NOVEMBER 2010

Public Spending on 

Transportation and 

Water Infrastructure

CONGRESS OF THE UNITED STATES

CONGRESSIONAL BUDGET OFFICE

A

S T U D Y

CBO

© JupiterImages Corp. and Shutterstock Images LLC
Pub. No. 4088
Pub. No. 4088
The Congress of the United States O Congressional Budget Office

A

STUDY

CBO

Public Spending on Transportation and 

Water Infrastructure

November 2010
CBO

Notes

Data on the federal government’s outlays for transportation and water infrastructure are available through fiscal year 2009 and include spending that year under the American Recovery 

and Reinvestment Act. In contrast, the most recent data on spending by state and local governments that span a 12-month period matching the federal fiscal year (October 1 through 

September 30) are from 2007. Therefore, to be able to express state and local spending for 

infrastructure on an annual basis that is consistent with federal fiscal years, the Congressional 

Budget Office reports total public spending for infrastructure—the sum of federal expenditures and state and local expenditures—through 2007.

Dollar values that have been adjusted for inflation—that are reported in “real” or “constant” 

terms—are expressed in 2009 dollars. 

Unless stated otherwise, spending by states and localities for infrastructure has been reduced 

by the amount of grants and loan subsidies they received from the federal government. The 

value of those grants and loan subsidies is included in the totals reported for federal spending 

on that infrastructure.

Numbers in the text and tables may not add up to totals because of rounding.
Preface

CBO

The nation’s transportation and water infrastructure—its highways, airports, water 

supply systems, wastewater treatment plants, and other facilities—plays a vital role in the 

economy. Private commercial activities and the daily lives of individuals depend on that 

physical infrastructure, which is provided by all levels of government in the United States. 

Concerns about the nation’s infrastructure and its ability to support commerce and promote 

public well-being have prompted calls for greater infrastructure spending. The Congress is 

currently considering the level of funding for the next several years for important federal 

infrastructure programs, such as highways, mass transit, and aviation. Crucial to such 

decisionmaking is information about how much the federal government and state and local 

governments have spent over time to build, improve, and rehabilitate physical infrastructure, 

as well as to operate and maintain existing facilities. 

In response to a request from the Chairman and Ranking Member of the Senate Committee 

on Finance, the Congressional Budget Office (CBO) prepared this study, which analyzes 

recent developments in spending on transportation and water infrastructure, trends in spending for capital and for operations and maintenance by the various levels of government, and 

the rationale for public spending on infrastructure. This study updates a previous report 

that CBO published in August 2007, Trends in Public Spending on Transportation and Water 

Infrastructure, 1956 to 2004. In keeping with CBO’s mandate to provide objective, impartial 

analysis, this report makes no recommendations.

Nathan Musick of CBO’s Microeconomic Studies Division wrote the study under the supervision of Joseph Kile and David Moore. Mary Froehlich of CBO provided data on federal 

infrastructure outlays under the American Recovery and Reinvestment Act of 2009 and 

Sarah Miller, formerly of CBO, provided research assistance. Jeffrey Holland and Sarah Puro 

reviewed early drafts of the manuscript and supplied useful feedback, and Mark Booth, 

Peter Fontaine, and Benjamin Page offered helpful comments. CBO would also like to thank 

the following: Jessie LaVine of the Office of Management and Budget and Joseph Dalaker 

of the Census Bureau, who supplied the primary data on infrastructure spending; 

William Holtzman of the Army Corps of Engineers, and Nicole Carter, Robert Kirk and 

William Mallett of the Congressional Research Service, who provided additional information 

about public infrastructure spending; Brian Parks of the Bureau of Economic Analysis, 

Lana Borgie of the Bureau of Labor Statistics, Lee Joung of the American Association of State 

Highway and Transportation Officials, Ken Simonson of the Associated General Contractors 
CBO

PREFACE

of America, and Tian Liu of Cemex, who provided insights about recent trends in infrastructure construction costs. (The assistance of outside reviewers implies no responsibility for the 

final product, which rests solely with CBO.)

Loretta Lettner edited the study, and Kate Kelly proofread it. Maureen Costantino designed 

the cover, and Jeanine Rees prepared the document for publication. Monte Ruffin oversaw the 

printing of the report, Linda Schimmel handled the print distribution, and Simone Thomas 

prepared the electronic version for CBO’s Web site (www.cbo.gov).

Douglas W. Elmendorf

Director

November 2010
Contents

CBO

Summary ix

Introduction 1

Recent Developments in Public Spending for Transportation and Water Infrastructure 2

The Decline in Total Public Spending from 2003 to 2007 3

Federal Spending and the American Recovery and Reinvestment Act of 2009 5

The Composition of Public Spending on Transportation and Water Infrastructure 7

Spending by Level of Government 8

Spending for Capital and for Operation and Maintenance 9

Spending by Type of Infrastructure 11

The Role of Government in Funding Transportation and Water Infrastructure 12

Deciding How Much the Public Sector Should Spend 14

Determining the Role of the Federal Government and of State and 

Local Governments 19

Appendix A: Detailed Data on Spending for Transportation and Water Infrastructure 21

Appendix B: Methodology and Data Sources 41
VI PUBLIC SPENDING ON TRANSPORTATION AND WATER INFRASTRUCTURE

CBO

Tables

A-1. Total Public Spending for Transportation and Water Infrastructure, 

1956 to 2007 22

A-2. Total Public Spending for Transportation and Water Infrastructure, by 

Level of Government, 1956 to 2007 24

A-3. Total Public Spending for Transportation and Water Infrastructure: 

Expenditures for Capital and Related Operation and Maintenance, 

1956 to 2007 26

A-4. Total Public Spending for Transportation and Water Infrastructure 

Capital, by Level of Government, 1956 to 2007 28

A-5. Total Federal Spending for Transportation and Water Infrastructure Capital: 

Grants and Loan Subsidies and Other Spending, 1956 to 2009 30

A-6. Total Public Spending for the Operation and Maintenance of 

Transportation and Water Infrastructure, by Level of Government, 

1956 to 2007 32

A-7. Total Public Spending for Transportation and Water Infrastructure, by 

Type of Infrastructure, 1956 to 2007 34

A-8. Total Public Spending for Transportation and Water Infrastructure 

Capital, by Type of Infrastructure, 1956 to 2007 36

A-9. Total Public Spending for the Operation and Maintenance of 

Transportation and Water Infrastructure, by Type of Infrastructure, 

1956 to 2007 38

B-1. Characteristics of Spending for Infrastructure Capital and for 

Related Operation and Maintenance, by Level of Government 44

Figures

1. Total Public Spending for Transportation and Water Infrastructure in 

Constant Dollars and as a Share of GDP, 1956 to 2007 3

2. Highway Construction Price Index, 1956 to 2007 4

3. Total Public Spending for Highway Capital, in Constant and 

Nominal Dollars, 1956 to 2007 6

4. Actual and Estimated Spending for Transportation and Water Infrastructure 

Under the American Recovery and Reinvestment Act, 2009 to 2020 7

5. Public Spending for Transportation and Water Infrastructure, by 

Level of Government, 1956 to 2007 10

6. Total Public Spending for Transportation and Water Infrastructure: 

Expenditures for Capital and Related Operation and Maintenance, 

1956 to 2007 12
CONTENTS PUBLIC SPENDING ON TRANSPORTATION AND WATER INFRASTRUCTURE VII

CBO

7. Public Spending for Transportation and Water Infrastructure Capital, by 

Level of Government, 1956 to 2007 13

8. Public Spending for the Operation and Maintenance of Transportation and 

Water Infrastructure, by Level of Government, 1956 to 2007 14

9. Total Public Spending for Transportation and Water Infrastructure, by 

Type of Infrastructure, 1956 to 2007 15

10. Total Public Spending for Transportation and Water Infrastructure 

Capital, by Type of Infrastructure, 1956 to 2007 16

11. Total Public Spending for the Operation and Maintenance of 

Transportation and Water Infrastructure, by Type of Infrastructure, 

1956 to 2007 17

Boxes

1. Tax-Preferred Bonds and Public Spending for Infrastructure 8

2. The Short-Run Effects of Infrastructure Spending on Output and 

Employment 18

Figures (Continued)

CBO

Summary

Ihn fiscal year 2007—the most recent year for which 

data on combined spending by the federal government 

and by state and local governments are available—total 

public spending for transportation and water infrastructure was $356 billion, or 2.4 percent of the nation’s 

economic output as measured by its gross domestic product. For the purposes of this study, transportation and 

water infrastructure encompasses infrastructure for all 

forms of surface transportation (highways, mass transit, 

rail, and waterways), aviation, water resources (such as 

dams and levees), and water distribution and wastewater 

treatment. 

Recent Developments in Public 

Spending for Transportation and 

Water Infrastructure

Between 2003 and 2007, real (inflation-adjusted) public 

spending on transportation and water infrastructure 

declined by $23 billion, or 6 percent. That decline, which 

reflects a decrease in real capital spending, especially by 

the federal government, stands in contrast to the fairly 

steady increase in spending for such infrastructure during 

the previous two decades. In particular, real capital 

spending on highways, mass transit, and aviation fell 

markedly even as capital spending on other types of infrastructure—such as rail and water transportation, water 

resources, and water supply and wastewater treatment—

remained stable or rose. The drop in real capital spending 

for highways, mass transit, and aviation between 2003 

and 2007 was primarily the result of a sharp increase in 

prices for materials used to build such infrastructure—an 

increase that outpaced the growth of nominal (currentdollar) spending on those types of infrastructure. 

In 2009, the federal government spent $87 billion on 

transportation and water infrastructure, an increase of 

$6 billion over the amount spent in 2007. Of those outlays, about $4 billion was made available through the 

American Recovery and Reinvestment Act of 2009 

(ARRA). In total, lawmakers appropriated $62 billion 

in funding for transportation and water infrastructure 

under that legislation. The Congressional Budget Office 

expects that, in nominal terms, federal spending for 

transportation and water infrastructure under ARRA will 

total $54 billion through 2013, by which time almost 

90 percent of the funds made available for infrastructure 

through ARRA will have been spent. 

The Composition of Public 

Spending for Transportation and 

Water Infrastructure

The composition of public spending on transportation 

and water infrastructure can be represented in three ways: 

by the level of government providing the funding or 

other form of financial support; by the nature of the 

spending (whether it is designated for capital projects or 

for operation and maintenance); and by the type of infrastructure. State and local governments account for about 

75 percent of total public spending on transportation and 

water infrastructure—even after subtracting from their 

gross spending the value of grants and loan subsidies that 

the federal government provides for such purposes—and 

the federal government accounts for the other 25 percent. 

That split has remained roughly constant over the past 

two decades. 

In recent years, not quite half of total public funding for 

transportation and water infrastructure in the United 

States has been devoted to capital spending for activities 

such as construction and equipment purchases. State and 

local governments have accounted for about 60 percent 

of those expenditures, and the federal government has 

accounted for about 40 percent. A little more than half of 

total public spending for such infrastructure has been 

used for operation and maintenance, of which state and 

local governments have provided about 90 percent. 
X PUBLIC SPENDING ON TRANSPORTATION AND WATER INFRASTRUCTURE

CBO

Although the federal government has played a limited 

role in the funding of operation and maintenance for 

transportation and water infrastructure as a whole, it has 

provided much of the funding for operating and maintaining the nation’s air traffic control system. 

Spending on highways at all levels of government 

accounted for 43 percent of expenditures for transportation and water infrastructure in 2007. Expenditures 

on water supply and wastewater treatment systems 

accounted for 28 percent of spending; aviation, mass 

transit and rail made up 23 percent; and the remaining 

categories of water transportation and water resources 

accounted for 5 percent.

The Role of Government in 

Funding Transportation and 

Water Infrastructure

In the United States, the public sector rather than the 

private sector typically provides funding for transportation and water infrastructure. Whether it is more efficient 

for the federal government to provide that funding 

depends on the type of infrastructure and the likelihood 

that such infrastructure will be undersupplied if its 

provision is left to state and local governments or to the 

private sector. 

Evidence suggests that spending for carefully selected 

infrastructure projects can contribute to long-term 

economic growth by increasing the capital stock and 

raising productivity. (During a prolonged economic 

downturn, infrastructure spending can also mitigate 

losses in output and employment.) Realizing the potential gains from public spending for transportation and 

water infrastructure depends crucially on identifying 

economically justifiable projects—those with benefits to 

society that are expected to outweigh costs—but a variety 

of factors make identifying such projects difficult. In 

addition, the demand for infrastructure could be better 

aligned with the existing supply by putting a price on 

those services that reflects the full cost of using infrastructure, including both the cost of providing infrastructure 

services and the costs that one person’s use imposes on 

others. The federal government could make its current 

funding more effective by ensuring that the costs of infrastructure projects are allocated across levels of government on the basis of where the benefits are expected to 

accrue. Otherwise, for example, federal funding for infrastructure that provided benefits primarily at the local 

level could result in too many projects, or projects that 

are too expensive, being undertaken. In addition, individuals and businesses might consume too many infrastructure services relative to the cost of providing those 

services—because the federal share of that cost is largely 

borne not by local residents but by taxpayers throughout 

the country. 
CBO

Public Spending on Transportation and 

Water Infrastructure

Introduction 

The nation’s physical infrastructure—including the facilities and systems that support transportation, provide 

water resources, ensure safe and adequate supplies of 

fresh water, and treat wastewater—plays a critical role in 

facilitating commerce and, more broadly, in promoting 

public well-being. Reports of problems associated with 

surface transportation and air travel, as well as concerns 

about the quality and safety of water supplies, have raised 

questions about the state of the nation’s infrastructure. 

According to one study, the number of hours wasted 

per driver in rush-hour traffic because of congestion more 

than doubled between 1982 and 1997; since then, that 

number has continued to rise.1

 According to another 

study, nearly 20 percent of air passengers experienced 

flight disruptions that, on average, added an estimated 

105 minutes to their travel time.2

Those and related developments will be pertinent as the 

Congress considers reauthorizing multiyear infrastructure 

programs that fund highways and roads, mass transit, and 

aviation facilities and services. Key to those and other 

deliberations about the federal government’s infrastructure policy is determining the following: the appropriate 

amount of funding to allocate to various types of infrastructure and to specific projects; the share of funding 

that would be optimally provided at the federal, state, 

and local levels; and the share of the cost that should be 

borne by the consumers who use those services. Fundamental to such decisionmaking are analyses of data that 

describe expenditures on various types of infrastructure at 

the federal level and at the state and local level. 

This Congressional Budget Office (CBO) study updates 

previous reports on public spending for transportation 

and water infrastructure.3

 It describes expenditures by the 

federal government and by state and local governments 

from 1956, when the Federal-Aid Highway Act authorized construction of the country’s interstate highway 

system, through 2007. In addition to providing detail on 

the composition of public infrastructure spending—for 

example, the amount of outlays devoted to capital expenditures versus operation and maintenance—CBO also 

explores recent developments in spending for infrastructure. In particular, the report examines the decline in 

real (inflation-adjusted) capital spending that occurred 

after 2003 and the effects on spending of the American 

Recovery and Reinvestment Act of 2009 (ARRA, 

Public Law 111-5).

Data on the federal government’s outlays for transportation and water infrastructure are available through fiscal 

year 2009 and therefore reflect spending that year under 

ARRA. In contrast, the most recent data on state and 

local spending (spanning a 12-month period matching 

the federal fiscal year) are from 2007. Therefore, to be 

able to express state and local spending on an annual basis 

that is consistent with federal fiscal years, CBO reports 

total public spending—the sum of federal expenditures 

1. David Schrank and Tim Lomax, 2009 Urban Mobility Report

(College Station, Texas: Texas A&M University System, 

Texas Transportation Institute, July 2009), available at http://

mobility.tamu.edu/ums/report.

