Funding And Innovation Deficits

Two useful studies on transportation finance were released in February and are worth studying by those involved in transportation funding issues and, in particular, the debate over the RTA's push for more transit funding as part of its Moving Beyond Congestion effort.

The first study is by the National Governors Association's Center for Best Practices and is entitled "State Policy Options for Funding Transportation." The study starts from the premise that the federal government's financial support for transportation is lagging and that state and local governments must pick up the slack. Its analysis of some of the structural problems facing the transportation system is particularly interesting:

Congestion: The study cites research that adding highway capacity does little to relieve congestion and concludes that "because of the tendency of added capacity to stimulate additional (and longer) vehicle trips, it is unclear whether any level of transportation expenditure can adequately address congestion."

Incentives: The study notes that there are many externalities related to highway travel such as environmental degradation and observes that "a central problem appears to be the structure of transportation finance, in that taxing fuel consumption, rather than street and highway use, disconnects the price travelers pay for using the transportation system from the actual cost of providing the capacity they use."

Among other things, the study summarizes the use of new toll roads and variable pricing strategies by various states to help control highway congestion. It summarizes how many states are using federally funded state infrastructure banks, taking advantage of the Transportation Infrastructure Finance and Innovation (TIFIA) program, issuing so-called GARVEE bonds backed by future federal gas tax receipts, using private activity bonds and engaging in public-private partnerships s to help finance their transportation systems.

The study has a section on "Strategies to Reduce Growth in Travel Demand." This section looks at various state initiatives to link transportation project funding to smart growth land-use requirements. For example, New Jersey "is focusing its capital investments in communities where sound land use planning will preserve the state's investment in new capacity."

Likewise, the Metropolitan Transportation Commission in the Bay Area of California has "adopted standards for minimum levels of housing development around transit stations along new transit corridors as a condition of transit funding." Massachusetts has "combined state capital assistance programs for housing, transportation, and public works in a Commonwealth Capital Fund that allocates funding to localities based in part on how effectively land use plans protect the state investment in the projects."

The second study is entitled "Future Financing Options to Meeting Highway and Transit Needs" and is published by the Transportation Research Board. The massive study looks at a variety of federal, state and local strategies to close the highway and transit funding gap during the 2007-2017 period. The report is impossible to summarize in a blog format, but here are some interesting points.

Level of Effort Analysis: The study (table G-1) compares the financial effort made by the 50 states and the District of Columbia when it comes to funding transportation. Illinois' scores are mediocre: It ranks 23 in terms of transportation expenditures per capita, 11 in terms of funding per vehicle mile traveled, 28 in terms of funding per $1,000 of personal income, and 26 in terms of transportation funding per $1,000 of gross state product.

Ballot Measures: Local ballot initiatives to raise taxes to fund highway and/or transit improvements have fared surprisingly well in recent years. The study has an extended section summarizing these successes and outlining how to put together a successful initiative. (pg. 7-1 - 7-15, Appendix B).

Transit's Funding Share: Transit's share of transportation revenue versus highways will increase slightly, from 23.1% in 2007 to 24.2% in 2017.

Like the NGA study, the TRB study discusses various creative state strategies to raise money for transportation and spend that money more effectively through initiatives like design-build construction and public private partnerships.

What is striking from the discussion of such initiatives in both studies is the absence of Illinois from the discussion. For example, the TRB study has charts showing the states that use GARVEEs (pg. 4-3), have established state infrastructure banks (pg. 4-5) and have successfully participated in the TIFFIA program (pg. 4-11). Illinois is nowhere to be found. And as we know all too well, neither the RTA nor the State condition investments in transportation infrastructure on land use policies that will best support that infrastructure.

The Auditor General's final performance audit on the RTA and the three service boards (CTA, Metra and Pace) promises to be harsh. Yet, the Illinois Department of Transportation bears much responsibility for the State's transportation problems. These two reports indicate that IDOT is seriously lacking in creativity and aggressiveness, leaving federal money on the table by failing to take full advantage of various federal funding opportunities and programs.

IDOT could have been a leader in pulling together multi-modal projects that would qualify for the TIFFIA program or setting up a state infrastructure bank that would invest transportation dollars in municipalities that practice transit oriented development policies. Instead, IDOT has continued to behave as if ISTEA, TEA-21, and SAFETEA-LU never happened.

The Auditor General might cast his critical eye on IDOT next.