Surface Transportation
Restructured Federal Approach Needed for More Focused, Performance-Based, and Sustainable Programs
Gao ID: GAO-08-400 March 6, 2008
Surface transportation programs need to be reexamined in the context of the nation's current unsustainable fiscal path. Surface transportation programs are particularly ready for review as the Highway Trust Fund faces a fiscal imbalance at a time when both congestion and travel demand are growing. As you requested, this report (1) provides an overview of the federal role in surface transportation and the goals and structures of federal programs, (2) summarizes GAO's conclusions about the structure and performance of these programs, and (3) provides principles to assess options for focusing future surface transportation programs. GAO's study is based on prior GAO reports, stakeholder reports and interviews, Department of Transportation documents, and the views of transportation experts.
Since federal financing for the interstate system was established in 1956, the federal role in surface transportation has expanded to include broader goals, more programs, and a variety of program structures. To incorporate additional transportation, environmental and societal goals, federal surface transportation programs have grown in number and complexity. While some of these goals have been incorporated as new grant programs in areas such as transit, highway safety, and motor carrier safety, others have been incorporated as additional procedural requirements for receiving federal aid. Broad program goals, eligibility requirements, and transfer provisions give states and local governments substantial discretion for allocating most highway infrastructure funds. For transit and safety programs, broad basic grant programs are augmented by programs that either require a competitive selection process or use financial incentives to directly target federal funds toward specific goals or safety activities. Many current programs are not effective at addressing key transportation challenges such as increasing congestion and freight demand. They generally do not meet these challenges because federal goals and roles are unclear, many programs lack links to needs or performance, and the programs often do not employ the best tools and approaches. The goals of current programs are numerous and sometimes conflicting. Furthermore, states' ability to transfer highway infrastructure funds among different programs is so flexible that some program distinctions have little meaning. Moreover, programs often do not employ the best tools and approaches; rigorous economic analysis is not a driving factor in most project selection decisions and tools to make better use of existing infrastructure have not been deployed to their full potential. Modally-stovepiped funding can impede efficient planning and project selection and, according to state officials, congressionally directed spending may limit the states' ability to implement projects and efficiently use transportation funds. A number of principles can help guide the assessment of options for transforming federal surface transportation programs. These principles include: (1) ensuring goals are well defined and focused on the federal interest, (2) ensuring the federal role in achieving each goal is clearly defined, (3) ensuring accountability for results by entities receiving federal funds, (4) employing the best tools and approaches to emphasize return on targeted federal investment, and (5) ensuring fiscal sustainability. With the sustainability and performance issues of current programs, it is an opportune time for Congress to more clearly define the federal role in transportation and improve progress toward specific, nationally-defined outcomes. Given the scope of needed transformation, it may be necessary to shift policies and programs incrementally or on a pilot basis to gain practical lessons for a coherent, sustainable, and effective national program and financing structure to best serve the nation for the 21st century.
Recommendations
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GAO-08-400, Surface Transportation: Restructured Federal Approach Needed for More Focused, Performance-Based, and Sustainable Programs
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Report to Congressional Requesters:
United States Government Accountability Office:
GAO:
March 2008:
Surface Transportation:
Restructured Federal Approach Needed for More Focused, Performance-
Based, and Sustainable Programs:
GAO-08-400:
GAO Highlights:
Highlights of GAO-08-400, a report to congressional requesters.
Why GAO Did This Study:
Surface transportation programs need to be reexamined in the context of
the nation‘s current unsustainable fiscal path. Surface transportation
programs are particularly ready for review as the Highway Trust Fund
faces a fiscal imbalance at a time when both congestion and travel
demand are growing. As you requested, this report (1) provides an
overview of the federal role in surface transportation and the goals
and structures of federal programs, (2) summarizes GAO‘s conclusions
about the structure and performance of these programs, and (3) provides
principles to assess options for focusing future surface transportation
programs. GAO‘s study is based on prior GAO reports, stakeholder
reports and interviews, Department of Transportation documents, and the
views of transportation experts.
What GAO Found:
Since federal financing for the interstate system was established in
1956, the federal role in surface transportation has expanded to
include broader goals, more programs, and a variety of program
structures. To incorporate additional transportation, environmental and
societal goals, federal surface transportation programs have grown in
number and complexity. While some of these goals have been incorporated
as new grant programs in areas such as transit, highway safety, and
motor carrier safety, others have been incorporated as additional
procedural requirements for receiving federal aid. Broad program goals,
eligibility requirements, and transfer provisions give states and local
governments substantial discretion for allocating most highway
infrastructure funds. For transit and safety programs, broad basic
grant programs are augmented by programs that either require a
competitive selection process or use financial incentives to directly
target federal funds toward specific goals or safety activities.
Many current programs are not effective at addressing key
transportation challenges such as increasing congestion and freight
demand. They generally do not meet these challenges because federal
goals and roles are unclear, many programs lack links to needs or
performance, and the programs often do not employ the best tools and
approaches. The goals of current programs are numerous and sometimes
conflicting. Furthermore, states‘ ability to transfer highway
infrastructure funds among different programs is so flexible that some
program distinctions have little meaning. Moreover, programs often do
not employ the best tools and approaches; rigorous economic analysis is
not a driving factor in most project selection decisions and tools to
make better use of existing infrastructure have not been deployed to
their full potential. Modally-stovepiped funding can impede efficient
planning and project selection and, according to state officials,
congressionally directed spending may limit the states‘ ability to
implement projects and efficiently use transportation funds.
A number of principles can help guide the assessment of options for
transforming federal surface transportation programs. These principles
include: (1) ensuring goals are well defined and focused on the federal
interest, (2) ensuring the federal role in achieving each goal is
clearly defined, (3) ensuring accountability for results by entities
receiving federal funds, (4) employing the best tools and approaches to
emphasize return on targeted federal investment, and (5) ensuring
fiscal sustainability. With the sustainability and performance issues
of current programs, it is an opportune time for Congress to more
clearly define the federal role in transportation and improve progress
toward specific, nationally-defined outcomes. Given the scope of needed
transformation, it may be necessary to shift policies and programs
incrementally or on a pilot basis to gain practical lessons for a
coherent, sustainable, and effective national program and financing
structure to best serve the nation for the 21st century.
What GAO Recommends:
Congress should consider reexamining and refocusing surface
transportation programs so that they: (1) have goals with direct links
to an identified federal interest and role, (2) make grantees more
accountable through more performance-based links between funding and
program outcomes, (3) use tools and approaches that emphasize the
return on the federal investment, and (4) address the current imbalance
between federal surface transportation revenues and spending. DOT
generally agreed with the information in this report, and provided
technical clarifications, which were incorporated as appropriate.
To view the full product, including the scope and methodology, click on
[hyperlink, http://www.GAO-08-400]. For more information, contact
JayEtta Hecker at (202) 512-2834 or heckerj@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
The Federal Role in Surface Transportation Has Expanded to Include
Broader Goals, More Programs, and a Variety of Program Structures:
Current Federal Surface Transportation Programs Do Not Effectively
Address Identified Transportation Challenges:
Principles Can Guide Assessment of Options to Restructure Federal
Surface Transportation Programs:
Conclusions:
Matter for Congressional Consideration:
Agency Comments:
Appendix I: Objectives, Scope, and Methodology:
Appendix II: Overview of Federal Surface Transportation Programs:
Appendix III: Implications of "Turning Back" Surface Transportation
Programs and Revenues to the States:
Appendix IV: GAO Contact and Staff Acknowledgments:
Related GAO Products:
Federal Roles and Goals:
Performance and Accountability; Best Tools and Approaches:
Fiscal Sustainability/Financing the Nation's Transportation System:
Tables:
Table 1: Potential Fiscal Impact of Turning Back Federal Transportation
Programs to the States, Assuming the Devolution of Almost All Programs
and Revenues:
Figures:
Figure 1: Budget Authority for Highway Trust Fund Expenditures by
Program Area, 2007:
Figure 2: Historical Expansion of Major Federally Funded Highway
Infrastructure Grant Programs:
Figure 3: Historical Expansion of Major Federally Funded Transit
Infrastructure Programs:
Figure 4: Historical Expansion of Major Federally Funded Highway Safety
Programs:
Figure 5: Historical Expansion of Major Federally Funded Motor Carrier
Safety Programs:
Figure 6: Broad Flexible Fund Transfer Provisions within Highway
Programs:
Abbreviations:
AASHTO: American Association of State Highway and Transportation
Officials:
APTA: American Public Transit Association:
CBO: Congressional Budget Office:
CDLP: Commercial Driver's License Program:
CMAQ: Congestion Mitigation & Air Quality Improvement Program:
DOT: Department of Transportation:
FHWA: Federal Highway Administration:
FMCSA: Federal Motor Carrier Safety Administration:
FRA: Federal Railroad Administration:
FTA: Federal Transit Administration:
GPRA: Government Performance and Results Act:
HBRRP: Highway Bridge Replacement and Rehabilitation Program:
HSIP: Highway Safety Improvement Program:
HTF: Highway Trust Fund:
ICC: Interstate Commerce Commission:
IM: Interstate Maintenance Program:
ISTEA: Intermodal Surface Transportation Efficiency Act:
ITS: intelligent transportation systems:
mph: miles per hour:
MCSAP: Motor Carrier Safety Assistance Program:
MPO: Metropolitan Planning Organizations:
NEPA: National Environmental Policy Act of 1969:
NHS: National Highway System:
NHTSA: National Highway Traffic Safety Administration:
RABA: revenue-aligned budget authority:
RITA: Research and Innovative Technology Administration:
SAFETEA-LU: Safe, Accountable, Flexible, Efficient Transportation
Equity Act - A Legacy for Users:
STP: Surface Transportation Program:
UMTA: Urban Mass Transit Act of 1964:
[End of section]
United States Government Accountability Office:
Washington, DC 20548:
March 6, 2008:
The Honorable James Inhofe:
Ranking Member:
Committee on Environment and Public Works:
United States Senate:
The Honorable Jim DeMint:
United States Senate:
Transportation programs, like all areas of federal involvement, need to
be viewed in the context of the nation's fiscal position. Long-term
fiscal simulations by GAO, the Congressional Budget Office (CBO), and
others all show that despite a 3-year decline in the federal
government's unified budget deficit, we still face large and growing
structural deficits driven by rising health care costs and known
demographic trends. As the baby boom generation retires, entitlement
programs will grow and require increasing shares of federal spending.
Absent significant changes to tax and spending programs and policies,
we face a future of unsustainable deficits and debt that threaten to
cripple our economy and quality of life.[Footnote 1] Although the long-
term outlook is driven by health care costs, demographics and revenues,
other areas of government should also be re-examined. This involves a
fundamental reexamination of government programs and commitments by
reviewing their results and testing their continued relevance and
relative priority for the 21st century. This reexamination offers an
opportunity to address emerging needs by eliminating outdated or
ineffective programs, more sharply defining the federal role in
relation to state and local roles, and modernizing those programs and
policies that remain relevant.
The nation's surface transportation programs are particularly ready for
reexamination. For example, the Highway Trust Fund (HTF) was created in
1956 to finance the construction of the Interstate Highway System
because of the national interest in interstate mobility. That system is
now complete. However, the federal highway program's financing and
delivery mechanisms have not substantially changed and their continued
relevance in the 21st century is unclear. In addition, without
significant changes in funding mechanisms or revenue sources, or
reductions in planned spending, the HTF is projected to begin incurring
significant deficits in the years ahead. As a result, in 2007, we added
financing the nation's federal transportation infrastructure to GAO's
High Risk List.
Given the need to reexamine all government programs and the importance
of a sustainable federal role in the nation's surface transportation
system, you asked us to examine the federal approach to surface
transportation programs--in particular, those financed by the HTF. This
report (1) provides an historical overview of the federal role in
surface transportation and the goals and structures of federal surface
transportation programs funded by the HTF, (2) summarizes conclusions
from our prior work on the structure and performance of these and other
federal surface transportation programs, and (3) identifies principles
to help assess options for focusing the future federal role and
structure of federal surface transportation programs.
To provide an historical overview of the federal role in surface
transportation and the goals and structures of federal surface
transportation programs funded by the HTF, we drew information from
statutes, regulations, budget documents, agency reports, and literature
on transportation policy by outside experts. We also interviewed
officials in the Office of the Secretary of Transportation and in the
relevant Department of Transportation (DOT) modal administrations. To
summarize conclusions from our prior work on the structure and
performance of federal surface transportation programs, we synthesized
relevant GAO reports on specific transportation programs, and reports
that looked at broader issues of performance measurement, oversight,
grant design, and other related issues. We also reviewed reports and
other materials from stakeholder groups and other organizations and
sought the views of transportation experts, including those who
participated in a forum on transportation challenges convened by the
Comptroller General in June 2007. To identify principles to help assess
options for focusing the future federal role and the structure of
surface transportation programs, we examined principles found in
relevant GAO reports on specific transportation programs, and reports
that looked at broader issues such as performance measurement,
oversight, grant design, and other related issues. We performed our
work between April 2007 and February 2008 in accordance with generally
accepted government auditing standards. A more extensive discussion of
our scope and methodology is in appendix I.
Results in Brief:
Since the Federal-Aid Highway Act of 1956 created the modern federal
highway program, the federal role in surface transportation has
expanded to include broader goals, more programs, and a variety of
program structures. Although most surface transportation funds remain
dedicated to highway infrastructure, federal surface transportation
programs have grown in number and complexity, incorporating additional
transportation, environmental, and societal goals. While some of these
goals have been incorporated as new grant programs in areas such as
transit, highway safety, and motor carrier safety, others have been
incorporated as additional procedural requirements for receiving
federal aid, such as environmental review and transportation planning
requirements. This program expansion has also created a variety of
grant structures and federal approaches for establishing priorities and
distributing federal funds. Most highway infrastructure funds continue
to be distributed to states in accordance with individual grant program
formulas and eligibility requirements. However, broad program goals,
eligibility requirements, and authority to transfer funds between
programs give state and local governments substantial discretion for
allocating highway infrastructure funds according to their priorities.
Although some transit formula grant programs also give grantees
considerable discretion to allocate funds, a portion of transit
assistance requires grantees to compete for funding based on specific
criteria and goals. Similarly, basic safety formula grant programs are
augmented by smaller programs that directly target federal funds to
specific goals and actions using financial incentives and penalty
provisions. Federal law has also increasingly allocated infrastructure
funds through provisions directing spending to specific areas or
projects. For example, according to the Transportation Research Board,
the most recent surface transportation reauthorization legislation,
passed in 2005--the Safe, Accountable, Flexible, Efficient
Transportation Equity Act - a Legacy for Users (SAFETEA-LU)--contained
over 5,000 dedicated spending provisions. Additionally, state and local
government responsibility for oversight has recently increased, as
state and local governments have assumed oversight responsibility for
the majority of highway infrastructure spending, and federal safety
programs have shifted from direct program oversight to a more
performance-based approach.
Our summary of our prior conclusions about federal surface
transportation programs found that many of these programs are not
effective at addressing key transportation challenges such as
increasing congestion and growing freight demand because federal goals
and roles are unclear, many programs lack links to needs or
performance, and the programs in some areas do not employ the best
tools and approaches to ensure effective investment decisions. The
goals of federal surface transportation programs are numerous and
sometimes conflicting, which contributes to a corresponding lack of
clarity in the federal role. For example, despite statutes and
regulations that call for an intermodal approach that creates
connections across modes, there is only one federal program
specifically designed for intermodal infrastructure. Most highway funds
are distributed through formulas that have only an indirect
relationship to needs and no relationship to performance or outcomes.
The largest safety and transit grants are also distributed through
formulas without regard to performance. However safety grants more
likely than highway grants to be focused on goals rather than specific
transportation systems, and several highway safety and motor carrier
safety grants allocate incentive funds on the basis of performance or
states undertaking specific safety-related activities. Since the
majority of surface transportation funds are distributed without regard
to performance, it is difficult to assess the impact of recent record
levels of federal highway expenditures, though congestion has increased
in the same period. Mechanisms to link programs to goals also appear
insufficient, because particularly in the Federal-Aid Highway Program,
federal rules for transferring funds between different highway
infrastructure programs are so flexible that the distinctions between
individual programs have little meaning. Furthermore, surface
transportation programs often do not employ the best tools and
approaches to ensure effective investment decisions. Rigorous economic
analysis is not a driving factor in most investment decisions by state
and local governments--in a survey of state DOTs, 34 cited political
support and public opinion as very important factors, whereas 8 said
the same of the ratio of benefits to costs. The federal government also
does not possess adequate data to assess outcomes or implement
performance measures; for example, DOT does not have a central source
of data on congestion, even though it has identified congestion as a
top priority. While some funds can be transferred between highway and
transit programs, modally-stovepiped funding nevertheless impedes
efficient planning and project selection. State DOT officials have
noted that congressionally directed spending may limit states' ability
to implement projects and efficiently use transportation funds.
Additionally, tools to make better use of existing infrastructure, such
as intelligent transportation systems and congestion pricing, have not
been deployed to their full potential. Finally, increases in federal
spending for transportation appear to reduce state spending for the
same purpose, reducing the return on the federal investment--research
estimates that 50 percent of each additional federal grant dollar for
the highway program displaces funds that states would otherwise have
spent on highways.
Through our prior work on reexamining the base of government, our
analysis of existing programs and other prior reports, we identified a
number of principles that could help drive reexamination of federal
surface transportation programs and an assessment of options for
restructuring the federal surface transportation program. These
principles include: (1) ensuring goals are well defined and focused on
the federal interest, (2) ensuring the federal role in achieving each
goal is clearly defined, (3) ensuring accountability for results by
entities receiving federal funds, (4) employing the best tools and
approaches to emphasize return on targeted federal investment, and (5)
ensuring fiscal sustainability. The first step involves identifying
issues in which there is a strong federal interest and determining what
the federal goals should be related to those issues. Once the federal
interest and goals have been identified, the federal role in relation
to the states and local governments can be clearly defined. For issues
in which there is a strong federal interest, ongoing federal financial
support and direct federal involvement could help meet federal goals.
But for issues in which there is little or no federal interest,
programs and activities may best be devolved to other levels of
government. The next step is to ensure accountability for results by
incorporating performance objectives, grant incentive or penalty
provisions, or more use of competitive selection procedures in awarding
grants. Then, in assessing investment decisions, more emphasis could be
placed on return on investment and benefit-cost analysis as criteria
for comparing alternatives and directing funds. The relationship of
investments to national goals also should be considered along with
locally-based calculations of benefit and cost. Efficient investment
decisions can be facilitated by employing the best tools and
approaches, using mechanisms such as congestion pricing to make more
efficient use of existing infrastructure, applying updated grant design
features such as varying matching requirements and maintenance of
effort provisions, supporting improved data collection, and promoting
intermodal approaches. Finally, bringing revenues and expenditures into
balance would ensure the fiscal sustainability of surface
transportation programs. The current challenge for Congress is to
structure a program responsive to these 21st century principles. With
the clear unsustainability and performance issues of the current
program, it is an opportune time for Congress to better define the
federal role in transportation and improve the progress toward
specific, nationally-defined outcomes. Reforming the current approach
to transportation problems will take time and it may be necessary to
shift policies and programs incrementally or on a pilot basis, but a
transformation of policies and programs is needed to effectively
address the nation's transportation needs and priorities.
To improve the effectiveness of the federal investment in surface
transportation, meet the nation's transportation needs, and ensure a
sustainable commitment to transportation infrastructure, Congress
should consider reexamining and refocusing surface transportation
programs to be responsive to these principles so that they: (1) have
well-defined goals with direct links to an identified federal interest
and federal role, (2) institute processes to make grantees more
accountable by establishing more performance-based links between
funding and program outcomes, (3) institute tools and approaches that
emphasize the return on the federal investment, and (4) address the
current imbalance between federal surface transportation revenues and
spending.
We provided copies of a draft of this report to DOT for its review and
comment. In an e-mail on February 22, 2008, DOT noted that surface
transportation programs could benefit from restructured approaches that
apply data driven performance oriented criteria to enable the nation to
better focus its resources on key surface transportation issues. DOT
officials generally agreed with the information in this report, and
they provided technical clarifications which we incorporated, as
appropriate.
Background:
Since 1796, the federal government has had a role in developing and
funding surface transportation infrastructure such as roads and canals
to promote the nation's economic vitality and improve the quality of
life for its citizens. In 1956, Congress substantially broadened the
federal role in road construction by establishing the Highway Trust
Fund, a dedicated source of federal revenue, to finance a national
network of standardized highways, known as the Interstate Highway
System. This system, financed and built in partnership with state and
local government over 50 years, has become central to transportation in
the United States.
Currently most federal surface transportation programs funded by the
HTF span four major areas of federal investment: highway
infrastructure, transit infrastructure and operations, highway safety,
and motor carrier safety. Federal surface transportation funds are
distributed either by a formula or on a discretionary basis through
several individual grant programs.[Footnote 2] These grant programs are
organized by mode and administered by four of DOT's operating
administrations--the Federal Highway Administration (FHWA), the
Federal Transit Administration (FTA), the National Highway Traffic
Safety Administration (NHTSA), and the Federal Motor Carrier Safety
Administration (FMCSA).[Footnote 3] The modal administrations work in
partnership with the states and other grant recipients to administer
federal surface transportation programs. For example the federal
government currently provides financial assistance, policy direction,
technical expertise and some oversight, while state and local
governments are ultimately responsible for executing transportation
programs by matching and distributing federal funds and by planning,
selecting and supervising infrastructure projects and safety programs
while complying with federal requirements. Appendix II provides further
information on the current and historical operation of these federal
surface transportation programs. Additionally, the federal government
provides financial assistance for other surface transportation programs
such as intercity passenger rail, which has received over $30 billion
of federal support since its inception in 1971. However this program is
financed and operated separately from other surface transportation
programs and an in-depth discussion of federal intercity passenger rail
assistance is not included in this report.[Footnote 4]
Increases over the past 10 years in transportation spending at all
levels of government have improved the physical condition of highways
and transit facilities to some extent, but congestion has worsened and
safety gains have leveled off. According to the most recent DOT data,
between 1997 and 2004 total highway spending per year by federal,
state, and local governments grew by 22.7 percent in constant dollars.
During this time, DOT reported some overall improvements in physical
condition for road systems and bridges. For example, the percentage of
vehicle miles traveled per year on "good" pavement conditions increased
from 39.4 percent to 44.2 percent and the percentage of deficient
bridges fell from 29.6 percent in 1998 to 26.7 percent per year in
2004. At the same time, incidents such as the Minneapolis bridge
collapse in August 2007 indicate that significant challenges remain.
