**National Surface Transportation Infrastructure Financing Commission**

**Background Materials**

1.  Transportation Research Board of the National Academies, **Special
    Report 285, The Fuel Tax and Alternatives for Transportation
    Funding**, 2006.

> <http://onlinepubs.trb.org/onlinepubs/sr/sr285.pdf>
>
> This study assesses the revenue-generating prospects of fuel taxes and
> other user fees and identifies alternatives to present surface
> transportation financing arrangements. The report concludes:

-   The risk is not great that the challenges evident today will prevent
    the highway finance system from maintaining its historical
    performance over the next 15 years; that is, it should be able to
    fund growth in capacity and some service improvements, although not
    at a rate that will reduce overall congestion.

-   Although the present highway finance system can remain viable for
    some time, travelers and the public would benefit greatly from a
    transition to a fee structure that more directly charged vehicle
    operators for their actual use of roads.

> The report recommends immediate changes to strengthen the existing
> highway
>
> and transit finance system and actions to prepare the way for
> fundamental reform.
>
> The recommendations are as follows:

1.  Maintain and Reinforce the Existing User Fee Finance System

2.  Expand Use of Tools and Test Road Use Metering

3.  Provide Stable, Broad-Based Tax Support for Transit

4.  Evaluate the Impact of Finance Arrangements on Transportation System
    Performance.

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2.  National Chamber Foundation of the U.S. Chamber of Commerce,
    **Future Highway and Public Transportation Financing Phase I:
    Current Outlook and Short-Term Solutions**, 2005.

> <http://www.uschamber.com/ncf/publications/default.htm>
>
> The objective of this two-phased study is to identify funding
> mechanisms to meet national highway and transit investment needs.
> Phase I focuses on short-term funding for the period 2005 through
> 2015. It examines Federal options that would increase Federal Highway
> Trust Fund (HTF) revenues, and options that could enable and stimulate
> greater investment by states, local government, and the private
> sector.
>
> Key findings and recommendations of the report are as follows:

-   Current revenues at all levels of government---Federal, state, and
    local---devoted to transportation investments are not sufficient to
    maintain or improve the nation's highways and transit systems.

-   Existing revenue streams into the HTF will fall \$20 billion short
    annually in meeting the Federal share of investments necessary to
    maintain the highway and transit systems and \$43 billion short
    annually of the amount needed to "improve" these systems.

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-   Analysis of recently available Treasury data shows that the Highway
    Account of the HTF would be in deficit starting in 2010, and the
    Mass Transit Account would be in deficit starting about 2013,
    assuming level funding of Federal programs after 2009.

-   Short-term funding mechanisms could help narrow the revenue gap
    between 2005 and 2015. Indexing the Federal motor fuel taxes would
    clearly have the most immediate and substantial impact on revenue
    shortfalls. Mechanisms examined include:

    -   Indexing Federal motor fuel taxes.

    -   Eliminating current HTF user fee exemptions and recapturing
        interest earnings on the HTF balances.

    -   Increasing use of tolling for new infrastructure.

    -   Continuing the Transportation Infrastructure Finance and
        Innovation Act (TIFIA) credit instruments and tax-exempt private
        activity bonds.

    -   Issuing tax credit bonds, such as the Build America Bonds
        proposed in the Senate, and distributing the proceeds to as
        grants to the states.

    -   Dedicating five to 10 percent of U.S. Customs duties to port and
        intermodal freight projects.

    -   Granting investment tax credits to equity investors in new
        freight-related capital improvements.

-   Implementing a full package of these short-term mechanisms could
    meet 70 percent of the total national investment needed to
    "maintain" highway and transit systems and 28 percent of the total
    needed to "improve" the systems.

3.  National Chamber Foundation of the U.S. Chamber of Commerce,
    **Future Highway and Public Transportation Financing Phase II,**
    2005.

> <http://www.uschamber.com/ncf/publications/default.htm>
>
> The objective of this two-phased study is to identify funding
> mechanisms to meet national highway and transit investment needs. This
> study identifies funding mechanisms to meet U.S. highway and transit
> needs. The second and final phase addresses long-term funding
> mechanisms, including alternatives to the current fuel tax-based
> system.
>
> The report recommends that the Federal government provide leadership
> for state and local governments to implement new systems of financing
> that reduce reliance on the motor fuels tax. Recommended strategies
> are as follows:

-   Implementing a mileage-based transportation revenue system to

> help address long-term revenue shortfalls.