2. Lance Sherry, Guillermo Calderon-Meza, and Ashwin Samant, 

“Trends in Airline Passenger Trip Delays, 2007–2009” (paper 

presented at the 2010 Integrated Communications Navigation 

and Surveillance Conference, Herndon, Va., May 11–13, 2010), 

available at http://catsr.ite.gmu.edu/pubs/2010-ICNS-Pax

TripDelay[1].pdf.

3. For the most recent paper in that series, see Congressional Budget 

Office, Trends in Public Spending on Transportation and Water 

Infrastructure, 1956 to 2004 (August 2007). 
2 PUBLIC SPENDING ON TRANSPORTATION AND WATER INFRASTRUCTURE

CBO

and state and local expenditures—through 2007. (For a 

complete discussion of the methodology CBO used to 

produce this report, as well as definitions and data 

sources, see Appendix B.)

In the United States, funding for the types of infrastructure covered in this study is typically provided by the 

public sector rather than the private sector. About threequarters of that funding is supplied by state and local 

governments, with the federal government providing the 

remainder. Almost one-half of the public sector’s spending on transportation and water infrastructure consists 

of capital outlays—primarily for the purchase, construction, rehabilitation, or improvement of physical assets, 

such as highways, waterways, and water treatment plants. 

The remaining portion of public expenditures consists 

of noncapital outlays—primarily for the operation and 

maintenance of physical assets.4

Although different definitions of “infrastructure” exist, 

this report focuses on two types that claim a significant 

amount of federal resources: transportation and water. 

Those types of infrastructure share the economic 

characteristics of being relatively capital intensive and 

producing services under public management that facilitate private economic activity. They are typically the types 

examined by studies that attempt to calculate the payoff, 

in terms of benefits to the U.S. economy, of the public 

sector’s funding of infrastructure.

For the purposes of CBO’s analysis, “transportation infrastructure” includes the systems and facilities that support 

the following types of activities:

B Vehicular transportation: highways, roads, bridges, 

and tunnels;

B Mass transit: subways, buses, and commuter rail;

B Rail transport: primarily the intercity passenger 

service provided by Amtrak;5

B Civil aviation: airport terminals, runways, and taxiways, and facilities and navigational equipment for air 

traffic control; and

B Water transportation: waterways, ports, vessels, and 

navigational systems.

The category “water infrastructure” includes facilities that 

provide the following: 

B Water resources: containment systems, such as dams, 

levees, reservoirs, and watersheds; and sources of fresh 

water such as lakes and rivers; and

B Water utilities: supply systems for distributing 

potable water, and wastewater and sewage treatment 

systems and plants.

Consistent with CBO’s previous reports on public spending for transportation and water infrastructure, this 

update excludes spending that is associated with such 

infrastructure but does not contribute directly to the provision of infrastructure facilities or certain strictly defined 

infrastructure services. Examples of excluded spending 

are federal outlays for homeland security (which are 

especially pertinent to aviation), law enforcement and 

military functions (such as those carried out by the Coast 

Guard), and cleanup operations (such as those conducted 

by the Army Corps of Engineers following Hurricane 

Katrina in 2005).

Recent Developments in Public 

Spending for Transportation and 

Water Infrastructure

Two major developments have marked public spending 

on transportation and water infrastructure during the 

past decade. First, construction costs for several types of 

transportation infrastructure rose rapidly from 2003 to 

2007, sharply outpacing the growth in nominal (current4. Much of the infrastructure spending that CBO terms “operation 

and maintenance” is classified by the Office of Management 

and Budget as expenditures for “noninvestment activities”; the 

corresponding classification by the Census Bureau is “current 

operations.” As defined by CBO, however, operation and maintenance spending also includes investment in intangible assets 

for instance, for research and development) as well as expenditures 

for administrative activities and public outreach (such as safety 

and educational programs). 

5. Although the federal government provides some funding for 

freight rail—in particular to cover expenses incurred by the 

Surface Transportation Board for performing certain regulatory 

and oversight functions—its financial support is limited because 

freight rail is effectively in the hands of the private sector. State 

and local governments do not report their expenditures for freight 

rail to the Census Bureau, and they include expenditures for 

passenger rail in the “mass transit” category. 
PUBLIC SPENDING ON TRANSPORTATION AND WATER INFRASTRUCTURE 3

CBO

Figure 1.

Total Public Spending for Transportation and Water Infrastructure in 

Constant Dollars and as a Share of GDP, 1956 to 2007 

(Billions of 2009 dollars) (Percent)

Source: Congressional Budget Office.

Notes: Total public spending is the sum of expenditures by the federal government and by state and local governments.

For the purposes of this analysis, the phrase “transportation and water infrastructure” encompasses the facilities and systems that 

support transportation, provide water resources, supply drinking water, and treat wastewater.

Spending expressed in constant dollars has been adjusted to reflect the effects of inflation between the year the spending occurred 

and a base year, which in this study is 2009.

GDP = gross domestic product.

dollar) spending for such infrastructure.6 Consequently, 

in real terms, spending fell during that period. Second, 

stimulus spending under ARRA provided about $4 billion for infrastructure in 2009 and is expected to lead to 

an additional $49 billion in spending from 2010 through 

2013. 

The Decline in Total Public Spending from 

2003 to 2007

Measured in constant dollars, total public spending for 

transportation and water infrastructure in 2007 

amounted to $356 billion—$23 billion (or 6 percent) 

below the level of funding provided in 2003. The decline 

in overall spending for such infrastructure from 2003 to 

2007 represents the most recent in a series of departures 

from a long-term pattern of annual growth since the 

mid-1950s (see Figure 1 and Table A-1 on page 22)7

. As a 

share of gross domestic product, spending on transportation and water infrastructure fell only slightly between 

2003 and 2007, from 2.5 percent to 2.4 percent. 

The decline in real public spending on transportation 

and water infrastructure between 2003 and 2007 primarily reflects a drop in real capital expenditures, especially at 

the federal level. After peaking in the early 2000s, real 

federal capital outlays dropped by 6.2 percent annually; 

real capital expenditures at the state and local level fell by 

an average of 2.4 percent a year. In contrast, annual real 

public spending on the operation and maintenance of 

such infrastructure by the federal government and by 

state and local governments was essentially flat during 

that period. However, capital expenditures account for 

almost one-half of total public spending on transporta1956 1959 1962 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007

0

50

100

150

200

250

300

350

400

0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

Constant Dollars

Share of GDP

6. Funding or spending expressed in nominal dollars indicates the 

amount of funding or spending over a given period without an 

adjustment for inflation. Funding or spending expressed in real or 

constant-dollar terms has been adjusted to reflect the effects of 

inflation between the year the funding or spending occurred and a 

base year, which in this study is 2009.

7. In addition to the tables in Appendix A, a Web supplement to this 

report provides greater detail on spending.
4 PUBLIC SPENDING ON TRANSPORTATION AND WATER INFRASTRUCTURE

CBO

Figure 2.

Highway Construction Price Index, 1956 to 2007

(Index value = 100 in 2009)

Source: Bureau of Economic Analysis.

tion and water infrastructure, so real total spending 

declined each year, by an average of 1.6 percent. 

The decline in real capital spending after 2003 was 

attributable primarily to a sharp increase in the cost of 

construction, which was not met with a corresponding 

increase in nominal spending. The cost of highway and 

road construction, as measured by the highway construction price index, increased much more rapidly after 2003 

than it did beforehand (see Figure 2).8

 Specifically, costs 

increased by an average of 10 percent a year from 2003 to 

2007, compared with an average annual increase of 

2.4 percent during the two decades preceding 2003. The 

cost of building other types of transportation structures 

increased 9 percent annually during that period, also a 

much more rapid rate of increase than had occurred in 

previous years.

Increases in the prices of materials that are key components of highway construction pushed up overall costs 

sharply. The cost of building highways and other transportation facilities is especially sensitive to changes in the 

price of commodities used to produce them because those 

projects offer relatively few possibilities for builders to 

replace more costly materials with cheaper alternatives. 

From 2003 to 2007, an increase in demand for petroleum 

products and other commodities elsewhere in the world 

(particularly in China and other developing nations), 

combined with the growth of residential and commercial 

construction in the United States, generated sustained 

upward pressure on the prices of energy and the materials 

widely used in highway construction. The price of petroleum, from which asphalt and diesel fuel are derived, rose 

21 percent annually over that period. In addition, other 

materials used in highway construction also posted large 

annual increases from 2003 to 2007: the price of iron and 

steel rose 13 percent annually; the price of sand, gravel, 

and other quarried products rose 7 percent each year; and 

the price of architectural and structural metals rose at an 

average annual rate of 6 percent. Finally, owing also in 

part to the reconstruction effort in the wake of Hurricane 

Katrina in 2005, the price of cement and concrete rose at 

a rate of 7 percent per year.

Wages paid to construction workers also increased from 

2003 to 2007, although much less rapidly than the prices 

of materials. For example, the average hourly earnings of 

1956 1959 1962 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007

0

10

20

30

40

50

60

70

80

90

100

8. For an overview of price trends for highway and road construction, see Department of Transportation, Federal Highway 

Administration, “Highway Construction Cost Increases and 

Competition Issues,” available at www.fhwa.dot.gov/program

admin/contracts/price.cfm. 
PUBLIC SPENDING ON TRANSPORTATION AND WATER INFRASTRUCTURE 5

CBO

production and nonsupervisory employees in highway, 

street, and bridge construction increased 2.4 percent 

annually.9

The rising cost of highway construction from 2003 to 

2007 more than offset an increase in nominal spending 

on that infrastructure, so that spending in constant 

dollars fell by an average of 1.6 percent per year (see 

Figure 3). In particular, the increasing cost to build 

highways outpaced average annual increases of 6 percent 

a year in nominal spending on such capital projects.10

Nominal spending for the construction of several other 

types of surface transportation and aviation infrastructure, which requires materials similar to those used to 

build highways, was also outstripped by rising costs. 

Overall, real capital spending on those types of infrastructure fell by an average of roughly 9 percent annually from 

2003 to 2007. 

Federal Spending and the American Recovery and 

Reinvestment Act of 2009 

In 2009, the federal government spent $87 billion on 

transportation and water infrastructure, an increase of 

$6 billion over the amount spent in 2007. Adjusted for 

inflation, that spending represented the first annual 

increase in federal outlays for such infrastructure since 

2002. Of those expenditures, about $4 billion was from 

appropriations contained in the American Recovery and 

Reinvestment Act of 2009. That amount is small in 

comparison with the approximately $62 billion in total 

federal funding that the Congress made available through 

ARRA for transportation and water infrastructure 

because it usually takes several years for such projects to 

be planned and implemented and the rate of spending 

typically reflects that pace. 

According to CBO’s estimates, in nominal terms, infrastructure outlays for transportation and water projects 

under ARRA peaked in 2010 and will remain relatively 

high in 2011 (see Figure 4 on page 7). CBO expects that 

cumulative spending for such infrastructure under ARRA 

will total $54 billion by 2013 and $61 billion by 2020. 

About three-quarters of nominal outlays through 2013 

($39 billion) will be devoted to surface transportation, 

CBO anticipates, with $27 billion designated for highways, $8 billion for mass transit, and $3 billion for rail 

and other projects. Additionally, CBO expects that, 

through 2013, $6 billion of the funding provided by 

ARRA will be spent on water resources, $8 billion on 

water and wastewater treatment, $2 billion on aviation, 

and $200 million on water transportation.11

Most of the $4.4 billion in outlays for transportation and 

water infrastructure that ARRA funded in 2009 was 

devoted to capital projects. Of that amount, $2.4 billion 

was allocated to highways and $1.0 billion to mass transit; all of that funding took the form of grants to state and 

local governments. The federal government also spent 

9. Neither workers’ wages nor the cost of other inputs into infrastructure construction (such as the cost of capital) are included 

in the price indexes that CBO used in its analysis to convert 

nominal spending on infrastructure capital into real quantities. 

However, because labor costs do not account for a large part of 

infrastructure spending—at least for the major types of infrastructure capital considered here—incorporating those more modest price increases would be very unlikely to reverse the conclusion 

that real public spending on infrastructure capital declined after 

2003. For example, total employment in the highway, street, and 

bridge construction sector was 358,500 in 2007, and average 

annual wages were $43,900. Thus, total wages in that sector 

amounted to $15.7 billion, or about 20 percent of all public 

spending on highway capital projects in that year ($82.2 billion). 

See Bureau of Labor Statistics, “May 2007 Occupational Employment Statistics, National Industry-Specific Occupational Employment and Wage Estimates, NAICS 237300 (Highway, Street, and 

Bridge Construction),” available at http://data.bls.gov/cgi-bin/

print.pl/oes/2007/may/naics4_237300.htm. 

10. As a result of the Safe, Accountable, Flexible, Efficient Transportation Act: A Legacy for Users (enacted as P.L. 109-59), which 

authorized funding for federal highway and mass transit programs 

after 2003, the average amount of budgetary resources available 

from the Highway Trust Fund for highway and mass transit infrastructure projects was almost 60 percent higher between 2005 and 

2009 than it was between 1998 and 2003. However, such authorizations do not automatically translate into outlays. States and 

localities draw on those federal resources to commit to multiyear 

highway and mass transit projects, on which they make payments 

over time as the work progresses. The associated federal outlays 

reimburse state and local governments for those eventual payments; as a result, the amount of outlays made in a given year can 

differ from the amount of federal funding available to state and 

local governments in that same year. See the statement of Robert 

A. Sunshine, Deputy Director, Congressional Budget Office, 

before the House Committee on the Budget, Public Spending on 

Surface Transportation Infrastructure (October 25, 2007), pp. 7–8 

and pp. 10–11. 

11. Projected outlays under ARRA may overstate the amount by 

which that legislation increases infrastructure spending above its 

normally funded level. The additional funding already provided 

by ARRA could result in lower appropriations in the future and 

displace infrastructure expenditures that state and local governments would otherwise have made. 
6 PUBLIC SPENDING ON TRANSPORTATION AND WATER INFRASTRUCTURE

CBO

Figure 3.

Total Public Spending for Highway Capital, in Constant and Nominal Dollars, 

1956 to 2007

(Billions of 2009 dollars)

Source: Congressional Budget Office.

Notes: Total public spending is the sum of expenditures by the federal government and by state and local governments.

Capital spending includes the purchase, construction, rehabilitation, or improvement of physical assets, such as land, facilities, and 

equipment.

Spending expressed in constant dollars has been adjusted to reflect the effects of inflation between the year the spending occurred 

and a base year, which in this study is 2009. Spending expressed in nominal dollars indicates the amount of spending over a given 

period without an adjustment for inflation.

$0.5 billion for water resources. Most of the remainder 

went to aviation, rail (Amtrak), and water utilities; in 

2009, there were no outlays for high-speed rail or water 

transportation infrastructure from amounts appropriated 

by ARRA. 

