5 Pages Research Paper

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Transportation Funding

Introduction

As with any developed economies, transportation infrastructure is key in enabling

economic growth, explaining why the state as well as local governments have prioritized

transportation funding. There have been uncertainties relating to the action of parties such as

federal government and rising costs of repair and maintenance that have led to states having to

carry a larger burden. In response, they have chosen for options such as leveraging public-private

partnerships which do not act as sources of funds, but as opportunity creators, hence leading to

cost savings (2016 P3 Statute Categorization and Analysis, 2017). As states feel they should take

more responsibility, it can be seen that there are changes and proposed models and legislations

which will see that state in partnership with other actors such as private organizations can take

part in funding the transportation sector.

Discussion

As noted, transportation funding is needed at the state level. Earlier on, there was an

overreliance on federal funding, which has over the years led to challenges due to the fact that

such funds are not sustainable. Sometimes the availability of the funds is affected by changing

economic times among other factors. The states have continued to take it upon themselves when

it comes to transport funding. Currently, there are funding shortfalls which means that states are

left without enough funds for funding infrastructure development and establishment.

Additionally, it is imperative to note that some of the infrastructure projects are complex where

even more funding and resources may be required. On the other hand, it is the duty of the states

and federal governments to offer public transit, which is deemed a benefit for the public. This

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type of transit has a number of benefits such as reducing congestion as well as carbon footprints.

There are less personal cars on the road which is good for the environment which has continually

become a key issue. Notably, the efficiency of public transit can only be realized if there is

enough funding of transport infrastructure. The infrastructure should be established and upgraded

in a bid to ensure that public transit is efficient and in line with initial goals. This notes a major

reason by transport funding should be undertaken seriously.

A report by the Congressional Budget Office (2014) looked into the changes that may be

experienced in the event that the new legislations are put in place. Already, there are tremendous

costs that are being incurred as a result of technicalities and are rapidly increasing. The budget

officer noted that balances in Highway Trust Fund, contracting authority expenditure, and

changes in direct spending could be experienced. This means that the already extensive spending

on the transportation sector would alternatively increase to a level that may not be sustainable for

a longer time.

In the US, a vast majority of resources and transportation funding go to surface

transportation. The sources for the funds involve state, federal, and local authorities. Going back

to 2012, around $221 billion was put to building highways, $58 billion was put in transit, $16.9

billion put into capital investments, and $14.4 billion put to operations costs. It is imperative to

note that about 29% of the funds came from taxes on motor fuel as well as other vehicle fees and

taxes levied on US consumers. About 20% of the funds came from general funds while the

remainder of the funding came from bonds, investment income, and tolls (Transportation,

funding & Financing, 2019). It can be seen that though the US has a self-sufficient system for

Funding transportation, the funds are not enough due to the fact that costs and expenditures are

growing steadily fast. For instance, the Congressional Budget Office (CBO) the costs of contract

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authority between 2013 and 2014 had increased by over $1billion which indicates a major

development that is leading to unavailability of enough funds when it comes to transportation

funding. In response, the states are required to seek other options for funding such as utilization

of Public-Private Partnerships (P3). The P3s have created an opportunity for states where

additional financing opportunities are provided. Though not all states have undertaken them, the

number is still growing. The diagram below shows states with Transportation P3 enabling

legislation as of 2016.

As states take more responsibility in terms of transportation funding, there have been

proposals for P3 legislations. First, it is imperative to note that partnerships such as the P3 are

complex and vulnerable to various issues, hence the need for the legislature arm to institute laws

and regulations that will govern the working structure of the P3s. The legislation is meant for

accomplishing a framework within which the various agencies can establish the role of

government levels when it comes to benefiting from the resources the three provide. When there

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is an effective legislation, the interests of the public will be protected and conditions for

agreements between the parties will be established (2016 P3 Statute Categorization and Analysis,

2017). Additionally, the legislations are looking into extending additional authority of the

various local governments which will enable local option taxes as well as sub-allocation of

particular funds that previously went to the state. A good example is the states of Pennsylvania

and Minnesota that have allowed counties to levy taxes on vehicle fees (Recent State Legislation

Allowing for more Local Transportation Funding, 2014). Up to now, at least twelve states have

already put in place legislations that are for allowing the counties to collect local income tax.