-   Adopting two vehicle miles of travel (VMT) fees: a state VMT fee as

> well as a local-option VMT fee to help ease metropolitan congestion.

-   Indexing VMT fees to inflation to help close the annual gap between

> transportation needs and revenues.

-   Varying the VMT by vehicle weight, fuel type and consumption,
    environmental impact, road system, and/or geography to account for
    different levels of use and impact and to ensure that all users of
    the system pay their fair share of infrastructure costs.

> The report also recommends that the federal government provide
> incentives for the states to develop and test new mileage-based
> revenue systems, noting that this process could lead to the eventual
> phasing out of the federal motor fuel tax and its replacement with a
> federal VMT tax.

4.  Federal Highway Administration and Federal Transit Administration,
    **The 2006 Status of the Nation's Highways, Bridges, and Transit:
    Conditions and Performance Report to Congress,** 2006.

<http://www.fhwa.dot.gov/policy/2006cpr/index.htm>

> The C&P report is intended to provide decision makers with an
> objective appraisal of the physical conditions, operational
> performance, and financing mechanisms of highways, bridges, and
> transit systems based both on the current state of these systems and
> on the projected future state of these systems under a set of
> alternative future investment scenarios.
>
> The report is organized into four major sections. Part I,
> \"Description of Current System,\" includes the core retrospective
> analyses in the report, including chapters on the role of highways and
> transit, system and usage characteristics, physical conditions,
> operational performance, safety performance, and finance.
>
> Part II, \"Investment/Performance Analysis,\" includes the core
> prospective analyses of the report, including projections of future
> highway, bridge, and transit capital investment under certain defined
> scenarios. This section also explores how these scenarios would be
> affected by changing the assumptions about travel growth, financing
> mechanisms, and other key variables.
>
> Part III, \"Special Topics,\" explores further some topics related to
> the primary analyses in the earlier sections of the report. Some of
> these chapters reflect recurring themes that have been discussed in
> previous editions of the C&P report, while others address new topics
> of particular interest that will be included in this edition only.
> Part IV, \"Afterword: A View to the Future,\" identifies potential
> areas for improvement in the data and analytical tools used to produce
> the analyses contained in this report, and describes ongoing research
> activities.
>
> This edition of the C&P report includes some preliminary analysis
> estimating the potential impacts of applying universal congestion
> pricing to all congested roadways. This underlying analytical approach
> will be refined further and peer reviewed by outside experts prior to
> the development of the 2008 C&P report; future reports will include
> pricing scenarios that may show larger or smaller effects. However,
> from even this preliminary analysis, it is clear that congestion
> pricing has the potential to significantly improve the operational
> performance of the Nation\'s highway system, while significantly
> reducing the level of future capital investment that would be
> necessary to achieve any specific level of performance (e.g., reducing
> the cost to maintain the system by 27 percent). Instituting congestion
> pricing on a widespread basis would also send clear signals concerning
> travelers\' willingness to pay to travel in certain corridors at
> certain times, which would inform decisions about where future capital
> investment should be directed in order to maximize net benefits. Such
> signals would be expected to improve the transportation planning
> process. The report also shows that infrastructure needs would also be
> significantly reduced by investments in Intelligent Transportation
> Systems.

5.  U.S. Department of Transportation, Federal Highway Administration,
    **Public-Private Partnerships Report to Congress**, December 2004.

<http://www.fhwa.dot.gov/reports/pppdec2004/index.htm>

> The report provides a resource document for States interested in using
> public-private partnerships as a method of procurement. The report is
> divided into five major sections: history and initiatives, value of
> public-private partnerships, impediments to their formation,
> stakeholder comments, and recommendations for removing those
> impediments.

6.  Texas Transportation Institute, David Schrank and Tim Lomax, **2005
    Urban Mobility Report,** May 2005.

> <http://mobility.tamu.edu/ums/report/>
>
> The report finds that congestion continues to grow in America's urban
> areas. Despite a slow growth in jobs and travel in 2003, congestion
> caused 3.7 billion hours of travel delay and 2.3 billion gallons of
> wasted fuel, an increase of 79 million hours and 69 million gallons
> from 2002 to a total cost of more than \$63 billion. The report says
> that solutions to this problem will require commitment by the public
> and by national, state and local officials to increase investment
> levels and identify projects, programs and policies that can achieve
> mobility goals. The 2005 Report shows that the current pace of
> transportation improvement, however, is not sufficient to keep pace
> with even a slow growth in travel demands in most major urban areas.
>
> The report finds that urban areas are not adding enough capacity,
> improving operations or managing demand well enough to keep congestion
> from growing larger. Over the most recent 3 years, the contribution of
> operations improvements has grown from 260 to 340 million hours of
> congestion relief, but delay has increased by 300 million hours over
> the same period. Congestion occurs during longer portions of the day
> and delays more travelers and goods than ever before*.* And if the
> current fuel prices are used, the congestion "invoice" climbs another
> \$1.7 billion which would bring the total cost to about \$65 billion.