Furthermore, despite increases in investment levels and some
improvements in physical condition, operational performance has
declined. For example, during the same period the average daily
duration of travel in congested conditions increased from 6.2 hours to
6.6 hours, and the extent and severity of congestion across urbanized
areas also grew.[Footnote 5] Transportation safety has improved
considerably over the past 40 years, and although motor vehicle and
large truck fatality rates have generally continued to fall modestly
since the mid-1990s, the improvements yielding the greatest safety
benefits (e.g., vehicle crashworthiness requirements and increases in
safety belt use) have already occurred, making future progress more
difficult.
Furthermore, demand on transportation facilities nationwide has grown
considerably since our transportation systems were built and is
projected to increase in the coming decades as population, income
levels, and economic activity continue to rise. According to the
Transportation Research Board, an expected population growth of 100
million people could double the demand for passenger travel by
2040.[Footnote 6] Similarly, freight traffic is expected to climb by 92
percent from 2002 to 2035. These trends have the potential to
substantially deepen the strain on the existing system, increasing
congestion, and decreasing the reliability of our transportation
network--with potentially severe consequences ranging from the economic
impact of wasted time and fuel to the environmental and health concerns
associated with increased fuel emissions.
Moreover, at the current fuel tax rate, revenues to support the HTF may
not be sufficient to sustain it. Currently, trust fund receipts are
growing and will continue to grow with increased traffic. However, the
purchasing power of the dollar has declined with inflation, and the
federal motor fuel tax rate has not increased since 1993. In addition,
more fuel-efficient and alternative-fuel vehicles are using less
taxable motor fuel per mile driven. Recent legislation has authorized
spending that is expected to outstrip the growth in trust fund
receipts. According to a recent estimate from CBO, the remaining
balance in the Highway Account of the Highway Trust Fund[Footnote 7]
will be exhausted in 2009, and in fiscal year 2009 projected highway
spending will exceed revenue by $4 to $5 billion.[Footnote 8]
In January 2008 the National Surface Transportation Policy and Revenue
Study Commission released a report with several recommendations to
place the trust fund on a sustainable path, as well as reform the
current structure of the nation's surface transportation
programs.[Footnote 9] The recommendations include significantly
increasing the level of investment by all levels of the government in
surface transportation, consolidating and reorganizing the current
programs, speeding project delivery, and making the current program
more performance-and outcome-based and mode-neutral, among other
things. To finance the additional investment, the Commission
recommended raising the current federal fuel tax rate by 25 to 40 cents
per gallon on an incremental basis equivalent to an increase of 5 to 8
cents per gallon per year for 5 years. It also said that states would
have to raise revenue from a combination of higher fuel taxes and other
sources. In addition to raising the fuel tax, the Commission
recommended a number of other user-based fees such as tolling,
congestion pricing, and freight fees to provide additional revenue for
transportation improvements.
Three members of the Commission disagreed with some of the findings and
recommendations of the Commission report. For example, the minority
view disagreed with the Commission's recommendations on expanding the
federal role and increasing the federal fuel tax, among others. Rather,
the minority view proposed sustaining fuel taxes at the current levels,
refocusing federal investment on two areas of national interest, and
providing the states with greater regulatory flexibility, incentives,
and the analytical tools to allow adoption of market-based reforms on
their highway systems. We have ongoing work assessing the Commission's
proposal and other reauthorization proposals and will be issuing a
report in 2008.
The Federal Role in Surface Transportation Has Expanded to Include
Broader Goals, More Programs, and a Variety of Program Structures:
Although most surface transportation funds are still directed to
highway infrastructure, the federal role in surface transportation has
broadened over the past 50 years to incorporate goals beyond highway
construction, and federal surface transportation programs have grown in
number and complexity. The resulting conglomeration of program
structures reflects a variety of federal approaches for setting
priorities, distributing federal funds, and sharing oversight
responsibility with state and local partners for surface transportation
programs.
Federal Goals Have Broadened, and Programs Have Grown in Number and
Complexity:
The HTF was established in 1956 to provide federal funding for
Interstate highway construction and other infrastructure improvements
based on the "user-pay principle"--that is, users of transportation
systems should pay for the systems' construction through highway user
fees such as taxes on motor fuels, tires, and trucks. However, since
1956, the federal role in surface transportation has expanded beyond
funding Interstate construction and highway infrastructure to include
grant programs that address other transportation, societal, and
environmental goals. For example, although most HTF expenditures
continue to support highway infrastructure improvements (see fig. 1),
Congress established new federal grants for highway safety and transit
during the 1960s and added a motor carrier safety grant program during
the 1980s.[Footnote 10]
Figure 1: Budget Authority for Highway Trust Fund Expenditures by
Program Area, 2007:
[See PDF for image]
This figure is a pie-chart, depicting the following information:
Budget Authority for Highway Trust Fund Expenditures by
Program Area, 2007:
Highway infrastructure programs[A]: 81%;
Transit: 15%;
Highway safety: 2%;
Motor carrier safety: 1%;
Highway infrastructure program administration: 1%.
Source: GAO analysis of CBO and DOT data.
Note: Program administration costs are included in the totals for NHTSA
and FMCSA. FTA program administration costs are funded by general
funds.
[A] Highway infrastructure programs include highway infrastructure-
related safety expenditures.
[End of figure]
Furthermore, Congress has since expanded the initial basic grant
programs in each of these areas to incorporate a variety of different
goals. For example, the highway program has expanded to include
additional programs to fund air quality improvements, Interstate
maintenance, and safety-related construction improvements (see fig. 2).
Figure 2: Historical Expansion of Major Federally Funded Highway
Infrastructure Grant Programs:
[See PDF for image]
This figure is a time line of the Historical Expansion of Major
Federally Funded Highway Infrastructure Grant Programs. The following
information is depicted:
Highway Infrastructure grant: Federal-aid Primary Program (1952-
1991)[A];
Type of grant: Formula grant;
Time frame: 1952-1991.
Highway Infrastructure grant: National System of Interstate Highways
(1944- )[B];
Type of grant: Formula grant;
Time frame: 1944- ongoing.
Highway Infrastructure grant: National Highway System (1991-);
Type of grant: Formula grant;
Time frame: 1991-ongoing.
Highway Infrastructure grant: Federal-aid Secondary Program (1952-
1991)[C];
Type of grant: Formula grant;
Time frame: 1952-1991.
Highway Infrastructure grant: Urban Extensions (1944-1976);
Type of grant: Formula grant;
Time frame: 1944-1976.
Highway Infrastructure grant: Federal-aid Urban System (1970-1991);
Type of grant: Formula grant;
Time frame: 1970-1991.
Highway Infrastructure grant: Surface Transportation Program (1991- );
Type of grant: Formula grant;
Time frame: 1991-ongoing.
Highway Infrastructure grant: Emergency Fund (Emergency Relief Program)
(1956- );
Type of grant: Discretionary grant;
Time frame: 1956-ongoing.
Highway Infrastructure grant: Highway Bridge Replacement and
Rehabilitation Program (1970 - );
Type of grant: Formula grant;
Time frame: 1970-ongoing.
Highway Infrastructure grant: Interstate System Resurfacing (Interstate
3R) (1976-1981);
Type of grant: Formula grant;
Time frame: 1976-1981.
Highway Infrastructure grant: Interstate 4R (1981-1991);
Type of grant: Formula grant;
Time frame: 1981-1991.
Highway Infrastructure grant: Interstate Maintenance Program (1991- );
Type of grant: Formula grant;
Time frame: 1991-ongoing.
Highway Infrastructure grant: Federal Lands Highways Program (1983- );
Type of grant: Discretionary grant;
Time frame: 1983-ongoing.
Highway Infrastructure grant: Minimum Allocation (1983-1998);
Type of grant: Formula grant;
Time frame: 1983-1998.
Highway Infrastructure grant: Minimum Guarantee (1998-2005);
Type of grant: Formula grant;
Time frame: 1998-2005.
Highway Infrastructure grant: Equity Bonus Program (2005- );
Type of grant: Formula grant;
Time frame: 2005-ongoing.
Highway Infrastructure grant: Congestion Mitigation & Air Quality
Improvement Program (1991- );
Type of grant: Formula grant;
Time frame: 1991-ongoing.
Highway Infrastructure grant: Highway Safety Improvement Program (2005-
[D];
Type of grant: Formula grant;
Time frame: 2005-ongoing.
Source: GAO analysis of DOT data.
Notes: This chart includes only a portion of federal highway
infrastructure grants. As part of its report, the National Surface
Transportation Policy and Revenue Study Commission identified 62
highway programs. Unless otherwise noted, start dates in the chart
indicate program authorization dates. Programs that are related in
purpose to grant programs in successive reauthorization legislation are
included in the same row.
[A] Federal funding for primary roads was first authorized in 1921, but
the separate grant program was not established until 1952.
[B] Federal funding for the Interstate Highway System was first
authorized in 1944, but the separate grant program was not established
until 1952. Significant funding was not provided until 1956.
[C] Federal funding for secondary roads was first authorized in 1921,
but the separate grant program was not established until 1952.
[D] Prior to the establishment of the Highway Safety Improvement
Program, dedicated funds for highway infrastructure-related safety
expenditures were available as a set-aside under the Surface
Transportation Program.
[End of figure]
Federal transit assistance expanded from a single grant program that
funded capital projects to multiple programs that provide general
capital and operating assistance for urban and rural areas,[Footnote
11] as well as numerous specialized grants with goals ranging from
supporting transit service for the elderly, persons with disabilities,
and low-income workers to promoting the use of alternative fuels (see
fig. 3).
Figure 3: Historical Expansion of Major Federally Funded Transit
Infrastructure Programs:
[See PDF for image]
This figure is a time line of the Historical Expansion of Major
Federally Funded Transit Infrastructure Programs. The following
information is depicted:
Transit infrastructure grant: Discretionary Grant or Loan Program (1964-
1987);
Type of grant: Discretionary grant;
Time frame: 1964-1987.
Transit infrastructure grant: New Starts (1987- );
Type of grant: Discretionary grant;
Time frame: 1987-ongoing.
Transit infrastructure grant: Bus Grants (1987 - );
Type of grant: Discretionary grant;
Time frame: 1987-ongoing.
Transit infrastructure grant: Fixed Guideway Modernization (1987- )[A];
Type of grant: Discretionary grant (1987-1992); Formula grant (1993-);
Time frame: 2987-ongoing.
Transit infrastructure grant: Small Starts (2005- );
Type of grant: Discretionary grant;
Time frame: 2005-ongoing.
Transit infrastructure grant: Alternatives Analysis Program (2005 -);
Type of grant: Discretionary grant;
Time frame: 2005-ongoing.
Transit infrastructure grant: Research, Development, and Demonstration
Projects Program (1964- );
Type of grant: Discretionary grant;
Time frame: 1964-ongoing.
Transit infrastructure grant: Grants for Technical Studies (Planning)
Program (1966- )[B];
Type of grant: Discretionary grant (1966-1992); Formula grant (1993-);
Time frame: 1966-ongoing.
Transit infrastructure grant: Planning and Research Program (1991-
2005)[C];
Type of grant: Discretionary grant;
Time frame: 1991-2005.
Transit infrastructure grant: Grants and Loans for Special Needs for
Elderly Individuals and Individuals with Disabilities (1970 -);
Type of grant: Formula grant;
Time frame: 1970-ongoing.
Transit infrastructure grant: Urban Mass Transit Program (1974-1982);
Type of grant: Formula grant;
Time frame: 1974-1982.
Transit infrastructure grant: Block Grants (Urbanized Area Formula
Grants) Program (1983 - );
Type of grant: Formula grant;
Time frame: 1983-ongoing.
Transit infrastructure grant: Formula Grant Program for Areas Other
than Urbanized Areas (1978-);
Type of grant: Formula grant;
Time frame: 1978-ongoing.
Transit infrastructure grant: Over the Road Bus Accessibility Program
(1998- )[D];
Type of grant: Discretionary grant;
Time frame: 1998-ongoing.
Transit infrastructure grant: Job Access and Reverse Commute Program
(1998- )[E];
Type of grant: Discretionary grant (1998-2005); Formula grant (2006-);
Time frame: 1998-ongoing.
Transit infrastructure grant: New Freedom Program (2005- );
Type of grant: Formula grant;
Time frame: 2005-ongoing.
Transit infrastructure grant: Parks & Public Lands (2005- )[F];
Type of grant: Discretionary grant;
Time frame: 2005-ongoing.
Transit infrastructure grant: Growing States & High Density States
Formula (2005- )[G];
Type of grant: Formula grant;
Time frame: 2005-ongoing.
Transit infrastructure grant: Clean Fuels Formula Grant Program (1998-
);
Type of grant: Formula grant;
Time frame: 1998-ongoing.
Source: GAO analysis of DOT data.
Notes: This chart includes only a portion of federal transit
infrastructure grants. As part of its report, the National Surface
Transportation Policy and Revenue Study Commission identified 20
transit programs. Unless otherwise noted, start dates in the chart
indicate program authorization dates. Programs that are related in
purpose to grant programs in successive reauthorization legislation are
included in the same row.
[A] In 1991, Fixed Guideway Modernization changed from a discretionary
grant to a formula grant program.
[B] In 1991, Grants for Technical Studies Program changed from a
discretionary grant to a formula grant program. This program currently
funds both state and local planning activities.
[C] Planning and Research Program provided separate funding to states
for planning and research activities. Research funds were distributed
on a discretionary basis and planning funds were distributed on a
formula basis.
[D] Over the Road Bus Accessibility Program is also referred to as the
Rural Transportation Accessibility Incentive Program.
[E] In 2005, Job Access and Reverse Commute Program changed from a
discretionary grant to a formula grant program.
[F] Parks and Public Lands is also referred to as Alternative
Transportation in Parks and Public Land.
[G] Growing States and High Density States Formula is also referred to
as Apportionments Based on Growing States Formula Factors.
[End of figure]
Federal safety assistance has also expanded from funding general state
highway and motor carrier safety programs and enforcement activities to
additionally funding many specialized grants to address specific
issues. For example, federal highway safety assistance currently
includes several grant programs to address specific accident factors
(e.g., alcohol-impaired driving) and safety data gaps (see fig. 4).
Similarly, the number of federal motor carrier assistance programs has
increased to include several grants for improving data collection,
supporting commercial driver's license programs and funding border
enforcement activities (see fig. 5). Consequently, federal funds
currently support a wide variety of goals and modes beyond the initial
federal focus on highway infrastructure, ranging from broad support for
transit in urban areas, to targeted grants to increase seat-belt usage.
Figure 4: Historical Expansion of Major Federally Funded Highway Safety
Programs:
[See PDF for image]
This figure is a time line of the Historical Expansion of Major
Federally Funded Highway Safety Programs. The following information is
depicted:
Highway safety grants: Highway Safety Programs (402) (1966- );
Type of grant: Formula grant;
Time frame: 1966-ongoing.
Highway safety grants: Highway Safety Research and Development (403)
(1966- );
Type of grant: Discretionary grant;
Time frame: 1966-ongoing.
Highway safety grants: Innovative Project Grants (1978- );
Type of grant: Discretionary grant;
Time frame: 1978-ongoing.
Highway safety grants: National Maximum Speed Limit (55 mph Incentive
Grants) (1978-1981);
Type of grant: Discretionary grant;
Time frame: 1978-1981.
Highway safety grants: Alcohol Traffic Safety Programs (408) (1982-
2005);
Type of grant: Discretionary grant;
Time frame: 1982-2005.
Highway safety grants: Drunk Driving Prevention Programs (410) (1988-
1991);
Type of grant: Discretionary grant;
Time frame: 1988-1991.
Highway safety grants: Alcohol–Impaired Driving Countermeasures (410)
(1991- )[A];
Type of grant: Discretionary grant;
Time frame: 1991-ongoing.
Highway safety grants: Safety Incentives to Prevent Operation of Motor
Vehicles by Intoxicated Persons (163) (1998-2005);
Type of grant: Discretionary grant;
Time frame: 1998-2005.
Highway safety grants: Safety Incentive Grants for Use of Seat Belts
(157) (1998-2005)[B];
Type of grant: Discretionary grant;
Time frame: 1998-2005.
Highway safety grants: Safety Belt Performance Grants (406) (2005- );
Type of grant: Discretionary grant;
Time frame: 2005-ongoing.
Highway safety grants: Occupant Protection Incentive Grants (405)
(1998 - );
Type of grant: Discretionary grant;
Time frame: 1998-ongoing.
Highway safety grants: Child Safety and Child Booster Seat Incentive
Grants (2011) (2005- );
Type of grant: Discretionary grant;
Time frame: 2005-ongoing.
Highway safety grants: State Highway Safety Data Improvements (411)
(1998-2002)[C];
Type of grant: Discretionary grant;
Time frame: 1998-2002.
Highway safety grants: State Traffic Safety Information System
Improvements (408) (2005 -);
Type of grant: Discretionary grant;
Time frame: 2005-ongoing.
Highway safety grants: Motorcyclist Safety (2010) (2005- );
Type of grant: Discretionary grant;
Time frame: 2005-ongoing.
Highway safety grants: Grant Program to Prohibit Racial Profiling
(1906) (2005- );
Type of grant: Discretionary grant;
Time frame: 2005-ongoing.
Highway safety grants: National Maximum Speed Limit (55 mph Penalty )
(1978-1995);
Type of grant: Penalty provisions;
Time frame: 1978-1995.
Highway safety grants: National Minimum Drinking Age (1984-)[D];
Type of grant: Penalty provisions;
Time frame: 1984-ongoing.
Highway safety grants: Use of Safety Belts and Motorcycle Helmets
(1991- )[E];
Type of grant: Penalty provisions;
Time frame: 1991-ongoing.
Highway safety grants: Operation of Motor Vehicles by Intoxicated
Minors (1995-);
Type of grant: Penalty provisions;
Time frame: 1995-ongoing.
Highway safety grants: Open Container Requirements (154) (1998- );
Type of grant: Penalty provisions;
Time frame: 1998-ongoing.
Highway safety grants: Minimum Penalties for Repeat Offenders for
Driving While Intoxicated or Driving Under the Influence (164) (1998-
);
Type of grant: Penalty provisions;
Time frame: 1998-ongoing.
Highway safety grants: Safety Incentives to Prevent Operation of Motor
Vehicles by Intoxicated Persons (BAC .08) (163) (2003- );
Type of grant: Penalty provisions;
Time frame: 2002-ongoing.
Source: GAO analysis of DOT data.
Notes: This chart includes only a portion of federal highway safety and
motor carrier safety grants. As part of its report, the National
Surface Transportation Policy and Revenue Study Commission identified
12 highway safety grant programs. Unless otherwise noted, start dates
in the chart indicate program authorization dates. Programs that are
related in purpose to grant programs in successive reauthorization
legislation are included in the same row.
[A] Alcohol-Impaired Driving Countermeasures was funded out of Highway
Safety Programs Section 402 funds from 1993-1997.
[B] Safety Incentive Grants for Use of Seat Belts remains authorized
but has not been funded since 2005.
[C] State Highway Safety Data Improvements remains authorized but has
not been funded since 2002, when the program funds were fully
disbursed.
[D] National Minimum Drinking Age penalty provisions were authorized in
1984, but did not take effect until 1987.
[E] The motorcycle helmet penalty provision of Use of Safety Belts and
Motorcycle Helmets was repealed in 1995.
[End of figure]
Figure 5: Historical Expansion of Major Federally Funded Motor Carrier
Safety Programs:
[See PDF for image]
This figure is a time line of the Historical Expansion of Major
Federally Funded Motor Carrier Safety Programs. The following
information is depicted:
Motor safety carrier grant: Motor Carrier Safety Assistance Program
Grants (1983 -)[A];
Type of grant: Formula grant;
Time frame: 1983-ongoing.
Motor safety carrier grant: Withholding of Highway Funds for State Non-
compliance (1986- );
Type of grant: Penalty provisions;
Time frame: 1986-ongoing.
Motor safety carrier grant: Commercial Driver's License Program (1986 -
1991)[B];
Type of grant: Discretionary grant;
Time frame: 1986-1991.
Motor safety carrier grant: Information System Grants (CVISN & PRISM)
(1998-2005);
Type of grant: Discretionary grant;
Time frame: 1998-2005.
Motor safety carrier grant: Commercial Vehicle Information Systems and
Network Developments (CVISN) Core Development Grants (2005 - )[D];
Type of grant: Discretionary grant;
Time frame: 2005-ongoing.
Motor safety carrier grant: Performance and Registration Information
Systems Management Grants (PRISM) (2005- );
Type of grant: Discretionary grant;
Time frame: 2005-ongoing.
Motor safety carrier grant: Data Collection and Analysis (Commercial
Vehicle Analysis Reporting System) (1999-2005)[E];
Type of grant: Discretionary grant;
Time frame: 1999-2005.
Motor safety carrier grant: Safety Data Improvement Program (2005- );
Type of grant: Discretionary grant;
Time frame: 2005-ongoing.
Motor safety carrier grant: Commercial Driver‘s License Information
System Modernization (2005- );
Type of grant: Discretionary grant;
Time frame: 2005-ongoing.
Motor safety carrier grant: Grants for Commercial Driver‘s License
Program Improvements (2005- )[F];
Type of grant: Discretionary grant;
Time frame: 2005-ongoing.
Motor safety carrier grant: Border Enforcement Grants (2005- )[G];
Type of grant: Discretionary grant;
Time frame: 2005-ongoing.
Source: GAO analysis of DOT data.
Notes: This chart includes only a portion of motor carrier safety
grants. Smaller grant programs such as the Grant Program for Commercial
Motor Vehicle Operators were not included. Unless otherwise noted,
start dates in the chart indicate program authorization dates. Programs
that are related in purpose to grant programs in successive
reauthorization legislation are included in the same row.
[A] Formula basis for distributing funds was established by the agency
rather than by statute.
[B] Commercial Driver's License Program (CDLP) funding began in 1987
and was provided by four separate grants in the authorizing
legislation. The program name was not established by statute but DOT
refers to the program as CDLP.
[C] Information System Grants remains authorized, but has not been
funded since 2005.
[D] CVISN Deployment activities were also funded from 1998-2005 as part
of DOT's Intelligent Transportation Systems (ITS) Deployment Program,
and from 1994-1998 through the Intelligent Vehicle Highway System
Program.
[E] Data Collection and Analysis program was jointly administered with
NHTSA. In 2005, the program was reauthorized as the Safety Data
Improvement Program.
[F] FMCSA provided funds to states for commercial drivers license
programs on an emergency basis from 2001-2003.
