms on Investment Decision Making and Operating Efficiency Proposal Potential Positives for Efficiency Potential Negatives for Efficiency New federal-aid program for freight National infrastructure authority Federally tax-advantaged borrowing to accelerate investment Federal assistance to private-sector rail and terminal operators Revenue derived from user fees. Grants competitively awarded. Read the entire page →
From page 231... ... Review of Finance Reform Proposals 221 Assignment of Responsibilities Among the six categories of proposals listed above (a federal-aid program for freight, a national infrastructure authority, acceleration of spending through federally subsidized borrowing, federal assistance to private-sector freight facilities, development of new local or projectspecific revenue-raising capacities, and adjustments in the federal-aid highway program) , most proposals in the first four envision major new federal commitments, possibly including substantial taxpayer subsidies. Read the entire page →
From page 232... ... 222 Funding Options for Freight Transportation Projects significance if the local community can capture a large enough portion of the national benefits of the activity in the form of income to local residents and tax and user fee revenue to local government (TRB 1998, 56) Read the entire page →
From page 233... ... Review of Finance Reform Proposals 223 on the basis of their effects on transportation system efficiency. They recommended programs of systematic evaluation to observe the impacts of fees on the behavior of system users, on investment decisions, and on the costs and benefits of transportation programs. Read the entire page →
From page 234... ... 224 Funding Options for Freight Transportation Projects the structure of grants. It is known that the rules of the federal-aid highway program with regard to matching shares and caps on grants available to each state attenuate the leverage that federal dollars exert over total infrastructure spending. Read the entire page →
From page 235... ... Review of Finance Reform Proposals 225 duced confidently without careful planning and preparation. The challenges of introducing mileage charging are well recognized. Read the entire page →
From page 236... ... 226 Funding Options for Freight Transportation Projects FHWA. Read the entire page →
From page 237... ... Annex 5-1 Examples of Recent Finance Reform Proposals Annex 5-1 Box 1 lists the proposals summarized in this annex. The proposals are grouped according to their features into the categories defined in Chapter 5. Read the entire page →
From page 238... ... 228 Funding Options for Freight Transportation Projects ANNEX 5-1 BOX 1 Selected Finance Reform Proposals New federal-aid program for freight • Critical Commerce Corridors proposal of ARTBA: An independent federal-aid program for projects on designated freight routes; funded by new user fees • Federal Freight Trust Fund proposal of the Coalition for America's Gateways and Trade Corridors • NSTPRSC Program to Enhance U.S. Global Competitiveness National infrastructure authority • National Investment Corporation proposal of CSIS: A federal entity empowered to issue bonds and make investment decisions; to be the sole source of all federal participation in transportation, water, and education infrastructure • Dodd–Hagel National Infrastructure Bank: Bill in Congress derived from the CSIS proposal • NSTPRSC National Surface Transportation Commission (advisory only) Read the entire page →
From page 239... ... gressionally charted corporation with power to select projects from state, local, or private proposals Federal assistance to private-sector rail and terminal operators • Railroad investment tax credit proposal, supported by the Association of American Railroads: 25 percent investment tax credit for freight rail infrastructure spending • Freight rail grant program proposals from NSTPRSC and other sources Development of new local or project-specific revenue sources and institutions responsible for finance • Tolling and road pricing proposals from TRB committees and other sources • Waterfront Coalition California port access finance concept: Regional authorities sponsor projects funded by public– private partnerships with cost sharing; each project to be self-supporting • Locally controlled port or container fee proposals from various sources • Aviation finance proposals from TRB committees and others • Port, harbor, and waterway finance proposals from TRB committees and others Reforms to the federal-aid highway program to increase cost-effectiveness and federal leverage • Changes in grant matching ratios proposed by GAO and others • Changes in truck user taxes SOURCES: See text. Review of Finance Reform Proposals 229 Read the entire page →
From page 240... ... 230 Funding Options for Freight Transportation Projects projects on facilities that are part of a federally defined 3C system. The main features are as follows: • Theprogram is to be federally funded anddirected,with a 25-year duration, and devoted to construction and upkeep of surface freight transportation facilities. Read the entire page →
From page 241... ... Review of Finance Reform Proposals 231 governments and industry. Cost estimates in the planwould determine revenue requirements and fee rates. Read the entire page →
