Transportation funding comes from all levels of government—federal, state, and local. Funding that is directly generated by local taxes and fees stays in corresponding local jurisdictions (counties, cities, and townships, for example). Federal and state transportation funding, however, is allocated through certain budgetary procedures and may not be used in the original point of collection. How are these transportation funds redistributed in Minnesota? An analysis from U of M researchers offers new perspectives.
For the study, which looked at the six-year period between 2009 and 2014, the researchers analyzed funding revenues and expenditures at the district level (see map of Minnesota’s eight districts) for both roadways and transit.
Transportation funding continues to be a contentious issue in Minnesota: Are we spending enough, too little, too much? One way to help answer that question is to compare spending with other states.
“A simple comparison, however, may not accurately reflect the real level of transportation funding across the states,” says Jerry Zhao, an associate professor in the Humphrey School of Public Affairs. “States face different levels of demand and costs due to different geographic, demographic, or labor market conditions.”
To better understand the factors that influence the transportation funding level, Zhao and Professor Wen Wang at Rutgers University developed a cost-adjusted approach to systematically compare highway expenses among states. They found that while Minnesota spends more than average on highways, its spending level actually ranks low in cost-adjusted measures.
Finding the funding needed to meet documented highway, bridge, and transit needs continues to be hotly debated in Washington, DC, and in state capitals around the country. The level of investment in the nation’s transportation infrastructure has declined. Federal figures compiled by The Associated Press show the total amount of money available to all states from the Federal Highway Trust Fund has declined by 3.5 percent during the five-year period ending in 2013. In Minnesota, the drop is even more severe: 33 percent.
At the same time, demand on the system and construction costs continue to increase. Population growth, increased freight shipments, and heavier vehicles have all contributed to a situation in which the transportation system is carrying much more of a load than it was ever designed to carry. According to the Minnesota Department of Transportation, highway construction costs have increased more than 70 percent since 2004.
In this guest post, Margaret Donahoe from the Minnesota Transportation Alliance shares her thoughts on how we might deal with trends that are producing less revenue for transportation while maintaining the user fee principal.
Many transportation issues have been with us for years: safety, funding, and so on. But today, they seem to be getting bigger, faster, more urgent. Driverless cars have moved beyond test tracks; the Highway Trust Fund came close to insolvency. Lyft and Uber are attracting subscribers, not owners; extreme weather is prompting resilient infrastructure. And right in front of our CTS offices, the Green Line opened light-rail service between St. Paul and Minneapolis. Combined with other trends and technologies, the implications of these developments are profound.
Such times demand big ideas—and the U of M has the big thinkers to create them. Our campuses are home to some of the brightest minds in transportation, in disciplines from engineering to planning to public policy. Their research generates the real-world solutions and out-there vision needed to tackle the transformative issues of today and tomorrow.
MnDOT has launched a new website, “Get Connected,” to help let Minnesota citizens know how and why the agency provides state transportation projects, programs, and services.
Funding the nation’s transportation system using a per-gallon fuel tax worked well for decades. Now, however, the system is under severe strain, says Cornell University’s Rick Geddes. Policies encourage motorists to drive more efficient vehicles, and people seem to be driving less. The fuel tax is not indexed to inflation, and its purchasing power has declined by about a third. Combined, these factors spell decreasing revenues just as investment needs are rising for our aging infrastructure.
There’s broad agreement that the U.S. transportation system cannot continue to be funded with existing financing and revenue-generation methods. What’s unclear, however, is how to pay for highway projects in the future. The current transportation funding system emphasizes user fees, but there is growing interest in alternative funding strategies. One promising strategy is value capture, which aims to recover the value of benefits received by property owners and developers as a result of infrastructure improvements.