In addition to the funding that ARRA provided, the 

legislation also authorized expanded federal tax preferences—particularly in the form of Build America Bonds 

(BABs)—for debt that state and local governments issue 

to finance infrastructure and other projects (see Box 1 on 

page 8). State and local governments report that, of the 

more than $137 billion in proceeds made available 

through the issuance of BABs between April 2009 and 

September 2010, they will use almost one-third ($43 billion) for capital spending on transportation and water 

projects.12

CBO projects that the issuance of BABs in 2009 and 

2010 will ultimately result in a federal subsidy to municipal borrowers of about $40 billion (in nominal dollars) 

through 2020. States and localities will generally respond 

to the larger federal financing subsidy offered by BABs 

and issue those bonds instead of conventional tax-exempt 

debt. In contrast to conventional tax-exempt debt, the 

interest paid on BABs is taxable. Thus, the $40 billion in 

federal subsidy payments to issuers of BABs is expected to 

be partially offset by $28 billion in tax revenues. As a 

result, the net impact on the federal budget of those 

issues is expected to be about $12 billion. Making a 

payment directly to state and local governments to compensate them for the interest they pay on BABs is a more 

1956 1959 1962 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007

0

20

40

60

80

100

120

Nominal Dollars

Constant Dollars

12. For updated information on Build America Bond issuance by purpose, see Securities Industry and Financial Markets Association, 

Build America Bonds Factsheet 2010, Third Quarter, available at 

www.sifma.org/research/item.aspx?id=19650.
PUBLIC SPENDING ON TRANSPORTATION AND WATER INFRASTRUCTURE 7

CBO

Figure 4.

Actual and Estimated Spending for Transportation and Water Infrastructure 

Under the American Recovery and Reinvestment Act, 2009 to 2020

(Billions of nominal dollars)

Source: Congressional Budget Office (August 2010 baseline estimates).

Notes: For the purposes of this analysis, the phrase “transportation and water infrastructure” encompasses the facilities and systems that 

support transportation, provide water resources, supply drinking water, and treat wastewater.

Spending expressed in nominal dollars indicates the amount of spending over a given period without an adjustment for inflation.

cost-effective way of providing a federal financing subsidy 

than offering a tax-exemption. Therefore, the reduction 

in state and local governments’ borrowing costs (over 

what they would have realized by issuing tax-exempt 

bonds) exceeds the $12 billion additional cost to the 

federal government.13

The Composition of Public Spending 

on Transportation and Water 

Infrastructure

About 75 percent of public funding for transportation 

and water infrastructure is supplied by state and local 

governments, with the federal government providing the 

remaining 25 percent. Almost 50 percent of total public 

funding for such infrastructure is devoted to capital 

expenditures. From the mid-1980s through the early 

2000s, public spending on capital was usually fairly close 

to that for operation and maintenance. Since that time, 

however, spending on capital has fallen somewhat below 

expenditures for operation and maintenance. State and 

local governments currently account for about 60 percent 

of public capital spending on transportation and water 

infrastructure, and they provide almost 90 percent of 

public spending for operation and maintenance. 

Between 1956 and 2007, the largest portion of annual 

public funding for transportation and water infrastructure was dedicated to highways. Public expenditures on 

highway capital in 2007 totaled $88 billion, more than 

twice as much as the next largest amount of capital 

expenditures that year ($39 billion on water supply and 

wastewater treatment). Among various types of infrastructure built over the 1956–2007 period, highways also 

claimed the largest amount of public expenditures for 

operation and maintenance ($67 billion). However, 

spending for the operation and maintenance of other 

forms of transportation infrastructure and for water supply systems and wastewater treatment plants grew at a 

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

0

5

10

15

20

25

Highways

Aviation, Mass Transit, and Rail

Water Transportation and Water Resources

Transportation

Water

Water Supply and Wastewater Treatment

13. For a discussion of the greater cost-effectiveness of Build America 

Bonds (and tax-credit bonds more generally) over tax-exempt 

debt, see Congressional Budget Office and Joint Committee on 

Taxation, Subsidizing Infrastructure Investment with Tax-Preferred 

Bonds (October 2009). For an early study estimating the additional savings that state and local governments realized by issuing 

BABs rather than tax-exempt debt, see Department of the 

Treasury, Treasury Analysis of Build America Bonds and Issuer Net 

Borrowing Cost (April 2, 2010), available at www.ustreas.gov/

offices/economic-policy/4%202%2010%20BABs%20Savings%

20Report%20FINAL.pdf. 
8 PUBLIC SPENDING ON TRANSPORTATION AND WATER INFRASTRUCTURE

CBO

Continued

faster rate than spending to operate and maintain highways. As a result, by 2007, public spending for the operation and maintenance of each of those types of infrastructure had reached levels close to those for highways.

Spending by Level of Government 

In 2007, state and local governments spent $275 billion 

on transportation and water infrastructure, and the federal government spent $82 billion (see Figure 5 on 

page 10). Thus, the federal share of spending for such 

infrastructure that year was 23 percent. Over the past two 

decades, federal spending on transportation and water 

infrastructure as a share of total public spending has 

ranged from 23 percent to 27 percent (see Table A-2 on 

page 24). 

From 1956 to 2007, public spending for transportation 

and water infrastructure rose at an average rate of 2.1 percent annually (after adjusting for inflation). Between 

1956 and 1977, real federal spending on such infrastructure grew much more rapidly than spending by states and 

Box 1.

Tax-Preferred Bonds and Public Spending for Infrastructure

Interest income from most bonds issued by state and 

local governments is exempt from federal income tax 

(and, in many cases, from state taxes as well). As a 

result, state and local governments can borrow at 

lower rates of interest. The federal revenues forgone 

through such tax preferences effectively subsidize 

state and local investment in infrastructure and other 

projects. Financing infrastructure projects using taxexempt bonds, however, is generally not considered 

to be a cost-effective way of transferring revenues 

from the federal government to states and localities. 

The savings in interest that states and localities gain 

through the tax exemption are less than the revenues 

forgone by the federal government as a result of the 

tax exemption. That differential arises because the 

average holder of tax-exempt bonds—who determines the amount of federal revenues forgone 

through the tax exemption—is typically in a higher 

tax bracket than the individual who buys the bond 

that determines the market price for those bonds and, 

correspondingly, the savings in financing costs for 

states and localities.

Over the past decade, the Congress has authorized 

tax-credit bonds as an alternative method for providing tax subsidies.1

 Tax-credit bonds subsidize the 

issuer’s cost of borrowing by providing a tax credit 

instead of (or in addition to) the payment of interest 

to the holder of the bond or, in some cases, directly to 

the issuer. Because each holder of a tax-credit bond 

pays taxes on the value of that credit at his or her own 

marginal income tax rate, there is no transfer of federal revenue to bondholders in upper-income tax 

brackets. Tax-credit bonds thus offer a more costeffective means of subsidizing borrowing because 

every dollar of federal revenue forgone through the 

tax credit is transferred to borrowers rather than 

accruing in part to individuals whose marginal tax 

rate is sufficiently high that the amount of interest 

they receive from tax-exempt bonds exceeds what 

they would require to be indifferent to holding taxable versus tax-exempt debt. Tax-credit bonds can 

also be more economically efficient in another way: 

Because the tax credit can be set at any amount, the 

federal subsidy can be adjusted to match the expected 

gains federal taxpayers receive from different infrastructure projects. 

The American Recovery and Reinvestment Act of 

2009 (ARRA) authorized a new type of tax-preferred 

1. The importance of those subsidies to infrastructure investment is discussed in Congressional Budget Office and Joint 

Committee on Taxation, Subsidizing Infrastructure Investment 

with Tax-Preferred Bonds (October 2009), pp. 17–29 and 

pp. 31–34. That study also provides additional discussion 

of the various types of tax-exempt and tax-credit bonds and 

of their advantages and disadvantages as a means of delivering a federal borrowing subsidy.
PUBLIC SPENDING ON TRANSPORTATION AND WATER INFRASTRUCTURE 9

CBO

localities (with average annual rates of growth of 7 percent and 1 percent, respectively). During the next decade, 

however, state and local spending grew at an average 

annual rate of about 5 percent, and federal spending 

declined by an average of just over 1 percent each year. 

Between 1987 and 2003, the average rate of real annual 

growth in the federal government’s spending for transportation and water infrastructure equaled that of state and 

local governments—2.3 percent. From 2003 to 2007, 

federal spending dropped by 4.7 percent annually, 

whereas state and local spending declined by 0.5 percent 

each year. 

Spending for Capital and for 

Operation and Maintenance

In 2007, real capital expenditures for transportation and 

water infrastructure totaled $161 billion; spending that 

year for operation and maintenance amounted to 

$196 billion (see Table A-3 on page 26). From 1956 

through the early 1970s, public spending on capital 

projects was considerably greater than spending for operation and maintenance as the federal government began 

constructing the interstate highway system and increased 

spending on other types of infrastructure (see Figure 6 on 

page 12). 

Box 1. Continued

Tax-Preferred Bonds and Public Spending for Infrastructure

bonds, Build America Bonds (BABs), which can be 

issued by state and local governments in 2009 or 

2010 and offer a more generous subsidy of interest 

costs. There are essentially two types of Build America Bonds: “tax-credit” BABs, for which the bondholder can claim a taxable credit equal to 35 percent 

of the coupon payment on the bond; and “directpay” BABs, for which the federal government makes 

a subsidy payment directly to bond issuers equal to 

35 percent of the coupon on the bond. Most of the 

BABs issued to date have been of the direct-pay variety. Direct-pay BABs provide issuers with a larger 

interest subsidy because holders of those bonds do 

not pay tax on the value of the credit and thus do not 

require compensation for any tax. However, some 

conditions must be met for a Build America Bond to 

qualify as a “direct-pay” issue: in particular, all of the 

proceeds (net of issuance costs) must be used for capital spending.

The popularity of Build America Bonds has 

prompted several initiatives to expand tax-credit 

financing at the federal level. For example, the President’s budget for fiscal year 2011 proposes to make 

BABs permanent at a 28 percent credit rate and allow 

them to be issued by nonprofits—organizations 

such as schools and hospitals, as defined in section 

501(c)(3) of the Internal Revenue Code—and for the 

additional purposes of refunding existing debt and 

financing working capital.2

 That proposal would thus 

configure BABs as a more complete replacement for 

traditional tax-exempt debt. The proposal in the 

President’s budget to make BABs permanent is 

echoed by the Bipartisan Tax Fairness and Simplification Act of 2010 (S. 3018), which would replace the 

federal tax exemption on state and local bond interest 

income for bondholders other than corporations with 

a tax credit equal to 25 percent of bond interest. 

Other legislative initiatives in the 111th Congress 

would authorize Build America Bonds for only a limited time. In the Investing in American Jobs and 

Closing Tax Loopholes Act, H.R. 5893, the Congress 

would authorize BAB issuance through 2012 and 

reduce the interest rate subsidy to 32 percent for 

bonds sold in 2011 and to 30 percent for bonds sold 

in 2012. S. 3793 would authorize BAB issuance 

through 2011 and reduce the subsidy rate for bonds 

issued in that year to 32 percent. As of the publication of this study, S. 3018, H.R. 5893, and S. 3793 

had not been approved by the Congress. 

2. Section 501(c)(3) of the Internal Revenue Code defines a 

qualified nonprofit as any entity “organized and operated 

exclusively for religious, charitable, scientific, testing for 

public safety, literary, or educational purposes, or to foster 

national or international amateur sports competition . . . or 

for the prevention of cruelty to children or animals.” A nonprofit may not engage in political activity, and none of its 

earnings may benefit any private shareholder or individual.
10 PUBLIC SPENDING ON TRANSPORTATION AND WATER INFRASTRUCTURE

CBO

Figure 5.

Public Spending for Transportation and Water Infrastructure, by Level of 

Government, 1956 to 2007

(Billions of 2009 dollars)

Source: Congressional Budget Office.

Notes: For the purposes of this analysis, the phrase “transportation and water infrastructure” encompasses the facilities and systems that 

support transportation, provide water resources, supply drinking water, and treat wastewater.

Spending expressed in constant dollars has been adjusted to reflect the effects of inflation between the year the spending occurred 

and a base year, which in this study is 2009.

Over the next two decades, capital expenditures for transportation and water infrastructure were either equal to or 

slightly below public spending for operating and maintaining that infrastructure. (A dip in capital spending 

during the early 1980s briefly caused that gap to widen 

markedly.) After 2003, real public spending on capital fell 

for several years in a row; by 2007, those expenditures 

were $35 billion less than spending for operation and 

maintenance (although capital expenditures still 

accounted for 45 percent of total spending). 

Spending for Capital. In 2007, state and local governments spent $103 billion on transportation and water 

infrastructure capital; the federal government spent 

$58 billion (see Figure 7 on page 13 and Table A-4 on 

page 28). State and local governments thus accounted for 

over 60 percent of public capital spending on such infrastructure, and the federal government accounted for just 

under 40 percent—shares that have been quite stable over 

the past two decades. More than 80 percent of federal 

capital outlays for transportation and water infrastructure 

took the form of grants and loan subsidies—which 

offer below-market interest rates or have the same effect 

as loan guarantees—to state and local governments 

(see Table A-5 on page 30).14

The federal government’s capital spending on transportation and water infrastructure posted a much steeper 

decline between 2003 and 2007 than did capital expenditures by state and local governments. Two developments 

in particular contributed to that outcome. First, in 

nominal terms, the federal government increased its 

spending on highways each year at a much slower rate 

(about 3 percent per year) than did state and local governments (about 8 percent per year). Because the costs of 

procuring highways rose at an average annual rate of 

10 percent, real federal investment in highways declined 

at an annual rate of 6 percent as compared with 

1.5 percent at the state and local level. 

There is a second reason that federal outlays for infrastructure capital fell more sharply from 2003 to 2007 

Federal

1956 1959 1962 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007

0

50

100

150

200

250

300

350

400

Federal

State and Local
PUBLIC SPENDING ON TRANSPORTATION AND WATER INFRASTRUCTURE 11

CBO

than did state and local capital spending: Patterns of 

spending for water supply and wastewater treatment facilities differed. In inflation-adjusted terms, investment by 

state and local governments in water utilities rose by 3 

percent annually while federal expenditures over the same 

period declined by 13 percent. During that period, 

spending on water and wastewater treatment accounted 

for more than 30 percent of capital expenditures by state 

and local governments for transportation and water infrastructure but only about 5 percent of such spending at 

the federal level. 

Spending for Operation and Maintenance. Nearly all 

public spending for operating and maintaining transportation and water infrastructure takes place at the state and 

local level. Whereas state and local governments spent 

$172 billion for the operation and maintenance of infrastructure in 2007, the federal government spent just 

$24 billion. States and localities supplied almost 90 cents 

of every public dollar allocated for operating and maintaining facilities related to transportation and water infrastructure. States and localities have been the primary 

source of that spending for the past 50 years (see Figure 8 

on page 14 and Table A-6 on page 32). However, the federal government does play a large role in funding the 

operation and maintenance of one component of transportation and water infrastructure: the nation’s air traffic 

control system. The federal government spent roughly 

$7 billion (in nominal dollars) to operate that system in 

2007, a figure that represented one-third of total public 

spending on the operation and maintenance of aviation 

infrastructure that year. 

Spending by Type of Infrastructure

Highways claim by far the largest amount of total public 

spending on transportation and water infrastructure and 

have done so for years (see Figure 9 on page 15). In constant dollars, spending on highways reached $155 billion 

in 2007, which represents 43 percent of all public spending for such infrastructure (see Table A-7 on page 34). 

Expenditures for water supply and wastewater treatment 

systems amounted to $101 billion in 2007 (which 

accounted for about 28 percent of total public spending 

for infrastructure), followed fairly closely by spending for 

aviation, mass transit, and rail at $84 billion (which 

accounted for 23 percent of total spending). Public 

spending on water transportation and water resources 

that year was $17 billion (which represents 5 percent of 

total spending).

With the exception of outlays for water transportation 

and water resources, real public spending on most broad 

categories of transportation and water infrastructure has 

tended to increase over time. However, depending on the 

type of infrastructure, capital expenditures have tended to 

fluctuate (see Figure 10 on page 16 and Table A-8 on 

page 36). For example, the construction of the interstate 

highway system caused real capital spending on highways 

to grow rapidly in the late 1950s and early 1960s, reaching a plateau that lasted through the early 1970s. Following a sharp drop-off in the mid-1970s, real spending on 

highways fluctuated for about a decade before resuming a 

pattern of fairly steady growth through the early 2000s, 

when the previously discussed decline occurred.

