States fund transportation through a variety of sources. Historically, states have primarily funded transportation projects by paying for construction, maintenance and administration as money became available from user fees-such as tax revenues, registration and driver's license fees, tolls, sales and property taxes, and other sources-and federal grants. During the last decade, new federal transportation funding laws, growing transportation funding demands, the declining value of the gas tax against inflation, the uncertainty of other user fees, and changing economic conditions in the states have forced legislatures to explore options beyond traditional pay-as-you go methods.
In this environment, three clear, long-term trends are shaping state approaches to transportation funding. First, states are more often seeking partnerships and contributions from private entities to supplement transportation funding needs. Second, states are relying more on proceeds from bonds and other financing mechanisms such as tolling to obtain sufficient up-front money to pay for transportation projects. Third, states are more frequently exploring innovative mechanisms to replace the traditional reliance on motor fuel taxes.
This chapter more closely defines and examines these state surface transportation funding trends. It examines increased state usage of public private partnerships, bonding, tolling and other innovations.