Transportation Funding and Finance

View all documents related to this topic by clicking on the document library tab at the top of this page

America’s transportation infrastructure is at a crossroads. State transportation revenues are not keeping pace with escalating construction costs and burgeoning travel demand, and years of underinvestment in aging infrastructure have built into a crisis.

All states face a shortfall between existing transportation revenues and projected needs.  The cumulative nationwide shortfall has been estimated at $1 trillion through 2015, and the National Surface Transportation Policy and Revenue Study Commission estimated the next decade’s gap for maintaining and building highway, transit and rail infrastructure at $155 billion to $200 billion per year.  Unless there are innovations and new money, roads, bridges and mass transportation systems will fall further into decline and disrepair.

States are seeking both funding and financing options that will help expand and maintain their transportation systems.  Funding options for transportation include tapping traditional revenue sources such as the gas tax and motor vehicle fees and increasing other sources such as tolls.  States also are considering finance solutions that borrow against or otherwise leverage revenues, including bonds, federal credit assistance, state infrastructure banks and public-private partnerships.

Trends

• Fuel tax revenues continue to decline due to erosion by inflation, less driving and use of fuel-efficient and alternative fuel vehicles.
• State general funds are coming under increasingly consideration as a source of transportation revenue. 
• Meanwhile, some states are diverting transportation revenues to plug other holes in their budgets, as the recession's impacts continue.
• Tolling is a growing source of revenue in more than 30 states.
• States continue to attempt to save money through more efficient project completion and improved overall system performance.
• The trend to borrow and leverage funds for transportation projects is ongoing.
• States have increasingly turned to public-private partnerships (PPPs), which involve the private sector in project financing, construction, maintenance or operation. As of August 2012, 33 states and Puerto Rico have laws enabling PPPs for highways and bridges.
• Local governments are a major source of transportation funding, providing about 30 percent of all highway funding in recent years.
• The federal program is uncertain. As of July 2012, federal surface transportation programs were reauthorized for the next 27 months only. As of 2006, federal funds were the largest single source of state-use highway funding for 17 states and D.C.

Foundational NCSL Resources

• The Transportation Funding and Finance Legislation Database tracks bills under consideration in the states—with summaries, sponsor information and status—in 18 transportation funding and finance categories.
• Transportation Governance and Finance: A 50-State Review of State Legislatures and DOTs (2011). This authoritative analysis provides a nationwide synthesis and state-by-state profiles about how states govern and pay for their transportation systems.
• Public-Private Partnerships for Transportation: A Toolkit for Legislators (2010). Leveraging limited transportation revenues through public-private partnerships has become increasingly attractive to states.  This in-depth report gives a comprehensive overview of PPPs, including key principles for state legislators and a list of enabling statutes for transportation PPP projects. More NCSL PPP resources are here.
• NCSL Partners Project on Public-Private Partnerships for Transportation (2008-2011). This working group brought together legislators, legislative staff and interested private sector entities to aid legislators’ decision-making concerning PPPs. The project webpage includes links to publications, meeting summaries and other materials.
• Financing Transportation in the 21^st Century: An Intergovernmental Perspective (2008). This report of the Intergovernmental Forum on Transportation Finance provides an intergovernmental perspective on options for strengthening the nation’s transportation finances.
• Surface Transportation Funding: Options for States (2006). This foundational resource explains transportation revenues and spending.

New NCSL Resources

• NCSL Transport Report Newsletter (monthly). This monthly newsletter covers state and federal transportation news, trends and analysis.
• Top Issues of 2013 Webinar: Energy Development and Transportation Priorities (2013). NCSL offered a 20‐minute update on transportation funding issues as part of our Top Issues of 2013 webinar series.
• Major State Transportation Legislation, 2012 (published 2013). This annual, in-depth report reviews major transportation bills considered during the previous year's state legislative sessions, including legislation to fund and finance transportation systems.
• NCSL State Legislative Infrastructure Priorities: 2012-2013. For two weeks in the fall of 2012, NCSL surveyed state legislators throughout the country on infrastructure priorities in their states.
• On the Move: State Strategies for 21st Century Transportation Solutions (2012 report). This 2012 report explores innovative surface transportation reform laws, policies and programs, including those related to sustainable transportation funding.
• Paving the Way (2012 article). This State Legislatures cover story features proposed funding and finance solutions being considered in state houses across the country including public-private partnerships, gas taxes, vehicle miles traveled fees, bonds and tolls.
• Toll Facilities in the United States (2012) provides 50-state data about U.S. toll facilities and high-occupancy toll (HOT) lanes.
• Taxation of Alternative Fuels (2012) documents state statutes and legislative activity related to taxation of alternative vehicle fuels, such as compressed natural gas.
• Motor Fuel Sales Taxes and Other Taxes on Fuel Distributors or Suppliers (2012) provides detailed information about the 15 states and Puerto Rico known to have state-level sales taxes on motor fuels or other taxes on fuel distributors or suppliers. 

You can search all transportation documents on the site here.

Updated March 2013