By 2007, the amounts spent to operate and maintain 

other types of transportation and water infrastructure—

water supply systems and wastewater treatment plants, 

and the facilities and equipment that support aviation, 

mass transit, and rail—had almost reached the levels 

spent to operate and maintain highways (see Figure 11 on 

page 17 and Table A-9 on page 38). Expenditures for 

water transportation and water resources are the exception: Public spending for the operation and maintenance 

14. Federal grants typically take the form of payments that reimburse 

state and local governments for certain expenses they incur. Federal credit subsidies result under the following circumstances: 

when the government makes loans at rates of interest that do not 

sufficiently compensate for the default risk posed by borrowers, or 

when the government incurs financial liability by guaranteeing the 

loans of borrowers who might default. Credit subsidies are calculated under the Federal Credit Reform Act of 1990 (FCRA), 

which requires that when federal loan or loan-guarantee programs 

are established or modified, funds must be appropriated to cover 

the credit subsidy that the government provides through those 

loans and credit guarantees (P.L. 101-508; 104 Stat. 1388-613). 

FCRA defines the subsidy amount—which counts as a federal 

outlay—as the present discounted value of expected net outlays 

from the federal government. The present discounted value is a 

single number that expresses a flow of current and future income 

(or payments) in terms of an equivalent lump sum received (or 

paid) today. The net present value depends on future cash flows 

and the interest rates used to translate each future cash flow into 

current dollars. The interest rates used to estimate a federal credit 

subsidy are specified by the Office of Management and Budget as 

the interest on a U.S. Treasury security with a payoff date that corresponds to the date of an expected future outlay. Those Treasury 

interest rates do not reflect the cost of risk associated with infrastructure investments that private investors would require compensation to bear. Hence, the subsidy recorded in the budget 

under FCRA is less than the full economic cost of federal credit 

assistance. 
12 PUBLIC SPENDING ON TRANSPORTATION AND WATER INFRASTRUCTURE

CBO

Figure 6.

Total Public Spending for Transportation and Water Infrastructure: 

Expenditures for Capital and Related Operation and Maintenance, 1956 to 2007

(Billions of 2009 dollars)

Source: Congressional Budget Office.

Notes: Total public spending is the sum of expenditures by the federal government and by state and local governments.

For the purposes of this analysis, the phrase “transportation and water infrastructure” encompasses the facilities and systems that 

support transportation, provide water resources, supply drinking water, and treat wastewater. 

Capital spending includes the purchase, construction, rehabilitation, or improvement of physical assets, such as land, facilities, and 

equipment. The remaining portion of public expenditures consists of noncapital outlays—primarily for the operation and maintenance 

of physical assets. When calculating spending for operation and maintenance, CBO also includes spending on investment in intangible 

assets (for instance, for research and development), as well as expenditures for administrative activities and public outreach (such as 

educational and safety programs).

Spending expressed in constant dollars has been adjusted to reflect the effects of inflation between the year the spending occurred 

and a base year, which in this study is 2009.

of those forms of infrastructure has been flat, on balance, 

over the entire 1956–2007 period. However, since 1991, 

the trend in public spending for water resources has been 

difficult to interpret from government statistics because, 

from that year onward, state and local governments have 

included data on their spending for that infrastructure in 

a broader category of natural resources that encompasses 

activities not considered in this study to be related to 

infrastructure. Consequently, spending by states and 

localities on water resources is not reported here. 

The Role of Government in Funding 

Transportation and Water 

Infrastructure

In the United States, transportation and water infrastructure is provided primarily by the public sector and paid 

for by taxpayers and users. Although such infrastructure 

projects may be built or operated and maintained by 

private firms on behalf of the public sector, the federal 

government and state and local governments typically 

determine which projects to undertake and how much to 

spend on them. 

The public sector acts as a principal provider of transportation and water infrastructure for several reasons. First, 

such infrastructure and the services associated with it display, at least to some degree, important characteristics of 

public goods: Specifically, it can be difficult and costly to 

exclude consumers from using that infrastructure, or to 

charge them for using it, once it is in place; and its use by 

one consumer may not alter the benefits it can provide to 

another consumer. For example, although toll roads have 

been in existence on a limited basis for years, controlling 

access to, and charging for the use of, highways and roads 

generally has been challenging. (Such obstacles may 

Federal

1956 1959 1962 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007

0

50

100

150

200

Capital

Operation and Maintenance
PUBLIC SPENDING ON TRANSPORTATION AND WATER INFRASTRUCTURE 13

CBO

Figure 7.

Public Spending for Transportation and Water Infrastructure Capital, by 

Level of Government, 1956 to 2007

(Billions of 2009 dollars)

Source: Congressional Budget Office.

Notes: For the purposes of this analysis, the phrase “transportation and water infrastructure” encompasses the facilities and systems 

that support transportation, provide water resources, supply drinking water, and treat wastewater.

Capital spending includes the purchase, construction, rehabilitation, or improvement of physical assets, such as land, facilities, and 

equipment.

Spending expressed in constant dollars has been adjusted to reflect the effects of inflation between the year the spending occurred 

and a base year, which in this study is 2009.

diminish in the future, however, as technological 

advances allow tolls to be used on a more widespread 

basis to pay for highways and roads.) Similarly, dams and 

other natural resource projects can provide various benefits, such as flood control and recreation, to a wide range 

of consumers, making it hard to know whom to charge, 

and how much, for those services. Moreover, where those 

services can be provided to an additional consumer at 

no extra cost—an additional home in an area protected 

by a dam, for example—there is a rationale for charging 

nothing at all.

Second, even if it was possible to completely control 

access to infrastructure and to charge individuals a fee 

commensurate with the benefits they obtain from using 

such services, the existence of benefits (or costs) that 

extended beyond the direct use of infrastructure could 

provide a rationale for the government to provide or 

regulate that infrastructure. An example of the broad 

social benefits that might warrant the public sector’s 

funding of infrastructure is the benefit, from a publichealth perspective, of having widespread access to potable 

water, which water supply systems and wastewater treatment plants make possible.

Finally, reinforcing the rationale for public provision is 

the fact that transportation and water infrastructure often 

constitutes what is known as a natural monopoly: Building such infrastructure imposes high up-front costs but 

requires low incremental costs to operate and maintain, 

making it economically feasible for only one entity to 

undertake such projects. As a consequence, public ownership—or at least public oversight—could be necessary to 

maintain the supply of such services at or near an economically efficient level and to keep the price no higher 

than what is required to cover the cost of supplying the 

services. By contrast, a private firm in such a position 

would be expected to try to maximize profits by restricting supply and raising prices. 

Those reasons for public provision leave open two questions: How much infrastructure should the public sector 

provide? And, of that infrastructure, how much should 

the federal government provide?

1956 1959 1962 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007

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40

60

80

100

120

State and Local

Federal
14 PUBLIC SPENDING ON TRANSPORTATION AND WATER INFRASTRUCTURE

CBO

Figure 8.

Public Spending for the Operation and Maintenance of Transportation and 

Water Infrastructure, by Level of Government, 1956 to 2007

(Billions of 2009 dollars)

Source: Congressional Budget Office.

Notes: For the purposes of this analysis, the phrase “transportation and water infrastructure” encompasses the facilities and systems that 

support transportation, provide water resources, supply drinking water, and treat wastewater. 

When calculating spending for operation and maintenance, which pertains primarily to physical assets, CBO also includes spending on 

investment in intangible assets (for instance, for research and development), as well as expenditures for administrative activities and 

public outreach (such as educational and safety programs).

Spending expressed in constant dollars has been adjusted to reflect the effects of inflation between the year the spending occurred 

and a base year, which in this study is 2009.

Deciding How Much the Public Sector Should Spend

Deciding how much the public sector should spend on 

infrastructure involves assessing the benefits and costs to 

society of that spending, as well as the distribution of 

those costs and benefits. Some benefits may be observable 

and measurable in indicators such as private-sector 

productivity or gross domestic product; other benefits 

may be difficult or impossible to measure. Moreover, 

concerns about equitable distribution may lead policymakers to pursue the goal of providing all citizens access 

to certain types of infrastructure—for example, air transportation services in small communities. (In addition, 

infrastructure spending can boost demand for goods and 

services during an economic downturn, helping mitigate 

temporary losses in output and employment; see Box 2 

on page 18.)

The Effect of Spending on Productivity and Output. Public investment in infrastructure can increase economic 

output by raising the stock of capital in the economy, 

thereby increasing the productivity of labor. Increasing 

the amount of transportation infrastructure, for example, 

makes it easier to get materials and labor to production 

facilities and finished goods to consumers. Consequently, 

workers can produce and deliver more in a given time 

and at a given transport cost. A more productive national 

economy results in more goods and services for citizens 

and more resources for further investment and continued 

growth. 

CBO’s review of the literature on the returns provided by 

infrastructure spending supports two main conclusions. 

First, in the United States, investment in public capital 

projects generally yields returns that are positive; the estimated returns, however, are much smaller than the 

returns reported in some previous research. Second, there 

is significant variation in the average return across different periods of time and in returns across individual projects at a given point in time.

1956 1959 1962 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007

0

50

100

150

200

Federal

State and Local
PUBLIC SPENDING ON TRANSPORTATION AND WATER INFRASTRUCTURE 15

CBO

Figure 9.

Total Public Spending for Transportation and Water Infrastructure, by 

Type of Infrastructure, 1956 to 2007

(Billions of 2009 dollars)

Source: Congressional Budget Office.

Notes: Total public spending is the sum of expenditures by the federal government and by state and local governments.

For the purposes of this analysis, the phrase “transportation and water infrastructure” encompasses the facilities and systems that 

support transportation, provide water resources, supply drinking water, and treat wastewater.

Spending expressed in constant dollars has been adjusted to reflect the effects of inflation between the year the spending occurred 

and a base year, which in this study is 2009.

Data on public spending for water transportation and water resources after 1990 do not include expenditures by states and localities 

on water resources.

For example, the payoff from investing in highways 

appears to have fallen significantly over time. According 

to data spanning 1953 to 1989, construction of the interstate highway system between 1953 and 1973 made vehicle-intensive industries in particular more productive; 

however, the capital spending that took place after that 

system was largely completed in 1973 seems to have had 

little further effect on productivity.15

Economically Justifiable Investment in Infrastructure. In 

research that assesses the impact of public spending on 

infrastructure, analysts typically use one of two criteria to 

determine the desirability of providing additional public 

funding for such purposes. Some analyses emphasize the 

technical features of the infrastructure in question—say, 

the thickness of highway pavement, the load-carrying 

capacity of bridges, or the purity of drinking water—and 

whether those features meet a desired engineering or 

public-health standard. Other studies take a more economically oriented approach and attempt to assess 

whether the value of any resulting benefits, when quantified in dollars, would at least match the additional expenditures required. Those benefits would be measured in 

terms of the value of improved infrastructure, such as 

reduced congestion or the public health benefits that 

result from widespread access to potable water. 

In a review in 2008 of studies that assess infrastructure 

spending in the United States, CBO evaluated estimates 

from the Federal Highway Administration (FHWA) and 

other public and private organizations. Those estimates 

Federal

1956 1959 1962 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007

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50

100

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200

Highways

Aviation, Mass Transit, and Rail

Water Supply and Wastewater Treatment

Water Transportation and Water Resources

15. See John G. Fernald, “Roads to Prosperity,” American Economic 

Review, vol. 89, no. 3 (June 1999), pp. 619–638.
16 PUBLIC SPENDING ON TRANSPORTATION AND WATER INFRASTRUCTURE

CBO

Figure 10.

Total Public Spending for Transportation and Water Infrastructure Capital, by 

Type of Infrastructure, 1956 to 2007

(Billions of 2009 dollars)

Source: Congressional Budget Office.

Notes: Total public spending is the sum of expenditures by the federal government and by state and local governments.

For the purposes of this analysis, the phrase “transportation and water infrastructure” encompasses the facilities and systems that 

support transportation, provide water resources, supply drinking water, and treat wastewater.

Capital spending includes the purchase, construction, rehabilitation, or improvement of physical assets, such as land, facilities, and 

equipment.

Spending expressed in constant dollars has been adjusted to reflect the effects of inflation between the year the spending occurred 

and a base year, which in this study is 2009.

Data on public spending for water transportation and water resources after 1990 do not include expenditures by states and localities 

on water resources.

indicate that tens of billions of dollars of additional 

spending per year on transportation infrastructure would 

be required to maintain current levels of service. Moreover, an even larger amount of spending could be justified 

on a cost–benefit basis, particularly for highways, to 

expand capacity and improve performance. (Performance 

would be gauged, for instance, by the effects of congestion on travel time.) For example, the FHWA estimated 

that, without significant changes in the way highways are 

funded, it would cost $126 billion in constant dollars 

each year to maintain performance—$33 billion more 

than the $93 billion spent in 2006. Further, the FHWA 

estimated that the amount of public spending that could 

be justified on the basis of comparing costs and benefits 

would be about $208 billion in constant dollars, or more 

than double the amount spent in 2006. Similarly, CBO 

analyzed investment in water supply and wastewater 

treatment infrastructure on the basis of estimates from 

the Environmental Protection Agency (EPA) and other 

sources. CBO found that, in constant dollars, roughly 

$36 billion to $60 billion of capital expenditures would 

be needed annually between 2000 and 2019 to maintain 

current service standards and allow some modest 

improvements to meet current or future regulations 

imposed by the EPA. By comparison, actual public 

investment in water utilities and water supply and wastewater treatment systems in 2007 was about $39 billion in 

constant dollars.16

Federal

1956 1959 1962 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007

0

20

40

60

80

100

120

Highways

Aviation, Mass Transit, and Rail

Water Transportation and Water Resources Water Supply and Wastewater Treatment

16. See Congressional Budget Office, Future Investment in Drinking 

Water and Wastewater Infrastructure (November 2002). CBO 

has adjusted those estimates for inflation using price indexes 

published by the Bureau of Economic Analysis for state and local 

investment in new water and new sewer structures. See Bureau 

of Economic Analysis, National Economic Accounts, Section 5: 

Saving and Investment Tables, 5.8.4A and 5.8.4B, “Price Indexes 

for Gross Government Fixed Investment by Type,” available at 

www.bea.gov/national/nipaweb/SelectTable.asp?Selected=N#S5. 
PUBLIC SPENDING ON TRANSPORTATION AND WATER INFRASTRUCTURE 17

CBO

Figure 11.

Total Public Spending for the Operation and Maintenance of Transportation and 

Water Infrastructure, by Type of Infrastructure, 1956 to 2007

(Billions of 2009 dollars)

Source: Congressional Budget Office.

Notes: Total public spending is the sum of expenditures by the federal government and by state and local governments.

For the purposes of this analysis, the phrase “transportation and water infrastructure” encompasses the facilities and systems that 

support transportation, provide water resources, supply drinking water, and treat wastewater.

When calculating spending for operation and maintenance, which pertains primarily to physical assets, CBO also includes spending on 

investment in intangible assets (for instance, for research and development), as well as expenditures for administrative activities and 

public outreach (such as educational and safety programs). 

Spending expressed in constant dollars has been adjusted to reflect the effects of inflation between the year the spending occurred 

and a base year, which in this study is 2009.

Data on public spending for water transportation and water resources after 1990 do not include expenditures by states and localities 

on water resources.

