When the Highway Trust Fund was created in 1957 to pay for the interstate highway system, taxing gasoline and diesel seemed a fair and logical funding mechanism. The economy was booming and oil was a seemingly endless resource.

But with technology improving and fuel consumption declining, the formula is reaching the end of its service life. Nationwide, fuel taxes represent less than half of the revenue generated for highway expenditures.

Last month, the Federal Highway Administration (FHWA) announced the sharpest 8-month decline since 1942 in vehicle miles traveled. Congress is trying to transfer general revenues to the Highway Trust Fund to avert an anticipated $3.2 billion shortfall next year, but stop-gap measures don't provide a long-term solution to the fundamental challenge.

"As Americans begin to migrate to alternatively fueled vehicles, gasoline sales are going to decline," says FHWA spokesperson Doug Hecox. "We need to figure out some other way to pay for our roads, because the gas tax is starving to death."

To that end, the U.S. DOT announced a Metropolitan Innovation Fund that--if adopted by Congress and President Bush's successor--would reward states and cities based on their success in setting and meeting performance-based goals that focus on Washington's priorities for the nation's transportation network: safety, innovative technology, and the environment. The highest performers would receive bonuses.

State and metropolitan transportation departments would be expected to use benefit-cost analysis to justify funding requests, a decision-making tool that monetizes benefits such as improved safety, travel time, and environmental impacts against project design, construction, and operating and maintenance costs. The results can be used to assess how projects will affect a city, state, or region's employment, business sales, land values, and tourism.

According to the U.S. DOT, of the 20 states that use the technique, six use it regularly.


A single institutional body, chosen through consensus, would plan and fund transportation projects regardless of mode, and the number of federal transportation programs would be cut from 102 and reorganized into eight comprehensive, intermodal programs.

The plan would further expand opportunities for private-sector assistance by broadening Transportation Infrastructure Finance and Innovation Act credit assistance and eliminating the cap on private activity bonds. In announcing the plan, Transportation Secretary Mary Peters referred to the $400 billion in private capital available worldwide through long-term infrastructure leases.

Regardless of what happens on the federal level, state and local sources already account for 75% of the $80 billion spent annually on transportation infrastructure. With at least 25 states expected to face budget shortfalls next year, the onus is on public works professionals to explain the value of streets, roads, and bridges to the public.

"Difficult decisions are approaching, and people need to be educated about these issues," says Frank Moretti, director of policy and research for The Road Improvement Program (TRIP), a nonprofit organization that promotes policies that relieve congestion, improve roads and air quality, and enhance productivity. "What's required is to educate elected officials and the public about the consequences of not maintaining highways and bridges versus the benefits of funding necessary repairs."

"The customer needs to be educated." In March, TRIP announced the results of research into the economic impact of the nation's transportation network: Poor road conditions add $64.7 billion annually to vehicle operating costs, an average of $322/driver. So in terms of cost-benefit analyses on infrastructure, constituents can get taxed at the pump or write a check to their local mechanic.