[G] Although authorized in 2005, Border Enforcement Grants program did
not distribute funds until 2006. FMCSA also funded border enforcement
activities from other sources during 2004 and 2005.
[End of figure]
Furthermore, Congress has also expanded the scope of federal safety
goals to include specific legislative changes at the state level. For
example, in accepting certain federal-aid highway infrastructure funds,
states must enact certain laws to improve highway safety or face
penalties in the form of either withholdings or transfers in their
federal grants. Over the past 30 years, penalty or incentive provisions
have been used to encourage states to enact laws that establish a
minimum drinking age of 21 years, a maximum blood alcohol level of 0.08
to determine impaired driving ability, and mandatory seat belt usage,
among others (see fig. 4), with transfer or withholding penalties as
high as 10 percent of a state's designated highway infrastructure
funds. While most states have chosen to adopt laws that comply with
many of these provisions, some remain subject to certain penalties. For
example, as of January 2008, 11 states are penalized for not enacting
an open container law and 11 are penalized for not enacting a repeat
offender law.
As federal goals have broadened, Congress has added new federal
procedural requirements for infrastructure projects and programs and
agencies have issued more complex rules to address these additional
federal goals. For example, Congress established cooperative urban
transportation planning as a matter of national interest and passed
legislation in 1962 requiring all construction projects to be part of a
continuing, comprehensive, and cooperative planning process between
state and local governments.[Footnote 12] In another example, grant
recipients may be required to conduct environmental assessments for
many federally funded transportation projects to comply with the
federal environmental goals established by the National Environmental
Policy Act of 1969 (NEPA). [Footnote 13] Other federal requirements may
include compliance with the Americans with Disabilities Act,
nondiscrimination clauses in the Civil Rights Act of 1964, labor
standards mandated by the Davis-Bacon Act, and Buy America procurement
provisions, among others.
Although behavior-oriented safety programs and activities are generally
not subject to construction-related requirements, Congress has required
that agencies address additional federal goals in safety-related
rulemaking processes. For example, to address national environmental
objectives, Congress expanded NHTSA's regulatory scope in highway
safety to include establishing regulations for corporate average fuel
economy standards, in addition to issuing rules in areas such as tire-
safety standards and occupant-protection devices (e.g., seat belts).
Similarly, to address other areas of national concern, Congress has
broadened FMCSA's regulatory authority in motor carrier safety to
include household goods movement, medical requirements for motor
carrier operators, and greater oversight of border and international
safety.[Footnote 14] Furthermore, when establishing federal standards
in these areas, regulatory agencies such as NHTSA and FMCSA may be
subject to increasingly rigorous requirements for analysis and
justification associated with a wide range of federal legislation and
executive orders including NEPA, Executive Order 12866 requiring cost-
benefit analysis for proposed rules,[Footnote 15] Executive Order 13211
requiring consideration of the effects of government regulation on
energy, and the Unfunded Mandates Reform Act of 1995, among others.
Current Program Structures Reflect a Variety of Federal Approaches to
Surface Transportation:
Program expansion over the past 50 years has created a variety of grant
structures and established different federal approaches for setting
priorities and distributing federal funds across surface transportation
programs. These approaches, which range from formula grants to
dedicated spending provisions, give state and local governments varying
degrees of discretion in allocating federal funds. As in the past, most
surface transportation programs are jointly administered by the federal
government in partnership with state or local governments, but in
recent years the federal government has increasingly delegated
oversight responsibility to state and local governments.
Federal Responsibility for Establishing Priorities and Directing Funds
Varies across Programs:
Federal approaches for setting priorities and distributing funds
currently range from giving state and local governments broad
discretion in allocating highway infrastructure funds to directly
targeting specific federal goals through the use of incentive grants
and penalty provisions in safety programs. In 1956 federal surface
transportation funds were distributed to the states through four
formula grant programs that provided federal construction aid for
certain eligible highway categories (e.g., Interstate, primary, and
secondary highways and urban extensions). The states in turn, matched
and distributed funds at their discretion, within each program's
eligibility requirements. Within the highway program, this federal-
state partnership has changed in response to considerable increases in
state and local authority and flexibility since 1956.
Largely because of revisions to federal highway programs in the 1990s,
state and local governments currently have greater discretion to
allocate the majority of their federal highway funds according to state
and local priorities. For example, core highway programs such as the
Surface Transportation Program and the National Highway System program
have broader goals and project eligibility requirements than earlier
highway infrastructure grant programs.[Footnote 16] Although funds
continue to be distributed by formula to the states for individual
programs based on measures of highway use or the extent of a state's
highway network, or other factors, as figure 6 demonstrates, six core
highway programs permit the states to transfer up to 50 percent of
their apportioned funds, with certain restrictions, to other eligible
highway programs. Furthermore, although the process for calculating the
distributions is complex for some programs, the end result of most
highway program formulas is heavily influenced by minimum
apportionment[Footnote 17] and "equity" requirements. For fiscal year
2008, each state's share of formula funds will be at least 92 percent
of their relative revenue contributions to the Highway Account of the
Highway Trust Fund.[Footnote 18] According to FHWA estimates, the
equity requirements will provide approximately $9 billion in highway
funds to the states in addition to the amount distributed by formula
through the individual grant programs.[Footnote 19] Over $2 billion of
these additional funds will have the same broad eligibility
requirements and transfer provisions of the Surface Transportation
Program. Moreover, flexible funding provisions within highway and
transit programs allow certain infrastructure funds to be used
interchangeably for highway or transit projects.
Figure 6: Broad Flexible Fund Transfer Provisions within Highway
Programs:
[See PDF for image]
This figure depicts the Broad Flexible Fund Transfer Provisions within
Highway Programs and the interrelationship of those programs.
Program: National Highway System (NHS);
Transfer to (Fund transfer provision): With certain restrictions, up to
50% of apportioned funds may be transferred[A]: HSIP, HBRRP, IM, CMAQ;
Transfer to (Fund transfer provision): 100% of NHS funds may be
transferred to the STP program if the Secretary of Transportation
approves the transfer and a sufficient public comment period is
provided[C]: STP;
Transfer from: (Fund transfer provision): With certain restrictions, up
to 50% of apportioned funds may be transferred[A]: HSIP, HBRRP, IM,
STP;
Transfer from: (Fund transfer provision): CMAQ funds may be transferred
if a minimum threshold is met[B]: CMAQ.
Program: Surface Transportation Program (STP);
Transfer to (Fund transfer provision): With certain restrictions, up to
50% of apportioned funds may be transferred[A]: HSIP, HBRRP, IM, CMAQ,
NHS;
Transfer from: (Fund transfer provision): With certain restrictions, up
to 50% of apportioned funds may be transferred[A]: IM, HBRRP, HSIP
Transfer from: (Fund transfer provision): CMAQ funds may be transferred
if a minimum threshold is met[B]: CMAQ;
Transfer from (Fund transfer provision): 100% of NHS funds may be
transferred to the STP program if the Secretary of Transportation
approves the transfer and a sufficient public comment period is
provided[C]: NHS.
Program: Interstate Maintenance Program (IM);
Transfer to (Fund transfer provision): With certain restrictions, up to
50% of apportioned funds may be transferred[A]: HBRRP, CMAQ, NHS; STP,
HSIP;
Transfer from: (Fund transfer provision): With certain restrictions, up
to 50% of apportioned funds may be transferred[A]: NHS, HBRRP, HSIP,
STP;
Transfer from: (Fund transfer provision): CMAQ funds may be transferred
if a minimum threshold is met[B]: CMAQ.
Program: Highway Bridge Replacement and Rehabilitational Program
(HBRRP);
Transfer to (Fund transfer provision): With certain restrictions, up to
50% of apportioned funds may be transferred[A]: IM, CMAQ, NHS, STP,
HSIP;
Transfer from: (Fund transfer provision): With certain restrictions, up
to 50% of apportioned funds may be transferred[A]: NHS, IM, HSIP, STP;
Transfer from: (Fund transfer provision): CMAQ funds may be transferred
if a minimum threshold is met[B]: CMAQ.
Program: Highway Safety Improvement Program (HSIP);
Transfer to (Fund transfer provision): With certain restrictions, up to
50% of apportioned funds may be transferred[A]: IM, CMAQ, NHS, STP,
HBRRP;
Transfer from: (Fund transfer provision): With certain restrictions, up
to 50% of apportioned funds may be transferred[A]: NHS, IM, HBRRP, STP;
Transfer from: (Fund transfer provision): CMAQ funds may be transferred
if a minimum threshold is met[B]: CMAQ.
Program: Congestion Mitigation and Air Quality Improvement Program
(CMAQ);
Transfer to (Fund transfer provision): CMAQ funds may be transferred if
a minimum threshold is met[B]: NHS, STP, IM, HBRRP, HSIP;
Transfer from: (Fund transfer provision): With certain restrictions, up
to 50% of apportioned funds may be transferred[A]: NHS, STP, IM, HBRRP,
HSIP.
Source: GAO.
[A] TEA-21, Pub. L. No. 105-178 §1310, (June 9, 1998), codified at 23
USC §126(a).
[B] Ibid.
[C] 23 USC §104.
[End of figure]
Major transit infrastructure grants currently range from broad formula
grants that provide capital and operating assistance,[Footnote 20] such
as the Block Grants Program (Urbanized Area Formula Grants), to
targeted discretionary grants for new transit systems, such as New
Starts and Small Starts, that require applicants to compete for funding
based on statutorily defined criteria. For example, projects must
compete for New Starts funds on the basis of cost-effectiveness,
potential mobility improvements, environmental benefits, and economic
development effects, among other factors.[Footnote 21] Additionally,
smaller formula grants direct funds to general goals such as supporting
transit services for special populations like elderly, disabled, and
low-income persons. Unlike most surface transportation funding, which
is distributed through the states, most transit assistance is
distributed directly to local agencies, since transit assistance was
originally focused on urban areas.
Current major highway and motor carrier safety grants include formula
grants to provide general assistance for state highway safety programs
and improving motor carrier safety and enforcement activities, such as
Highway Safety Programs (402) and Motor Carrier Safety Assistance
Program (MCSAP) Grants. They also include targeted discretionary grants
such as Occupant Protection Incentive Grants and Border Enforcement
Grants. Additionally, they include penalty provisions, such as Open
Container Requirements (154) and Minimum Penalties for Repeat Offenders
for Driving While Intoxicated or Driving Under the Influence (164),
designed to address specific safety areas of national interest. Unlike
formula-based funding, some of the discretionary grants, such as the
Safety Belt Performance Grants, directly promote national priorities by
providing financial incentives for meeting specific performance or
safety activity criteria (e.g., enforcement, outreach). Additionally,
penalty provisions such as those associated with Open Container laws
and MCSAP Grants promote federal priorities by either transferring or
withholding state highway infrastructure funds from states that do not
comply with certain federal provisions. For example, in 2007, penalty
provisions transferred over $217 million of federal highway
infrastructure assistance to highway safety programs in the 19 states
and Puerto Rico that were penalized for failure to enact either open
container or repeat offender laws.
Finally, Congress provides congressionally directed spending for
surface transportation through specific provisions in legislation or
committee reports. While estimates of the precise number and value of
these congressional directives vary, observers agree that they have
grown dramatically. For instance, the Transportation Research Board
found that congressional directives have grown from 11 projects in the
1982 reauthorization act to over 5,000 projects in the 2005
reauthorization act.[Footnote 22]
State and Local Government Oversight Responsibilities Have Increased:
Most federal surface transportation programs continue to be jointly
administered by the federal and state, or local governments, but the
federal government has increasingly delegated oversight responsibility
to state and local governments. This trend is most pronounced for
highway infrastructure programs; however, it has also occurred in
federal transit and safety programs. For example, when Interstate
construction began, the federal government fully oversaw all federally
funded construction projects, including approving design plans,
specifications, and estimates, and periodically inspecting
construction progress. In 1973, Congress authorized DOT to delegate
oversight responsibility to states for compliance with certain federal
requirements for noninterstate projects.[Footnote 23] During the 1990s,
Congress further expanded this authority to allow states and FHWA to
cooperatively determine the appropriate level of oversight for
federally funded projects, including some Interstate
projects.[Footnote 24] Currently, based on a stewardship agreement with
each state, FHWA exercises full oversight over a limited number
Federal-aid Highway projects, constituting a relatively limited amount
of highway mileage. States are required to oversee all Federal-aid
Highway projects that are not on the National Highway System, which
constitutes a large majority of the road mileage receiving federal
funds, and states oversee design and construction phases of other
projects based on an agreement between FHWA and the state. Full federal
oversight for transit projects is limited to major capital projects
that cost over $100 million, and grant recipients are allowed to self-
certify their compliance with certain federal laws and regulations for
other projects. Although state and local grant recipients have
considerable oversight authority, FHWA and FTA both periodically review
the recipients' program management processes to ensure compliance with
federal laws and regulations.
State and local government responsibilities for overseeing
transportation planning processes have also grown in recent decades.
Although such responsibilities predate federal transportation
assistance programs, since 1962, the federal government has made
compliance with numerous planning and project selection requirements a
condition for receiving federal assistance.[Footnote 25] During the
1970s, federal requirements grew in range and complexity and, in some
cases, specified how state and local governments should conduct
planning activities. However, since the 1980s, state and local
governments have had greater flexibility to fulfill federal planning
requirements. For example, in 1983, urban transportation planning
regulations were revised to reduce the level of direct federal
involvement in state and local planning processes, and state and local
agencies were allowed to self-certify their compliance with federal
planning requirements. Similarly, although the federal government
identified specific environmental and economic factors to be considered
in the planning process as part of the surface transportation program
legislation enacted in 1991 and subsequently amended in 1998, these
requirements give state and local governments considerable discretion
in selecting analytical tools to evaluate projects and make investment
decisions based on their communities' needs and priorities.
The states have also been given greater oversight responsibility for
safety programs as federal agencies have shifted from direct program
oversight to performance-based oversight of state safety goals. For
example, since 1998, NHTSA has not approved state highway safety plans
or projects, but instead focuses on a state's progress in achieving the
goals it set for itself in its annual safety performance plan. Under
this arrangement, a state must provide an annual report that outlines
the state's progress towards meeting its goals and performance measures
and the contribution of funded projects toward meeting its goals. If a
state does not meet its established safety goals, NHTSA and the state
work cooperatively to create a safety improvement plan. FMCSA uses a
similar approach to oversee state motor carrier safety activities.
Starting in 1997, the states were required to identify motor carrier
safety problems based on safety data analysis, target their grant
activities to address these issues, and report on their progress toward
the national goal of reducing truck crashes, injuries, and fatalities.
Much as FHWA and FTA do for their grant programs, both NHTSA and FMCSA
periodically review state management processes for compliance with
federal laws and regulations.
Current Federal Surface Transportation Programs Do Not Effectively
Address Identified Transportation Challenges:
Many federal surface transportation programs do not effectively address
identified transportation challenges such as growing congestion. While
program goals are numerous, they are sometimes conflicting and often
unclear--which contributes to a corresponding lack of clarity in the
federal role. The largest highway, transit, and safety grant programs
distribute funds through formulas that are typically not linked to
performance and, in many cases, have only an indirect relationship to
needs. Mechanisms generally do not link programs to the federal
objectives they are intended to address, in part due to the wide
discretion granted to states and localities in using most federal
funds. Furthermore, surface transportation programs often do not employ
the best tools and approaches available, such as rigorous economic
analysis for project selection and a mode-neutral approach to planning
and investment.
There Is No Clear, Consistent Federal Role in Surface Transportation:
The federal role in surface transportation is unclear, in part because
program goals are often unclear. In some cases, stated goals may be
contradictory or may come into direct conflict.[Footnote 26] For
example, it may not be possible to improve air quality while spurring
economic development with new highway construction. With the
proliferation of goals and programs discussed in the previous section
of this report, the federal role varies from funding improvements in
specific types of infrastructure (such as the National Highway System)
to aiming at specific outcomes (such as reducing highway fatalities).
At a recent expert panel on transportation policy convened by the
Comptroller General, experts cited the lack of focus of the federal
role in transportation as a problem, and some stakeholders have also
made similar criticisms.
In some policy areas, the federal role is limited despite consensus on
goals. For example, freight movement is widely viewed as a top
priority, yet no clear federal role has been established in freight
policy. DOT's draft Framework for a National Freight Policy, issued in
2006, is a step toward clarifying a federal role and strategy, but it
lacks specific targets and strategies and criteria for achieving
them.[Footnote 27] Current approaches to planning and financing
transportation infrastructure do not effectively address freight
transportation issues--few programs are directly aimed at freight
movement, and funding is based on individual modes, but freight moves
across many modes.[Footnote 28] Similarly, despite statutes and
regulations that identify an intermodal approach that provides
connections across modes as a goal of federal transportation policy,
there is currently only one federal program[Footnote 29] specifically
designed for intermodal infrastructure, and all the funds available for
the program are congressionally designated for specific
projects.[Footnote 30]
The federal government also lacks a defined role in or mechanism for
aiding projects that span multiple jurisdictions.[Footnote 31] The
discretion and differing priorities of individual states and localities
can make it difficult to coordinate large projects that involve more
than one state or local sponsor.[Footnote 32] There have been some
successful multijurisdictional transportation initiatives, such as the
FAST Corridor across several metropolitan areas in Washington
State,[Footnote 33] but a lack of established political or
administrative mechanisms for cooperation, combined with the large
degree of state and local autonomy in transportation decision-making,
is an obstacle to such "megaprojects."[Footnote 34] At a hearing of the
National Surface Transportation Policy and Revenue Study Commission in
New York City, an expert on the regional economy cited the Tappan Zee
Bridge in New York State as an example of the obstacles such projects
can face. Neighboring Connecticut wants the bridge's capacity expanded,
but there is currently no established mechanism that allows Connecticut
to help move the project forward.[Footnote 35] In testimony for the
Commission, stakeholders such as the U.S. Chamber of Commerce and the
American Association of Port Authorities cited fostering
interjurisdictional coordination as a key federal role, and AASHTO has
also highlighted the need for improved multijurisdictional coordination
mechanisms in its reports on the future of federal transportation
policy.[Footnote 36]
At times, DOT has undertaken new activities without assessing the
rationale for a federal role. For example, the agency made short sea
shipping[Footnote 37] of freight a priority, but did not first examine
the effect of federal involvement on the industry or identify obstacles
to success and potential mitigating actions. Without a consistent
approach to identifying the rationale for a federal role, DOT is
limited in its ability to evaluate potential investments and determine
whether short sea shipping--or another available measure--is the most
effective means of enhancing freight mobility.[Footnote 38]
Most Programs Do Not Link Funding to Performance and Lack Mechanisms to
Ensure That Stated Objectives Are Met:
Most federal surface transportation programs lack links between funding
and performance.[Footnote 39] Federal funding for transportation has
increased significantly in recent years, but because spending is not
explicitly linked to performance, it is difficult to assess the impact
of these increases on the achievement of key goals. During this period
of funding increases, the physical condition of the highway system has
improved, but the system's overall performance has decreased, according
to available measures of congestion.[Footnote 40] DOT has established
goals under the Government Performance and Results Act (GPRA) of 1993
that set specific benchmarks for performance outcomes such as
congestion and highway fatalities. However, these performance measures
are not well-reflected in individual grant programs because
disbursements are seldom linked to outcomes--most highway funds are
apportioned without relationship to the performance of the recipients.
The largest transit and safety programs also lack links to
performance.[Footnote 41] States and localities receive the same
disbursement regardless of their performance at, for example, reducing
congestion or managing project costs. As a result, the incentive to
improve return on investment--the public benefits gained from public
resources expended--is reduced.
Safety and some transit grants are more directly linked to goals than
highway infrastructure programs, and several incorporate performance
measures. Whereas highway infrastructure programs tend to focus on
improving specific types of facilities such as bridges, highway safety,
and, to a lesser extent, transit programs, are more often designed to
achieve specific objectives. For instance, the goal of the Job Access
and Reverse Commute transit program is to make jobs more accessible for
welfare recipients and other low-income individuals. Likewise, under
the Section 402 State and Community Highway Safety Grant Program, funds
must be used to further the goal of reducing highway
fatalities.[Footnote 42] To some extent, transit and safety programs
also have a more direct link to needs because their formulas do not
incorporate equity adjustments that seek to return funds to their
source. Furthermore, several highway safety and motor carrier safety
grants make use of performance measures and incentives. For example,
under the Motor Carrier Safety Assistance Program, some funds are set
aside for incentive grants that are awarded using five state
performance indicators that include, among others, large truck-involved
vehicle fatality rates, data sharing, and commercial driver's license
verification.[Footnote 43]
Most highway transportation programs lack links to need as well as
performance. As discussed above, most grant funds are instead
distributed according to set formulas that typically have an indirect
relation to need. As a result, grant disbursements for these programs
not only fail to reflect performance, but they may also not reflect
need.[Footnote 44] Some of the formula criteria, such as population,
are indirect measures of need, but the equity bonus[Footnote 45] and
minimum apportionment criteria are not related to need, and exert a
strong influence on formula outcomes. Certain programs, such as the
Highway Bridge Replacement and Rehabilitation Program, which bases
disbursements on the cost of needed repairs, use more direct
measures.[Footnote 46] In general, however, the link between needs and
federal highway funding is weak.
Besides lacking links between funding and performance, federal surface
transportation programs generally lack mechanisms to tie state actions
to program goals. DOT does not have direct control over the vast
majority of activities that it funds; instead, states and localities
have wide discretion in selecting projects to fund with federal
grants.[Footnote 47] Federal law calls the federal-aid highway program
a "federally-assisted state program," and specifies that grant funds
"shall in no way infringe on the sovereign rights of the States to
determine which projects shall be federally financed."[Footnote 48] In
addition, states have broad flexibility in using more than half of
federal highway funds as a result of a combination of programs with
wide eligibility (such as the Surface Transportation Program) and the
ability to transfer some funds between highway programs.[Footnote 49]
Furthermore, "flex funding" provisions allow transfers between eligible
highway and transit programs; between 1992 and 2006, states used this
authority to transfer $12 billion from highway to transit programs.