These are some of the developments that are being brought about as a result of the new trends on

the need for new legislations.

The federal government has a number of roles to play when it comes to transportation

funding as follows. First, the federal government is supposed to offer the Highway Trust Fund,

which is mainly about surface transportation and capital projects. It is imperative to note that

some of the funds under the trust fund is given to states and local governments as grants which

must go funding transportation. In 2018 alone, the Congressional Budget Office (CBO) that the

Trust fund’s revenues accumulated to at least $41 billion (Key Elements of U.S. Tax System,

2016). The revenues come from the federal exercise tax on gas, diesel fuel, and taxes and levy

from other sources as earlier outlined. Additionally, under the Federal Transit Administration,

the federal government funds budgetary programs. The federal government tends to pay for

budgetary programs through gasoline taxes. Also, the funds can be used for the establishment or

development of the transit project. Further, it is important to note that the federal government is

also involved in subsidies that are aimed at promoting transport infrastructure at both state and

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federal levels (MacKechnie, 2019). In essence, the federal government has much to do when it

comes to funding the transportation sector.

Currently, there are numerous projects majorly by the state governments that are meant

for improving on the transportation sector. One, the Transportation Authority of Northern

Arizona is overseeing a project that involves the creation of a corridor-based BRT between the

Flagship Mall and the Pulliam regional airport (Current Capital Investment Grant, 2019). This is

seen as a major development that will address congestion issues that have been experienced over

the years as a result of the rapidly growing population in the area. The project has received a

grant from the federal government as well as funds from the state and local governments. Two,

the San Diego Association of Governments is also overseeing construction of Mid-Coast transit

project, which is an improvement and a means of addressing traffic issues in the area. San Diego

is one of the regions in the state of California that are experiencing rapid economic growth,

hence the need for equal growth in infrastructure (Current Capital Investment Grant, 2019). The

project is being funded by both state and local governments. Though the project has also

received an investment grant, the two are currently ongoing projects are being funded to a larger

part by the state and local governments. As can be seen, like many other projects, their aim

entails addressing traffic problems as well as aligning transport infrastructure with the current

economic growth.

Conclusion

The transportation sector is a key sector when it comes to economic growth and

development. Federal, state, and local governments are also playing a role in enabling

transportation funding, especially as a result of new legislations that are empowering state and

local governments to collect revenues. The state is facing challenges as an amount receivable

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from the federal government is neither sustainable nor enough. A major response to this entails

creation of Public-Private Partnerships which are providing better opportunities for financing and

cost saving. However, for these two to work effectively, there is a need for legislations for

regulating the partnerships to be put in place.

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References

2016 P3 Statute Categorization and Analysis. (2017, February 16). Retrieved from NCSL:

http://www.ncsl.org/research/transportation/public-private-partnerships-for-

transportation-categorization-and-analysis-of-state-statutes-january-2016.aspx

Current Capital Investment Grant (CIG) Projects. (2019, March 15). Retrieved from Federal

Transit Administration: https://www.transit.dot.gov/funding/grant-programs/capital-

investments/current-capital-investment-grant-cig-projects

Key Elements of the U.S. Tax System. (2016, August 30). Retrieved from Tax Policy Center:

https://www.taxpolicycenter.org/briefing-book/what-highway-trust-fund-and-how-it-

financed

MacKechnie, C. (2019, February 19). The Basics of Transit Funding . Retrieved from

Thoughtco: https://www.thoughtco.com/basics-of-transit-funding-2798674

Recent State Legislation Allowing for More Local Transportation Funding. (2014, May 13).

Retrieved from Transportation for America: http://t4america.org/maps-tools/measuring-

up/measuring-up-recent-state-legislation-allowing-for-more-local-transportation-funding/

Transportation Funding & Financing. (2019, March 02). Retrieved from BATIC Institute:

http://www.financingtransportation.org/funding_financing/funding/