The literature on economic returns on infrastructure 

spending implies that the ratio of benefits to costs for 

economically justifiable projects varies widely from project to project. For example, the benefits arising from 

some projects would probably greatly exceed their costs, 

whereas the benefits from others would probably just 

barely do so (and might not exceed the benefits available 

from other types of federal or private spending). Carefully 

ranking and funding projects so that only those with the 

highest net benefits were implemented could yield a large 

share of the total possible benefits at a fraction of the 

cost.17

In addition, the estimates of economically justifiable 

spending would be considerably lower if the amount of 

infrastructure provided accounted for its economic cost, 

which could be accomplished by charging for its use 

when that was feasible. For example, the Federal Highway Administration has estimated that widespread use of 

congestion pricing—which would result in motorists’ 

paying higher fees to drive on a given road during peak 

hours and lower fees during off-peak hours—would 

reduce by almost $41 billion and $52 billion, respectively, previous estimates of the annual investment 

required to maintain services at current levels and to 

undertake all economically justifiable investments. That 

is because some motorists would respond to the higher 

prices for accessing a road during peak travel periods 

by driving when it is less crowded (and travel is cheaper), 

by finding alternative routes, or by switching to public 

transit. A similar argument applies to the use of airspace

Federal

1956 1959 1962 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007

0

20

40

60

80

100

120

Highways

Aviation, Mass Transit, and Rail

Water Supply and Wastewater Treatment

Water Transportation and Water Resources

17. See Congressional Budget Office, Issues and Options in Infrastructure Investment (May 2008). For related discussions, see Congressional Budget Office, The Economic Effects of Federal Spending on 

Infrastructure and Other Investments (June 1998) and How Federal 

Spending for Infrastructure and Other Public Investments Affects the 

Economy (July 1991). 
18 PUBLIC SPENDING ON TRANSPORTATION AND WATER INFRASTRUCTURE

CBO

and landing slots at major airports and to other types of 

infrastructure. 18

Several other factors should also be considered when 

interpreting findings about economically justifiable 

investment in infrastructure. First, assessing the amount 

of capital spending needed to maintain the performance 

of established infrastructure is easier than estimating the 

amount of spending necessary to expand and improve 

those facilities and determining whether that spending is 

warranted. Most estimates pertaining to the latter issue 

are approximations made on the basis of analyses of broad 

samples of generic projects rather than detailed analyses 

of individual projects. Moreover, such estimates are often 

quite sensitive to various assumptions. For example, the 

value of future benefits must be adjusted with an appropriate discount rate, which represents the cost of elapsed 

time between an investment and the subsequent benefits 

received from it, as well as the uncertainty of receiving 

benefits deferred to the future; a range of parameters 

could arguably be chosen as the discount rate. 

A second consideration is that analyses generating 

estimates of economically justifiable infrastructure investment typically make no allowance for the opportunity 

costs associated with public spending, either in terms of 

the inefficiency those expenditures could introduce in 

private-sector economic outcomes or in terms of the 

benefits of using those same funds for other types of public spending. When taxes on income are used to fund 

public spending for any purpose, consumers’ decisions 

about how much to work may be distorted because taxes 

on income can reduce the incentive to work. Similarly, 

Box 2.

The Short-Run Effects of Infrastructure Spending on 

Output and Employment

Infrastructure spending involves direct purchases of 

goods and services and the hiring of workers, which, 

in some circumstances, can increase total output and 

employment in the economy. Spending by the federal 

government is more likely to contribute to higher 

output and employment when productive resources 

in the economy are idle. Under those conditions, 

public funding for infrastructure projects can lead to 

the hiring of otherwise unemployed workers who, as 

a result of the income they receive, create demand for 

additional goods and services. In contrast, a substantial increase in public spending that occurs when the 

use of labor and other resources is at a high level will 

tend to bid up the cost of labor and drive up interest 

rates. In that scenario, government-funded projects 

would crowd out private-sector purchases, offsetting 

some or all of the direct effect of higher government 

spending on output and employment. 

The timing of federal outlays in relation to periods of 

economic weakness is therefore an important determinant of the effects such outlays will have on total 

output and employment. Once funding has become 

available, infrastructure outlays are usually made over 

the course of the following several years. Some projects, such as highway repair and resurfacing, can be 

implemented relatively quickly. However, many public infrastructure projects require coordination among 

different levels of government and the private sector 

and, as a result, take longer to implement. For 

instance, large-scale construction projects generally 

require years of planning and preparation; examples 

include building new transportation infrastructure 

that requires establishing rights-of-way and developing and implementing alternative energy sources.1

1. For further discussion see Congressional Budget Office, 

Policies for Increasing Economic Growth and Employment in 

2010 and 2011 (January 2010).

18. For a comprehensive discussion of the benefits and challenges 

of congestion pricing, including options for its design and implementation for highways, see Congressional Budget Office, Using 

Pricing to Reduce Traffic Congestion (March 2009). Examples of 

alternative pricing regimens for other types of infrastructure 

are provided in the Economic Report of the President (2008), 

“Chapter 6: The Nation’s Infrastructure,” pp. 137–162.
PUBLIC SPENDING ON TRANSPORTATION AND WATER INFRASTRUCTURE 19

CBO

when the government raises revenues through borrowing, 

it can crowd out some private-sector investment and 

thereby reduce economic growth. The benefits of the 

government’s investments in infrastructure (and spending 

in other areas) should be evaluated in light of those 

potential costs. In addition, the government might 

undertake other activities that would have equal, or 

higher, payoffs. Thus, the returns from spending on 

infrastructure should be weighed against the benefits forgone from not spending on other things.

A third consideration when evaluating estimates of economically justifiable infrastructure investment is the 

degree to which those findings take into account potential indirect effects of providing that infrastructure. For 

example, although certain investments in highways and 

roads might appear economically justifiable because they 

lower the cost of transporting passengers and products by 

more than those highways and roads cost to build and 

maintain, several developments could combine to diminish those net benefits, at least over time. When additional 

highways and roads are supplied, traffic might simply 

increase; as a result, growing congestion could eventually 

counteract the initial gains in travel time resulting from 

the new construction. Similarly, encouraging more driving by providing more highways and roads could lead to 

greater vehicle emissions of air pollutants such as carbon 

dioxide, a greenhouse gas that has been linked to global 

warming. Many studies find that global warming could 

have wide-ranging effects on the environment, which 

could impose significant costs on the economy and, more 

broadly, on society.19

Determining the Role of the Federal Government 

and of State and Local Governments 

In terms of economic efficiency, whether the federal 

government or state and local governments should fund 

certain infrastructure projects depends upon whether that 

funding benefits the nation as a whole or particular states 

and localities. If those who benefit from a project do not 

bear its costs, too large a project (or too many projects) 

might be undertaken or too many infrastructure services 

consumed relative to the resources used to provide the 

project or services. To avoid that problem, the federal 

government could choose to fund a project undertaken 

by a particular state or locality only if that funding was 

expected to generate benefits for taxpayers nationwide. 

Under that scenario, projects that produced benefits only 

for the citizens of a given state or locality would be 

funded at those levels of government. Notwithstanding 

that argument, the federal government might provide 

funding for infrastructure that offered only local benefits 

as a way to address other policy goals, such as guaranteeing that all citizens have equal access to a certain type of 

facility. 

Even if the distinction between the federal government’s 

role in funding infrastructure and that of states and localities seems fairly clear in principle, determining how 

broadly a project provides benefits can be challenging in 

practice. Whereas it is reasonable to expect that almost all 

of the benefits resulting from public expenditures on city 

streets would accrue to the communities served by such 

infrastructure, the benefits arising from investment in 

interstate highways could be less locality based and, 

instead, be distributed regionally or nationally. For 

example, a highway or airport provides services not just 

to those who live nearby, but also to those in transit to 

other places. Consequently, it can be difficult to determine how much of the benefit from highways and roads 

accrues to local drivers and how much accrues to other 

motorists.

The challenge of deciding what constitutes an economically efficient level of federal funding for infrastructure 

that offers a mix of local and national benefits is also 

reflected in the difficulty of determining how much federal funding would produce benefits that accrued at the 

national level. Ideally, the amount of federal support 

would be tailored to specific projects and reflect the 

desirability of making those investments from a national 

perspective. However, the federal share of funding for 

many infrastructure projects usually does not vary among 

individual projects. For example, states have broad flexibility in deciding how to use the grants they receive under 

the federal highway program. As long as those highway 

projects qualify for federal funding, and as long as state 

governments pay for a portion—typically 20 percent—

of the costs, states can decide which projects to carry out 

and how to do so.

Research has shown that, for highways that are potentially eligible for federal grants, the share of total spending borne by state and local governments is considerably 

larger than the 20 percent match required for most 

19. See Congressional Budget Office, Potential Impacts of Climate 

Change in the United States (May 2009).
20 PUBLIC SPENDING ON TRANSPORTATION AND WATER INFRASTRUCTURE

CBO

projects.20 That pattern of spending, as well as additional 

analysis of highway spending by the respective levels of 

government over time, suggests that federal spending on 

highways may have displaced some funding that states 

and localities (which receive some financial assistance 

for highway projects from their respective state governments) would have provided in the absence of federal 

involvement. Effectively, although the 80 percent contribution by the federal government could be required to 

induce state and local spending on some projects that 

generate benefits at the national level, in general, that 

contribution could be higher than necessary to foster 

recent levels of public spending on highways. Raising 

the matching rate required of state governments above 

20 percent would reduce the ability of state and local governments to substitute federal grants for their own funding and thereby divert to other uses some expenditures 

they otherwise would have made on highways.

The amount of funding that the federal government 

provides for infrastructure depends not only on matching 

grants but also on the value of tax preferences provided 

to states and localities in the form of tax-exempt and 

tax-credit bonds (see the discussion in Box 1 on page 8). 

Those tax preferences reduce the financing costs that state 

and local governments incur when they invest in 

infrastructure. The amount that those governments 

receive depends on the types of tax-preferred bonds the 

Congress allows for specific purposes and on the amount 

of the subsidy provided by those bonds. In particular, the 

amount of subsidy that state and local borrowers receive 

by issuing tax-exempt bonds is largely determined indirectly by the federal tax code. (The degree of progressivity 

of the federal income tax is an important determinant of 

the demand for those bonds and, consequently, the interest rates that state and local borrowers must pay.) The 

effectiveness of federal support for infrastructure could 

be increased by substituting tax-exempt bonds with taxcredit bonds. Such a policy change would allow the 

amount of federal subsidy to be determined independently of other federal policy decisions and deliver 

subsidies of any amount in a more economically 

efficient manner than would tax-exempt bonds. 

20. For a more detailed discussion of the role of federal grants in state 

and local highway spending, and for additional analysis that supports this conclusion, see Government Accountability Office, 

Federal-Aid Highways: Trends, Effects on State Spending, and 

Options for Future Program Design, GAO-04-802 (August 2004). 

Another factor that undermines the efficiency of federal funding is 

the formulaic approach commonly used to divide federal resources 

among the states, which can be an obstacle to the funding of projects with the best benefit–cost ratios.
APPENDIX

CBO

A

Detailed Data on Spending for 

Transportation and Water Infrastructure

The tables in this appendix provide the amounts 

spent annually for transportation and water infrastructure 

and serve as the basis for the figures that appear in the 

text. In addition to the tables in Appendix A, a Web 

supplement to this paper provides greater detail on 

spending. 
22 PUBLIC SPENDING ON TRANSPORTATION AND WATER INFRASTRUCTURE

CBO

Table A-1. 

Total Public Spending for Transportation and Water Infrastructure, 1956 to 2007

Continued

Billions of 2009 Dollars Share of GDP 

1956 122.8 2.6

1957 128.9 2.8

1958 135.9 2.9

1959 153.2 3.1

1960 153.8 3.0

1961 163.3 3.1

1962 166.4 3.0

1963 175.3 3.1

1964 179.3 3.0

1965 185.5 2.9

1966 189.9 2.8

1967 193.1 2.8

1968 193.7 2.8

1969 196.4 2.7

1970 194.4 2.8

1971 201.8 2.9

1972 205.2 2.8

1973 199.7 2.7

1974 190.6 2.6

1975 198.9 2.8

1976 200.5 2.8

1977 203.5 2.7

1978 210.3 2.6

1979 226.7 2.7

1980 233.8 2.8

1981 228.3 2.7

1982 214.3 2.6

1983 218.3 2.6

1984 227.5 2.5

1985 243.0 2.5

1986 256.0 2.6

1987 264.2 2.6

1988 273.8 2.6

1989 281.3 2.5
APPENDIX A PUBLIC SPENDING ON TRANSPORTATION AND WATER INFRASTRUCTURE 23

CBO

Table A-1. Continued

Total Public Spending for Transportation and Water Infrastructure, 1956 to 2007

Source: Congressional Budget Office.

Notes: Total public spending is the sum of expenditures by the federal government and by state and local governments.

For the purposes of this analysis, the phrase “transportation and water infrastructure” encompasses the facilities and systems that 

support transportation, provide water resources, supply drinking water, and treat wastewater.

Spending expressed in constant dollars has been adjusted to reflect the effects of inflation between the year the spending occurred 

and a base year, which in this study is 2009.

Data on the federal government’s outlays for transportation and water infrastructure are available through fiscal year 2009 and reflect 

spending that year under the American Recovery and Reinvestment Act. In contrast, the most recent data on state and local spending 

that span a 12-month period matching the federal fiscal year (October 1 through September 30) are from 2007. Therefore, to be able 

to express annual state and local spending for infrastructure on a basis that is consistent with federal fiscal years, CBO reports total 

public spending for infrastructure—the sum of federal, state, and local expenditures—through 2007. 

GDP = gross domestic product.

Billions of 2009 Dollars Share of GDP 

1990 289.4 2.5

1991 287.9 2.5

1992 295.2 2.5

1993 298.0 2.4

1994 308.1 2.5

1995 311.9 2.4

1996 312.2 2.4

1997 318.7 2.4

1998 326.2 2.3

1999 337.7 2.3

2000 345.6 2.3

2001 361.1 2.4

2002 375.4 2.5

2003 379.6 2.5

2004 370.9 2.4

2005 361.1 2.4

2006 358.7 2.4

2007 356.4 2.4
24 PUBLIC SPENDING ON TRANSPORTATION AND WATER INFRASTRUCTURE

CBO

Table A-2. 

Total Public Spending for Transportation and Water Infrastructure, by 

Level of Government, 1956 to 2007

Continued

Total

Share of Billions of Share of Public 

Total 2009 Dollars Total Spending

1956 19.0 0.15 103.8 0.85 122.8

1957 21.6 0.17 107.3 0.83 128.9

1958 27.4 0.20 108.5 0.80 135.9

1959 42.6 0.28 110.6 0.72 153.2

1960 47.7 0.31 106.2 0.69 153.8

1961 47.5 0.29 115.8 0.71 163.3

1962 48.6 0.29 117.7 0.71 166.4

1963 51.6 0.29 123.7 0.71 175.3

1964 57.1 0.32 122.2 0.68 179.3

1965 60.8 0.33 124.7 0.67 185.5

1966 59.8 0.31 130.1 0.69 189.9

1967 58.9 0.31 134.1 0.69 193.1

1968 59.2 0.31 134.5 0.69 193.7

1969 57.2 0.29 139.3 0.71 196.4

1970 55.6 0.29 138.8 0.71 194.4

1971 60.2 0.30 141.6 0.70 201.8

1972 59.2 0.29 146.0 0.71 205.2

1973 61.1 0.31 138.6 0.69 199.7

1974 59.4 0.31 131.2 0.69 190.6

1975 61.9 0.31 137.0 0.69 198.9

1976 71.8 0.36 128.8 0.64 200.5

1977 78.4 0.39 125.1 0.61 203.5

1978 77.4 0.37 133.0 0.63 210.3

1979 82.4 0.36 144.3 0.64 226.7

1980 88.5 0.38 145.3 0.62 233.8

1981 82.9 0.36 145.5 0.64 228.3

1982 68.7 0.32 145.7 0.68 214.3

1983 65.6 0.30 152.7 0.70 218.3

1984 70.5 0.31 156.9 0.69 227.5

1985 75.5 0.31 167.5 0.69 243.0

1986 77.1 0.30 178.9 0.70 256.0

1987 68.4 0.26 195.8 0.74 264.2

1988 70.2 0.26 203.6 0.74 273.8

1989 69.6 0.25 211.7 0.75 281.3

2009 Dollars

Federal State and Local 

Billions of 
APPENDIX A PUBLIC SPENDING ON TRANSPORTATION AND WATER INFRASTRUCTURE 25

CBO

Table A-2. Continued

Total Public Spending for Transportation and Water Infrastructure, by 

Level of Government, 1956 to 2007

Source: Congressional Budget Office.