[Footnote 50] While these provisions give states the discretion to
pursue their own priorities, the provisions may impede the targeting of
federal funds toward specific national objectives. Federal rules for
transferring funds between highway programs are so flexible that the
distinctions between individual programs have little meaning. To some
extent, the Federal-aid Highway program functions as a cash transfer,
general purpose grant program, not as a tool for pursuing a cohesive
national transportation policy.[Footnote 51] Transit and safety grants,
in contrast, are more linked to goals because they do not allow
transfers among programs to the same degree.[Footnote 52] Safety grants
are linked to goals because states must use data on safety measures to
create performance plans that structure their safety investments, yet
states are still able to set their own goals, develop their own
programs, and select their own projects. Performance measures are also
used in allocating funding in several highway safety grant programs,
providing an even more direct link to goals.[Footnote 53]
Programs Do Not Employ the Best Tools and Approaches to Ensure
Effective Investment Decisions:
In some areas, federal surface transportation programs do not use the
best tools and approaches available. Rigorous economic analysis,
applied in benefit-cost studies, is a key tool for targeting
investments, but does not drive transportation decision-making. While
such analysis is sometimes used, we have previously reported that it is
generally only a small factor in a given investment decision.[Footnote
54] Furthermore, statutory requirements of the planning and project
selection processes--such as public participation procedures or NEPA
requirements that may be difficult to translate into economic terms--
can interfere with the use of benefit-cost analysis. Decision makers
often also see other factors as more important. In a survey of state
DOTs that we conducted in 2004 as part of that same study, 34 said that
political support and public opinion are factors of great or very great
importance in the decision to recommend a highway project, while 8 said
that the ratio of benefits to costs was a factor of great or very great
importance. Economic analysis was more common for transit projects,
largely because of the requirements of the competitive New Starts grant
program, which uses a cost-effectiveness measure. However, the New
Starts program constitutes only 18 percent of transit funding
authorizations under the Safe, Accountable, Flexible, and Efficient
Transportation Equity Act - A Legacy for Users (SAFETEA-LU)
authorization.[Footnote 55] There are also few formal evaluations of
the outcomes of federally-funded projects. As a result, policymakers
miss a chance to learn more about the efficacy of different approaches
and projects. Such evaluations are especially important because highway
and transit projects often have higher costs and lower usage than
estimated beforehand.[Footnote 56] New Starts is also the only
transportation grant program that requires before-and-after studies of
outcomes.[Footnote 57]
The modal basis of transportation funding also limits opportunities to
invest scarce resources as efficiently as possible. Instead of being
linked to desired outcomes, such as mobility improvements, funds are
"stovepiped" by transportation mode.[Footnote 58] Although, as
discussed above, states and localities have great flexibility in how
they use their funds, this modal structure can still discourage
investments based on an intermodal approach and cross-modal
comparisons.[Footnote 59] Reflecting the separate federal
transportation funding programs, many state and local DOTs are
organized into several operating administrations with responsibilities
for particular modes. Because different operating administrations
oversee and manage separate funding programs, these programs often have
differing timelines, criteria, and matching fund requirements, which
can make it difficult for public planners to pursue the goal--stated in
law and DOT policy--of an intermodal approach to transportation needs.
For example, a recent project at the Port of Tacoma (Washington)
involved widening a road and relocating rail tracks to improve freight
movement on both modes, but it was delayed because highway funding was
available, but rail funding was not. Moreover, despite the wide funding
flexibility within the highway program and between the highway and
transit programs, many funds are dedicated on a modal basis, and state
and local decision makers may choose projects based on the mode
eligible for federal funding.[Footnote 60] Experts on the Comptroller
General's recent transportation policy panel cited modal stovepiping as
a problem with the current federal structure, saying that it inhibits
consideration of a range of transportation options.[Footnote 61] State
officials have also criticized stovepiping, both in AASHTO policy
statements and individually.[Footnote 62] For instance, a state
transportation official told a hearing of the National Surface
Transportation Policy and Revenue Study Commission that modal
flexibility should be increased to allow states to select the best
project to address a given goal.[Footnote 63]
The federal government is not equipped to implement a performance-based
approach to transportation funding in many areas because it lacks
comprehensive data. Data on outcomes--ideally covering all projects and
parts of the national transportation network, as well as all modes--
would be needed in order to consider performance in funding decisions.
Presently, data on key performance and outcome indicators is often
absent or flawed. For example, DOT does not have a central source of
data on congestion--the available data are stovepiped by mode--and some
congestion information for freight rail is inaccessible because it is
proprietary and controlled by railroad companies.[Footnote 64]
Likewise, FTA does not possess reliable and complete data on transit
safety.[Footnote 65] A partial exception is highway safety, for which
NHTSA and FMCSA have data on a variety of outcomes, such as traffic
fatalities. NHTSA employs this information to help states set
priorities, FMCSA uses it to target enforcement activities, and both
agencies use it to monitor states' progress toward achieving their
goals and to award incentive grants. However, the safety data that
states collect are not always timely, complete, and consistent. For
example, a review of selected states found that some of the information
in their databases was several years old.[Footnote 66]
Tools to make better use of existing infrastructure have not been
deployed to their full potential, in part because their implementation
is inhibited by the current structure of federal programs. Research has
shown that a variety of congestion management tools, such as
Intelligent Transportation Systems (ITS) and congestion
pricing[Footnote 67] are effective ways of increasing or better
utilizing capacity.[Footnote 68] Although such tools are increasingly
employed by states and localities, their adoption has not been as
extensive as it could be given their potential to decrease congestion.
One factor contributing to this slow implementation is the lack of a
link between funding and performance in current federal programs--
projects with a lower return on investment may be funded instead of
congestion management tools such as ITS. Furthermore, DOT's measures of
effects fall short of capturing the impact of ITS on congestion, making
it more difficult for decision makers to assess the relative worth of
alternative solutions. State autonomy also contributes to the slowed
rollout of these tools. Even though federal funding is available to
encourage investment in ITS, states often opt for investments in more
visible projects that meet public demands, such as capacity
expansion.[Footnote 69]
Federal investment in transportation may lead to the substitution of
federal spending for state and local spending. One strategy that
Congress has used to meet the goals of the Federal-aid Highway program
has been to increase federal investment. However, not all of the
increased federal investment has increased the total investment in
highways, in part because Congress cannot prevent states and localities
from using some of their own highway funds for other purposes when they
receive additional federal funds. We reported, on the basis of our own
modeling and a review of other empirical studies, that increased
federal highway grants influence states and localities to substitute
federal funds for funds they otherwise would have spent on
highways.[Footnote 70] Specifically, we studied the period from 1983
through 2000 and our model suggests that over the entire time period,
states substituted about 50 cents of every dollar increase in federal
highways grants for funds they would have spent on highways from their
own resources. For the latter part of that period, 1992 through 2000,
we estimated a substitution rate of about 60 cents for every dollar
increase in federal aid. These results were consistent with other study
findings and indicate that substitution is reducing the impact of
federal investment.[Footnote 71] Federal grant programs have generally
not employed the best tools and approaches to reduce this potential for
substitution--maintenance of effort requirements and higher nonfederal
matching requirements, discussed in the next section of this report.
One reason for the high rate of substitution for the Federal-aid
Highway program is that states typically spend more than the amount
required to meet federal matching requirements--generally 20 percent.
Thus, states can reduce their own highway spending and still obtain
increased federal funds.[Footnote 72]
Finally, congressionally directed spending may not be an ideal means of
allocating federal grant funds. Some argue that Members of Congress are
good judges of investment needs in their districts, and some
congressional directives are requested by states. However, officials
from FHWA and FTA have stated that congressional directives sometimes
displace their priority transportation projects by providing funds for
projects that would not have been chosen in a competitive selection
process. For example, FHWA officials stated that some congressional
directives listed in the Projects of National and Regional Significance
program[Footnote 73] would not have qualified for funding in a merit-
based selection process.[Footnote 74] Officials from three state
departments of transportation also noted that inflexibilities in the
use of congressionally directed funds limit the states' ability to
implement projects and efficiently use transportation funds by, for
example, providing funding for projects that are not yet ready for
implementation or providing insufficient funds to complete particular
projects. However, an official from one state department of
transportation noted that although congressional directives can create
administrative challenges, they often represent funding that the state
may not have otherwise received.
Sustainability of Transportation Financing Threatened by Funding
Imbalance and Long-Term Trends:
The solvency of the federal surface transportation program is at risk
because expenditures now exceed revenues for the Highway Trust Fund,
and projections indicate that the balance of the Highway Trust Fund
will soon be exhausted. According to the Congressional Budget Office,
the Highway Account will face a shortfall in 2009, the Transit Account
in 2012.[Footnote 75] The rate of expenditures has affected its fiscal
sustainability. As a result of the Transportation Equity Act for the
21st Century (TEA-21), Highway Trust Fund spending rose 40 percent from
1999 to 2003 and averaged $36.3 billion in contract authority per year,
and the upward trend in expenditures continued under SAFETEA-LU, which
provided an average of $57.2 billion in contract authority per year.
Congress also established a revenue-aligned budget authority (RABA)
mechanism in TEA-21 to help assure that the Highway Trust Fund would be
used to fund projects instead of accumulating large balances.[Footnote
76] When revenues into the Highway Trust Fund are higher than forecast,
RABA ensures that additional funds are apportioned to the states. The
RABA provisions were written so that the adjustments could work in
either direction--going up when the trust fund had greater revenues
than projected and down when revenues did not meet projected levels.
However, when the possibility of a downward adjustment occurred in
fiscal year 2003 as a result of lower-than-projected trust fund
revenues, Congress chose to maintain spending at the fiscal year 2002
level. If the RABA approach is kept in the future, allowing downward
adjustments could help with the overall sustainability of the fund.
While expenditures from the trust fund have grown, revenues into the
fund have not kept pace. The current 18.4 cents per gallon fuel tax has
been in place since 1993, and the buying power of the fixed cents-per-
gallon amount has since been eroded by inflation. The reallocation to
the Highway Trust Fund of 4.3 cents of federal fuel tax previously
dedicated to deficit reduction provided an influx of funds beginning in
1997. However, this influx has been insufficient to sustain current
funding levels. In addition, if changes are not made in policy to
compensate for both the increased use of alternative fuels that are not
currently taxed and increased fuel economy, fuel tax revenues, which
still account for the majority of federal transportation financing, may
further erode in the future.[Footnote 77]
Principles Can Guide Assessment of Options to Restructure Federal
Surface Transportation Programs:
A sound basis for reexamination can productively begin with
identification of and debate on underlying principles. Through our
prior work on reexamining the base of government, our analysis of
existing programs and other prior reports, we identified a number of
principles that could help drive reexamination of federal surface
transportation programs and an assessment of options for restructuring
the federal surface transportation program. The appropriateness of
these options will depend on the underlying federal interest and the
relative potential of the options to develop sustainable strategies
addressing complex national transportation challenges. These
principles are as follows:
* Create well-defined goals based on identified areas of federal
interest.
* Establish and clearly define the federal role in achieving each goal.
* Incorporate performance and accountability for results into funding
decisions.
* Employ best tools and approaches to emphasize return on investment.
* Ensure fiscal sustainability.
Create Well-Defined Goals Based on Identified Areas of Federal
Interest:
Determining the federal interest involves examining the relevance and
relative priority of existing programs in light of 21st century
challenges and identifying emerging areas of national importance. For
instance, increases in passenger and freight travel have led to growing
congestion, and this strain on the transportation system is expected to
grow with population increases, technology changes, and the
globalization of the economy. Furthermore, experts have suggested that
federal transportation policy should recognize emerging national and
global imperatives such as reducing the nation's dependence on foreign
fuel sources and minimizing the impact of the transportation system on
global climate change. Given these and other challenges, it is
important to assess the continued relevance of established federal
programs and to determine whether the current areas of federal
involvement are still areas of national interest. Key to such an
assessment is how narrowly or broadly the federal interest in the
nation's transportation system should be defined and whether the
federal interest is greater in certain areas of national priority:
* Should federal spending and programs be more focused on specific
national interests such as interstate freight mobility or on broad
corridor development?
* Is there a federal interest in local issues such as urban congestion?
If so, are there more distinct ways in which federal transportation
spending and programs could address local issues that would enhance
inherent local incentives and choices?
* To what extent should federal transportation policy address social
concerns such as mobility for disadvantaged persons and transportation
safety?
* If environmental stewardship is part of the federal interest, how
might federal transportation policy better integrate national long-term
goals related to energy independence and climate change?
The proliferation of federal surface transportation programs has, over
time, resulted in an amalgam of policy interests that may not
accurately reflect current national concerns and priorities. Although
policymakers have attempted to clarify federal transportation policy in
the past[Footnote 78] and an FHWA Task Force has called for focusing
federal involvement on activities that clearly promote national
objectives, current policy statements continue to cover a wide spectrum
of broadly defined federal interests ranging from promoting global
competitiveness to improving citizens' quality of life. While these
federal programs, activities, and funding flows reflect the interests
of various constituencies, they are not as a whole aligned with a
strategic, coherent, and well-defined national interest. In short, the
overarching federal interest has blurred. Once the federal interest has
been refocused and more clearly defined, policymakers will have a
foundation for allocating scarce federal resources according to the
level of national interest.
With the federal interest in surface transportation clearly defined,
policymakers can clarify the goals for federal involvement. The more
specific, measurable, achievable, and outcome-based the goals are, the
better the foundation will be for allocating resources and optimizing
results. Even though some federal transportation safety programs are
linked to measurable outcome-based goals, such as achieving a specific
rate of safety-belt use to reduce traffic fatalities, the formula
funding for general improvements to transit facilities or highway
systems is generally provided without reference to achieving specific
outcomes for federal involvement. For example, the guidelines for state
and local recipients' use of the largest highway and transit formula
grant funds, such as the Surface Transportation Program or Block Grant
Program (Urbanized Area Formula Grants), are based on broad project
eligibility criteria. These criteria involve the type of highway or
type of work (e.g., transit capital investment versus operating
assistance) rather than the achievement of clearly defined and
measurable outcomes.[Footnote 79] Furthermore, although DOT has already
established some outcome measures as part of its strategic planning
process, its agencywide goals and outcomes cover a vast array of
activities and are generally not directly linked to project selection
or funding decisions for most highway funding and the largest transit
and safety programs. Without specific and measurable outcomes for
federal involvement, policymakers will have difficulty determining
whether certain programs are achieving desired results.
Establish and Clearly Define the Federal Role in Achieving Each Goal:
After identifying the federal interest and federal goals, policymakers
can clearly define the federal government's role in working toward each
goal and define that role in relation to the roles of other levels of
government and other stakeholders. This would involve an examination of
state and local government roles, as well as of the federal role.
Following such an examination, the current relationship between the
federal and other levels of government could change. For example, in
the federal-aid highway program, the current "partnership" between the
federal government and the states is based on an explicit recognition
of state sovereignty in the conduct of the program, and the states have
considerable flexibility in moving funds within this program. By
contrast, highway safety programs operate under a grantor-grantee
relationship and for transit the grantees are largely local units of
government, although the role of states has grown. An examination of
these programs could change these relationships, since different
federal goals may require different degrees and types of federal
involvement. Where the federal interest is greatest, the federal
government may play a more direct role in setting priorities and
allocating resources, as well as fund a higher share of program costs.
Conversely, where the federal interest is less evident, state and local
governments could assume more responsibility.
Functions that other entities may perform better than the federal
government could be turned back to the states or other levels of
government. Given the already substantial roles states and localities
play in the construction and operation of transportation facilities,
there may be areas that no longer call for federal involvement and
funding could be reassessed. Notably, we have reported that the modal
focus of federal programs can distort the investment and decision-
making of other levels of government and a streamlining of federal
goals and priorities could better align programs with desired outcomes.
Turning functions back to the states has many other implications. For
example, states would likely have to raise additional revenues to
support the increased responsibilities. While states might be freer to
allocate funds internally without modally stovepiped federal funding
categories, some states could face legal funding restrictions. For
example, some states prohibit the use of highway funds for transit
purposes, so if a transit program were returned to the states,
alternative taxes would have to be raised or the laws would have to be
changed. Until a program or function is actually turned back to the
states or localities, it is uncertain how these other levels of
government will perform. For example, if highway safety programs were
turned back to the states, it is not known whether states would
continue to target the same issues that they currently choose to
address under federally-funded programs or would emphasize different
issues. Likewise, if a program that targets a specific area such as
urban transit systems is turned back to the states, there is no
assurance that the states would continue to fund this area. Turning
programs back to the states would have far-reaching consequences, as
discussed in appendix III.
Observers have argued that certain issues, such as urban mobility, are
essentially metropolitan in character and therefore should be addressed
by metropolitan regions, rather than by states or cities. In addition,
regional organizations can promote collaborative decision-making and
advance regional coordination by creating a forum for stakeholders,
address problems of mutual concern, and engage in information and
resource sharing.[Footnote 80] Metropolitan Planning Organizations
(MPO) currently perform this function for surface transportation. While
MPOs do receive some federal funding for operations, they are not
regional governments and generally do not execute projects. Addressing
these regional problems remains difficult in the absence of more
powerful regional governmental bodies. The development of more powerful
regional entities could create new opportunities to address regional
transportation problems.
Incorporate Performance and Accountability into Funding Decisions:
Once federal goals and the federal role in surface transportation have
been clarified, significant opportunities exist to incorporate
performance and accountability mechanisms into federal programs.
Tracking specific outcomes that are clearly linked to program goals
could provide a strong foundation for holding grant recipients
responsible for achieving federal objectives and measuring overall
program performance. In particular, substituting specific performance
measures for the federal procedural requirements that have increased
over the past 50 years could help to shift federal involvement in
transportation from the current process-oriented approach to a more
outcome-oriented approach. Furthermore, shifting from process-oriented
structures such as mode-based grant programs to performance-based
programs could improve project selection by removing barriers to
funding intermodal projects and giving grantees greater flexibility to
select projects based on the project's ability to achieve results.
Directly linking outcome-based goals to programs based on clearly
defined federal interests would also help to clarify federal surface
transportation policy and create a foundation for a transparent and
results-based relationship between the federal government and other
transportation stakeholders.
Accountability mechanisms can be incorporated into grant structures in
a variety of ways. For example, grant guidelines can establish uniform
outcome measures for evaluating grantees' progress toward specific
goals, and grant disbursements can depend in part on the grantees'
performance instead of set formulas. Thus, if reducing congestion was
an established federal goal, outcome measures for congestion such as
travel time reliability could be incorporated into infrastructure
grants to hold states and localities responsible for meeting specific
performance targets. Similarly, if increasing freight movement was an
established federal goal, performance targets for freight throughput
and travel time in key corridors could be built into grant programs.
Performance targets could either be determined at the national level
or, where appropriate, in partnership with grantees--much as DOT has
established state performance goals for highway safety and motor
carrier safety assistance.
Incentive grants or penalty provisions in transportation grants can
also create clear links between performance and funding and help hold
grantees accountable for achieving desired results. For example, the
current highway and motor carrier safety incentive grants and penalty
provisions can be used to increase or withhold federal grant funds
based on the policy measures that states enact and the safety outcomes
they achieve. Depending on the federal interest and established goals,
these types of provisions could also be used in federal infrastructure
grants.
In addition, a competitive selection process can help hold recipients
accountable for results. For example, DOT's competitive selection
process for New Starts and Small Starts transit programs require
projects to meet a set of established criteria and mandates post-
construction evaluations to assess project results. To better ensure
that other discretionary grant programs are aligned with federal
interests and achieve clearly defined federal transportation goals,
Congress could establish specific project selection criteria for those
programs and require that they use a competitive project selection
process. For instance, key freight projects of national importance
could be selected through such a competitive process that would
identify those investments that are most crucial to national freight
flows. DOT also recently selected metropolitan areas for Urban
Partnership Agreements, which are not tied to a single grant program
but do provide recipients with financial resources, regulatory
flexibility, and dedicated technical support in exchange for their
adoption of aggressive congestion-reduction strategies. When a national
competition is not feasible, Congress could require a competitive
selection process at the state or local level, such as those required
for the Job Access and Reverse Commute Program. This program, however,
lacks the statutorily defined selection criteria used to select
projects for the New Starts and Small Starts programs.
Employ Best Tools and Approaches to Help Improve Return on Investment:
The effectiveness of any overall federal program design can be
increased by promoting and facilitating the use of the best tools and
approaches. Within broader federal program structures that fit the
principles we discuss in this report, a number of specific tools and
approaches can be used to improve results and return on investment,
which is increasingly necessary to meet transportation challenges as
federal resources become even more constrained. We and others have
identified a range of leading practices, discussed below, however their
suitability varies depending on the level of federal involvement or
control that policymakers desire for a given area of policy.
Rigorous economic analysis is recognized by experts as a useful tool
for evaluating and comparing potential transportation projects.
Benefit-cost analysis gives transportation decision makers a way to
identify projects with the greatest net benefits and compare
alternatives for individual projects. By translating benefits and costs
into quantitative comparisons to the maximum extent feasible, these
analyses provide a concrete way to link transportation investments to
program goals. However, in order for benefit-cost analysis to be
effective, it must be a key factor in project selection decisions and
not seen simply as a requirement to be fulfilled. A complementary type
of tool is outcome evaluation, which is already required for New Starts
transit projects. Such evaluations would be useful in identifying
leading practices and understanding project performance, especially
since the available information indicates that the costs of highway and
transit projects are often higher than originally anticipated.
It should be recognized, however, that benefit-cost comparisons and
other analyses do not necessarily identify the federal interest--many
local benefits from transportation investments are not net benefits in
national terms. For example, economic development may provide financial
benefits locally, but nationally the result may be largely a
redistribution of resources rather than a net increase. Accordingly, in
emphasizing return on federal investment, the relationship of
investments to national goals must be considered along with locally-
based calculations of benefit and cost.
Because current programs are generally based on specific modes, it is
difficult to plan and fund intermodal links and projects that involve
more than one mode, despite a consensus among experts and DOT itself
that an intermodal approach is needed. A number of strategies could be
used to move toward an intermodal approach. For example, policy could
be changed to allow a single stream of funding to pay for all aspects
of a corridor-based project--even if the improvements include such
diverse measures as highway expansion, transit expansion, and
congestion management. DOT recently created competitive Urban
Partnership Agreements, which award grants for initiatives that address
congestion through congestion pricing, transit, telecommuting, and ITS
elements. Finally, decision makers cannot make full use of cross-modal
project comparisons, such as those developed through benefit-cost
analysis, if funding streams remain stovepiped.
Better management of existing capacity is another strategy that has
proved successful, primarily on highways; it is useful because of the
growing cost and, in some cases the impracticality, of building
additional capacity. We have reported that implementing ITS technology
can improve system performance. Congestion pricing of highways, where
toll rates change according to demand, is another such leading
practice. From an economic perspective, congested highways are
generally "underpriced." Although the social cost of using a roadway is
much higher at peak usage times, this higher cost is usually not
reflected in what drivers pay. When toll rates increase with demand,
some drivers respond to higher peak-period prices by changing the mode
or time of their travel for trips that are flexible. This tool can
increase the speed of traffic and has the potential to increase
capacity as well--an evaluation of the variably priced lanes of State
Route 91 in Orange County, California, showed that although the priced
lanes represent only 33 percent of the capacity of State Route 91, they
carry an average of 40 percent of the traffic during peak travel times.
