Federal funding uncertainty affects transportation planning, study finds
Government leaders’ uncertainty about the allocation of federal funding “hasn’t had a major impact” on long-term transportation planning across the country, but the impact it is having is largely negative, according to a report published last week by the National Cooperative Roads Research Program. States, metropolitan planning organizations, and regional governments depend on federal money, but they don’t know from year to year when the money will come in, how much they’ll get, or what rules they’ll have to follow. Uncertainty “generates a series of deleterious outcomes,” the report says.
The question has plagued officials for at least two decades, reports the NCHRP. Officials tend to assume that the funding status quo will remain “despite declining federal fuel purchasing power tax.” Uncertainty has increased the workload of officials and the availability of contractors, the report said.
States vary in using their own funds to make up for shortfalls or delays in federal assistance. Some state and local governments have increased their own sources of transportation revenue, for example by raising their own taxes, tolls, vehicle registration fees, using general revenue, or borrowing. The report points out that “the availability of nonfederal transportation revenue, the condition of assets, and the size of the state’s road network have a fundamental influence on the extent to which states and regions are sensitive to uncertainty in the federal funding”. States with more access to nonfederal funds for transportation infrastructure, transportation assets in better condition, and less extensive public road networks were less susceptible to uncertainty.
The report also says restrictions on federal funds are not allowing states to prioritize their most pressing projects. Since states are required to maintain federal highways, for example, these highway bridges are better maintained than other bridges, which can lead to significant disparities in bridge condition. A provision in the new Infrastructure Investment and Jobs Act restricting the transfer of federal funds from one pot to another could further hamper the ability to meet local needs, officials told NCHRP.
Various factors contribute to the lack of certainty. Governments do not know if or when their competitive applications will be approved; some programs only reimburse beneficiaries for funds they have already spent, and they do not know when the reimbursement will arrive; re-authorization is often not carried out within the regulatory deadlines; and agencies don’t know when a new law will come into effect, let alone what funding it will provide. Also, sometimes during recessions, stimulus money comes in a rush and needs to be spent quickly without a lot of planning time.
Funding uncertainty can mean projects are not built on time and highways deteriorate. The report warns that rising gasoline prices, increased fuel efficiency, as well as the rise of electric vehicles and ride-sharing options, could lead to a steady decline in fuel tax revenues, a major source of funding for surface transportation. “States may have to manage federal revenue reductions if the current fuel tax rate remains unchanged, particularly if coupled with parallel reductions in state fuel tax revenue,” he declares.
Program researchers conducted in-depth case studies in six states after speaking with staff from 17 state and regional transportation departments and planning agencies to see how states and regions are coping with uncertainty. financing. Missouri established a provident fund; the North-Central Pennsylvania Rural Planning Organization noted that it was not affected by cash flow, as the Pennsylvania Department of Transportation replaced it.
The report does not address the impact of recent inflation, such as soaring gasoline prices, on transportation revenues. All states rely heavily on fuel taxes to support their roads. Some 37 states have raised gasoline taxes over the past decade, and “as the price of gasoline goes up, the percentage of tax revenue does not go up” because the taxes are generally a flat rate per gallon, not a percentage of the purchase price. said Susan Howard, director of policy and government relations for the American Association of Highway and Transportation Officials. As gas prices rise, “people make different choices about how long they drive. It will be interesting to see how this will affect revenue. Several states recently declared gasoline tax holidays to help motorists cope with high prices, “but suspending a gasoline tax doesn’t always pass the savings on to consumers,” he said. she warned.
While transportation departments can look forward to the increases in funding the IIJA will provide (about 20% more for highways and 30% more for other public transit), much of it will be swallowed up by increased costs, which has already caused planning problems. “We are seeing drastic increases in the cost of materials and labor,” Howard noted.
Howard, who was on the committee overseeing the report, said she didn’t notice many complaints about a lack of flexibility within the IIJA framework, however. “I haven’t heard many protests against [it] tie our hands,” she said. There is generally broad eligibility among these categories in terms of the scope of what can be funded. She added that “states tend to make conservative forecasts. If extra money comes in, it’s easier to add to your programs than to have to cut projects. »