Notes: Total public spending is the sum of expenditures by the federal government and by state and local governments.

For the purposes of this analysis, the phrase “transportation and water infrastructure” encompasses the facilities and systems that 

support transportation, provide water resources, supply drinking water, and treat wastewater.

Spending expressed in constant dollars has been adjusted to reflect the effects of inflation between the year the spending occurred 

and a base year, which in this study is 2009.

Data on the federal government’s outlays for transportation and water infrastructure are available through fiscal year 2009 and reflect 

spending that year under the American Recovery and Reinvestment Act. In contrast, the most recent data on state and local spending 

that span a 12-month period matching the federal fiscal year (October 1 through September 30) are from 2007. Therefore, to be able 

to express annual state and local spending for infrastructure on a basis that is consistent with federal fiscal years, CBO reports total 

public spending for infrastructure—the sum of federal, state, and local expenditures—through 2007. 

Total

Share of Billions of Share of Public

Total 2009 Dollars Total Spending

1990 71.7 0.25 217.7 0.75 289.4

1991 72.7 0.25 215.1 0.75 287.9

1992 76.6 0.26 218.6 0.74 295.2

1993 77.3 0.26 220.7 0.74 298.0

1994 80.7 0.26 227.3 0.74 308.1

1995 80.4 0.26 231.5 0.74 311.9

1996 78.0 0.25 234.2 0.75 312.2

1997 77.6 0.24 241.1 0.76 318.7

1998 79.4 0.24 246.8 0.76 326.2

1999 82.8 0.25 254.9 0.75 337.7

2000 86.1 0.25 259.5 0.75 345.6

2001 97.2 0.27 263.9 0.73 361.1

2002 102.1 0.27 273.3 0.73 375.4

2003 99.0 0.26 280.6 0.74 379.6

2004 93.4 0.25 277.5 0.75 370.9

2005 90.3 0.25 270.8 0.75 361.1

2006 87.4 0.24 271.3 0.76 358.7

2007 81.7 0.23 274.7 0.77 356.4

2009 Dollars

Billions of 

Federal State and Local 
26 PUBLIC SPENDING ON TRANSPORTATION AND WATER INFRASTRUCTURE

CBO

Table A-3. 

Total Public Spending for Transportation and Water Infrastructure: 

Expenditures for Capital and Related Operation and Maintenance, 1956 to 2007

Continued

Total 

Share of Share of Public

 Total Total Spending

1956 70.8 0.58 52.0 0.42 122.8

1957 73.3 0.57 55.7 0.43 128.9

1958 80.3 0.59 55.6 0.41 135.9

1959 92.8 0.61 60.5 0.39 153.2

1960 91.8 0.60 62.0 0.40 153.8

1961 98.3 0.60 65.0 0.40 163.3

1962 102.5 0.62 63.9 0.38 166.4

1963 107.8 0.61 67.5 0.39 175.3

1964 111.5 0.62 67.8 0.38 179.3

1965 115.1 0.62 70.4 0.38 185.5

1966 116.4 0.61 73.5 0.39 189.9

1967 118.5 0.61 74.6 0.39 193.1

1968 117.6 0.61 76.1 0.39 193.7

1969 118.5 0.60 77.9 0.40 196.4

1970 113.2 0.58 81.2 0.42 194.4

1971 116.6 0.58 85.2 0.42 201.8

1972 118.3 0.58 86.9 0.42 205.2

1973 111.1 0.56 88.6 0.44 199.7

1974 100.7 0.53 89.9 0.47 190.6

1975 100.8 0.51 98.2 0.49 198.9

1976 100.6 0.50 99.9 0.50 200.5

1977 97.8 0.48 105.8 0.52 203.5

1978 99.3 0.47 111.1 0.53 210.3

1979 112.3 0.50 114.4 0.50 226.7

1980 116.5 0.50 117.3 0.50 233.8

1981 103.6 0.45 124.7 0.55 228.3

1982 93.2 0.43 121.1 0.57 214.3

1983 94.4 0.43 123.9 0.57 218.3

1984 101.6 0.45 125.9 0.55 227.5

1985 113.5 0.47 129.6 0.53 243.0

1986 121.6 0.47 134.4 0.53 256.0

1987 126.9 0.48 137.3 0.52 264.2

1988 133.3 0.49 140.5 0.51 273.8

1989 136.2 0.48 145.0 0.52 281.3

2009 Dollars

Capital Operation and Maintenance

2009 Dollars

Billions of Billions of
APPENDIX A PUBLIC SPENDING ON TRANSPORTATION AND WATER INFRASTRUCTURE 27

CBO

Table A-3. Continued

Total Public Spending for Transportation and Water Infrastructure: 

Expenditures for Capital and Related Operation and Maintenance, 1956 to 2007

Source: Congressional Budget Office.

Notes: Total public spending is the sum of expenditures by the federal government and by state and local governments.

For the purposes of this analysis, the phrase “transportation and water infrastructure” encompasses the facilities and systems that 

support transportation, provide water resources, supply drinking water, and treat wastewater.

Spending expressed in constant dollars has been adjusted to reflect the effects of inflation between the year the spending occurred 

and a base year, which in this study is 2009.

Capital spending includes the purchase, construction, rehabilitation, or improvement of physical assets, such as land, facilities, and 

equipment. The remaining portion of public expenditures consists of noncapital outlays—primarily for the operation and maintenance 

of physical assets. When calculating spending for operation and maintenance, CBO also includes spending on investment in intangible 

assets (for instance, for research and development), as well as expenditures for administrative activities and public outreach (such as 

educational and safety programs).

Data on the federal government’s outlays for transportation and water infrastructure are available through fiscal year 2009 and reflect 

spending that year under the American Recovery and Reinvestment Act. In contrast, the most recent data on state and local spending 

that span a 12-month period matching the federal fiscal year (October 1 through September 30) are from 2007. Therefore, to be able 

to express annual state and local spending for infrastructure on a basis that is consistent with federal fiscal years, CBO reports total 

public spending for infrastructure—the sum of federal, state, and local expenditures—through 2007.

Total

Share of Share of Public

Total Total Spending

1990 141.0 0.49 148.4 0.51 289.4

1991 143.5 0.50 144.4 0.50 287.9

1992 145.2 0.49 149.9 0.51 295.2

1993 144.8 0.49 153.2 0.51 298.0

1994 147.1 0.48 161.0 0.52 308.1

1995 147.7 0.47 164.3 0.53 311.9

1996 146.4 0.47 165.8 0.53 312.2

1997 148.4 0.47 170.3 0.53 318.7

1998 152.8 0.47 173.4 0.53 326.2

1999 162.2 0.48 175.4 0.52 337.7

2000 168.1 0.49 177.5 0.51 345.6

2001 175.6 0.49 185.5 0.51 361.1

2002 184.7 0.49 190.7 0.51 375.4

2003 188.3 0.50 191.3 0.50 379.6

2004 182.9 0.49 188.1 0.51 370.9

2005 171.3 0.47 189.7 0.53 361.1

2006 167.4 0.47 191.3 0.53 358.7

2007 160.8 0.45 195.5 0.55 356.4

Billions of Billions of 

2009 Dollars 2009 Dollars

Capital Operation and Maintenance
28 PUBLIC SPENDING ON TRANSPORTATION AND WATER INFRASTRUCTURE

CBO

Table A-4. 

Total Public Spending for Transportation and Water Infrastructure Capital, by 

Level of Government, 1956 to 2007

Continued

Billions of Share of Share of 

2009 Dollars Total Total

1956 13.8 0.19 57.0 0.81 70.8

1957 15.7 0.21 57.6 0.79 73.3

1958 22.7 0.28 57.6 0.72 80.3

1959 35.1 0.38 57.6 0.62 92.8

1960 39.6 0.43 52.3 0.57 91.8

1961 38.5 0.39 59.8 0.61 98.3

1962 40.2 0.39 62.2 0.61 102.5

1963 42.6 0.39 65.2 0.61 107.8

1964 47.9 0.43 63.6 0.57 111.5

1965 50.5 0.44 64.5 0.56 115.1

1966 49.4 0.42 67.0 0.58 116.4

1967 48.2 0.41 70.3 0.59 118.5

1968 47.7 0.41 69.9 0.59 117.6

1969 45.2 0.38 73.3 0.62 118.5

1970 42.8 0.38 70.5 0.62 113.2

1971 45.2 0.39 71.4 0.61 116.6

1972 44.6 0.38 73.7 0.62 118.3

1973 45.2 0.41 65.9 0.59 111.1

1974 44.1 0.44 56.6 0.56 100.7

1975 43.6 0.43 57.2 0.57 100.8

1976 51.9 0.52 48.7 0.48 100.6

1977 58.5 0.60 39.3 0.40 97.8

1978 55.7 0.56 43.6 0.44 99.3

1979 61.0 0.54 51.3 0.46 112.3

1980 65.6 0.56 50.8 0.44 116.5

1981 55.2 0.53 48.4 0.47 103.6

1982 48.0 0.51 45.2 0.49 93.2

1983 47.2 0.50 47.2 0.50 94.4

1984 52.3 0.52 49.3 0.48 101.6

1985 57.5 0.51 56.0 0.49 113.5

1986 60.2 0.50 61.4 0.50 121.6

1987 52.0 0.41 74.9 0.59 126.9

1988 53.7 0.40 79.6 0.60 133.3

1989 52.5 0.39 83.8 0.61 136.2

2009 Dollars

Federal State and Local 

Spending

Public

Total

Billions of 
APPENDIX A PUBLIC SPENDING ON TRANSPORTATION AND WATER INFRASTRUCTURE 29

CBO

Table A-4. Continued

Total Public Spending for Transportation and Water Infrastructure Capital, by

Level of Government, 1956 to 2007

Source: Congressional Budget Office.

Notes: Total public spending is the sum of expenditures by the federal government and by state and local governments.

For the purposes of this analysis, the phrase “transportation and water infrastructure” encompasses the facilities and systems that 

support transportation, provide water resources, supply drinking water, and treat wastewater.

Spending expressed in constant dollars has been adjusted to reflect the effects of inflation between the year the spending occurred 

and a base year, which in this study is 2009.

Capital spending includes the purchase, construction, rehabilitation, or improvement of physical assets, such as land, facilities, and 

equipment.

Data on the federal government’s outlays for transportation and water infrastructure are available through fiscal year 2009 and reflect 

spending that year under the American Recovery and Reinvestment Act. In contrast, the most recent data on state and local spending 

that span a 12-month period matching the federal fiscal year (October 1 through September 30) are from 2007. Therefore, to be able 

to express annual state and local spending for infrastructure on a basis that is consistent with federal fiscal years, CBO reports total 

public spending for infrastructure—the sum of federal, state, and local expenditures—through 2007. 

Billions of Share of Share of 

2009 Dollars Total Total

1990 54.9 0.39 86.1 0.61 141.0

1991 55.8 0.39 87.6 0.61 143.5

1992 57.4 0.40 87.8 0.60 145.2

1993 59.1 0.41 85.7 0.59 144.8

1994 60.6 0.41 86.4 0.59 147.1

1995 60.4 0.41 87.3 0.59 147.7

1996 58.5 0.40 87.9 0.60 146.4

1997 57.1 0.38 91.3 0.62 148.4

1998 59.0 0.39 93.8 0.61 152.8

1999 62.8 0.39 99.4 0.61 162.2

2000 66.9 0.40 101.2 0.60 168.1

2001 73.6 0.42 102.0 0.58 175.6

2002 78.3 0.42 106.4 0.58 184.7

2003 75.0 0.40 113.3 0.60 188.3

2004 70.3 0.38 112.6 0.62 182.9

2005 65.9 0.38 105.5 0.62 171.3

2006 64.0 0.38 103.3 0.62 167.4

2007 58.0 0.36 102.8 0.64 160.8

Billions of 

Total

2009 Dollars Spending

Public

Federal State and Local 
30 PUBLIC SPENDING ON TRANSPORTATION AND WATER INFRASTRUCTURE

CBO

Table A-5. 

Total Federal Spending for Transportation and Water Infrastructure Capital: 

Grants and Loan Subsidies and Other Spending, 1956 to 2009

Continued

Total 

Share of Share of Federal

Total Total Spending

1956 8.0 0.58 5.8 0.42 13.8

1957 9.5 0.61 6.2 0.39 15.7

1958 15.2 0.67 7.5 0.33 22.7

1959 26.3 0.75 8.8 0.25 35.1

1960 30.3 0.77 9.3 0.23 39.6

1961 27.7 0.72 10.8 0.28 38.5

1962 28.8 0.71 11.5 0.29 40.2

1963 30.5 0.72 12.1 0.28 42.6

1964 36.0 0.75 11.9 0.25 47.9

1965 38.8 0.77 11.7 0.23 50.5

1966 37.1 0.75 12.2 0.25 49.4

1967 36.1 0.75 12.1 0.25 48.2

1968 36.8 0.77 10.9 0.23 47.7

1969 35.8 0.79 9.4 0.21 45.2

1970 34.6 0.81 8.2 0.19 42.8

1971 35.9 0.79 9.4 0.21 45.2

1972 34.4 0.77 10.2 0.23 44.6

1973 35.0 0.77 10.2 0.23 45.2

1974 34.5 0.78 9.5 0.22 44.1

1975 34.3 0.79 9.3 0.21 43.6

1976 42.8 0.82 9.2 0.18 51.9

1977 46.1 0.79 12.4 0.21 58.5

1978 43.9 0.79 11.7 0.21 55.7

1979 48.8 0.80 12.3 0.20 61.0

1980 53.1 0.81 12.6 0.19 65.6

1981 46.3 0.84 9.0 0.16 55.2

1982 39.5 0.82 8.4 0.18 48.0

1983 39.3 0.83 7.9 0.17 47.2

1984 44.4 0.85 7.9 0.15 52.3

1985 49.6 0.86 7.9 0.14 57.5

1986 52.3 0.87 7.9 0.13 60.2

1987 44.0 0.85 8.0 0.15 52.0

1988 45.0 0.84 8.7 0.16 53.7

1989 43.9 0.84 8.6 0.16 52.5

Grants and Loan Subsidies Other Spending 

2009 Dollars 2009 Dollars

Billions of Billions of 
APPENDIX A PUBLIC SPENDING ON TRANSPORTATION AND WATER INFRASTRUCTURE 31

CBO

Table A-5. Continued

Total Federal Spending on Transportation and Water Infrastructure Capital: 

Grants and Loan Subsidies and Other Spending, 1956 to 2009

Source: Congressional Budget Office.

Notes: For the purposes of this analysis, the phrase “transportation and water infrastructure” encompasses the facilities and systems that 

support transportation, provide water resources, supply drinking water, and treat wastewater.