Although the Value Pricing Pilot Program encourages the use of this
tool, tolling is prohibited on most Interstate highways by statute.
Broader support in policy could increase the adoption of congestion
pricing, improving the efficiency and performance of the system.
Public-private partnerships are another tool that may benefit public
sponsors by bringing private-sector financing and efficiencies to
transportation investments, among other potential advantages.
Specifically, private investors can help public agencies improve the
performance of existing facilities, and in some cases build new
facilities without directly investing public funds. At the same time,
such partnerships also present potential costs and trade-offs, but the
public sector can take steps to protect the public interest. For
example, when evaluating the public interest of public-private
partnerships, the public sector can employ qualitative public interest
tests and criteria, as well as quantitative tests such as Value for
Money and Public Sector Comparators, which are used to evaluate if
entering into a project as a public-private partnership is the best
procurement option available.[Footnote 81] Such formal assessments of
public interest are used routinely in other countries, such as
Australia and the United Kingdom, but use of systematic, formal
processes and approaches to the identification and assessment of public
interest issues has been more limited in the United States. Since
public interest criteria and assessment tools generally mandate that
certain aspects of the public interest are considered in public-private
partnerships, if these criteria and tools are not used, then aspects of
public interest might be overlooked. Although these techniques have
limitations, they are able to inform public decision making--for
instance, the Harris County, Texas, toll authority conducted an
analysis similar to a public-sector comparator, and the results helped
inform the authority's decision not to pursue a public-private
approach.
Tools can also be used in designing grants to help increase the impact
of federal funds. One such tool is maintenance of effort requirements,
under which state or local grantees must maintain their own level of
funding in order to receive federal funds. Maintenance of effort
requirements could discourage states from substituting federal support
for funds they themselves would otherwise have spent. However, our past
work has shown that maintenance of effort requirements should be
indexed to inflation and program growth in order to be effective.
Matching requirements are another grant design tool that can be
adjusted to increase the impact of federal programs. The allowable
federal share covers a substantial portion of project costs--often 80
percent--in many transportation programs, especially for highways.
Increasing the state share can help induce recipients to commit
additional resources. For example, NHTSA's Occupant Protection grant
program provides 75 percent federal funding the first year, but reduces
the federal share to 25 percent in the fifth and sixth years to shift
the primary financing responsibility to the states.
Data collection is a key tool to give policymakers information on how
the transportation system is functioning. Data on the system and its
individual facilities and modes are useful in their own right for
decision making, but are also essential to enable other effective
approaches, such as linking grant disbursements to grantees'
performance. As discussed previously, DOT does not have complete data
in some crucial areas; the effective use of data in safety programs,
despite problems, demonstrates the potential of more comprehensive data
gathering to improve evaluations and induce improved performance in the
surface transportation system.
A restructured federal program could increase the application of these
and other leading tools and approaches by providing incentives for or
requiring their use in certain circumstances. For example, in
competitive discretionary grant programs, the application of specific
tools and approaches could be considered in evaluating proposals, just
as the use of incentives or penalties could be considered in
noncompetitive grant programs. The Motor Carrier Safety Assistance
Program already employs this approach--one factor considered in
awarding incentive funds is whether states provide commercial motor
vehicle safety data for the national database. The use of certain tools
and approaches could also simply be required in order to receive
federal funds under relevant transportation grant programs. However, if
federal programs were restructured to be based on performance and
outcomes, states would have more incentive to implement such tools and
approaches on their own. Under such a scenario, an appropriate federal
role could be to facilitate their identification and dissemination.
Ensure Fiscal Sustainability:
Transportation financing, and the Highway Trust Fund in particular,
faces an imbalance of revenues and expenditures and other threats to
its long-term sustainability. In considering sustainable sources of
funds for transportation infrastructure, the user-pay principle is
often cited as an appropriate pricing mechanism for transportation
infrastructure.[Footnote 82] While fuel taxes do reflect usage, they
are not an exact user-pay mechanism and they do not convey to drivers
the full costs of their use of the road. These taxes are not tied to
the time when drivers actually use the road or which road they use.
Taxes and fees should also be equitably assigned and reflect the
different costs imposed by different users. The trucking industry pays
taxes and fees for the highway infrastructure it uses, but its payments
generally do not cover the costs it imposes on highways,[Footnote 83]
thereby giving the industry a competitive price advantage over
railroads, which use infrastructure that they own and operate.[Footnote
84] An alternative to fuel taxes would be to introduce mileage charges
on vehicles--Oregon is pilot testing the technology to implement this
approach. Finally, the use of congestion pricing to reflect the much
greater cost of traveling congested highways at peak times will help
optimize investment by providing market cues to policymakers.
Concerns about funding adequacy have led state and local governments to
search for alternative revenue approaches, including alternative
financing vehicles at the federal level, such as grant anticipation
revenue vehicles, grant anticipation notes, state infrastructure banks
and federal loans. These vehicles can accelerate the construction of
projects, leverage federal assistance, and provide greater flexibility
and more funding techniques. However, they are also different forms of
debt financing. This debt ultimately must be repaid with interest,
either by highway users--through tolls, fuel taxes, licensing or
vehicle fees--or by the general population through increases in general
fund taxes or reductions in other government services. Highway public-
private partnerships show promise as an alternative, where appropriate,
to help meet growing and costly transportation demands. Highway public-
private partnerships have resulted in advantages, from the perspective
of state and local governments, such as the construction of new
infrastructure without using public funding, and obtaining funds by
extracting value from existing facilities for reinvestment in public
transportation and other public programs. However, there is no "free"
money in public-private partnerships. Highway financing through public-
private partnerships also is largely a new source of borrowed funds
that must be repaid to private investors by road users, over what could
be a period of several generations.[Footnote 85]
Finally, the sustainability of transportation financing should also be
seen in the context of broader fiscal challenges. In a time of growing
structural deficits, constrained state and local budgets, and looming
Social Security and Medicare spending commitments, the resources
available for discretionary programs will be more limited.[Footnote 86]
The federal role in transportation funding must be reexamined to ensure
that it is sustainable in this new fiscal reality. The long-term
pressures on the Highway Trust Fund and the governmentwide problem of
fiscal imbalance highlight the need for a more efficient, redesigned
program based on the principles we have identified. The sustainability
of surface transportation programs depends not only on the level of
federal funding, but also on the allocation of funds to projects that
provide the best return on investment and address national
transportation priorities. Using the tools and approaches for improving
transportation programs that we have discussed could also help surface
transportation programs become more fiscally sustainable and more
directly address national transportation priorities.
Restructuring Principles Can Help Frame the Discussion of the National
Commission Report and Dissent:
The National Surface Transportation Policy and Revenue Study Commission
(National Commission) issued its final report in January 2008.[Footnote
87] The report recommended significantly increasing the level of
investment by all levels of government in surface transportation,
consolidating and reorganizing the current programs, speeding project
delivery, and making the current program more performance-based and
mode-neutral, among other things. However, several commissioners
offered a dissenting view on some of the Commission's recommendations,
notably the level of investment, size of the federal role, and the
revenue sources recommended. The divergent views of the commission
members indicate that while there is a degree of consensus on the need
to reexamine federal surface transportation programs, there is not yet
a consensus on the form a restructured surface transportation program
should take. The principles that we discussed for examining
restructuring options are a sound basis on which this discussion can
take place. These principles do not prescribe a specific approach to
restructuring, but they do provide key attributes that will help ensure
that a restructured surface transportation program addresses current
challenges.
Conclusions:
The current federal approach to addressing the nation's surface
transportation problems is not working well. Despite large increases in
expenditures in real terms for transportation the investment has not
resulted in a commensurate improvement in the performance of nation's
surface transportation system, as congestion continues to grow, and
looming problems from the anticipated growth in travel demand are not
being adequately addressed. The current collection of flexible but
disparate programs grants that characterizes the existing approach is
the result of a patchwork evolution of programs over time, not a result
of a specific rationale or plan. This argues for a fundamental
reexamination of the federal approach to surface transportation
problems. In cases where there is a significant national interest,
maintaining strong federal financial support and a more direct federal
involvement in the program may be needed. In other cases, functions may
best be carried by other levels of government or not at all. There may
also be instances where federal financial support is desirable but a
more results-oriented approach is appropriate. In addition, it is
important to recognize that depending on the transportation issue and
the desired goals, different options and approaches may best fit
different problems. Reforming the current approach to transportation
problems will take time, but a vision and strategy is needed to begin
the process of transforming to a set of policies and programs to
effectively address the nation's transportation needs and priorities.
The current system evolved over many years and involves different
modes, infrastructure and safety issues, and extends widely into the
operations of state and local governments.
Given the proliferation of programs and goals previously discussed,
refocusing federal programs is needed to address the shortfalls of the
current approach. Focusing federal programs around a clear federal
interest is key. Well-defined goals based on identified areas of
federal interest would establish what federal participation in surface
transportation is designed to accomplish. A clearly defined federal
role in achieving these goals would give policymakers the ability to
direct federal resources proportionately to the level of national
interest. Once this is accomplished, a basis exists to reexamine the
current patchwork of programs, test their continued relevance and
relative priority, potentially devolve programs and policies that are
outdated or ineffective, and modernize those programs and policies that
remain relevant.
Once those areas of federal interest are known, tying federal funds to
performance and having mechanisms to test whether goals are met would
help create incentives to state and local governments to improve their
performance and the performance of the transportation system. Both
incentive programs and sanctions are possible models for better tying
performance to outcomes. Having more federal programs operate on a
competitive basis and projects selected based on potential benefits
could also help tie federal funds to performance.
There also is a need to improve the use of analytical tools in the
selection and evaluation of the performance of projects. Better use of
tools such as benefit-cost analysis and using return on investment as a
criterion for the selection of individual projects can help identify
the best projects. Specifically, the use of a return on investment
framework will help to emphasize that federal financial commitments to
transportation infrastructure projects are, in fact, long-term capital
investments designed to achieve tangible results in a transparent
fashion.
Finally, a fundamental problem exists in the fiscal sustainability of
surface transportation programs as a result of the impending shortfall
in the Highway Trust Fund. The trust fund is the primary source of
federal support to state and local governments across highways,
transit, and surface transportation safety programs. This fiscal crisis
is fundamentally based on the balance of revenues and expenditures in
the fund, and thus either reduced expenditures, increased revenues, or
a combination of the two is now needed to bring the fund back into
balance. Finally, given the scope of needed transformation, the shifts
in policies and programs may need to be done incrementally or on a
pilot basis to gain practical lessons for a coherent, sustainable, and
effective national program and financing structure to best serve the
nation for the 21st century.
Matter for Congressional Consideration:
To improve the effectiveness of the federal investment in surface
transportation, meet the nation's transportation needs, and ensure a
sustainable commitment to transportation infrastructure, Congress
should consider reexamining and refocusing surface transportation
programs to be responsive to these principles so that they:
* have well-defined goals with direct links to an identified federal
interest and role,
* institute processes to make grantees more accountable by establishing
more performance-based links between funding and program outcomes,
* institute tools and approaches to that emphasize the return on the
federal investment, and:
* address the current imbalance between federal surface transportation
revenues and spending.
Agency Comments:
We provided copies of a draft of this report to DOT for its review and
comment. In an email on February 22, 2008, DOT noted that surface
transportation programs could benefit from restructured approaches that
apply data driven performance oriented criteria to enable the nation to
better focus its resources on key surface transportation issues. DOT
officials generally agreed with the information in this report, and
they provided technical clarifications which we incorporated, as
appropriate.
We will send copies of this report to interested congressional
committees and the Secretary of Transportation. Copies will also be
available to others upon request and at no cost on GAO's Website at
[hyperlink, http://www.gao.gov].
If you or your staff have any questions about this report, please
contact me at (202) 512-2834, or heckerj@gao.gov. Contact points for
our Offices of Congressional Relations and Public Affairs may be found
on the last page of this report. GAO staff who made key contributions
to this report are listed in appendix IV.
Signed by:
JayEtta Z. Hecker:
Director, Physical Infrastructure Issues:
[End of section]
Appendix I: Objectives, Scope, and Methodology:
We were asked to (1) provide an historical overview of the federal role
in surface transportation and the goals and structures of federal
surface transportation programs funded by the Highway Trust Fund, (2)
summarize conclusions from our prior work on the structure and
performance of these and other federal programs, and (3) identify
principles to help assess options for focusing the future federal role
and the structure of federal surface transportation programs.
We focused our work on programs funded by the Highway Trust Fund (HTF)
because it is the primary vehicle for federal financing of surface
transportation, receiving nearly all federal fuel tax revenue; it is
also a focus of most proposals to reform the current federal role. We
examined the Federal Highway Administration (FHWA), Federal Motor
Carrier Safety Administration (FMCSA), Federal Transit Administration
(FTA) and National Highway Traffic Safety Administration (NHTSA) as
part of this study; we did not look at two other DOT agencies that
receive HTF funds, the Research and Innovative Technology
Administration (RITA) and the Federal Railroad Administration (FRA).
RITA was excluded because it focuses on federal research, in contrast
to our focus on federal-state programs; FRA was excluded because the
portion of HTF funds that it receives is so small that it cannot be
compared to the other operating agencies.
To provide an historical overview of the federal role in surface
transportation and the goals and structures of federal surface
transportation programs, we drew information from statutes, especially
transportation authorization laws; regulations; budget documents;
agency reports; and literature on transportation policy by outside
experts. We interviewed officials in DOT's modal administrations,
including FHWA, FMCSA, FTA, and NHTSA in order to help clarify agency
goals, roles and structures. We also interviewed representatives of
stakeholder groups such as the American Association of State Highway
and Transportation Officials (AASHTO) and the American Public Transit
Association (APTA).
To describe conclusions that we and others have drawn about the current
structure and performance of these federal programs, we reviewed
relevant GAO reports on specific transportation programs, as well as
reports that looked at broader issues of performance measurement,
oversight, grant design, and other related issues. We also reviewed
reports, policy statements, and other materials from stakeholder groups
and other organizations. Additionally, we reviewed materials from
hearings held by the National Surface Transportation Policy and Revenue
Study Commission. Finally, we sought the views of transportation
experts, including the 22 who participated in a forum convened by the
Comptroller General in May 2007, that included public officials,
private-sector executives, researchers, and others.
To review policy options for addressing the federal role, we identified
options from previous proposals, both those originating in Congress and
presidential administrations, as well as those presented by stakeholder
groups such as AASHTO. We also reviewed options discussed in previous
GAO reports, as well as testimony and other materials generated by the
National Surface Transportation Policy and Revenue Study Commission,
which the Congress also tasked to examine the federal approach to
surface transportation programs.
In addition, to complement our appendix III discussion of the
implications of turning over responsibility for surface transportation
to the states, we analyzed the potential fiscal impact of turning over
most elements of the federal transportation program to the states. We
obtained DOT data on state grant disbursements and calculated total
federal grant receipts for each state and the District of Columbia. We
limited our analysis to grant programs funded by the HTF, because the
federal fuel taxes that would be eliminated or sharply reduced under
this scenario are deposited almost exclusively in the HTF. We also
omitted discretionary grants because they are a small portion of
federal transportation grants and often vary significantly from year to
year in a given state. Separately, we obtained state fuel consumption
data from DOT. In order to calculate the extent to which individual
states would have to raise their fuel taxes to maintain the same level
of spending if federal grants were eliminated, we divided the total
grant receipts (as described above) for each state by the number of
gallons of highway fuel used in that state in the prior year. This
calculation yielded the per-gallon increase in state taxes that would
be needed to maintain spending, assuming it would be implemented evenly
across all types of fuel. Because diesel and gasoline are taxed at
different federal rates, and represent different shares of total usage
in each state, we used a weighted average to calculate the current
effective per-gallon federal fuel tax rate in each state. We then
expressed the per-gallon tax rate results in terms of change from the
current federal tax rate. Where we had not previously assessed the
reliability of the source data, we conducted a limited data reliability
analysis and found the data suitable for the purpose of this analysis.
We conducted this performance audit between April 2007 and February
2008 in accordance with Generally Accepted Government Auditing
Standards. Those standards require that we plan and perform the audit
to obtain sufficient, appropriate evidence that provides a reasonable
basis for our findings and conclusions based on our audit objectives.
We believe that the evidence obtained provides a reasonable basis for
our findings and conclusions based on our audit objectives.
[End of section]
Appendix II: Overview of Federal Surface Transportation Programs:
Federal Highway Infrastructure Assistance Since 1956:
Current Programs:
Federal assistance for highway infrastructure is distributed through
several grant programs, known collectively as the Federal-Aid Highway
Program. Both Congress and DOT have established multiple broad policy
goals for the Federal-Aid Highway Program, which provides financial and
technical assistance to states to construct, preserve, and improve
eligible federal-aid highways. The program's current goals include
safety, efficiency, mobility, congestion relief, interstate and
international commerce, national security, economic growth,
environmental stewardship, and sustaining the nation's quality of life.
The Federal-Aid Highway Program currently consists of seven core
formula grant programs and several smaller formula and discretionary
grant programs. The majority of Highway Trust Fund revenues are
distributed through the core formula grant programs to the states for a
variety of purposes, including road construction and improvements,
Interstate highway and bridge repair, air pollution mitigation, highway
safety, and equity considerations. Broad flexibility provisions allow
states to transfer funds between core highway programs and to the
Federal Transit Administration (FTA) for eligible transit projects.
Highway Trust Fund revenues are also distributed through the smaller
formula and discretionary grant programs, which cover a wide range of
projects, including border infrastructure, recreational trails, and
safe routes to schools. Congress has also designated funds for specific
projects. For example, according to the Transportation Research Board,
SAFETEA-LU--the most recent reauthorization legislation--contained
over 5,000 dedicated spending provisions.
The Federal-Aid Highway Program is administered through a federal-state
partnership. The federal government, through FHWA, provides financial
assistance, policy direction, technical expertise, and some
oversight.[Footnote 88] FHWA headquarters provides leadership,
oversight, and policy direction for the agency, FHWA state division
offices deliver the bulk of the program's technical expertise and
oversight functions, and five FHWA regional service resource centers
provide guidance, training, and additional technical expertise to the
division offices. In turn, state and local governments execute the
programs by matching and distributing federal funds; planning,
selecting, and supervising projects; and complying with federal
requirements. Currently, based on stewardship agreements with each
state, FHWA exercises full oversight on a limited number of federal-aid
projects. States are required to oversee all federal-aid highway
projects that are not on the National Highway System, and states
oversee design and construction phases of other projects based on an
agreement between FHWA and the state. FHWA also reviews state
management and planning processes. Many state and local government
processes are driven by federal requirements, including not only
highway-specific requirements for transportation planning and
maintenance, but also environmental review requirements and labor
standards that are the result of separate federal legislation designed
to address social and environmental goals.
Changes over Time:
Since its reauthorization under the Federal-Aid Highway Act of 1956,
the Federal-Aid Highway Program has grown in size, scope, and
complexity as federal goals for the program have expanded. In 1956, the
primary focus of the Federal-Aid Highway Program was to help states
finance and construct the Interstate Highway System to meet the
nation's needs for efficient travel, economic development, and national
defense. The Federal-aid Highway Program made funds available to states
for road construction and improvements through four formula programs--
one program for each of four eligible road categories--with a
particular focus on the Interstate system. Yet the Federal-Aid Highway
Program has also served as a mechanism to achieve other societal goals.
For example, the 1956 Act requires that states adhere to federal wage
and labor standards for any state construction project using federal-
aid funds. In successive reauthorizations of the program, Congress has
increased program requirements to achieve other societal goals such as
civil rights, environmental protection, urban planning, and economic
development.
Besides increasing compliance requirements, Congress has authorized new
grant programs to achieve expanded program objectives. For example,
Congress authorized new core grant programs to address Interstate
highway maintenance, environmental goals, and safety. In response to
controversy over the distribution of highway funds between states that
pay more in federal taxes and fees than they receive in federal-aid
(donor states) and states that receive more in federal-aid than they
contribute (donee states), Congress established and strengthened equity
programs that guarantee states a minimum relative return on their
payments into the Highway Account of HTF. Additionally, Congress has
further expanded the program's scope by authorizing highway funds for
additional purposes and uses, such as highway beautification, historic
preservation, and bicycle trails.
The federal-state partnership has evolved as programs have changed to
give states and localities greater funding flexibility. For example, in
1991, when Interstate construction was nearly complete, Congress
restructured the Federal-aid Highway Program to promote a more
efficient and flexible distribution of funds. Specifically, under the
Intermodal Surface Transportation Efficiency Act of 1991
(ISTEA),[Footnote 89] Congress substantially increased flexibility by
consolidating road-category grant programs, creating a surface
transportation block grant, and establishing broad flexible fund
transfer provisions between highway programs and transit--a structure
that remains today. At the same time, Congress altered the established
federal-state partnership by increasing the authority of metropolitan
planning organizations--local governmental planning bodies--in
federally mandated planning processes.
The federal-state partnership has further evolved as Congress has
delegated federal oversight responsibilities to state and local
governments, but has assumed a greater role in project selection. When
Interstate construction began, the federal government provided direct
oversight during the construction and maintenance phases of projects
and ensured that the states complied with federal requirements. By
1973, states could self-certify compliance with most federal grant
requirements, and during the 1990s, Congress further expanded this
authority to allow states and FHWA to cooperatively determine the
appropriate level of oversight for federally funded projects, including
some Interstate projects. While reducing the federal role in oversight,
Congress has increased its role in project selection--traditionally a
state and local responsibility--through congressional directives. For
example, according to the Transportation Research Board, there were
over 5,000 directives in the latest reauthorization from 2005, up from
1,850 in 1998 and 11 in 1982.
