Key Findings
As never before we are engaged in an intensive competition in the global economy, now not only with our traditional trading partners such as Japan and Europe, but also with China and India. Because the economies of these two emerging megastates have been growing at between 8 percent and 10 percent annually, compared to 2.8 percent here in the United States, while we may be ahead for the moment, they are on track to catch up, and possibly overtake us.
Part of what it will take to sustain our prosperity in the context of this global economy is a modern, efficient transportation system which enables the U.S. to increase productivity growth, create jobs, and compete head-to-head with all comers.
As early as FY2009, and almost certainly by FY2010, unless additional revenues are provided, the nation will face a federal funding crisis which could require an $18 billion cut in highway assistance and a $3 billion cut in transit by 2012.
Highway Trust Fund revenues grew from $22.2 billion in 1995 to $37.9 billion in 2005, a ten-year increase of 70 percent. In 2005, $24.5 billion in revenues came from gas taxes and $8.9 billion from diesel taxes. So 88 percent of revenues came from fuel taxes. At current tax rates, Trust Fund revenues are forecast to increase from $37.9 billion in 2005 to $46.9 billion by 2015, a ten-year increase of $9 billion.
Congress directed the Commission to assess “whether the amount of revenue flowing into the Highway Trust Fund is likely to increase, decrease or remain constant, taking into consideration the impact of possible changes in vehicle choice, fuel use or travel alternatives.” The findings of recent reports show the following:
- The authoritative 2006 Transportation Research Board (TRB) study, titled The Fuel Tax and Alternatives for Transportation Funding, concluded that fuel taxes would continue to be a viable source of support for the Highway Trust Fund, “for at least the next fifteen years.” EPA reported that the fuel economy for the light-duty automotive fleet, which is made up of automobiles, light trucks and sports utility vehicles, has declined 5 percent over the last 19 years from 22.1 miles per gallon in 1987 to 21 miles per gallon in 2006. A 2003 National Cooperative Highway Research study on alternative fueled vehicles, such as those fueled by hydrogen, electricity and compressed natural gas, forecast that the market share of these vehicles will not exceed .02 percent until after 2020.
Between 1993, the year in which federal fuel taxes were last adjusted, and 2015, construction costs will have increased by 70 percent. To restore the purchasing power of the highway and transit programs, highway capital investment will have to increase to $160 billion and transit capital investment to nearly $40 billion, by 2015. If the federal government sustains its historical share of national investment at 45 percent, federal highway assistance would have to increase to $73 billion and transit assistance to $17 billion. For state and local governments to sustain their historical 55 percent share, their highway capital investment would have to increase to $89 billion and their transit capital investment to $21 billion.
This analysis makes two things clear: First, the investment requirements are huge. Second, the only way the Nation can meet them is for all levels of government to continue to fund their share.
Tolls are currently collected on 4,600 miles of roads in 25 states. There are approximately 25 Interstate toll roads and 65 significant non-Interstate toll roads in operation. Toll-generated revenues increased to $7.75 billion in 2005, which amounted to 5 percent of total highway revenues that year. Analysts, who have specialized in the potential of tolling, believe that tolling’s market share of highway funding could be increased from 5 percent to as much as 7 percent over the next fifteen years if it receives strong policy support from Congress and State Legislatures.
Increasing use of tolling and public–private ventures can help states and local governments to increase their funding efforts and to sustain their historical share of the investment levels needed nationally. However, tolls and public–private ventures in no way offset what will be required for the federal government to sustain its share of the national investment required.The tonnage of freight moved in the United States is forecast to double between 2005 and 2035, from 16 billion tons to 31.4 billion tons. It is projected that 80 percent of that freight by tonnage and 94 percent by value will be moved by truck. Trade with Canada is up. Oil imports and expanding trade with Mexico and Latin America have resulted in major increases in trade through Gulf Coast ports and across the U.S.-Mexico border. International container cargo coming primarily from Asia and Europe grew from 8 million units in 1980 to 40 million units by 2000 and is expected to explode to 110 million units by 2020. This is placing enormous pressure on West Coast and East Coast ports and the highway and rail distribution systems in between.
With growing congestion, an aging infrastructure, and continuing safety and security concerns, our customers demand high-quality roads, put in place as quickly as possible with sensitivity to the environment and at the lowest possible costs. “Business as usual” approaches are not acceptable—construction costs are increasing at alarming rates, and our customers want projects delivered on time and on budget, and want us to “get in, get out, and stay out.”
The national goal must be to deliver transportation projects faster so that our citizens obtain the significant benefits of improved mobility, highway safety, economic vitality, community cohesion, and environmental betterment as quickly as possible. What is needed on a constant basis is for U.S. DOT to commit itself to help states deliver projects as fast as possible, and to enlist other federal agencies in this approach. What is at stake are economic and social objectives for the country just as important as the environmental objectives states are being asked to achieve.
