Funding the Nation's Surface Transportation System

Why It's High Risk

Surface Transportation System

The nation's surface transportation system is critical to the economy and affects the daily life of most Americans. However, the system is under growing strain, and the costs of repairs and upgrades to meet current and future demands are estimated in the hundreds of billions of dollars and may exceed what the nation can afford. Moreover, recent increases in spending for surface transportation programs have not commensurately improved the system’s performance because many programs do not effectively address key challenges, federal goals and roles are unclear, programs lack links to performance, and some programs do not use the best tools and approaches to ensure effective investment decisions.

^ Back to topWhat We Found

Highways and Transit

• Revenues from motor fuel and other highway use taxes to support the Highway Trust Fund—the major source of federal highway and transit funding—are eroding.
• Congress has transferred over $30 billion from general revenues to supplement Highway Trust Fund revenues since 2008; this approach to augmenting transportation funding is not sustainable in the face of the federal government’s growing fiscal challenge.
• Alternative financing approaches—such as public-private partnerships and bonding strategies—can help meet demands but can be forms of debt that must be repaid.
• New revenues can come only from taxes and fees, and ultimately major changes in transportation spending, revenues, or both will be needed to bring the two into balance.

Passenger Rail

• Amtrak relies on about $1.5 billion in federal financial support annually. The federal government finances nearly all of its capital costs. This financial support is expected to continue in the future.
• In addition, Amtrak received $1.3 billion in one-time capital funds from the American Recovery and Reinvestment Act of 2009.
• Amtrak has estimated significant future capital funding needs, including for such items as
  • Northeast Corridor improvements (about $52 billion through 2030) and
  • locomotive and passenger car replacement (about $23 billion through 2040).
• In response to the Passenger Rail Investment and Improvement Act of 2008, which reauthorized federal support for intercity passenger rail, Amtrak and the Department of Transportation (DOT) recently established minimum performance and service quality standards for Amtrak. Amtrak has also taken measures to improve its financial management.
• However, these actions are too recent to determine how they will affect Amtrak’s financial performance, the need for federal subsidies, and the way subsidies are targeted to achieve public benefits.

Freight Rail

• Freight rail currently moves about 40 percent of the goods shipped nationwide (as measured by ton-miles), and DOT expects the demand for freight rail service to increase 88 percent by 2035.
• The federal government has begun to finance freight rail infrastructure improvements that are expected to generate public benefits.
• However, the federal role is still being defined, and the sustainability of future federal investments is unclear given the growing federal fiscal challenge.
• Decisions about future federal investments will involve trade-offs between potential gains in economic efficiency from freight improvements and the benefits of alternative uses of federal funds.

^ Back to topWhat Needs to Be Done

We have called for fundamental reexamination and reform of the nation's surface transportation policies to ensure

• a federal role based on well-defined national goals and interests,
• performance and accountability for results, and
• fiscal sustainability.

Congressional reauthorization of federal surface transportation programs presents a timely opportunity for reform. The changes we have called for have not occurred, in large part because the current multiyear authorization for surface transportation programs expired in 2009 and the administration has not presented a reauthorization proposal. Existing programs have been funded since then through temporary extensions.

^ Back to topKey Reports

Surface Transportation

Surface Transportation

Surface Transportation

Statewide Transportation Planning

Physical Infrastructure

Metropolitan Planning Organizations

Highway Trust Fund

Highway Trust Fund

Highway Public-Private Partnerships

Highway Bridge Program

High Speed Passenger Rail

Freight Transportation

Federal Transit Programs

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