As the Federal-Aid Highway Program has grown in size and complexity, so
too has the federal administrative structure although some shifting or
consolidation of responsibilities has occurred. Before FHWA was created
in 1967, its predecessor, the Bureau of Public Roads, established a
decentralized administrative structure and a field office in each
state, reflecting the close partnership between the federal government
and the states. Moreover, as the number of the Federal-Aid Highway
Program requirements and the scope of the program increased, the
agency, which initially had an engineering focus, hired a wide range of
specialists including: economists, landscape architects, planners,
historians, ecologists, safety experts, civil rights experts, and
others. When DOT was formed in 1967, new motor carrier and traffic and
vehicle safety functions were assigned to FHWA. These functions have
since shifted to NHTSA and FMCSA, although FHWA continues to
collaborate on these issues and retains responsibility for highway
infrastructure-related safety projects and programs. In 1998, FHWA
consolidated its organization by eliminating its nine regional offices
and establishing regional service resource centers, as well as
devolving responsibility for state projects and programs entirely to
the FHWA division offices in each state. For fiscal year 2009, FHWA
requested funding for 2,861 full-time equivalent staff divided between
headquarters, 5 regional service resource centers and 55 division
offices.[Footnote 90]
Federal Transit Assistance:
Current Programs:
Both Congress and DOT have established multiple broad policy goals for
FTA, which provides financial and technical assistance to local and
state public agencies to build, maintain, and operate mass
transportation systems. FTA's current statutory goals include (1)
promoting the development of efficient and coordinated urban
transportation systems that maximize mobility, support economic
development, and reduce environmental and energy consumption impacts,
and (2) providing mobility for vulnerable populations in both urban and
rural areas. DOT's six strategic goals also apply to FTA: safety,
congestion mitigation, global connectivity, environmental stewardship,
security and preparedness, and organizational excellence.
Currently, FTA divides its major capital and operating assistance
programs into two categories: formula and bus grants, which are funded
entirely from HTF's Mass Transit Account,[Footnote 91] and capital
investment grants, which are financed using general revenue. The
formula and bus grants provide capital and operating
assistance[Footnote 92] to transit agencies and states through a
combination of seven relatively large and five smaller formula and
discretionary grants. Under these grants, the federal government
generally provides 80 percent of the funding and the locality provides
20 percent, with certain exceptions.[Footnote 93] The capital
investment grants provide discretionary capital assistance for the
construction of new fixed-guideway and corridor systems and extensions
of existing systems. Funds for new fixed-guideway systems are
distributed through the New Starts and Small Starts grant programs and
are awarded to individual projects through a competitive selection
process.[Footnote 94] Although the statutory federal match for the New
Starts and Small Starts programs is 80 percent, agency officials stated
the actual federal match is closer to 50 percent due to high levels of
state and local investment and the competitive selection process that
favors projects that require a lower federal match. FTA also provides
financial support for research and planning activities. Funds for
research are allocated on a discretionary basis out of the General
Fund, and planning funds are taken from the Mass Transit Account of the
Highway Trust Fund and distributed to states by formula. In addition to
the funding they obtain through these programs, states may transfer a
portion of certain highway program funds to FTA for eligible transit
expenses. According to the most recent DOT data, in 2004, 28.1 percent
of the funding for transit was system-generated through fares or other
charges, and the remaining funds came from local (34.6 percent), state
(19.7 percent), and federal (17.6 percent) sources. Approximately 75
percent of federal transit assistance is directed to capital
investments, and the remainder is directed to other eligible expenses
such as operating expenses.
In contrast to federal highway infrastructure programs, which are
administered through a federal-state partnership, federal transit
programs are generally administered through a federal-local
partnership, although rural programs are administered at the state
level. The federal government, through FTA headquarters and 10 FTA
regional offices, provides financial assistance, establishes
requirements, performs oversight, and conducts research. Grant
recipients such as local transit agencies are responsible for matching
federal funds and for planning, selecting, and executing projects while
complying with federal requirements. The degree of federal oversight
varies across programs and among grant recipients. Currently, full
federal oversight[Footnote 95] is limited to major capital projects
that cost over $100 million, and local and state grant recipients are
allowed to self-certify their compliance with certain federal laws and
regulations. For example, FTA conducts periodic reviews of program
management processes for recipients of Block Grants Program (Urbanized
Area Formula Grants) funds and provides direct project management
oversight for recipients of New Starts funding.[Footnote 96] In
addition, FTA conducts discretionary reviews of grantees' compliance
with requirements in other areas such as financial management or civil
rights and uses a rating system to determine the level of oversight
needed for each grantee.[Footnote 97] FTA employees work with external
contractors to conduct project management and program management
process reviews. For fiscal year 2009, FTA requested funding for 526
full-time-equivalent staff, divided among its 10 regional offices and
headquarters.
Changes over Time:
From the modern transit program's inception as part of the Urban Mass
Transportation Act of 1964 (UMTA), Congress justified federal funding
for mass transportation capital improvements as a means to address
pressing urban problems such as urban decay, traffic congestion, and
poor development planning. Federal capital assistance was distributed
to local governments on a discretionary basis to help urban areas
improve and expand urban mass transportation systems. Congress also
established federal transit programs to achieve other societal goals.
For example, UMTA required grant recipients to provide labor
protections for transit employees and relocation assistance for
individuals displaced by transit projects.[Footnote 98] Later federal
legislation increased grant requirements to achieve other societal
goals such as civil rights, environmental protection, and economic
development.
In addition to increasing compliance requirements, Congress has
authorized new grant programs and broadened program eligibility
requirements to promote expanding objectives. For example, federal
transit assistance expanded during the 1970s to include grant programs
designed to meet social and transportation-related goals such as:
improving mobility in rural areas[Footnote 99] and making public
transportation more accessible for the elderly and the
disabled.[Footnote 100] More recently, Congress has further broadened
the scope of programs to include making transportation to jobs more
accessible for welfare recipients and low-income individuals[Footnote
101] and providing transit service within public parks and
lands.[Footnote 102] Although federal transit funding was initially
provided on a discretionary basis from the General Fund of the
Treasury, many of the newer programs make funds available through
formulas, and highway user fees have replaced general revenues as the
major source of transit assistance since the creation of the Mass
Transit Account of the Highway Trust Fund in 1983. In addition,
Congress has broadened the scope of federal transit assistance to
include operating expenses and capital maintenance as well as capital
expenses. For example, concerns about growing operating deficits among
transit agencies led Congress to authorize the use of federal funds for
transit operating expenses in 1974. Although federal support for
operating expenses in urbanized areas has since declined, operating
assistance is still available for areas with a population of less than
200,000.
The federal-local relationship in transit has evolved as Congress has
expanded federal involvement in transit and increased state and local
government authority and flexibility in using federal funds. For
example, in 1978, Congress expanded federal transit assistance to rural
areas and made state governments responsible for receiving and
distributing these funds. According to agency officials, states
previously played a limited role in transit projects because the
federal government worked directly with urban areas and transit
agencies. In 1991, Congress increased local authority by expanding the
role of metropolitan planning organizations in project selection and
transportation planning. At the same time, Congress substantially
increased state and local authority to transfer funds between highway
and transit programs. The combination of additional transfer authority
and the gradual shift toward apportioning funds through formulas rather
than individual project awards has increased flexibility for both state
and local transit grant recipients. In addition, state and local
government oversight responsibilities have increased for federal
transit grants, much as they have for federal highway infrastructure
grants, with self-certification procedures for compliance with federal
laws and regulations, and additional federal compliance requirements
such as those for environmental review.
Federal Highway Safety and Motor Carrier Safety Assistance:
Current Programs:
Federal highway safety and motor carrier safety assistance programs are
separately administered by NHTSA and FMCSA. The primary statutory
policy goals of these programs are directed to reducing accidents, and
the bulk of NHTSA's and FMCSA's financial support and research,
education, rulemaking, and enforcement activities fall under DOT's
strategic goal of improving safety. Although FHWA and FTA exercise
rulemaking authority in the administration of their programs,
rulemaking and enforcement are primary tools that NHTSA and FMCSA use
to reduce accidents and their associated damages.
Highway safety and motor carrier safety grant programs are similarly
organized. Both use a basic formula grant to provide funding to states
for safety programs, enforcement activities, and related expenditures,
coupled with several targeted discretionary grants. Currently, almost
40 percent of authorized federal highway safety assistance is
distributed by formula to states through the State and Community
Highway Safety Grant Program (Section 402), which supports a wide range
of highway safety initiatives at the state and local level. This basic
program is augmented by several smaller discretionary grant programs
that mostly target funds to improve safety through the use of measures
such as seat belts and child safety restraints, among others.[Footnote
103] Most of these discretionary grants provide states with financial
incentives for meeting specific performance or safety activity
criteria. For example, to be eligible for Alcohol-Impaired Driving
Countermeasures Incentive grants, most states must either have a low
alcohol fatality rate or meet programmatic criteria for enforcement,
outreach, and other related activities.[Footnote 104] In addition to
discretionary grants, Congress has authorized highway safety provisions
that penalize states by either transferring or withholding state
highway infrastructure funds from states that do not comply with
certain federal provisions. These penalty provisions can provide a
substantial amount of additional funding for state safety activities.
For example, in 2007, penalty provisions transferred over $217 million
of federal highway infrastructure assistance to highway safety programs
in the 19 states and Puerto Rico that were penalized for failure to
meet federal criteria for either open container requirements or minimum
penalties for repeat offenders for driving while intoxicated or under
the influence.[Footnote 105]
The majority of federal motor carrier safety funds are distributed by
formula to states through the Motor Carrier Safety Assistance Program
(MSCAP), which provides financial assistance to states for the
enforcement of federal motor carrier safety and hazardous materials
regulations. In addition, several smaller discretionary programs are
targeted to achieve specific goals such as data system improvements and
border enforcement, among others. Some of these grants require states
to maintain a level of funding for eligible motor carrier safety
activities to reduce the potential for federal funds to replace state
financial support.[Footnote 106] Finally, FMCSA sets aside MCSAP funds
to support high-priority areas such as audits of new motor carrier
operations. Unlike the highway safety grants, most of these
discretionary programs do not have statutorily defined performance or
outcome-related eligibility criteria, and funds are allocated at the
agency's discretion.[Footnote 107] States that do not comply with
federal commercial driver licensing requirements may have up to 5
percent of their annual highway construction funds withheld in the
first fiscal year and 10 percent in the second fiscal year of
violation. However, these withheld funds, unlike the funds withheld or
transferred under some highway safety penalty provisions, are not
available to the penalized states for motor carrier safety activities.
Like highway infrastructure grants, most federal highway safety and
motor carrier safety grants are jointly administered through a federal-
state partnership. Through NHTSA and FMCSA, the federal government
provides funds, establishes and enforces regulations, collects and
analyzes data, performs oversight, conducts research, performs
educational outreach, and provides technical assistance. In turn,
states provide matching funds, develop and execute safety and
enforcement plans and programs, distribute funds to other governmental
partners, collect and analyze data, and comply with federal grant and
reporting requirements. Both NHTSA and FMCSA use a performance-based
approach to grant oversight. Each agency reviews state safety plans,
which establish specific performance goals, and then monitors states'
progress towards achieving their goals. Because these efforts rely on
the accuracy and completeness of state safety data, both NHTSA and
FMCSA emphasize state data collection and analysis in the
administration of their grant programs. In addition to their annual
safety performance reviews, NHTSA and FMCSA conduct periodic management
and compliance reviews of grant recipients.
NHTSA and FMCSA also each have a substantial regulatory role. NHTSA
establishes and enforces safety standards for passenger vehicles in
areas such as tire safety, occupant protection devices, and
crashworthiness, as well as issuing fuel economy standards. FMCSA
establishes and enforces standards for motor carrier vehicles and
operations, hazardous materials, household goods movement, commercial
vehicle operator medical requirements, and international motor carrier
safety. NHTSA conducts testing, inspection, analysis, and
investigations to identify noncompliance with vehicle safety standards,
and if necessary, initiates a product recall. FMCSA conducts compliance
reviews of motor carriers' operations at their places of business as
well as roadside inspections of drivers and vehicles, and can assess a
variety of penalties including fines and cessation orders for
noncompliance. Both NHTSA and FMCSA rely on data to target their
enforcement activities.
NHTSA and FMCSA use different organizational structures to administer
their grant programs. NHTSA has both a headquarters office and 10
regional offices. Headquarters staff develop policy and programs and
provide technical assistance to regional staff. Regional staff review
and approve state safety plans, and provide technical assistance.
According to agency officials, since NHTSA does not provide the same
level of technical assistance as FHWA, a regional rather than a state
division structure is appropriate to NHTSA's needs. For fiscal year
2009, NHTSA requested funding for 635 full-time-equivalent staff
divided among its headquarters and regional offices. Similar to FHWA,
FMCSA has a field structure of 4 regional service centers and 52
division offices. Headquarters staff establish and communicate agency
priorities, issue policy guidance, and carry out financial management
activities. Regional service centers act as an intermediary between
headquarters and division offices by clarifying policy and organizing
training and goal-setting meetings for MSCAP grants. Division offices
have primary responsibility for overseeing state motor carrier safety
programs and work closely with the states to develop commercial vehicle
safety plans. These offices also monitor state progress and grant
expenditures. For fiscal year 2009, FMCSA requested funding for 1119
full-time equivalent staff divided among its headquarters and field
offices.
Changes over Time:
In broad terms, both federal highway safety and motor carrier safety
programs have followed a similar path since their inception. Both
federal highway safety and motor carrier safety activities were
components of the federal highway program before separate modal
agencies were established within DOT. Both state-assistance programs
began as a single basic formula grant that was then expanded to include
smaller targeted discretionary grants. Additionally, Congress has given
states greater flexibility to set their own priorities within the
parameters of national safety goals, and both NHTSA and FMCSA have
adopted a performance-based approach to grant oversight. Although
broader environmental and social goals have had less of an impact on
federal safety grant programs, the scope and administrative complexity
of highway safety and motor carrier safety regulatory functions has
expanded to incorporate these goals.
Because of growing concerns about vehicle safety and traffic accidents,
the National Traffic and Motor Vehicle Safety Act and Highway Safety
Act established highway safety as a separate grant program and
regulatory function in 1966. Two major grants provided federal highway
safety assistance in 1966: the State and Community Highway Safety
(Section 402) grants and Highway Safety Research and Development
(Section 403) grants. Section 402 grants distributed federal assistance
to states by formula to support the creation of state highway safety
programs and the implementation of countermeasures to address
behavioral factors in accidents. State safety programs were required to
meet several uniform federal standards to be eligible for funding and
avoid withholding penalties. Section 403 grants provided discretionary
federal funding for research, training, technical assistance, and
demonstration projects. Although originally administered by the
Department of Commerce, federal highway safety grants and regulatory
authority were transferred to the Federal Highway Administration (FHWA)
upon its creation in 1967. In 1970, FHWA's National Highway Safety
Bureau became a separate agency within DOT and was renamed the National
Highway Traffic Safety Administration.
Since 1966, Congress has increased state and local government authority
and flexibility to set and fund safety priorities by removing some
federal grant requirements and restrictions, and by relying more on
incentive-based discretionary grants to achieve national safety goals.
For example, the uniform federal standards first established in 1966
for state highway safety programs funded by Section 402 grants became
guidelines in 1987, and in 1998, Congress amended federal oversight
procedures from direct oversight of state safety programs to selective
oversight of state safety goals based on state performance.
Additionally Congress has removed dedicated spending restrictions on
Section 402 funds and replaced some of them with separate incentive
grant programs. For example, provisions that required a percentage of
Section 402 funds to be dedicated to 55 mph speed limit enforcement,
school bus safety, child safety restraints, and seat belt use have been
discontinued. Some of the priorities addressed by these spending
restrictions have become separate incentive programs designed to reward
state performance and activities in these areas rather than limit the
availability of Section 402 funds.[Footnote 108] However, in certain
priority areas, Congress has provided additional incentives for state
compliance by authorizing penalty provisions to withhold or transfer
state highway infrastructure funds for failure to meet specific safety
criteria.
Unlike federal highway and transit infrastructure grants, NHTSA's
grants have not been as directly affected by emerging national social
and environmental goals, although Congress has incorporated these goals
into NHTSA's regulatory processes. States must comply with several
broad federal requirements such as nondiscrimination policies to
receive federal safety funds. However, these requirements have not
increased the administrative complexity of highway safety grants to the
same extent as infrastructure grants because most safety activities
funded through NHTSA do not require construction. For example, state
safety activities such as enforcement of traffic laws and accident data
collection are generally not subject to construction-related
requirements such as environmental assessments and construction
contract labor standards which apply to highway and transit
infrastructure programs. Similarly, Congress has added only one
targeted highway safety grant program to specifically address a social
goal unrelated to safety--the reduction of racial profiling in law
enforcement--and one grant provision requiring states to ensure
accessibility for disabled persons on all new roadside curbs. In
contrast, federal social and environmental goals have had a greater
impact on NHTSA's regulatory processes. For example, in response to the
energy crisis during the 1970s, Congress gave NHTSA authority to set
corporate average fuel economy standards. Furthermore, the agency's
rulemaking process is subject to executive orders and regulations
designed to meet legislatively established social and environmental
goals such as NEPA, the Paperwork Reduction Act, energy effects, and
unfunded mandates.
Before FMCSA was established as a separate modal administration within
DOT in 1999, federal motor carrier safety functions were administered
by both the former Interstate Commerce Commission and FHWA. Until 1982,
the federal government regulated motor carrier safety but did not
provide financial assistance to states for enforcement. The Surface
Transportation Act of 1982 authorized the Secretary of Transportation
to make grants to the states for the development or implementation of
state programs to enforce federal and state commercial motor vehicle
regulations. This authorization became the foundation for the basic
MCSAP grant. Since 1982, Congress has expanded the number and scope of
motor carrier grant programs and requirements to meet emerging areas of
concern, including border enforcement, vehicle and driver information
systems, commercial driver license oversight, and safety data
collection. Congress has also set-aside grant funds for purposes such
as high-priority areas and new entry audits. Additionally, grant
eligibility requirements have increased. For example, state enforcement
plans must meet 24 criteria to be eligible for a basic MCSAP grant
today, compared with 7 criteria when the program started in 1982.
Although grant requirements have increased, Congress has given states
some flexibility to set enforcement priorities by restructuring the
programs to become performance-based and allowing states to tailor
their activities to meet their particular circumstances, provided these
activities work toward national goals. Additionally, FMCSA follows a
performance-based approach to grant oversight.
Like highway safety grant programs, motor carrier safety grant programs
have undergone fewer structural and administrative changes in response
to emerging national social and environmental concerns than have
federal highway and transit infrastructure grant programs. Although
states must adhere to broad requirements to receive federal funds, some
of these requirements, such as those calling for environmental
assessments, are not relevant for safety activities that do not involve
construction. Furthermore, Congress has not added any specific grant
programs or grant requirements exclusive to motor carrier safety
assistance that directly address other social and environmental goals.
FMCSA's regulatory and enforcement scope has expanded considerably over
time. Much of this expansion is related directly to safety, but
Congress has also incorporated other policy goals into FMCSA's
regulatory functions. For example, hazardous materials transport,
commercial driver licensing programs, and operator medical requirements
have become additional areas of FMCSA regulation and enforcement that
directly relate to safety. However, Congress has also given FMCSA
regulatory authority for consumer protection in interstate household
goods movement, which does not specifically address reducing motor
carrier-related fatalities. Additionally, FMCSA's rulemaking process
is subject to executive orders and regulations designed to meet
legislatively established social and environmental goals.
[End of section]
Appendix III: Implications of "Turning Back" Surface Transportation
Programs and Revenues to the States:
A fundamental reexamination of surface transportation programs begins
with identifying issues in which there is a strong federal interest and
determining what the federal goals should be related to those issues.
Once the federal interest and goals have been identified, the federal
role in relation to state and local governments can be clearly defined.
For issues in which there is a strong federal interest, ongoing federal
financial support and direct federal involvement could help meet
federal goals. But for issues in which there is little or no federal
interest, programs and activities may better be devolved to other
levels of government or to other parties.
In some cases, it may be appropriate to "turn back" activities and
programs to state and local governments if they are best suited to
perform them. Many surface transportation programs have a dedicated
source of funding, that is, they are funded from a dedicated fund--the
Highway Trust Fund. Devolving federal responsibility for programs could
entail simultaneously relinquishing the federal revenue base, in this
case, revenues that go into the Highway Trust Fund.[Footnote 109] A
turnback of federal programs, responsibilities, and funding would have
many implications and would require careful decisions to be made at the
federal, state, and local levels. These implications and decisions
include the following:
* At the federal level, it would need to be determined (1) what
functions would remain and (2) how federal agencies would be structured
and staffed to deliver those programs. In deciding what functions would
remain, the extent of federal interest in the activity compared to the
extent of state or local interest should be considered. Furthermore, in
deciding how to staff and deliver programs, for agencies with a large
field presence, like FHWA and FMCSA, it would have to be determined
what their responsibilities would be.
* At all levels of government, it would need to be determined how to
handle a variety of other federal requirements that are tied to federal
funds, such as the requirements for state highway safety programs
related to impaired driving and state and metropolitan planning roles.
At the federal level, Congress would have to decide whether to keep the
requirements, and if so, how to ensure that they are met without
federal funds to provide incentives or to withhold with sanctions. If
the effect of a turnback is to relinquish requirements, then states and
localities would have to decide what kind of planning and other
requirements they want to have and how to implement them.
* At the state and local levels, it would need to be determined (1)
whether to replace revenues with state taxes and (2) what type of
programs to finance. Deciding whether to replace federal revenues with
state taxes may be difficult because states also face fiscal challenges
and replacing revenues would have different effects on different
states. For example, if states decided to raise fuel taxes, some states
could simply replace the current federal tax with an equivalent state
tax, but other states might have to levy additional state taxes at a
much higher level than the current federal tax. States would also have
options of using other revenue sources such as vehicle registration
fees or expanded use of tolling. With states deciding what type of
programs to continue there is no way to predict which federal programs
would be replaced with equivalent state programs. Finally, while states
may gain flexibility in how they deliver projects, in some cases states
could actually lose some flexibility they currently have using federal
funds--for example, the flexibility to move funds between highway and
transit programs.
A Turnback Would Require Deciding What Federal Functions Would Remain
and How Federal Agencies Would Be Structured to Deliver Those
Functions:
The functions that would remain at the federal level would be
determined by the level of federal interest. Some functions are
financed from the Highway Trust Fund but exist because of broader
commitments. For example, the federal government owns land managed by
agencies such as the Bureau of Land Management, Bureau of Indian
Affairs, and the Forest Service. The responsibility for funding and
overseeing construction of these roads is within DOT, specifically
within FHWA's federal lands division. It is unlikely that the federal
government would assign the responsibilities to construct roads on
federal lands to state or local government. Thus, the decision may be
whether, in a restructured federal program, to continue to finance this
responsibility from federal gas taxes or shift responsibility to the
managing agency, but not whether the responsibility would be turned
over to another level of government. In another area, the federal
government takes a defined role in response to disasters, as
exemplified in the Robert T. Stafford Disaster Relief and Emergency
Assistance Act.[Footnote 110] Similarly, the Emergency Relief program
provides funds to states and other federal agencies for the repair or
reconstruction of federal-aid highways that have been damaged or
destroyed by natural disasters or catastrophic failures. This is a
long-established federal function and Congress has provided funds for
the emergency repair of roads since at least 1928. Given the ongoing
federal commitment to respond to disasters it is likely that emergency
relief would remain a federal function. Devolving other programs would
depend on how the federal interest and the federal role were defined.
