New Reports Examine U.S. Infrastructure Needs, Taxpayer-Friendly Transportation Solutions, Other Issues
New reports out in recent weeks detail how the United States is falling behind other countries in infrastructure improvement, offer “taxpayer-friendly” solutions for the nation’s transportation challenges, explain how highway infrastructure spending is connected to the larger U.S. economy and examine tax provisions for financing infrastructure. Here’s a rundown.
U.S. Infrastructure Falling Behind
A report released last week by the Urban Land Institute says that as global competitors like Brazil, China and India have charted a course toward infrastructure improvement, the United States has underfunded infrastructure over the last 30 years. As the American Society of Civil Engineers has previously estimated, the nation will need to spend in the neighborhood of $2 trillion just to rebuild deteriorating infrastructure networks and even more to expand and maintain roads, bridges, water lines, sewage treatment plants, dams and other infrastructure. The report offers six recommendations aimed at helping the U.S. catch up. Among them:
- Prioritizing repairs and maintenance over big-ticket capital projects. The report suggests pooling regional resources and encouraging help from the private sector.
- Developing a national infrastructure plan, which emphasizes funding projects at the state and local level based on merit and how they dovetail with the nation’s overall economic priorities.
- Concentrating spending on primary metropolitan areas where population and business activity are concentrated while at the same time integrating infrastructure and land use planning to gain greater efficiencies.
- Ensuring long-term federal funding certainty, which may in turn give private interests more confidence to invest.
- Developing federal and state infrastructure banks to help support project financing, including public-private partnerships.
- Phasing in new user fees (vehicle miles traveled charges, tolls, local taxes) to help fund infrastructure initiatives on an ongoing basis.
Cost-Effective Transportation Strategies
“The Most for Our Money: Taxpayer Friendly Solutions for the Nation’s Transportation Challenges” is a report just out from the free-market think tank Reason Foundation along with Taxpayers for Common Sense and Transportation for America. It offers a list of seven cost-effective transportation strategies, including:
- Transportation Scenario Planning – This involves bringing together a variety of community stakeholders to envision how the future could look under a variety of possible scenarios. The group comes up with a preferred scenario and sets goals aimed at achieving it.
- High Occupancy Toll Lanes – These allow single-occupant vehicles to access high-occupancy vehicle lanes for a fee that varies throughout the day, ensuring the lanes remain uncongested and move at a minimum speed. Tolls collected can be used not only to maintain the road but can also finance express bus service. The HOT lanes also help to relieve congestion on the free non-HOT lanes.
- Bus Rapid Transit – This kind of express bus service can be implemented at relatively low cost and provide riders with more comfort, faster travel times, and increased reliability compared to typical city transit bus service, the report’s authors point out.
- Intelligent Transportation Systems – ITS technologies allow for toll collections at highway speeds, optimize coordination of traffic signals, and tell transit riders when the next vehicle will arrive, among other things. Many of them can be implemented at a minimal cost compared to their benefits to congestion relief and safety.
- Inter-city Buses – These buses provide 750 million passenger trips each year with support from a low federal subsidy. They provide transportation for many rural and suburban dwellers into nearby job centers and play an important role in connecting densely populated urban centers. Each bus can keep as many as 55 cars off the nation’s highways.
- Telework/Telecommuting – An entire region’s transportation system can benefit when employers allow employees to work from home, thus helping to reduce the traffic load at times of heavy congestion.
- Local Street Connectivity – Improving the connectivity of local roads to offer multiple routes and alternatives to interstates and major highways can also help reduce congestion.
Determining Infrastructure Spending’s Impact on the Economy
A recent report from the Rand Corp. examines “Highway Infrastructure and the Economy: Implications for Federal Policy.” It provides a literature review on the fiscal outcomes of highway infrastructure spending, its connection with the larger U.S. economy, and avenues for future research. Among the patterns the report identifies in the literature:
- While research has identified positive effects of highway infrastructure on economic outcomes (in particular productivity and output), studies often do not take the next step of calculating whether the benefits stemming from the infrastructure outweigh the costs of building it.
- Private capital investment tends to have larger effects on economic outcomes than public capital investment or highway investment.
- Not just the quantity but the condition of infrastructure and its level of congestion may be important for inducing positive economic benefits.
Rand contends that current fiscal challenges demand that the federal government focus its financing on only those projects expected to have large net benefits across vast geographic regions. The report also recommends more quantitative analysis of changes in productivity, output and employment to allow for a more complete assessment of highway infrastructure investment.
Future of Transportation Finance
Work on a new federal transportation authorization bill continues in Washington but Streetsblog Capitol Hill reported Friday that many are becoming convinced that a six-year bill likely won’t be in the cards this year.
One thing that has resulted from recent hearings on authorization is a collection of reports on the financing of infrastructure. The Joint Committee on Taxation recently produced an “Overview of Selected Tax Provisions Relating to the Financing of Infrastructure.” The report includes sections on public-private partnerships, tax-exempt government bonds, private activity bonds, the now-expired Build America Bonds program and national infrastructure bank proposals.
The Congressional Budget Office highlighted “Alternative Approaches to Funding Highways” in a recent report, including potential VMT taxes.
While Obama Administration officials were recently forced to disavow a proposal that was part of a draft transportation bill and which would have created a new office to explore the feasibility of a VMT system, many have recommended the nation eventually transition from the gas tax to a revenue system based on vehicle miles traveled. A coalition called the Mileage-Based User Fee Alliance (which includes several state departments of transportation and representatives of the private sector) has come out with a handy two-page primer of FAQs on VMT revenue collection which briefly addresses some of the chief concerns expressed about such a system as well as how research and pilot projects might proceed in the years ahead and help to alleviate some of those concerns.