Governors Examine Transportation Challenges

A new issue brief from the National Governors Association Center for Best Practices (NGA Center) examines the transportation finance challenges faced by states and outlines tools available to address them.

The brief was released by Indiana Gov. Mitch Daniels and Pennsylvania Gov. Edward Rendell.

According to the brief, states are facing a number of critical transportation challenges, including finding sufficient resources to finance all of their transportation needs. A recent study by the National Chamber Foundation of the U.S. Chamber of Commerce estimates $222 billion in public investment in highways and transit is needed annually to maintain our current surface transportation system, and an annual public investment of $288 billion is needed to advance the system to a level that enhances the nation's productivity. There are serious questions as to whether the current system of transportation finance can provide that level of support.

"States must find innovative ways to meet transportation needs. We had a gap of nearly $3 billion in Indiana, and many highway projects languished for years before we found a way to fund our transportation program for the next 10 years," said Gov. Daniels.

"States play the largest role in funding the construction, operation and maintenance of our national transportation network," said Gov. Rendell. "Governors are taking the lead in developing solutions to state transportation funding challenges."

Governors are considering a variety of options to fund transportation systems. Gov. Daniels has leased the Indiana toll road and Gov. Rendell has asked the investment community for statements of interest in leasing the Pennsylvania turnpike. The brief discusses these and other strategies that can be pursued alone or in combination with taxes, pricing and demand-side solutions as part of a comprehensive financing structure, including:

• tax-based approaches for increasing revenues;
• toll and road-pricing schemes to raise revenues;
• debt financing to reduce project development costs;
• asset leases to raise revenues;
• creating more effective partnerships with local governments; and
• reducing long-term growth in highway travel demand.

"State leaders are faced with the daunting challenge of maintaining and improving our nation's infrastructure with limited resources," said John Thomasian , director of the NGA Center. "This issue brief offers options to help governors finance the operation, maintenance, integration and future growth of the national transportation network."

Related Link:

• NGA Center Transportation & Land Use Planning webpage