For example, maintaining systems such as Interstate highways or the
National Highway System could be designated as part of the national
interest.
The effect of various turnback scenarios on DOT modal agencies would
depend on how expansively the federal role is defined. For example,
FHWA in fiscal year 2008 had about 1,400 personnel in field offices, or
about half of its total staff. FHWA maintains a division office in each
state that provides oversight of state programs and projects as defined
in a stewardship agreement between the state and the division office.
The division offices may provide project-level oversight in some cases
or delegate that responsibility to the state. Division offices also
review state DOTs' programs and processes to ensure that states have
adequate controls in place to effectively manage federally assisted
projects. Thus, if a substantial portion of federal highway programs is
turned back to the states, the greatest effect might be felt at the
division office level, as the oversight activities of these offices
might largely be considered for elimination. However, certain functions
and offices could remain, such as the Office of Federal Lands Highways,
which provides funding and oversight for highways on federal lands and
constitutes, including both headquarters and field, about one-fourth of
all FHWA staff. Other functions, such as Emergency Relief program or
environmental oversight, might remain and require a field office
presence of some type. A reduced or eliminated division office
structure might be warranted, or residual functions might suggest a
regional structure. Even under an extensive turnback scenario, FHWA
might retain a technical support function, along with its five existing
resource center locations. Effects on other DOT agencies of a general
turnback of transportation grants would vary and would hinge on what
activities the agencies would continue to perform. For example,
assuming FMCSA's inspection activities continue, the significant
numbers of field staff required to perform those functions would
remain. If NHTSA's safety grants to the states for purposes such as
reducing impaired driving or increasing seat belt use were turned back,
the functions of NHTSA field staff would need to be reviewed, as these
staff would no longer be needed for grant oversight. However, NHTSA
could still retain its regulatory and research responsibilities, such
as those related to fuel economy standards, automotive recalls, and
crash testing, among others, and might need to retain those staff.
The Status of Other Federal Requirements Tied to Federal Funds Would
Need to Be Decided:
In some programs, federal funding is contingent on actions taken by
states. In the highway safety area the federal government has applied
both incentives and sanctions based on state actions. In the past these
strategies have been used to encourage states to enact laws that
establish a minimum drinking age of 21 years and a maximum blood
alcohol level of 0.08 to determine impaired driving ability. In
addition, Safety Belt Performance Grants promote national priorities by
providing financial incentives for meeting certain specific performance
or safety activity criteria. Penalty provisions such as those
associated with Open Container laws and Motor Carrier Safety Assistance
Program grants promote federal priorities by transferring or
withholding the state's federal funds if states do not comply. If such
programs were turned back to the states and if these incentive and
sanction programs were eliminated, there would not appear to be a
substitute basis for the federal government to influence state actions.
Extensive state and metropolitan planning requirements could be
affected by a turnback of the highway program. Federal laws and
requirements specify an overall approach for transportation planning
that states and regional organizations must follow in order to receive
federal funds. This approach includes involving numerous stakeholders,
identifying state and regional goals, developing long-and short-range
state and metropolitan planning documents, and ensuring that a wide
range of transportation planning factors are considered in the process.
Without this structure, it is not clear what form planning processes
might take at the state level, or what role, if any, the federal
government would have in relation to planning activities. At the local
level, metropolitan planning organizations (MPO) came into being
largely as result of federal planning requirements, and MPO activities
are in part funded through the current federal-aid program. In general,
the role MPOs would play after a turnback of the federal program is
unclear and would need to be redefined. The status of existing planning
requirements and the amount of federal funding for metropolitan
planning organizations (MPOs), if any, would have to be determined. If
the effect of a turnback is to relinquish requirements, then states and
localities would have to decide what kind of planning and other
requirements they want to have and how to establish those requirements
as a matter of policy.
In addition, a turnback of federal surface transportation programs
would necessitate a review of which federal requirements still apply.
As a condition of receiving federal funds, states must adhere to
federal regulations such as those covering contracting
practices.[Footnote 111] For example, under the current highway program
states must comply with the provisions of the Disadvantaged Business
Enterprise Program, which requires that a certain percentage of
contracts be awarded to socially or economically disadvantaged firms
such as minority and women-owned businesses.[Footnote 112] Yet another
area requiring review would be the applicability of federal
environmental requirements. Federal laws not predicated on the receipt
of federal funds would still apply and in some cases states have
environmental regulations requiring their own environmental process.
States and Localities Would Have to Decide Whether to Replace Revenues
with State Taxes and What Types of Programs to Finance:
States would have to decide whether to replace revenues with state
taxes. This decision would have different impacts on different states
because some states contribute more in taxes than they get back in
program funds and vice versa. In the highway context, these states are
referred to as donor and donee states. However, a turnback might
require states to replace Highway Trust Fund revenues for transit
programs and safety grants as well as highways. For some states
replacing federal revenues with state taxes sufficient to continue to
fund existing federal programs would result in a net decrease in fuel
taxes in that state while in others a net increase in fuel taxes--in
some cases a substantial increase. This raises questions whether
surface transportation programs would continue at the same funding
level under a turnback because states face their own long-term fiscal
challenges, and the fiscal capacity of states varies. Other factors
could affect outcomes at the state level. For example, there is no way
to reliably predict the extent to which "tax competition" between
states--efforts to keep taxes lower as a way of attracting business--
would occur.
We considered the implications of a relatively complete turnback of
federal grant programs, including highway, transit and safety grants.
In the following example, almost all federal surface transportation
programs funded through the Highway Trust Fund would be turned back to
the states, with the exception of Federal Lands and Emergency
Relief.[Footnote 113] In order to provide a consistent basis for
comparison, we assumed that states would substantially continue current
programs and activities that now receive federal funding, and that
states would raise their fuel taxes to provide the additional revenues
needed to cover the cost of these programs and activities. However, if
a turnback of the federal program were to actually occur, the outcome
would almost certainly differ from these results, because states would
not necessarily elect to replace all current federal programs or
finance the same programs and activities from their own resources.
Furthermore, states might not elect to replace federal revenue with
state fuel taxes as states have options for raising revenue other than
fuel taxes. For example, a state might choose to raise vehicle
registration fees or increase the use of tolling.
The illustrative analysis of this turnback scenario showed that 27
states could achieve the same funding level as they currently receive
through federal transportation grants with taxes lower than the
existing federal tax, while 23 states and the District of Columbia
would require taxes higher than the existing federal tax, or other
revenue sources, to achieve full replacement value.
Figure 1 lists the net change in per-gallon fuel taxes that would occur
if the federal fuel tax were eliminated and states replaced Highway
Trust Fund grants with their own fuel taxes.[Footnote 114] States in
table 1 with a negative value would need to raise state taxes less than
the current federal tax level, and states with a positive value would
need to raise state taxes more than the current federal tax level, or
obtain other revenue sources.
Table 1: Potential Fiscal Impact of Turning Back Federal Transportation
Programs to the States, Assuming the Devolution of Almost All Programs
and Revenues:
State: Virginia;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Highway account: -5.60;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Transit account: -0.44;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Total: -6.04.
State: Arizona;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Highway account: -5.57;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Transit account: -0.47;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Total: -6.04.
State: Kentucky;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Highway account: -3.57;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Transit account: -1.51;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Total: -5.09.
State: Minnesota;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Highway account: -4.58;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Transit account: -0.47;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Total: -5.05.
State: Ohio;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Highway account: -4.24;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Transit account: -0.41;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Total: -4.64.
State: Colorado;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Highway account: -4.82;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Transit account: 0.25;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Total: -4.57.
State: Maine;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Highway account: -3.06;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Transit account: -1.45;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Total: -4.52.
State: Tennessee;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Highway account: -3.22;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Transit account: -1.14;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Total: -4.35.
State: Iowa;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Highway account: -2.91;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Transit account: -1.20;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Total: -4.11.
State: Missouri;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Highway account: -3.00;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Transit account: -0.85;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Total: -3.85.
State: Indiana;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Highway account: -2.82;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Transit account: -1.00;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Total: -3.82.
State: Oregon;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Highway account: -3.67;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Transit account: 0.29;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Total: -3.38.
State: North Carolina;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Highway account: -1.97;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Transit account: -1.14;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Total: -3.11.
State: Nevada;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Highway account: -2.91;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Transit account: -0.01;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Total: -2.92.
State: Utah;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Highway account: -3.31;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Transit account: 0.73;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Total: -2.58.
State: Texas;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Highway account: -1.76;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Transit account: -0.78;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Total: -2.53.
State: Georgia;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Highway account: -1.74;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Transit account: -0.73;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Total: -2.48.
State: South Carolina;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Highway account: -0.68;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Transit account: -1.75;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Total: -2.43.
State: Wisconsin;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Highway account: -1.39;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Transit account: -0.68;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Total: -2.08.
State: Michigan;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Highway account: -1.57;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Transit account: -0.40;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Total: -1.96.
State: Oklahoma;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Highway account: -0.06;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Transit account: -1.73;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Total: -1.79.
State: Pennsylvania;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Highway account: -3.98;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Transit account: 2.26;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Total: -1.71.
State: Nebraska;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Highway account: -0.42;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Transit account: -1.19;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Total: -1.60.
State: New Hampshire;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Highway account: -0.05;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Transit account: -1.53;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Total: -1.58.
State: Maryland;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Highway account: -3.84;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Transit account: 2.26;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Total: -1.58.
State: California;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Highway account: -3.62;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Transit account: 2.11;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Total: -1.51.
State: Alabama;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Highway account: 1.04;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Transit account: -1.19;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Total: -0.15.
State: New Mexico;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Highway account: 1.18;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Transit account: -1.10;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Total: 0.08.
State: Florida;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Highway account: 0.24;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Transit account: -0.07;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Total: 0.17.
State: Arkansas;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Highway account: 1.82;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Transit account: -1.58;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Total: 0.24.
State: Kansas;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Highway account: 1.65;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Transit account: -1.15;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Total: 0.50.
State: Illinois;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Highway account: -2.92;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Transit account: 3.47;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Total: 0.55.
State: Washington;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Highway account: -0.69;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Transit account: 2.07;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Total: 1.38.
State: New Jersey;
Net change in per-gallon tax rate If state replaced
all federal funds using fuel tax (cents): Highway account: -2.44;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Transit account: 5.41;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Total: 2.96.
State: West Virginia;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Highway account: 4.18;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Transit account: -0.66;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Total: 3.53.
State: Delaware;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Highway account: 3.55;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Transit account: 0.33;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Total: 3.88.
State: Wyoming;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Highway account: 6.84;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Transit account: -1.79;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Total: 5.05.
State: Massachusetts;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Highway account: -0.37;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Transit account: 5.76;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Total: 5.39.
State: Idaho;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Highway account: 6.40;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Transit account: -0.68;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Total: 5.72.
State: Connecticut;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Highway account: 4.03;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Transit account: 4.17;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Total: 8.20.
State: Hawaii;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Highway account: 3.57;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Transit account: 5.12;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Total: 8.69.
State: North Dakota;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Highway account: 14.31;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Transit account: -0.86;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Total: 13.46.
State: Vermont;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Highway account: 14.39;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Transit account: -0.92;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Total: 13.47.
State: New York;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Highway account: 1.77;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Transit account: 12.53;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Total: 14.31.
State: South Dakota;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Highway account: 14.94;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Transit account: -0.15;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Total: 14.78.
State: Louisiana;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Highway account: 18.43;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Transit account: -0.77;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Total: 17.66.
State: Rhode Island;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Highway account: 16.43;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Transit account: 3.72;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Total: 20.15.
State: Montana;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Highway account: 21.21;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Transit account: -0.48;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Total: 20.73.
State: Mississippi;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Highway account: 32.75;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Transit account: -1.89;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Total: 30.86.
State: Alaska;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Highway account: 40.32;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Transit account: 8.61;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Total: 48.93.
State: District of Columbia;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Highway account: 52.57;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Transit account: 89.89;
Net change in per-gallon tax rate If state replaced all federal funds
using fuel tax (cents): Total: 142.46.
Source: GAO analysis of DOT data.
Notes: The Highway Account of the Highway Trust Fund receives 15.44
cents of the total 18.4 cents of the per-gallon federal gasoline tax;
21.44 cents of the total 24.4 cents of the federal diesel fuel tax goes
to the Highway Account. The Transit Account of the Highway Trust Fund
receives 2.86 cents of the per-gallon federal gasoline tax.
[End of table]
Although table 1 shows that a similar number of states would likely
require net increases and net decreases, the range is much wider among
states that would require a net increase. While some states, such as
Virginia and Arizona, would likely end up with modest net decreases in
fuel taxes of up to 6 cents per gallon under this scenario, nine states
and the District of Columbia would face increases of more than twice
that--Mississippi and Alaska would all require comparatively extreme
net increases of more than 30 cents per gallon, and the District of
Columbia over $1 per gallon. These results reflect a cumulative effect
of many factors, such as the "donor-donee" distinctions between states,
equity and minimum apportionment adjustments from the Highway Trust
Fund, the various allocations made to states for safety, and
allocations to states and localities for transit programs.
States Would Have Flexibility in Funding Programs:
In general, states would have great flexibility in how they use funds
under a turnback approach. States would have greater flexibility to
develop their own programs and approaches without being limited to the
current federal program categories, and would have greater discretion
to define and fund projects that best suit their needs. In addition,
there would be no congressionally directed spending. To the extent that
federal programs affect the targeting of funds, states might shift
funds to different projects. However, the current federal-aid program
already gives states great discretion in setting priorities and
selecting projects. In contrast, the current federal program may
provide some states with flexibility they otherwise would not have. For
example, some federal highway programs provide that funds may be
transferred (flexed) between highway and transit programs. However,
under a turnback of surface transportation programs, this flexibility
could be lost in some states. For example, some states have
constitutional provisions that require all fuel taxes to be spent
solely on roads, thus making transit and safety programs ineligible
barring constitutional change. Such states would have to revise certain
laws and constitutional provisions or develop alternative sources of
revenue in order to replace federal funds.
[End of section]
Appendix IV: GAO Contact and Staff Acknowledgments:
GAO Contact:
JayEtta Hecker (202) 512-2834 or heckerj@gao.gov:
Staff Acknowledgments:
In addition to the individual named above, other key contributors to
this report were Steve Cohen, Assistant Director; Lauren Calhoun;
Robert Ciszewski; Jay Cherlow; Elizabeth Eisenstadt; Teague Lyons; Josh
Ormond; and Lisa Van Arsdale.
[End of section]
Related GAO Products:
The following are GAO products pertinent to the issues discussed in
this report. Other products may be found at GAO's Web site at
[hyperlink, http://www.gao.gov].
Federal Roles and Goals:
Surface Transportation: Preliminary Observations on Efforts to
Restructure Current Program. GAO-08-478T. Washington, D.C.: February 6,
2008.
Freight Transportation: National Policy and Strategies Can Help Improve
Freight Mobility. GAO-08-287. Washington, D.C.: January 7, 2008.
Highlights of a Forum: Transforming Transportation Policy for the 21st
Century. GAO-07-1210SP. Washington, D.C.: September 19, 2007.
Railroad Bridges and Tunnels: Federal Role in Providing Safety
Oversight and Freight Infrastructure Investment Could Be Better
Targeted. GAO-07-770. Washington, D.C.: Aug. 6, 2007.
Motor Carrier Safety: Preliminary Information on the Federal Motor
Carrier Safety Administration's Efforts to Identify and Follow Up with
High-Risk Carriers. GAO-07-1074T. Washington, D.C.: July 11, 2007.
Intermodal Transportation: DOT Could Take Further Actions to Address
Intermodal Barriers. GAO-07-718. Washington, D.C.: June 20, 2007.
Intercity Passenger Rail: National Policy and Strategies Needed to
Maximize Public Benefits from Federal Expenditures. GAO-07-15.
Washington, D.C.: November 13, 2006.
Freight Railroads: Industry Health Has Improved, but Concerns about
Competition and Capacity Should Be Addressed. GAO-07-94. Washington,
D.C.: October 6, 2006.
Public Transportation: New Starts Program Is in a Period of Transition.
GAO-06-819. Washington, D.C.: August 30, 2006.
Freight Transportation: Short Sea Shipping Option Shows Importance of
Systematic Approach to Public Investment Decisions. GAO-05-768.
Washington, D.C.: July 29, 2005.
Rail Transit: Additional Federal Leadership Would Enhance FTA's State
Safety Oversight Program. GAO-06-821. Washington, D.C.: July 26, 2006.
Intermodal Transportation: Potential Strategies Would Redefine Federal
Role in Developing Airport Intermodal Capabilities. GAO-05-727.
Washington, D.C.: July 26, 2005.
21st Century Challenges: Reexamining the Base of the Federal
Government. GAO-05-325SP. Washington, D.C.: February, 2005.
Homeland Security: Effective Regional Coordination Can Enhance
Emergency Preparedness. GAO-04-1009. Washington, D.C.: September 15,
2004.
Freight Transportation: Strategies Needed to Address Planning and
Financing Limitations. GAO-04-165. Washington, D.C.: December 19, 2003.
Surface and Maritime Transportation: Developing Strategies for
Enhancing Mobility: A National Challenge. GAO-02-775. Washington, D.C.:
August 30, 2002.
Highway Infrastructure: Interstate Physical Conditions Have Improved,
but Congestion and Other Pressures Continue. GAO-02-571. Washington,
D.C.: May 31, 2002.
Performance and Accountability; Best Tools and Approaches:
Highway Public-Private Partnerships: More Rigorous Up-front Analysis
Could Better Secure Potential Benefits and Protect the Public Interest.
GAO-08-44. Washington D.C.: February 8, 2008.
Federal-Aid Highways: Increased Reliance on Contractors Can Pose
Oversight Challenges for Federal and State Officials. GAO-08-198.
Washington D.C.: January 8, 2008.
A Call For Stewardship: Enhancing the Federal Government's Ability to
Address Key Fiscal and Other 21st Century Challenges. GAO-08-93SP.
Washington, D.C.: December 2007.
Public Transportation: Future Demand Is Likely for New Starts and Small
Starts Programs, but Improvements Needed to the Small Starts
Application Process. GAO-07-917. Washington, D.C.: July 27, 2007.
Surface Transportation: Strategies Are Available for Making Existing
Road Infrastructure Perform Better. GAO-07-920. Washington, D.C.: July
26, 2007.
Motor Carrier Safety: A Statistical Approach Will Better Identify
Commercial Carriers That Pose High Crash Risks Than Does the Current
Federal Approach. GAO-07-585. Washington, D.C.: June 11, 2007.
Public Transportation: Preliminary Analysis of Changes to and Trends in
FTA's New Starts and Small Starts Programs. GAO-07-812T. Washington,
D.C.: May 10, 2007.
Older Driver Safety: Knowledge Sharing Should Help States Prepare for
Increase in Older Driver Population. GAO-07-413. Washington, D.C.:
April 11, 2007.
Older Driver Safety: Survey of States on Their Implementation of
Federal Highway Administration Recommendations and Guidelines, an E-
Supplement. GAO-07-517SP. Washington, D.C.: April 11, 2007.
Performance and Accountability: Transportation Challenges Facing
Congress and the Department of Transportation. GAO-07-545T. Washington,
D.C.: March 6, 2007.
Transportation-Disadvantaged Populations: Actions Needed to Clarify
Responsibilities and Increase Preparedness for Evacuations. GAO-07-44.
Washington, D.C.: December 22, 2006.
Federal Transit Administration: Progress Made in Implementing Changes
to the Job Access Program, but Evaluation and Oversight Processes Need
Improvement. GAO-07-43. Washington, D.C.: November 17, 2006.
Truck Safety: Share the Road Safely Pilot Initiative Showed Promise,
but the Program's Future Success Is Uncertain. GAO-06-916. Washington,
D.C.: September 8, 2006.
Public Transportation: Preliminary Information on FTA's Implementation
of SAFETEA-LU Changes. GAO-06-910T. Washington, D.C.: June 27, 2006.
Intermodal Transportation: Challenges to and Potential Strategies for
Developing Improved Intermodal Capabilities. GAO-06-855T. Washington,
D.C.: June 15, 2006.
Federal Motor Carrier Safety Administration: Education and Outreach
Programs Target Safety and Consumer Issues, but Gaps in Planning and
Evaluation Remain. GAO-06-103. Washington, D.C.: December 19, 2005.
Large Truck Safety: Federal Enforcement Efforts Have Been Stronger
Since 2000, but Oversight of State Grants Needs Improvement. GAO-06-
156. Washington, D.C.: December 15, 2005.
Highway Safety: Further Opportunities Exist to Improve Data on Crashes
Involving Commercial Motor Vehicles. GAO-06-102. Washington, D.C.:
November 18, 2005.
Transportation Services: Better Dissemination and Oversight of DOT's
Guidance Could Lead to Improved Access for Limited English-Proficient
Populations. GAO-06-52. Washington, D.C.: November 2, 2005.
Highway Congestion: Intelligent Transportation Systems Promise for
Managing Congestion Falls Short, and DOT Could Better Facilitate Their
Strategic Use. GAO-05-943. Washington, D.C.: September 14, 2005.
Highlights of an Expert Panel: The Benefits and Costs of Highway and
Transit Investments. GAO-05-423SP. Washington, D.C.: May 6, 2005.
Federal-Aid Highways: FHWA Needs a Comprehensive Approach to Improving
Project Oversight. GAO-05-173. Washington, D.C.: January 31, 2005.
Highway and Transit Investments: Options for Improving Information on
Projects' Benefits and Costs and Increasing Accountability for Results.
GAO-05-172. Washington, D.C.: January 24, 2005.
Highway Safety: Improved Monitoring and Oversight of Traffic Safety
Data Program Are Needed. GAO-05-24. Washington, D.C.: November 4, 2004.
Surface Transportation: Many Factors Affect Investment Decisions. GAO-
04-744. Washington, D.C.: June 30, 2004.
Highway Safety: Better Guidance Could Improve Oversight of State
Highway Safety Programs. GAO-03-474. Washington, D.C.: April 21, 2003.
Executive Guide: Leading Practices in Capital Decision Making. GAO/
AIMD-99-32. Washington, D.C.: December 1998.
