Infrastructure update: New reports detail funding mess; toll road manager goes bust

Updated Jul 1, 2015


Congress is away through the November elections, and MAP-21 has been extended through next May, but plenty of groups with interests in transportation, the economy and good government continue to weigh in with ideas for a new highway bill.

Federal, state cooperation

The Pew Charitable Trusts has released a new report that examines the contributions of the states and the federal government, as well as those of localities, to the funding of highway and transit programs.

All levels of government have a long history of investment in transportation, and all are facing challenges in maintaining transportation expenditures, the report explains. (See the slides, above.)

The paper recommends four “key principles” for policymakers to consider with regard to short- and long-term solutions for funding surface transportation infrastructure:

  1. Falling revenue forces hard choices. Declines in inflation-adjusted gas and vehicle tax revenue will require the federal government and the states to either raise additional revenue to maintain current spending levels or manage within existing resources by cutting spending in real terms.
  2. Financing is not funding. While financing (infrastructure banks, P3s) is a vital tool for building transportation infrastructure, it is not, by itself, a funding solution. Ultimately, borrowed funds need to be repaid by using taxes, tolls, fees, or other revenue sources.
  3. Rethink the roles of all levels of government. Any reassessment of the federal role should take into account the fiscal conditions of all levels of government and also consider how states and localities might change the way they fund surface transportation infrastructure to best complement a revised federal approach.
  4. Partnership is essential to confronting challenges. States and localities need to know what to expect from the federal government; in turn, the federal government needs to understand the challenges other jurisdictions face and how policies and procedures might affect them.


The full Pew Report is here.

Economic consequences

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new study commissioned by the National Association of Manufacturers and conducted by Inforum at the University of Maryland offers a view into the economic benefits the U.S. economy would reap with a more concerted effort to address the nation’s infrastructure needs.

In total, the study finds that a targeted and long-term increase in public infrastructure investments from all public and private sources over the next 15 years will:

  • Increase jobs by almost 1.3 million at the onset of an initial boost;
  • Grow real GDP 1.3 percent by 2020 and 2.9 percent by 2030;
  • Create a progressively more productive economy, which, due to cumulative effects through time, will benefit from a $3 return on investment for every $1 invested in infrastructure by 2030; and
  • Provide Americans an increase in take-home pay after taxes—a $1,300 net gain per household by 2020 and $4,400 per household by 2030 (measured in 2009 dollars).

The report also reveals a decade of troubling trends in infrastructure formation, such as a 3.5 percent drop per year in the volume of highway, road and bridge investments as well as further sharp decreases in mass transit, aviation and water transportation infrastructure investment.

Last year, the NAM sounded the alarm on this troubling trend by partnering with Building America’s Future to survey manufacturers about their perspectives on the state of infrastructure in the United States. Some 70 percent responded that American infrastructure is in fair or poor shape and needs a great deal or quite a bit of improvement.

“This research helps confirm what engineers and executives both know: The quality and quantity of current U.S. infrastructure is deficient, and these deficiencies are already hampering economic growth,” says University of Maryland Professor and Inforum Executive Director Jeffrey Werling.

Toll concession

The international consortium that ponied up $3.8 billion in 2006 to operate the Indiana Toll Road for 75 years filed for Chapter 11 protection last week.

As the Wall Street Journal reports, ITR Concession Co. LLC has proposed either to sell the toll road’s assets at a bankruptcy auction, or senior creditors can swap their stakes for a 95.75 percent stake in a reorganized company. Under that plan, the existing lenders have agreed to lend $2.75 billion to the new company to aid the reorganization.

In addition to the lease payment to the State of Indiana, ITR reports spending almost a half-billion dollars on improvements. But lower-than-expected toll revenue – blamed on a struggling economy and reduced truck traffic – has not kept pace with the company’s interest payment schedule, prompting the bankruptcy filing.

As the WSJ notes, a number of other toll roads backed by private financing have struggled in recent years.

Such public-private partnerships are often cited as alternative solutions to the highway funding shortfall.