The National Academies

NCHRP 20-24(055) [Completed]

National Summit on Future Transportation Funding and Finance Strategies: States and Metropolitan Regions
[ NCHRP 20-24 (Administration of Highway and Transportation Agencies) ]

  Project Data
Funds: $185,000
Research Agency: Cambridge Systematics, Inc.
Principal Investigator: Patricia Hendren
Effective Date: 1/26/2007
Completion Date: 1/25/2008

Recent estimates of costs and projected revenues suggest that current funding for the nation’s surface transportation system is inadequate to meet expenses for the system’s continued development, maintenance and needed extensions as to provide an adequate transportation system for the 21st.century. Both the Department of Treasury and Congressional Budget Office project that the Highway Account of the Highway Trust Fund will be depleted and may reach a zero balance prior to September 30, 2009, the end of the current legislative authorization period. This could result in as much as an $11 billion reduction in Federal-aid obligations in fiscal year 2009.  Approximately 90 percent of the Federal Highway Trust Fund income derives from fuel taxes making the tax a key element in short-term solutions.
The Safe, Accountable, Flexible, Efficient Transportation Equity Act - A Legacy for Users (SAFETEA-LU) acknowledges the finance challenge, (1) mandating the creation of a National Surface Transportation Policy and Revenue Study Commission to study and report on the current conditions and future needs of the surface transportation system, and potential funding sources to meet such needs, and (2) providing for the creation of a National Surface Transportation Financing Commission charged with considering highway and transit needs and the available federal resources to meet those needs. These commissions will provide forums for developing deeper understanding of the problems of future surface-transportation finance, alternative revenue sources that could be tapped to supplement or replace fuel taxes as a primary source of revenue and the potential role particularly of tolling and public-private ventures as means for future financing of the surface transportation system. 
The search for new long-term funding mechanisms raises many issues beyond simply how much revenue can be raised. The institutional structure and organizational arrangements that have been developed and adopted by government agencies at federal, state, and local levels for planning, development, and operation of the transportation system have been fundamentally shaped by our existing ways of raising and distributing revenues. Because fuel taxes in aggregate currently cover about two-thirds of the system’s costs, state and local governments face future challenges no less daunting than those at the federal level.
Many of these challenges will be acute in the nation’s metropolitan areas. These areas are centers of concentrated demands for transportation services and rely of these services for their prosperity and quality of life. At the same time, metropolitan areas typically span many governmental jurisdictions, increasing the complexity of raising and distributing resources to meet the demands. Metropolitan planning organizations (MPOs) have been formed to provide a means for state and local governments to plan and manage their metropolitan transportation systems. These MPOs in turn provide forums for raising such questions as the potential for tolling and public-private ventures to complement or replace traditional revenue sources such as fuel taxes, sales taxes, property taxes, and user fees.
The objective of this project was to bring together representatives from state departments of transportation (DOTs) and MPOs to participate in a meeting to consider the implications for future of surface-transportation funding and for metropolitan areas and their constituents. A three-day conference was heldApril 11-13, 2007,  in New Orleans, LA, to facilitate discussion among approximately DOT and MPO leaders and senior staff.  The discussions included key future transportation-funding issues, revenue-generating options, applications of financing tools and the role of public-private partnerships to leverage resources. Participants also considered the implications for program delivery, institutional arrangements, and organizational forms; the evolution of the federal-state-local surface-transportation funding partnership; and strategies for how that partnership may evolve to maintain robust support for the surface-transportation system as a vital contributor to nation’s economic growth and wellbeing. A conference report summarizing discussions and presenting background materials was prepared and delivered to AASHTO and the Association of Metropolitan Planning Organizations.

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