Fiscal Sustainability/Financing the Nation's Transportation System:
Congressional Directives: Selected Agencies' Processes for Responding
to Funding Instructions. GAO-08-209. Washington, D.C.: January 31,
2008.
Highway and Transit Investments: Flexible Funding Supports State and
Local Transportation Priorities and Multimodal Planning. GAO-07-772.
Washington, D.C.: July 26, 2007.
State and Local Governments: Persistent Fiscal Challenges Will Likely
Emerge within the Next Decade. GAO-07-1080SP. Washington D.C.: July 18,
2007.
Highway Emergency Relief: Reexamination Needed to Address Fiscal
Imbalance and Long-Term Sustainability. GAO-07-245. Washington, D.C.:
February 23, 2007.
High Risk Series: An Update. GAO-07-310. Washington, D.C.: January
2007.
Highway Finance: States' Expanding Use of Tolling Illustrates Diverse
Challenges and Strategies. GAO-06-554. Washington, D.C.: June 28, 2006.
Highway Trust Fund: Overview of Highway Trust Fund Estimates. GAO-06-
572T. Washington, D.C.: April 4, 2006.
Federal-Aid Highways: Trends, Effect on State Spending, and Options for
Future Program Design. GAO-04-802. Washington, D.C.: August 31, 2004.
U.S. Infrastructure: Funding Trends and Federal Agencies' Investment
Estimates. GAO-01-986T. Washington, D.C.: July 23, 2001.
Federal Budget: Choosing Public Investment Programs. GAO/AIMD-93-25.
Washington, D.C.: July 23, 1993.
[End of section]
Footnotes:
[1] Additional information about GAO's simulations and the nation's
long-term fiscal challenge can be found at [hyperlink,
http://www.gao.gov/special.pubs/longterm/].
[2] Formula grant programs allocate funds to states or their
subdivisions in accordance with a distribution formula prescribed in
law or administrative regulation. Grant recipients may then allocate
these funds to specific projects based on program eligibility
guidelines. Discretionary grant programs provide funds to recipients
for specific projects or eligible activities based on eligibility and
selection criteria as established by law, regulation, or on an
administrative basis.
[3] Although federal funds are distributed to states through several
individual grant programs, in aggregate, these grants are often
referred to as a single federal program in each area of federal
investment. For example, the collection of individual highway
infrastructure grants is commonly referred to as the Federal-Aid
Highway program. Similarly, the assortment of federal motor carrier
safety grants is collectively referred to as the federal motor carrier
safety program.
[4] GAO, Intercity Passenger Rail: National Policy and Strategies
Needed to Maximize Public Benefits from Federal Expenditures, GAO-07-15
(Washington, D.C.: Nov. 13, 2006).
[5] DOT defined congested conditions as periods of time where travel at
less than free-flow speeds occurs on a portion of a road system.
[6] Transportation Research Board, Critical Issues in Transportation
(Washington, D.C.: 2006).
[7] The HTF is divided into two major accounts, the Highway Account and
the Mass Transit Account. A portion of federal fuel taxes is deposited
into the Mass Transit Account. For example, of the 18.4 cents federal
gas tax, 2.86 cents is deposited into the Mass Transit Account.
[8] CBO, Public Spending on Transportation Infrastructure (Washington,
D.C.: Oct. 25, 2007).
[9] Congress created The National Surface Transportation Policy and
Revenue Study Commission in 2005 under Section 1909 of the Safe,
Accountable, Flexible, Efficient Transportation Equity Act--A Legacy
for Users (SAFETEA-LU), Pub. L. No. 109-59, §1909, 119 Stat. 1471 (Aug.
10, 2005). The Commission was created to examine the condition and
future needs of the nation's surface transportation system, and short
and long-term alternatives to replace or supplement the fuel tax as the
principal revenue source to support the HTF.
[10] Although federal transit funding was initially provided on a
discretionary basis from the General Fund of the Treasury, highway user
fees have replaced general revenues as the major source of transit
assistance since the creation of the Mass Transit Account of the
Highway Trust Fund by the Surface Transportation Assistance Act of
1982. Pub. L. No. 97-424, §531, 96 Stat. 2187 (Jan. 6, 1983).
[11] When federal operating assistance was initially established in
1974, large urbanized areas were eligible for these grants. However,
operating assistance is currently limited to urbanized areas with a
population of less than 200,000. See appendix II for more information
about federal transit assistance programs.
[12] Pub. L. No. 87-866, §9, 76 Stat. 1148 (Oct. 23, 1962).
[13] Pub. L. No. 91-190, 83 Stat. 852 (Jan. 1, 1970); 42 USC §4321 et
seq.
[14] Prior to the establishment of FMCSA by the Motor Carrier Safety
Improvement Act of 1999, both FHWA and the former Interstate Commerce
Commission (ICC) regulated separate aspects of motor carrier and
commercial vehicle safety. When the ICC was terminated in 1995, its
motor carrier and commercial vehicle regulatory authority was
transferred to the Secretary of Transportation. Although some of the
changes to the federal motor carrier programs and regulations predate
FMCSA, for the purpose of clarity, we refer to FMCSA as the only modal
administration with responsibility for motor carrier safety in the
text. See app. II for more information about the history of federal
motor carrier safety programs.
[15] On January 18, 2007, the President issued Executive Order 13422,
"Amendment to Executive Order 12866 for Regulatory Planning and
Review," which revised Executive Order 12866 to include a process for
interagency coordination and review of significant guidance prior to
issuance, among other procedural changes.
[16] The majority of highway infrastructure funding is distributed
through seven major programs, often referred to as "core" highway
programs. These programs are the National Highway System, Surface
Transportation Program, Interstate Maintenance, Highway Bridge
Replacement and Rehabilitation Program, Congestion Mitigation and Air
Quality Improvement Program, Highway Safety Improvement Program, and
the Equity Bonus Program. FHWA also administers a number of smaller,
discretionary grants programs to provide federal highway infrastructure
assistance to states.
[17] For most of the largest Federal-aid Highway programs, the minimum
apportionment is 0.5 percent; each state must receive at least that
much of the total money apportioned, regardless of other formula
calculations.
[18] This also includes projects designated "high priority" by Congress
in accordance with SAFETEA--LU.
[19] Based on state data, FHWA estimates how much tax revenue each
state contributes to the Highway Trust Fund. The Equity Bonus Program
guarantees states will receive a minimum rate of return on their
contributions to the Highway Account of the Highway Trust Fund and a
minimum funding increase relative to their average annual program
apportionments under the previous transportation authorization bill,
TEA-21, which authorized transportation programs from 1998-2003.
[20] Operating assistance is limited to urbanized areas with a
population of less than 200,000.
[21] GAO is evaluating FTA's approach to measuring all of these
factors, and identifying alternative approaches. GAO is planning to
issue this report in July 2008.
[22] Transportation Research Board, The Fuel Tax and Alternatives for
Transportation Funding (Washington, D.C.: 2006).
[23] In a process known as certification acceptance, states may certify
that they will operate under state laws, regulations, directives, and
standards at least equivalent to the current federal requirements.
[24] Interstate projects eligible for state oversight include
resurfacing or other maintenance projects and new construction/
reconstruction under $1 million.
[25] Federal planning requirements describe various tasks that state
and local governments must perform and currently include developing
strategic goals and objectives, considering a wide range of
environmental and economic factors, preparing long-term and short-range
plans, and ensuring an inclusive planning process.
[26] GAO, Highlights of a Forum: Transforming Transportation Policy for
the 21st Century, GAO-07-1210SP (Washington, D.C.: September 2007).
[27] GAO, Railroad Bridges and Tunnels: Federal Role in Providing
Safety Oversight and Freight Infrastructure Investment Could Be Better
Targeted, GAO-07-770 (Washington, D.C.: Aug. 6, 2007).
[28] GAO, Freight Transportation: Strategies Needed to Address Planning
and Financing Limitations, GAO-04-165 (Washington, D.C.: Dec. 19,
2003).
[29] The Freight Intermodal Distribution Pilot Grant Program is the
only federal program specifically directed at intermodal
infrastructure.
[30] GAO, Intermodal Transportation: DOT Could Take Further Actions to
Address Intermodal Barriers, GAO-07-718 (Washington, D.C.: June 20,
2007).
[31] In part to address this problem, in 2006 DOT issued a request for
applications for the new Corridors of the Future program, which will
assist a limited number of multi-state partnerships selected through a
competitive process.
[32] GAO-06-855T; GAO, Intermodal Transportation: DOT Could Take
Further Actions to Address Intermodal Barriers, GAO-07-718 (Washington,
D.C.: June 20, 2007); GAO, Surface Transportation: Many Factors Affect
Investment Decisions, GAO-04-744 (Washington, D.C.: June 30, 2004);
GAO-04-165.
[33] The FAST Corridor created an improved freight rail route and
improved port access across several cities in Washington State,
including Seattle and Tacoma.
[34] GAO-04-165.
[35] Transcript of New York City hearing of the National Surface
Transportation Policy and Revenue Commission, Nov. 15, 2006.
[36] AASHTO, Vision for Metropolitan Transportation-Metropolitan
Mobility and Congestion Issues Panel, March 19-20, 2007.
[37] Short sea shipping refers to moving freight on ships along coasts
or on rivers; although it typically involves heavy or bulky cargoes
that are not time-sensitive, in recent years there have been efforts to
use it to transport cargo that would otherwise travel by truck or
train.
[38] GAO, Freight Transportation: Short Sea Shipping Option Shows
Importance of Systematic Approach to Public Investment Decisions,
GAO-05-768 (Washington, D.C.: July 29, 2005).
[39] GAO, High Risk Series: An Update, GAO-07-310 (Washington, D.C.:
Jan. 31, 2007); GAO, Federal-Aid Highways: Trends, Effect on State
Spending, and Options for Future Program Design, GAO-04-802
(Washington, D.C.: Aug. 31, 2004).
[40] GAO, Highway Infrastructure: Interstate Physical Conditions Have
Improved, but Congestion and Other Pressures Continue, GAO-02-571
(Washington, D.C.: May 31, 2002).
[41] U.S. Department of Transportation Performance and Accountability
Report for Fiscal Year 2007, [hyperlink,
http://www.dot.gov/perfacc2007/index.htm]; GAO-07-1210SP; GAO,
Performance and Accountability: Transportation Challenges Facing
Congress and the Department of Transportation, GAO-07-545T (Washington,
D.C.: Mar. 6, 2007); GAO, Federal-Aid Highways: FHWA Needs a
Comprehensive Approach to Improving Project Oversight, GAO-05-173
(Washington, D.C.: Jan. 31, 2005).
[42] FHWA program description, [hyperlink,
http://www.safety.fhwa.dot.gov/state_program/section402/402_over.htm].
[43] 49 CFR 350.327.
[44] GAO-07-545T.
[45] The "equity bonus" criterion applies only in highway programs.
[46] FHWA Highway Statistics 2005 Table FA-4A, Apportionment Formulas:
Federal-aid Highway Program, Enacted in SAFETEA-LU.
[47] GAO-07-545T.
[48] 23 U.S.C. 145.
[49] GAO-04-802.
[50] GAO, Highway and Transit Investments: Flexible Funding Supports
State and Local Transportation Priorities and Multimodal Planning,
GAO-07-772 (Washington, D.C.: July 26, 2007).
[51] GAO-04-802.
[52] Transfers to the highway program are permitted, but have been
small compared to highway-to-transit transfers; only $40 million was
moved from transit to highway programs between 1992 and 2002.
[53] GAO, Highway Safety: Better Guidance Could Improve Oversight of
State Highway Safety Programs, GAO-03-474 (Washington, D.C.: Apr. 21,
2003).
[54] GAO, Highway and Transit Investments: Options for Improving
Information on Projects' Benefits and Costs and Increasing
Accountability for Results, GAO-05-172 (Washington, D.C.: Jan. 24,
2005).
[55] Federal Transit Administration, SAFETEA-LU: Authorization Levels
for Fiscal Years 2005 Through 2009, [hyperlink,
http://www.fta.dot.gov/documents/SAFETEAU_Funding_by_Program_by_Year.pdf
].
[56] GAO-05-172.
[57] GAO, Surface Transportation: Strategies Are Available for Making
Existing Road Infrastructure Perform Better, GAO-07-920 (Washington,
D.C.: July 26, 2007).
[58] GAO-07-920.
[59] GAO, Freight Transportation: National Policy and Strategies Can
Help Improve Freight Mobility, GAO-08-287 (Washington, D.C.: Jan. 7,
2008); GAO-04-165.
[60] GAO-04-165.
[61] GAO-07-1210SP.
[62] AASHTO, Transportation - Invest in Our Future: A New Vision for
the 21st Century, July 2007.
[63] Testimony of Thomas J. Madison Jr., Commissioner, New York State
Department of Transportation, to the New York City hearing of the
National Surface Transportation Policy and Revenue Study Commission,
November 16, 2006.
[64] Congressional Research Service, Surface Transportation
Congestion: Policy and Issues (RL 33995) May 10, 2007; GAO-07-770.
[65] GAO, Rail Transit: Additional Federal Leadership Would Enhance
FTA's State Safety Oversight Program, GAO-06-821 (Washington, D.C.:
July 26, 2006).
[66] GAO, Highway Safety: Improved Monitoring and Oversight of Traffic
Safety Data Program Are Needed, GAO-05-24 (Washington, D.C.: Nov. 4,
2004).
[67] Under congestion pricing, toll rates vary with demand. ITS employs
technologies such as monitoring of traffic conditions and optimized
timing of traffic signals.
[68] GAO-07-920; GAO, Highway Congestion: Intelligent Transportation
Systems' Promise for Managing Congestion Falls Short, and DOT Could
Better Facilitate Their Strategic Use, GAO-05-943 (Washington, D.C.:
Sept. 14, 2005).
[69] GAO-05-943.
[70] GAO-04-802.
[71] In our analysis, as well as the other studies that we reviewed,
the focus was on highway spending. Thus, if increased federal grants
for highways led states and localities to shift their own funds from
highway spending to transit spending, such a shift would be considered
substitution. To the extent that occurred, then the substitution away
from total transportation spending from increased federal grants would
be smaller than the rates that we and others estimated.
[72] In contrast, for the New Starts transit capital program, the level
of state and local contributions is a factor the FTA considers in
awarding discretionary grants.
[73] Projects of National and Regional Significance was created as part
of SAFETEA-LU to provide funding for high cost projects of national or
regional importance that have total costs higher than $500 million or
higher than 75 percent of the state's annual federal highway funds.
Although it was established in law as a competitive program, the
competition never took place because Congress directed all the funds to
specific projects.
[74] GAO, Congressional Directives: Selected Agencies' Processes for
Responding to Funding Instructions, GAO-08-209 (Washington, D.C.: Jan.
31, 2008).
[75] CBO, Status of the Highway Trust Fund: 2007 (Washington, D.C.:
Mar. 27, 2007).
[76] The unexpended balance in the Highway Account of the Highway Trust
Fund grew from about $10 billion in 1995 to about $23 billion in 2000,
according to the CBO.
[77] GAO-07-310.
[78] The most recent major restructuring of federal surface
transportation policy occurred in 1991, with the passage of the
Intermodal Surface Transportation Efficiency Act (ISTEA), which
consolidated highway grant categories and substantially increased
transfer flexibility between highway and transit funds.
[79] The Equity Bonus Program provides the most funding to states on an
annual basis. However, rather than providing funds directly to states
for allocation to eligible projects like other highway programs, the
Equity Bonus Program distributes funds to states through the other core
highway programs.
[80] GAO, Homeland Security: Effective Regional Coordination Can
Enhance Emergency Preparedness, GAO-04-1009 (Washington, D.C.: Sept.
15, 2004).
[81] Public Sector Comparators are a quantitative analysis technique
used to compare the cost of completing a project using public versus
public-private partnership delivery methods. Value-for-Money analyses
are often completed as part of that process, and calculate total
project benefits and costs; they are not limited to financial aspects,
and often examine factors that are hard to quantify, such as the
quality of construction. For further discussion, see GAO, Highway
Public-Private Partnerships: More Rigorous Up-front Analysis Could
Better Secure Potential Benefits and Protect the Public Interest,
GAO-08-44 (Washington D.C.: Feb. 8, 2008).
[82] GAO-07-1210SP.
[83] Only the lightest combination unit vehicles pay sufficient taxes
and fees to cover the costs they impose on highways.
[84] GAO, Freight Railroads: Industry Health Has Improved, but Concerns
about Competition and Capacity Should Be Addressed, GAO-07-94
(Washington, D.C.: Oct. 6, 2006).
[85] GAO, Highway Public-Private Partnerships: More Rigorous Up-Front
Analysis Could Better Secure Potential Benefits and Protect the Public
Interest, GAO-08-44 (Washington, D.C.: Feb. 8, 2008).
[86] GAO, 21st Century Challenges: Reexamining the Base of the Federal
Government, GAO-05-325SP (Washington, D.C.: Feb. 1, 2005).
[87] National Surface Transportation Policy and Revenue Study
Commission, Transportation for Tomorrow (Washington, D.C.: Jan. 15,
2008).
[88] FHWA also conducts research activities at the Turner-Fairbank
Highway Research Center. These activities are coordinated by FHWA's
Office of Research, Development, and Technology.
[89] Pub. L. No. 102-240 (Dec. 18, 1991).
[90] This number includes division offices in Puerto Rico and the
District of Columbia, as well as FLH division offices in Lakewood,
Colo.; Sterling, Va.; and Vancouver, Wash.
[91] The Highway Trust Fund is divided into two major accounts, the
Highway Account and the Mass Transit Account. A portion of federal fuel
taxes is deposited into the Mass Transit Account. For example, of the
18.4 cents federal gas tax, 2.86 cents is deposited into the Mass
Transit Account.
[92] Operating assistance is limited to urbanized areas with a
population of less than 200,000.
[93] Some programs such as the Formula Grant Program for Other Than
Urbanized Areas provide a greater federal share of funding if states
have a high percentage of federal lands. This program also provides a
higher federal match for projects that meet requirements of the
American Disabilities Act, the Clean Air Act, or bicycle access
projects. Lower federal matches include capital assistance from the
Over the Road Bus Accessibility Program and federal assistance for
operating expenses under the Formula Grant Program for Other Than
Urbanized Areas and Urbanized Area Formula Grants, which are capped at
50 percent.
[94] The Over-the-Road Bus Accessibility Program also awards funds on a
national competitive basis to help finance incremental capital and
training costs associated with DOT's regulations on transit
accessibility for disabled and special needs populations in rural
areas.
[95] Full federal oversight refers to federal oversight at the project
level.
[96] For program management process reviews, FTA officials or
contractors review grant recipients' management systems and records to
ensure recipients are adhering to statutory and administrative
requirements such as federal planning, civil rights, and other
provisions. FTA's project management reviews require federal oversight
at the project rather than program level. Areas of review include
grantee recipient's fiscal and management capacity to implement the
project, project progress according to planned specifications,
schedule, and budget levels, among others.
[97] FTA also conducts reviews in specialized areas such as financial
management, procurement, civil rights, and planning processes, among
others.
[98] Pub. L. No. 88-365, §10, 78 Stat. 307 (July 9, 1964).
[99] Pub. L. No. 95-599, § 313, 92 Stat. 2748 (Nov. 6, 1978) and Pub.
L. No. 95-599, §323, 92 Stat. 2754 (Nov. 6, 1978).
[100] Pub. L. No. 91-453, §16, 84 Stat. 967 (Oct. 15, 1970).
[101] Pub. L. No.105-178, § 3037, 112 Stat. 387 (June 9, 1998).
[102] Pub. L. No. 109-59, §3021, 119 Stat. 1608 (Aug. 10, 2005).
[103] NHTSA administers four grant programs that do not target specific
accident factors. These include grants to prohibit racial profiling,
and grants for innovative approaches to highway safety, state traffic
safety systems, and highway safety research activities.
[104] This program also sets aside funds for grants to the 10 states
with the highest impaired-driving fatality rates.
[105] Although highway infrastructure funds are transferred to states'
Section 402 program funds, states may allocate transferred funds back
to the Federal-Aid Highway Program for use on safety-related
infrastructure improvements.
[106] MCSAP basic grants also require states to maintain their average
previous expenditure levels for commercial motor vehicle safety and
traffic safety enforcement programs.
[107] Some motor carrier safety grants such as State Safety Data
Improvement grants and CVISN Core Deployment grants have statutorily-
defined criteria. For example, State Safety Data Improvement grants
criteria include: conducting a comprehensive audit of data systems
within the past 2 years, developing a plan that identifies and
prioritizes safety data needs and goals, and identifying performance
measures to track progress toward those goals.
[108] A notable exception is the 55 mph speed limit enforcement
spending provision, which was established first as an incentive/penalty
grant in 1978 and then changed to a mandatory spending restriction on
Section 402 funds in 1982 until its repeal in 1995.
[109] Advisory Commission on Intergovernmental Relations, Devolving
Selected Federal-Aid Highway Programs and Revenue Bases: A Critical
Appraisal (Washington, D.C.: September 1987).
[110] Program was created as the Disaster Relief Act of 1974, Pub. L.
No. 93-288, 88 Stat. 143, May 22, 1974, and was later amended and
renamed in 2000 by Pub. L. No. 106-390 §301, 114 Stat. 1572, Oct. 30,
2000; 42 U.S.C. § 5121 et seq.
[111] GAO, Federal-Aid Highways: Increased Reliance on Contractors Can
Pose Oversight Challenges for Federal and State Officials, GAO-08-198
(Washington, D.C.: Jan. 8, 2008).
[112] 49 CFR Part 26.
[113] Many different variations of a turnback approach could be
posited, including ones that retain some federal programs and some
level of federal gasoline tax. These scenarios would yield different
results. This analysis illustrates the potential fiscal impact of
turnback by providing a common basis for comparing the state tax burden
that would be necessary to maintain the same level of revenue in the
absence of a federal grant program.
[114] There are methodological limitations to this analysis. These
results represent only 1 year of federal surface transportation
programs, and shifts in fuel usage and other factors cause change from
year to year. Sampling multiple years was not practical because the
changeover from the TEA-21 authorization to the SAFETEA-LU
authorization resulted in grant disbursement and fuel consumption data
that are not equivalent across years. Also, discretionary programs were
omitted because their grants typically last for only 1 or several
years, and they represent a small portion federal grant funds. Finally,
because this analysis only considers programs funded by the federal
fuel tax via the Highway Trust Fund, the few programs financed from
general funds--most notably the New Starts transit capital grant
program--are outside the scope of analysis.
[End of section]
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