7.  Federal Highway Administration, **Financing Federal-aid Highways,**
    August 1999.

<http://www.fhwa.dot.gov/reports/finfedhy.htm>

> This report follows the Federal-aid highway financial process from
> inception in an authorization act to payment from the Highway Trust
> Fund (HTF), and includes discussion of the congressional and Federal
> agency actions that occur throughout.
>
> Major areas covered in the report are as follows:

-   Authorization Act

-   Federal-Aid Financing Procedures

-   Limitation on Obligations

-   Appropriations

-   The Highway Trust Fund

8.  U.S. Department of Transportation, **National Strategy to Reduce
    Congestion on America's Transportation Network**, January 2007.

> <http://www.fightgridlocknow.gov/docs/conginitoverview070201.htm>
>
> The National Strategy to Reduce Congestion on America's Transportation
> Network Congestion is a DOT priority initiative first announced by
> Secretary Mineta in May 2006, then subsequently supported by Secretary
> Peters. It includes six major components, each of which shows
> potential to both reduce congestion in the short term and to build the
> foundation for successful longer-term congestion-reduction efforts.
> The six components are:

-   Urban Partnership Agreements with 1-5 metro areas to implement a
    comprehensive policy response to urban congestion, including a
    congestion pricing demonstration.

-   Public-Private Partnerships.

-   A Corridors of the Future competition to develop new interstate
    highway and rail capacity.

-   Reducing Southern California Freight Congestion.

-   Reducing Border Congestion.

-   Increasing Aviation Capacity.

9.  Federal Highway Administration, **Congestion Pricing: A Primer**,
    December 2006.

> <http://ops.fhwa.dot.gov/publications/congestionpricing/index.htm>
>
> This brochure provides basic information on congestion pricing,
> including:

-   The congestion problem.

-   What is congestion pricing.

-   Benefits of congestion pricing.

-   Examples in the U.S.

-   Examples from abroad.

-   Federal policy and programs on pricing.

-   Frequently asked questions.

10. Mayer, Jennifer; **Private Returns, Public Concerns:** **Addressing
    Private Sector Returns in Public-Private Highway Toll Concessions,**
    Transportation Research Board, August 2006.

> This paper examines various approaches used by procurement officials
> to address real and perceived private sector returns in highway
> concessions. While special focus is given to revenue sharing
> provisions, it also discusses other concession features that affect
> returns, including tender structure, bid selection, and negotiated
> contract terms and prohibitions. The analysis includes discussion of
> specific revenue sharing provisions in two U.S. concessions and one
> Irish concession, as well as a general discussion of the approaches
> taken by several European governments to address returns in their
> concession programs.

11. National Governors Association, **State Policy Options for Funding
    Transportation**, February 2007.
    http://www.nga.org/Files/pdf/0702transportation.PDF

> This paper examines the federal-state partnership in transportation
> finance and the need for new financing mechanisms. The paper finds
> that the federal-state partnership in transportation finance is
> entering a period of transition. In the future, states may bear more
> responsibility for funding transportation systems. While the states
> and other stakeholders continue to work to determine the appropriate
> federal role in transportation finance, states can use new financing
> tools, as well as federal policies allowing (and even encouraging)
> states to impose tolls on federal-aid highways and bridges to meet
> some of their transportation finance needs. These new financing tools
> and tolling strategies can help manage highway capacity, fight
> congestion, and improve total system performance. In addition, a
> variety of demand-side strategies are available to help states reduce
> their financing needs by diffusing demand across the entire
> transportation network, taking trips off congested facilities, and
> managing transportation for a broader array of societal outcomes.
>
> Among the tools at states' disposal to address demands for increased
> transportation capacity are the following:

-   Tax-based strategies for increasing revenue.

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-   Tolls and road-pricing strategies.

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-   Debt financing.

