Funding Infrastructure

Crowdfunding

The American Institute of Architects released Crowdfunding Architecture, a report that explored the potential of raising private funds from many people investing, loaning, or donating small sums. Crowdfunding is a growing trend in other areas, especially in the arts and product development.

Of course, public civil infrastructure requires a lot of money. The investors who might be able to put substantial sums into a project will expect a return. This is an issue for other forms of private investment in public infrastructure, often there is no revenue generated by the infrastructure to pay back investors.

What do you think? Does crowdfunding have the potential to be a serious source of funding for public infrastructure?

Related posts and articles

Crowdfunding can be a building tool (Koroluc, K., Daily Commercial News, Feb. 19, 2013)

Roads by the Mile

IW has previously written about declining fuel tax revenues. An alternative to fuel taxes is a tax or fee based on miles driven. Oregon is planning to implement a program based on VMT (vehicle miles traveled).

Related posts and articles

Taxed by the Mile Instead of Taxed at the Pump (Twomey, M., NBC News, Nov. 22, 2013)

Highway Funding

Infrastructure Watch previously posted about the dwindling Highway Trust Fund.  One of the reasons this fund has shrunk is that it is supported by taxes on gasoline.  Improvements in fuel efficiency and changes in driving habits have reduced revenues from gas taxes.

This is issue for states as well as the federal government.  Like the Highway Trust Fund, most state highway revenues come from gas taxes.  At all levels of government, people are looking for alternative sources of revenue.  Some of the proposals include increasing gas taxes, sales taxes, miles-traveled taxes, increasing fees, and new or increased tolls.

Increased Gas Tax

One approach is to simply increase the tax on gas.  In 13 states, it has been 20 years or more since the gas tax has changed.

Sales Tax

Some states are looking at supplementing highway funding with a sales tax.  Virginia Governor Bob McDonnell has gone so far as to propose eliminating his states gas tax and replacing it with a sales tax to support transportation.  Though no other state has considered going so far, many have looked at increased or new sales taxes to supplement funds for highways.

Miles-Traveled Tax

The gas tax has some relation to road use because the more you drive the more gas you use.  Several states have looked at the possibility of directly taxing for roads based on use.  The difficulty of such a tax is that there needs to be a mechanism of tracking and reporting miles traveled.

Fees

Most states have fees for motor vehicle registration.  Some are considering increasing these fees and dedicating them completely to transportation.  It seems unlikely that these fees alone could replace losses in gas tax revenue.

Tolls

Tolls are a longstanding method of road funding.  One suggestion for raising road revenues is to increase toll and institute tolls on free roads.

Related posts and articles

Highway Trust Fund Running Out of Money (Infrastructure Watch, Feb. 9, 2012)

New tax hikes eyed for roads, transit (Copeland, L., USA Today, Jan. 28, 2012)

Time to tweak gas taxes? States weigh options (Copeland, L., USA Today, Jan. 28, 2012)

Quick Hits: Highway Funding (Infrastructure Watch, Jan. 22, 2013)

Congressional Budget Office Presents Testimony on Transportation Spending

Earlier this month, Mr. Robert A. Sunshine, Deputy Director of the Congressional Budget Office (CBO) presented testimony on federal spending on surface transportation infrastructure. This report was prompted by events anticipate for 2007: the expiration of SAFETEA-LU and spending form the Highway Trust Fund outpacing revenues.

Most government spending on surface transportation infrastructure is by state and local governments (about three-fourths). The great majority of federal spending is on capital (92 percent). The majority of state and local spending is on operations and maintenance (64 percent).

The CBO points out that Congress will need to find ways to decrease spending (or at least the growth in spending), increase revenues, or some combination of these. Fully funding the projected spending by raising fuel taxes could result in an increase of 5 cents per gallon.

The CBO suggested alternatives to fuel taxes.
-Mileage fees. Fees based on the number of miles traveled by a vehicle. This would include tolls.
-Weight-distance fees. Annual fees based on the mileage and type of vehicle.
-Congestion fees. Fees based on road choice and travel timing.
State and local governments are using or have experimented with these alternatives. They are advantageous and more economically efficient in that they link particular infrastructure resources to their users and type of use. The present fuel tax system is advantageous in that it is relatively inexpensive to administer and hard to evade.