From page 242... ... 232 Funding Options for Freight Transportation Projects is to be partly from a share of the revenue of the federal Highway Trust Fund and partly from additional user and nonuser sources to be determined, possibly including a share of existing customs fee revenue. ["The cost of goods and goods movement should support and internalize some portion of the cost of expanding related infrastructure, such that growth in demand for moving goods supports corresponding expansion of infrastructure" (Coalition for America's Gateways and Trade Corridors n.d., 7) Read the entire page →
From page 243... ... Review of Finance Reform Proposals 233 "the likely need for a significant portion of the revenues from certain freight sources to be dedicated to freight-oriented congestion and intermodal or border crossing projects and programs," that is, the need for a freight trust fund if new fees or taxes are imposed on freight movements, because "visible benefits are necessary to generate the industry support required to make the mechanism politically viable" (NSTIFC 2009, 112) Read the entire page →
From page 244... ... 234 Funding Options for Freight Transportation Projects container charge or freight waybill surcharge) as well as shares of existing fuel taxes and customs duties. Read the entire page →
From page 245... ... Review of Finance Reform Proposals 235 on loans and could presumably include the dedicated taxes now credited to the trust funds. • The corporation would receive project proposals from state and local governments and from federal agencies. Read the entire page →
From page 246... ... 236 Funding Options for Freight Transportation Projects operating budget, with the result that investment decisions would not be distorted by short-term cash availability. They cite the European Infrastructure Bank as a successful model of the proposal. Read the entire page →
From page 247... ... Review of Finance Reform Proposals 237 investment. The planwould specify performance targets in each of 10 program areas, of which freightwould be one.NASTRACwould recommend user tax rates to Congress (including rates for the new federal freight fee that the commission proposed) Read the entire page →
From page 248... ... 238 Funding Options for Freight Transportation Projects Unlike the national infrastructure authority proposals described above, the AASHTO tax credit bond proposal had no provisions for reforming the process of allocating federal aid and would not create a revolving fund for infrastructure finance. The intent was to allow an increase in the federal-aid program without immediately raising the rates of the fuel tax and other taxes supporting the program. Read the entire page →
From page 249... ... Review of Finance Reform Proposals 239 U.S. government and that the bondswouldnot beU.S. Read the entire page →
From page 250... ... 240 Funding Options for Freight Transportation Projects shippers and rail intermodal terminalswouldbe eligible. The railroads estimate that the lost tax revenuewould average $300million annually. Read the entire page →
From page 251... ... Review of Finance Reform Proposals 241 established by the owner of the facility, which may be the federal government, a state or local government, an independent public authority, or a corporation. Regional Corridor Authorities A group of shipper and carrier associations has proposed action by the California state legislature to create regional authorities with revenueraising powers to coordinate the planning and construction of port access improvements and mainline facilities to carry international commerce throughCalifornia. Read the entire page →
From page 252... ... 242 Funding Options for Freight Transportation Projects the direct transportation cost savings to users of the facility) andwould participate in governance of the project. Read the entire page →
From page 253... ... Review of Finance Reform Proposals 243 and private support would include user fees and in-kind contributions. Funding arrangementswould be negotiated on a project-by-project basis. Read the entire page →
From page 254... ... 244 Funding Options for Freight Transportation Projects Mileage charging systems would be operated by the state and local governments that owned and maintained the roads and would increase both the capability and the willingness of these governments to generate revenue to cover the cost of providing services to highway freight traffic. Proposals for Reform of Finance Arrangements of Federally Provided Infrastructure A 1991 TRB study committee considered how to cope with capacity constraints in the air traffic control (ATC) Read the entire page →
From page 255... ... Review of Finance Reform Proposals 245 dues to pay for the local share of channel dredging projects, with restrictions. It seeks to have Congress eliminate the provision in favor of broad language recognizing that a port may impose fees to recover the cost of services it provides. Read the entire page →
From page 256... ... 246 Funding Options for Freight Transportation Projects taxes on large trucks (TRB 2006, 164–167, 193, 196) Read the entire page →
From page 257... ... Review of Finance Reform Proposals 247 Boyd, J Read the entire page →
From page 258... ... 248 Funding Options for Freight Transportation Projects NSTPRSC. Read the entire page →

From page 208...

... 5Review of Finance Reform Proposals This chapter reviews selected prominent proposals for creating new arrangements to pay for major freight transportation infrastructure projects. The proposals originate with the private sector, government, and independent sources and are responses to the concerns described inChapter 2 about the course of development of transportation infrastructure.