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-   Asset leases.

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-   Strategies to shift transportation finance responsibilities to other
    levels of government.

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-   Strategies to reduce the growth in travel demand.

12. HM Treasury, **The Eddington Transport Study Volume 4,** **Taking
    Action: Enabling the System to Deliver. (Engaging the Private
    Sector. P.297-310)**, December 2006.

> www.treasury.gov.uk/independent_reviews/eddington_transport_study/eddington_main_report.cfm
>
> Sir Rod Eddington was jointly commissioned by the Chancellor of the
> Exchequer and the Secretary of State for Transport to examine the
> long-term links between transport and the UK\'s economic productivity,
> growth and stability, within the context of the Government\'s broader
> commitment to sustainable development.
>
> Volume 4 concludes that the case for engaging the private sector in
> transport is well documented in the UK and in the right circumstances
> can deliver:

-   Reduced costs through greater efficiencies in construction and
    delivery of projects to time and budget.

-   Potential for increased benefits where efficiencies free up public
    funds for new investments.

-   The Government is already using the private sector to deliver
    transport infrastructure and services in ways which secure value for
    money.

-   Structural changes in the sector provide new and unique
    opportunities to engage the private sector where it represents value
    for money -- most notably:

    -   unprecedented global investor appetite actively looking for the
        potential stable and long-term returns offered by transport
        infrastructure projects; and

    -   as markets mature, a narrowing of the gap between the costs of
        borrowing for the public and private sectors.

-   As the sector evolves, Government must continue to learn the lessons
    of experience and help shape the future market:

    -   Offering certainty and transparency through a clear framework
        for private sector

    -   Engagement, including managing a pipeline of potential projects;
        and employing the right skills at all levels of Government to
        sustain this.

13. Gomez-Ibanez, Jose; Meyer, John; **Going Private: The International
    Experience with Transport Privatization,** Brookings Institute,
    1993.

> Going Private examines the diverse privatization experiences of
> transportation services and facilities. Cases are drawn from the
> United States, Asia, Europe, and Latin America. Since almost every
> country has experimented to some degree with highway and bus
> privatization, the authors focus particularly on these services,
> although they also discuss urban rail transit and airports. Highways
> and buses, they explain, encompass all three of the most common and
> basic forms of privatization: The sale of an existing state-owned
> enterprise; use of private, rather than public, financing and
> management for new infrastructure development; and contracting out to
> private vendors public services previously provided by government
> employees.\
> \
> After thoroughly examining these services and discussing the motives
> for, and objections to, privatization, the authors look at the
> prospects for privatization in other sectors and industries. They
> assess those circumstances in which privatization is most likely to
> succeed and those in which it is most likely to fail, for political as
> well as economic reasons.\
> \
> The authors conclude that privatization involves many political and
> social as well as economic dimensions. Privatization is usually not
> simply a matter of efficiency improvements or capital augmentation but
> also involves such deeply imbedded societal concerns as equity, income
> transfers, environmental problems, and attitudes toward taxation and
> the role of government.

14. U.S. Government Printing Office, **Economic Report of the President,
    2007, Chapter 6, The Transportation Sector, Energy and
    Infrastructure Use**. www.whitehouse.gov/cea/ch6-erp07.pdf

> The key points of Chapter 6 are:
>
> Recent increases in the price of oil and the external costs of oil
> have led to renewed interest by markets and governments in the
> development of new alternatives. Government can play a role in
> ensuring that external costs are taken into account by markets, but
> ultimately markets are best suited to decide how to respond.
>
> Cars and light trucks are the largest users of petroleum. As a result,
> the fuel economy of the vehicles purchased and the number of miles
> that they are driven have a large effect on oil consumption.
>
> Congestion is a growing problem in American urban areas. Cities and
> States have shown a growing interest in and capacity for setting
> prices for road use during peak periods to reduce the full economic
> costs of congestion.

15. Federal Highway Administration, **International Urban Road
    Pricing**, June 2006.
    http://www.trb-pricing.org/docs/FHWA_International_Case_Studies_Final_6-12-06.pdf

> This report explores the use of road pricing in various cities and
> countries outside the United States, with a focus on different road
> pricing schemes used to manage demand in urban areas. Also included
> are several distance-based heavy vehicle pricing schemes used in
> several European countries to address the growing post-European Union
> (EU) problems of foreign trucks traversing their highway system
> without purchasing fuel in those countries. As a result, these
> vehicles have avoided contributing to the cost if building,
> maintaining, and operation these facilities. The report summarizes the
> major kinds of road pricing schemes, the goals of these schemes, and
> the predominant locales were these approaches are being used. The
> report includes a series of case studies and cameos of actual road
> pricing initiatives, with case studies of successful projects and
> cameos of unsuccessful efforts. Through these case studies and cameos,
> the report provides insights and lessons learned regarding what to do
> and what not to do in developing and implementing urban area road
> pricing for demand management.

