How to Increase Transportation Revenue - continued...
2. Skyrocketing Construction Costs
In addition to years of steady growth in inflation, from 2004 to 2008 construction prices soared for steel, concrete, asphalt, and construction machinery. It is estimated that between 1993, the year in which federal fuel taxes were last adjusted, and 2015, the purchasing power of the federal transportation program will have declined by 80 percent.
To restore the purchasing power to that of 1993, federal highway funding will have to be increased from $43 billion in 2009 to $75 billion by 2015, and federal transit funding would have to be increased from $10.3 billion in 2009 to $18.5 billion in 2015.
Addressing Freight and Passenger Rail Investment
Surface transportation investment must also address the needs of the national freight network and intercity passenger rail.
Freight Funding Needed to Meet Capacity Crisis
The nation is entering the early stages of a freight transportation capacity crisis. Truck volumes are expected to double by 2035 and rail freight to increase by 60 percent. Highways, railroads, ports, waterways, and airports all require investment well beyond current levels to maintain, much less improve, their performance.
Investment is needed to fix freight bottlenecks, improve intermodal connections, build bridges to eliminate unsafe highway-rail crossings, and fund freight corridor improvements. AASHTO recommends that a freight program be funded at $42 billion per year, from resources outside the Highway Trust Fund.
Intercity Passenger Rail Network Overdue
AASHTO believes we are overdue for the United States to provide a robust intercity passenger rail network that provides competitive, reliable, and frequent passenger service, comparable to world-class systems in other countries. Current service should be brought up to a good state of repair. Ultimately service should expand to include high-speed rail corridors, regional corridors, and long-distance service. Federal funding of $35 billion over six years is needed to begin the capital investment required.
A Menu of Federal Revenue Options for Surface Transportation
There are several options to accomplish the dual objectives of sustaining the program at the levels currently authorized and then restoring the program’s purchasing power.
Listed below are illustrative examples of revenue sources which together come to $1 trillion. It will be up to Congress to choose from these, and possibly other options, to generate revenues sufficient to fund the $545 billion program total recommended.
State and Local Government Investment
If the United States is to make the substantial increase in investment needed, state and local governments must do their part as well. The good news is that they have delivered increases at this scale before. In the 24-year period between 1981 and 2005, state and local governments increased their highway capital investment from $8 billion to $42 billion, an increase of over 400 percent. During the period between 1990 and 2005, state funding for transit increased by over 250 percent from $3.7 billion to $9.5 billion.
During the past three general elections, state and local transportation measures have done well at the polls. In the 2004 elections, 78 percent of transportation ballot measures passed. In the 2006 elections, 72 percent passed. In 2008, 78 percent of ballot measure passed authorizing new transportation spending of $75 billion.Over the past five years, several states have had the courage to raise gas taxes, Ohio by six cents, Minnesota by eight cents, and Washington state by 14.5 cents. But others have been reluctant to do so. Today states are facing one of the worst fiscal crises in U.S. history. How soon they will again be in a position to increase their transportation investment is not yet clear.
Tolls and Public–Private Partnerships Can Play a Role
Toll-generated revenues nationally came to $7.75 billion in 2005, which represented about five percent of total highway revenues that year. Over the past 10 years, 30 percent to 40 percent of the new highway arterial capacity added in the United States has been financed through tolls. AASHTO believes this percentage could rise to as much as 50 percent in fast-growing urban states in the years ahead.
Broader interest in tolling has been stimulated by two developments. First, public–private partnerships, such as Indiana receiving $3.8 billion for a concession on the Indiana Tollway and the $1.8 billion lease of the Chicago Skyway to a private concessionaire have shown the scale of what is possible. The second development is the growing popularity of High Occupancy Toll (HOT) lanes. This concept was pioneered on an eight-mile segment of HOV lanes on Interstate 15 in San Diego. Virginia has recently entered into a $1.93 billion agreement with a public–private consortium to add four lanes to the Capital Beltway funded using HOT-lane revenues.
AASHTO believes every state should be given all options possible in the areas of tolling and public–private partnerships, so those states can determine for themselves what is in the best interests of their citizens. However, two key points need to be recognized: first, tolls are rarely an option other than in fast-growing metropolitan areas with high traffic volumes; and second, toll revenues can, in no way, substitute for the highway and transit funding assistance needed from the federal government.