Spending expressed in constant dollars has been adjusted to reflect the effects of inflation between the year the spending occurred 

and a base year, which in this study is 2009.

Capital spending includes the purchase, construction, rehabilitation, or improvement of physical assets, such as land, facilities, and 

equipment.

Federal grants are typically payments that reimburse state and local governments for expenses they have incurred. Federal credit 

subsidies result when the government makes loans at below-market rates or incurs financial liability by guaranteeing the loans of 

borrowers who might default.

Data on the federal government’s outlays for transportation and water infrastructure are available through fiscal year 2009 and reflect 

spending that year under the American Recovery and Reinvestment Act. In contrast, the most recent data on state and local spending 

that span a 12-month period matching the federal fiscal year (October 1 through September 30) are from 2007. Therefore, to be able 

to express annual state and local spending for infrastructure on a basis that is consistent with federal fiscal years, CBO reports total 

public spending for infrastructure—the sum of federal, state, and local expenditures—through 2007. 

Total 

Share of Share of Federal

Total Total Spending

1990 45.9 0.84 9.0 0.16 54.9

1991 46.4 0.83 9.5 0.17 55.8

1992 47.2 0.82 10.2 0.18 57.4

1993 49.5 0.84 9.6 0.16 59.1

1994 51.2 0.84 9.4 0.16 60.6

1995 50.5 0.84 10.0 0.16 60.4

1996 48.8 0.83 9.7 0.17 58.5

1997 48.2 0.84 8.9 0.16 57.1

1998 49.3 0.84 9.6 0.16 59.0

1999 52.9 0.84 9.9 0.16 62.8

2000 56.1 0.84 10.8 0.16 66.9

2001 60.9 0.83 12.6 0.17 73.6

2002 65.6 0.84 12.7 0.16 78.3

2003 63.7 0.85 11.3 0.15 75.0

2004 60.0 0.85 10.3 0.15 70.3

2005 56.3 0.86 9.5 0.14 65.9

2006 54.5 0.85 9.5 0.15 64.0

2007 49.5 0.85 8.5 0.15 58.0

2008 48.9 0.9 8.4 0.15 57.3

2009 54.7 0.9 9.3 0.14 64.0

Grants and Loan Subsidies Other Spending 

2009 Dollars 2009 Dollars

Billions of Billions of 
32 PUBLIC SPENDING ON TRANSPORTATION AND WATER INFRASTRUCTURE

CBO

Table A-6. 

Total Public Spending for the Operation and Maintenance of Transportation and 

Water Infrastructure, by Level of Government, 1956 to 2007

Continued

Share of Share of 

Total Total

1956 5.2 0.10 46.8 0.90 52.0

1957 5.9 0.11 49.8 0.89 55.7

1958 4.7 0.08 50.9 0.92 55.6

1959 7.5 0.12 52.9 0.88 60.5

1960 8.1 0.13 53.9 0.87 62.0

1961 9.0 0.14 56.1 0.86 65.0

1962 8.4 0.13 55.5 0.87 63.9

1963 9.0 0.13 58.5 0.87 67.5

1964 9.2 0.14 58.6 0.86 67.8

1965 10.2 0.15 60.2 0.85 70.4

1966 10.4 0.14 63.0 0.86 73.5

1967 10.7 0.14 63.8 0.86 74.6

1968 11.5 0.15 64.6 0.85 76.1

1969 12.0 0.15 66.0 0.85 77.9

1970 12.9 0.16 68.3 0.84 81.2

1971 15.0 0.18 70.2 0.82 85.2

1972 14.6 0.17 72.3 0.83 86.9

1973 15.9 0.18 72.7 0.82 88.6

1974 15.3 0.17 74.6 0.83 89.9

1975 18.3 0.19 79.8 0.81 98.2

1976 19.8 0.20 80.1 0.80 99.9

1977 19.9 0.19 85.8 0.81 105.8

1978 21.7 0.20 89.4 0.80 111.1

1979 21.4 0.19 93.1 0.81 114.4

1980 22.9 0.19 94.5 0.81 117.3

1981 27.6 0.22 97.1 0.78 124.7

1982 20.7 0.17 100.4 0.83 121.1

1983 18.4 0.15 105.5 0.85 123.9

1984 18.2 0.14 107.7 0.86 125.9

1985 18.0 0.14 111.5 0.86 129.6

1986 16.9 0.13 117.6 0.87 134.4

1987 16.4 0.12 120.9 0.88 137.3

1988 16.5 0.12 124.0 0.88 140.5

1989 17.1 0.12 127.9 0.88 145.0

Federal State and Local 

2009 Dollars

Billions of Billions of 

Total 

Public

2009 Dollars Spending
APPENDIX A PUBLIC SPENDING ON TRANSPORTATION AND WATER INFRASTRUCTURE 33

CBO

Table A-6. Continued

Total Public Spending for the Operation and Maintenance of Transportation and 

Water Infrastructure, by Level of Government, 1956 to 2007

Source: Congressional Budget Office.

Notes: Total public spending is the sum of expenditures by the federal government and by state and local governments.

For the purposes of this analysis, the phrase “transportation and water infrastructure” encompasses the facilities and systems that 

support transportation, provide water resources, supply drinking water, and treat wastewater.

Spending expressed in constant dollars has been adjusted to reflect the effects of inflation between the year the spending occurred 

and a base year, which in this study is 2009.

When calculating spending for operation and maintenance, which pertains primarily to physical assets, CBO also includes spending on 

investment in intangible assets (for instance, for research and development), as well as expenditures for administrative activities and 

public outreach (such as educational and safety programs).

Data on the federal government’s outlays for transportation and water infrastructure are available through fiscal year 2009 and reflect 

spending that year under the American Recovery and Reinvestment Act. In contrast, the most recent data on state and local spending 

that span a 12-month period matching the federal fiscal year (October 1 through September 30) are from 2007. Therefore, to be able 

to express annual state and local spending for infrastructure on a basis that is consistent with federal fiscal years, CBO reports total 

public spending for infrastructure—the sum of federal, state, and local expenditures—through 2007. 

Share of Share of 

Total Total

1990 16.8 0.11 131.6 0.89 148.4

1991 16.9 0.12 127.5 0.88 144.4

1992 19.2 0.13 130.8 0.87 149.9

1993 18.2 0.12 135.0 0.88 153.2

1994 20.1 0.13 140.9 0.87 161.0

1995 20.0 0.12 144.3 0.88 164.3

1996 19.5 0.12 146.3 0.88 165.8

1997 20.5 0.12 149.8 0.88 170.3

1998 20.4 0.12 153.0 0.88 173.4

1999 20.0 0.11 155.5 0.89 175.4

2000 19.2 0.11 158.3 0.89 177.5

2001 23.6 0.13 161.9 0.87 185.5

2002 23.7 0.12 167.0 0.88 190.7

2003 24.0 0.13 167.3 0.87 191.3

2004 23.1 0.12 165.0 0.88 188.1

2005 24.4 0.13 165.3 0.87 189.7

2006 23.4 0.12 167.9 0.88 191.3

2007 23.7 0.12 171.9 0.88 195.5

Federal State and Local 

Public

Spending

Total

2009 Dollars 2009 Dollars

Billions of Billions of 
34 PUBLIC SPENDING ON TRANSPORTATION AND WATER INFRASTRUCTURE

CBO

Table A-7. 

Total Public Spending for Transportation and Water Infrastructure, by 

Type of Infrastructure, 1956 to 2007

(Billions of 2009 dollars)

Continued

1956 77.0 10.3 22.9 12.5 122.8

1957 80.8 10.9 23.5 13.7 128.9

1958 86.5 11.9 23.2 14.3 135.9

1959 96.6 13.8 25.2 17.7 153.2

1960 95.6 15.0 27.2 16.0 153.8

1961 99.8 16.8 28.8 17.9 163.3

1962 103.0 17.2 29.4 16.9 166.4

1963 107.6 17.9 31.4 18.4 175.3

1964 110.2 18.1 32.0 19.0 179.3

1965 112.9 20.1 33.9 18.6 185.5

1966 112.7 19.6 35.7 21.9 189.9

1967 117.1 21.0 32.6 22.3 193.1

1968 116.3 22.4 33.0 22.0 193.7

1969 117.1 24.6 34.4 20.3 196.4

1970 115.1 25.8 35.2 18.3 194.4

1971 116.5 29.0 37.0 19.3 201.8

1972 115.7 30.7 39.5 19.2 205.2

1973 106.2 33.9 40.2 19.4 199.7

1974 98.7 31.8 41.6 18.5 190.6

1975 97.5 36.7 45.5 19.2 198.9

1976 98.4 37.9 46.1 18.1 200.5

1977 94.0 41.8 49.0 18.8 203.5

1978 99.6 42.2 49.4 19.1 210.3

1979 107.9 44.2 53.5 21.1 226.7

1980 108.7 47.8 55.0 22.3 233.8

1981 98.1 53.2 55.9 21.2 228.3

1982 90.9 49.5 54.7 19.3 214.3

1983 93.8 50.0 54.9 19.6 218.3

1984 101.7 52.0 54.3 19.6 227.5

1985 112.8 52.0 57.7 20.5 243.0

1986 118.5 54.0 62.8 20.7 256.0

1987 119.8 55.7 67.4 21.3 264.2

1988 123.3 56.7 69.4 24.4 273.8

1989 126.2 58.4 71.5 25.1 281.3

Highways Wastewater Treatment Transit, and Rail

Aviation, Mass Total Public Water Supply and

Spending

Water Transportation

and Water Resources 
APPENDIX A PUBLIC SPENDING ON TRANSPORTATION AND WATER INFRASTRUCTURE 35

CBO

Table A-7. Continued

Total Public Spending for Transportation and Water Infrastructure, by 

Type of Infrastructure, 1956 to 2007

(Billions of 2009 dollars)

Source: Congressional Budget Office.

Notes: Total public spending is the sum of expenditures by the federal government and by state and local governments.

For the purposes of this analysis, the phrase “transportation and water infrastructure” encompasses the facilities and systems that 

support transportation, provide water resources, supply drinking water, and treat wastewater.

Spending expressed in constant dollars has been adjusted to reflect the effects of inflation between the year the spending occurred 

and a base year, which in this study is 2009.

Data on the federal government’s outlays for transportation and water infrastructure are available through fiscal year 2009 and reflect 

spending that year under the American Recovery and Reinvestment Act. In contrast, the most recent data on state and local spending 

that span a 12-month period matching the federal fiscal year (October 1 through September 30) are from 2007. Therefore, to be able 

to express annual state and local spending for infrastructure on a basis that is consistent with federal fiscal years, CBO reports total 

public spending for infrastructure—the sum of federal, state, and local expenditures—through 2007. 

Data on public spending for water transportation and water resources after 1990 do not include expenditures by states and localities 

on water resources.

1990 128.5 60.9 74.2 25.7 289.4

1991 131.7 65.1 77.0 14.1 287.9

1992 133.3 69.2 78.0 14.7 295.2

1993 135.0 69.6 78.9 14.4 298.0

1994 140.2 74.3 78.7 14.9 308.1

1995 142.6 73.3 81.6 14.5 312.0

1996 141.4 73.3 83.1 14.4 312.2

1997 143.2 76.2 85.4 14.0 318.8

1998 149.6 75.5 85.5 15.6 326.2

1999 155.9 77.5 87.7 16.6 337.7

2000 161.3 80.0 86.8 17.5 345.6

2001 165.4 85.5 87.3 22.8 361.0

2002 171.0 92.1 92.7 19.5 375.4

2003 168.6 95.5 95.0 20.5 379.6

2004 164.7 93.7 95.7 16.8 370.9

2005 160.3 89.3 94.1 17.3 361.0

2006 159.4 85.9 96.3 17.1 358.7

2007 154.5 83.6 101.3 16.9 356.4

Transit, and Rail

Aviation, Mass Water Transportation

Highways

Water Supply and

Wastewater Treatment and Water Resources

Total Public

Spending
36 PUBLIC SPENDING ON TRANSPORTATION AND WATER INFRASTRUCTURE

CBO

Table A-8. 

Total Public Spending for Transportation and Water Infrastructure Capital, by 

Type of Infrastructure, 1956 to 2007

(Billions of 2009 dollars)

Continued

Water Supply and

Wastewater Treatment

1956 48.8 2.3 12.5 7.1 70.8

1957 50.4 2.8 12.6 7.5 73.3

1958 55.2 3.9 12.2 9.0 80.3

1959 64.6 3.9 14.1 10.2 92.8

1960 63.0 4.0 14.9 9.8 91.8

1961 65.5 5.3 15.8 11.6 98.3

1962 69.5 4.6 16.4 12.0 102.5

1963 72.5 4.6 17.4 13.2 107.8

1964 75.5 4.2 18.4 13.5 111.5

1965 77.2 5.0 20.0 12.9 115.1

1966 76.4 4.5 20.9 14.7 116.4

1967 80.2 5.4 17.9 15.0 118.5

1968 79.0 6.3 18.0 14.3 117.6

1969 79.1 8.1 19.0 12.3 118.5

1970 76.1 7.8 19.0 10.4 113.2

1971 76.7 8.2 20.2 11.4 116.6

1972 75.4 9.4 22.0 11.5 118.3

1973 65.9 12.3 22.0 10.9 111.1

1974 58.1 9.4 22.4 10.7 100.7

1975 55.1 9.9 25.1 10.7 100.8

1976 55.7 10.8 24.6 9.5 100.6

1977 50.7 12.2 24.8 10.1 97.8

1978 54.3 11.7 23.8 9.4 99.3

1979 61.9 13.3 26.9 10.2 112.3

1980 63.1 14.5 27.7 11.0 116.5

1981 53.6 12.8 27.2 10.1 103.6

1982 46.2 13.2 24.2 9.7 93.2

1983 47.6 14.0 23.1 9.6 94.4

1984 54.6 15.1 22.0 9.8 101.6

1985 63.8 15.3 24.0 10.3 113.5

1986 67.8 16.3 27.1 10.5 121.6

1987 68.7 17.4 30.1 10.7 126.9

1988 73.3 17.5 31.1 11.4 133.3

1989 75.2 18.4 31.1 11.7 136.2

Spending

Water Transportation 

and Water Resources

Aviation, Mass

Total 

Highways Transit, and Rail

Public
APPENDIX A PUBLIC SPENDING ON TRANSPORTATION AND WATER INFRASTRUCTURE 37

CBO

Table A-8. Continued

Total Public Spending for Transportation and Water Infrastructure Capital, by 

Type of Infrastructure, 1956 to 2007

(Billions of 2009 dollars)

Source: Congressional Budget Office.

Notes: Total public spending is the sum of expenditures by the federal government and by state and local governments.

For the purposes of this analysis, the phrase “transportation and water infrastructure” encompasses the facilities and systems that 

support transportation, provide water resources, supply drinking water, and treat wastewater.

Spending expressed in constant dollars has been adjusted to reflect the effects of inflation between the year the spending occurred 

and a base year, which in this study is 2009.

Capital spending includes the purchase, construction, rehabilitation, or improvement of physical assets, such as land, facilities, and 

equipment.

Data on the federal government’s outlays for transportation and water infrastructure are available through fiscal year 2009 and reflect 

spending that year under the American Recovery and Reinvestment Act. In contrast, the most recent data on state and local spending 

that span a 12-month period matching the federal fiscal year (October 1 through September 30) are from 2007. Therefore, to be able 

to express annual state and local spending for infrastructure on a basis that is consistent with federal fiscal years, CBO reports total 

public spending for infrastructure—the sum of federal, state, and local expenditures—through 2007. 

Data on public spending for water transportation and water resources after 1990 do not include expenditures by states and localities 

on water resources.