16. Federal Highway Administration and PB Consult, **Public-Private
    Partnerships and the Development of Transport Infrastructure: Trends
    on Both Sides of the Atlantic**, August 2006.
    http://www.fhwa.dot.gov/PPP/perez_banff_ppp_final.pdf

> This investigation focuses on the use of public-private partnerships
> (PPPs) in developing transport infrastructure in Europe and the United
> States. It begins by describing the different ways the public and
> private sectors collaborate to develop transport infrastructure in the
> United States and then compares recent experience and emerging trends
> in PPP applications on both sides of the Atlantic.

17. AECOM Consult Inc., **Synthesis of Public-Private Partnership
    Projects for Roads, Bridges and Tunnels From Around the World --
    1985-2004**, 2005.
    http://www.fhwa.dot.gov/PPP/ppp_global_sy_rpt_83005.pdf

> This report presents a synthesis of a comprehensive database of
> highway infrastructure projects from around the world financed or
> delivered through some form of public-private partnership (PPP). This
> synthesis provides insights into the nature and extent of highway
> infrastructure projects that have and are being advanced through
> various types of PPP contractual arrangements. They also reveal the
> predominant types and sizes of PPP contracts used in various regions
> and countries around the world for developing different types of
> highway infrastructure, including roads, bridges, and tunnels. The
> results of this synthesis are intended to inform those involved in the
> development, funding, or delivery of highway infrastructure regarding
> the worldwide use of PPPs to delivery highway and other forms of
> public use infrastructure.

18. U.S. DOT, Office of the Assistant Secretary for Budget and Programs,
    **Highway Trust Fund Update,** March 21, 2007.

> <http://www.transportationfortomorrow.org/pdfs/commission_meetings/0307_meeting_washington/ziff_presentation.pdf>
>
> This Power Point Presentation provides estimates of projected cash
> balances in the Highway Account and the Mass Transit Account of the
> Highway Trust Fund based on data in FY 2008 President's Budget. The
> consequences of negative balances are also discussed.

19. Goldman, Todd; Wachs, Martin; **A Quiet Revolution in Transportation
    Finance: The Rise of Local Option Transportation Taxes**,
    *Transportation Quarterly*, Vol. 57, No. 1, Winter 2003.

. <http://wws.uctc.net/papers/644.pdf>

> This paper examines recent changes in the nature of the partnership
> between federal, state, and local governments to finance surface
> transportation infrastructure. The paper finds that policymakers are
> devolving fiscal responsibility from federal and state to local
> governments, by increasingly authorizing the use of local option
> transportation taxes. This trend substitutes general taxes for user
> fees and charges, and shifts decisions about major transportation
> projects into the electoral and legislative arena.

20. American Association of State Highway and Transportation Officials,
    **Transportation/Invest in Our Future: Surface Transportation Policy
    Recommendations for the National Surface Transportation Policy and
    Revenue Study Commission,** March 2007.

> <http://www.transportation1.org/tif2report/>
>
> This report is the second of six reports being provided by AASHTO to
> the National Surface Transportation Policy and Revenue Study
> Commission, which will make transportation recommendations to
> Congress. The report, based on policy recommendations of the AASHTO
> Board of Directors, sets eight major goals:

-   To increase federal highway funding from \$43 billion a year to \$73
    billion a year, and to increase funding for transit from \$10.3
    billion a year to \$17.3 billion a year, by the year 2015.

-   To supplement state and local revenues through alternative financing
    options.

-   To double transit ridership over the next 20 years.

-   To preserve the 47,000-mile Interstate Highway System so it lasts
    for another 50 years.

-   To add nearly as much capacity to the Interstate Highway System as
    it already has, over the next 50 years.

-   To reduce annual fatalities on U.S. Highways by 10,000 per decade.

-   To reduce congestion and energy consumption, and improve air
    quality.

-   To establish a National Rail Transportation Policy to address the
    needs of passenger travel and freight users.