Water Supply and

Wastewater Treatment

1990 76.3 20.6 31.9 12.2 141.0

1991 79.2 22.4 33.9 8.0 143.5

1992 79.7 24.6 33.4 7.4 145.2

1993 80.3 25.7 31.6 7.2 144.8

1994 84.1 27.4 28.4 7.2 147.1

1995 85.3 25.9 29.7 6.8 147.7

1996 83.5 25.6 30.2 7.0 146.4

1997 83.8 27.0 31.4 6.2 148.4

1998 88.7 27.3 30.1 6.7 152.8

1999 93.3 28.6 32.3 8.0 162.2

2000 96.4 30.6 31.3 9.9 168.1

2001 99.5 32.2 30.5 13.3 175.6

2002 103.5 36.9 34.1 10.2 184.7

2003 101.1 39.4 36.7 11.1 188.3

2004 98.7 39.1 36.8 8.3 182.9

2005 94.0 33.6 35.9 7.8 171.3

2006 92.5 30.2 36.5 8.2 167.4

2007 87.5 26.6 38.9 7.8 160.8

Total

Highways

Aviation, Mass Water Transportation 

Transit, and Rail and Water Resources Spending

Public
38 PUBLIC SPENDING ON TRANSPORTATION AND WATER INFRASTRUCTURE

CBO

Table A-9. 

Total Public Spending for the Operation and Maintenance of Transportation and 

Water Infrastructure, by Type of Infrastructure, 1956 to 2007

(Billions of 2009 dollars)

Continued

Aviation, Mass Water Supply and

Highways Transit, and Rail Wastewater Treatment

1956 28.2 8.0 10.4 5.4 52.0

1957 30.4 8.1 10.9 6.2 55.7

1958 31.3 8.0 11.1 5.3 55.6

1959 32.0 9.9 11.1 7.5 60.5

1960 32.6 11.0 12.3 6.2 62.0

1961 34.3 11.5 13.0 6.3 65.0

1962 33.4 12.6 13.0 4.9 63.9

1963 35.0 13.3 14.0 5.2 67.5

1964 34.7 13.9 13.6 5.5 67.8

1965 35.6 15.1 14.0 5.7 70.4

1966 36.3 15.1 14.8 7.2 73.5

1967 36.8 15.6 14.7 7.4 74.6

1968 37.3 16.1 15.0 7.7 76.1

1969 38.0 16.4 15.4 8.0 77.9

1970 39.0 18.0 16.2 7.9 81.2

1971 39.8 20.8 16.7 7.9 85.2

1972 40.3 21.3 17.5 7.7 86.9

1973 40.2 21.6 18.2 8.5 88.6

1974 40.5 22.4 19.2 7.8 89.9

1975 42.4 26.8 20.4 8.5 98.2

1976 42.7 27.0 21.5 8.6 99.9

1977 43.2 29.4 24.2 8.7 105.8

1978 45.2 30.3 25.6 9.7 111.1

1979 45.9 30.8 26.7 10.9 114.4

1980 45.5 33.0 27.3 11.2 117.3

1981 44.4 40.2 28.7 11.1 124.7

1982 44.7 36.2 30.5 9.6 121.1

1983 46.2 35.9 31.7 10.0 123.9

1984 47.0 36.8 32.2 9.8 125.9

1985 49.1 36.7 33.7 10.1 129.6

1986 50.7 37.8 35.7 10.3 134.4

1987 51.1 38.3 37.3 10.7 137.3

1988 50.1 39.3 38.2 13.0 140.5

1989 51.1 40.1 40.5 13.5 145.0

Spending

Total 

Water Transportation Public

 and Water Resources
APPENDIX A PUBLIC SPENDING ON TRANSPORTATION AND WATER INFRASTRUCTURE 39

CBO

Table A-9. Continued

Total Public Spending for the Operation and Maintenance of Transportation and 

Water Infrastructure, by Type of Infrastructure, 1956 to 2007

(Billions of 2009 dollars)

Source: Congressional Budget Office.

Notes: Total public spending is the sum of expenditures by the federal government and by state and local governments.

For the purposes of this analysis, the phrase “transportation and water infrastructure” encompasses the facilities and systems that 

support transportation, provide water resources, supply drinking water, and treat wastewater.

Spending expressed in constant dollars has been adjusted to reflect the effects of inflation between the year the spending occurred 

and a base year, which in this study is 2009.

When calculating spending for operation and maintenance, which pertains primarily to physical assets, CBO also includes spending on 

investment in intangible assets (for instance, for research and development), as well as expenditures for administrative activities and 

public outreach (such as educational and safety programs).

Data on the federal government’s outlays for transportation and water infrastructure are available through fiscal year 2009 and reflect 

spending that year under the American Recovery and Reinvestment Act. In contrast, the most recent data on state and local spending 

that span a 12-month period matching the federal fiscal year (October 1 through September 30) are from 2007. Therefore, to be able 

to express annual state and local spending for infrastructure on a basis that is consistent with federal fiscal years, CBO reports total 

public spending for infrastructure—the sum of federal, state, and local expenditures—through 2007. 

Data on public spending for water transportation and water resources after 1990 do not include expenditures by states and localities 

on water resources.

Aviation, Mass Water Supply and

Highways Transit, and Rail Wastewater Treatment

1990 52.2 40.4 42.3 13.5 148.4

1991 52.6 42.7 43.1 6.1 144.4

1992 53.5 44.6 44.6 7.3 149.9

1993 54.7 44.0 47.3 7.3 153.2

1994 56.1 46.9 50.3 7.7 161.0

1995 57.3 47.4 51.8 7.7 164.3

1996 57.9 47.6 52.9 7.4 165.8

1997 59.4 49.2 54.0 7.7 170.3

1998 61.0 48.1 55.3 8.9 173.4

1999 62.6 48.8 55.4 8.6 175.4

2000 64.9 49.4 55.5 7.6 177.5

2001 65.9 53.2 56.8 9.5 185.5

2002 67.5 55.1 58.6 9.4 190.7

2003 67.5 56.0 58.3 9.4 191.3

2004 66.0 54.5 58.8 8.5 188.1

2005 66.3 55.6 58.2 9.5 189.7

2006 66.9 55.7 59.7 8.9 191.3

2007 67.0 57.0 62.4 9.1 195.5

and Water Resources Spending

Total

Water Transportation Public

APPENDIX

CBO

B

Methodology and Data Sources

In this study, the Congressional Budget Office (CBO) 

reports on spending by the federal government and by 

state and local governments for seven types of transportation and water infrastructure: highways and roads; mass 

transit; rail; aviation; water transportation; water 

resources; and water supply and wastewater treatment. 

The study focuses on those forms of infrastructure 

because they draw heavily on federal resources. To determine the types of public spending and categories of infrastructure to evaluate, CBO used the same definitions it 

relied on in previous reports on this topic; in addition, 

the agency used information from the Office of Management and Budget (OMB) to confirm that those categories continue to be important elements of federal spending on infrastructure.1

Methodology

In its reports on public spending for transportation and 

water infrastructure, CBO has focused on two categories 

of spending: capital and operation and maintenance. 

Within those categories, only actual infrastructure expenditures—as opposed to the amount of public funds made 

available for that purpose—were analyzed. (That is, the 

federal government’s spending on infrastructure capital 

and on operation and maintenance is reported in terms of 

outlays rather than as budget authority.) CBO reported 

gross public spending on infrastructure and thus did not 

subtract from spending totals the receipts collected for 

the use of services associated with infrastructure facilities. 

Capital and Operation and Maintenance

To determine whether federal spending was designated 

for infrastructure capital or for related operation and 

maintenance, CBO applied the classification scheme for 

Character Class data that OMB collects, on its form 

schedule C, from federal agencies. Character Class data 

are divided into two types of spending: investment and 

noninvestment.2 With only a few exceptions, which are 

noted below, the classification of an outlay in one of those 

categories indicates whether that federal spending was for 

capital projects or for operation and maintenance. 

In calculating federal capital outlays, CBO included all 

spending on physical infrastructure. As reported on 

schedule C, federal investment in physical infrastructure 

includes “amounts for the purchase, construction, manufacture, rehabilitation, or major improvement of physical 

assets regardless of whether the assets are owned or operated by the Federal Government, States, municipalities, 

or private individuals. Physical assets are land, structures, 

equipment, and intellectual property (for example, software) that have an estimated useful life of two years or 

more, and commodity inventories. The cost of the asset 

includes both its purchase price and all other costs 

incurred to bring it to a form and location suitable for 

its use.”3

To calculate the federal government’s spending for operation and maintenance, CBO combined the remaining 

investment spending reported on schedule C (that is, 

investment in nonphysical infrastructure assets, such as 

research and development and education) and all other 

noninvestment spending.

1. See, respectively, Congressional Budget Office, Trends in Public 

Spending on Transportation and Water Infrastructure, 1956 to 2004

(August 2007) and Budget of the United States Government, Fiscal 

Year 2011: Analytical Perspectives, Table 20-2: “Federal Investment 

Budget Authority and Outlays—Grant and Direct Federal Programs,” pp. 332–334, www.whitehouse.gov/omb/budget/

Analytical_Perspectives/.

2. See Office of Management and Budget, Circular No. A-11: 

Preparation, Submission, and Execution of the Budget (July 2010), 

Section 84, www.whitehouse.gov/sites/default/files/omb/assets/

a11_current_year/a_11_2010.pdf.

3. Ibid., Section 84, p. 6.
42 PUBLIC SPENDING ON TRANSPORTATION AND WATER INFRASTRUCTURE

CBO

To determine what constituted spending for infrastructure capital and related operation and maintenance at the 

state and local level, CBO used the definition reported 

in the Census Bureau’s Government Finance and Employment Classification Manual.4

Table B-1 compares the definitions used by OMB and 

the Census Bureau to differentiate capital spending from 

spending for operation and maintenance at the federal 

level and at the state and local level.

Measurement Issues 

To report actual federal outlays on infrastructure—as 

opposed to the amount of funding made available by the 

Congress for that purpose—CBO expressed the federal 

government’s spending on infrastructure as outlays rather 

than budget authority. In addition, some federal programs earned revenues from the infrastructure services 

they provide; with a few small exceptions, such receipts 

were netted out from outlays reported by OMB, and 

CBO added them back in order to report gross federal 

spending on infrastructure.

Outlays, Budget Authority, and Obligations. With only 

a few exceptions, this study reports federal infrastructure 

spending in the form of outlays. OMB defines the term 

as “a payment to liquidate an obligation (other than the 

repayment of debt principal). Outlays generally are equal 

to cash disbursements ... [and are] the measure of 

Government spending.”5

 Outlays may reflect past and 

current budget authority—that is, “the authority provided by law to incur financial obligations that will 

[ultimately] result in outlays.”6

In a few instances, OMB’s schedule C data are not sufficiently detailed to distinguish federal infrastructure 

expenditures from other types of outlays. In those cases, 

CBO relied on additional sources of information for this 

study, including relevant chapters of the Budget of the 

United States Government: Appendix for various fiscal 

years, to collect the necessary data (those specific sources 

of data are listed in the data section of this appendix). In 

the President’s budget, federal infrastructure spending is 

often expressed as an obligation—that is, as a “binding 

agreement that will result in outlays, immediately or in 

the future.”7

Gross Versus Net Federal Outlays for Infrastructure. For 

this report, CBO measured gross spending—the total 

amount spent by government—for transportation and 

water infrastructure. Fees for the use of public infrastructure were not netted out from gross spending. Consequently, to calculate federal infrastructure spending, 

CBO excluded any budget accounts that were purely 

receipts accounts (accounts that serve simply to account 

for federal receipts related to the use of infrastructure). 

The most notable examples of such accounts are the trust 

funds that provide funding for surface transportation 

and aviation programs. However, that approach did not 

avoid all netting out of infrastructure receipts from gross 

federal infrastructure outlays. In particular, federal outlays for operation and maintenance reported on OMB’s 

schedule C net out some user fees that are classified as 

offsetting collections (see Table B-1).8

 Offsetting collections are payments to the government that are credited to 

expenditure accounts and typically allow spending without an appropriation. When the Congress authorizes 

offsetting collections for a federal infrastructure program, 

the corresponding entry for operation and maintenance 

outlays will understate actual (or gross) direct spending 

from it.9

 That outcome is a result of the fact that 

schedule C data are collected for budgetary accounting—

that is, for calculating the net outlays that determine the 

federal government’s budget deficit or surplus—rather 

than for purposes of analysis.

The understatement of federal spending in the analysis 

presented in this study does not appear to be a substantial 

problem because the types of infrastructure that receive 

most federal funding typically do not have offsetting 4. See Census Bureau, Federal, State and Local Governments: Government Finance and Employment Classification Manual, Table 5.1: 

“Description of Character and Object Categories,” available at 

www.census.gov/govs/www/06classificationmanual/chapter

05-2.html#p2c5table51.

5. See Office of Management and Budget, Circular No. A-11:

Preparation, Submission, and Execution of the Budget (July 2010), 

Section 20, p. 7.

6. Ibid., p. 3.

7. Ibid., p. 7.

8. In Table B-1, sales of physical infrastructure assets are entered as 

negative capital spending outlays because those sales reflect federal 

disinvestment in infrastructure capital.

9. An illustration is provided by Office of Management and Budget, 

Circular No. A-11: Preparation, Submission, and Execution of the 

Budget (July 2010), Section 84, p. 4.
APPENDIX B PUBLIC SPENDING ON TRANSPORTATION AND WATER INFRASTRUCTURE 43

CBO

collections that are netted out. For example, in 2002, the 

Government Accountability Office found that “the federal funding approach for aviation and highways relied 

almost exclusively on assessments on users of the transportation systems ... [and] most of these collections were 

credited to trust fund accounts.”10 Although the federal 

infrastructure spending reported in this study includes 

outlays made from trust fund accounts, the corresponding receipts—in the form of excise taxes and other fees—

are reported separately in the OMB data. As a result, outlays from trust funds were interpreted as gross federal 

spending.

In this study, where possible, CBO also identified federal 

infrastructure programs (other than those reliant on trust 

fund accounts) for which offsetting collections are especially relevant and then added those revenues back to the 

net outlays reported by OMB. To do so, CBO relied on 

the Object Class Analysis that is part of the President’s 

budget each year and that reports offsetting collections 

from both federal and nonfederal sources.11 Offsetting 

collections from nonfederal sources appear to be especially important for water resource programs (for example, dams, levees, and watersheds). Consequently, CBO 

revised the federal infrastucture spending reported for the 

following programs from 1998 through 2009 so that 

their net outlays are increased by the amount of their 

offsetting collections:

B Army Corps of Engineers

• General Investigations;

• Construction Program; 

• Operation and Maintenance; and

• Flood Control and Coastal Emergencies.

B Bureau of Reclamation

• Water and Related Resources Account;

• Lower Colorado River Basin Fund Account; and

• Upper Colorado River Basin Fund Account. 

Federal Grants, Loan Subsidies, and Other Federal 

Infrastructure Spending. As with its calculations of 

capital spending and spending for operation and maintenance, CBO relied on the Character Class data collected 

on OMB’s form schedule C to distinguish federal grants 

and loan subsidies to states and localities from other 

federal spending.12 Federal grants and loan subsidies 

“support state or local programs of government operations or provision of services to the public.”13 Beyond 

what is reported in this study, information on federal 

grants and loan subsidies generally is also available in

Budget of the United States Government, Fiscal Year 2011: 

Analytical Perspectives.14

Other federal infrastructure spending described in this 

study includes any that is not a grant or a loan subsidy.

Other Methodological Issues 

To compare federal outlays on infrastructure in a given 

year with corresponding expenditures at the state and 

10. See Government Accountability Office, Marine Transportation: 

Federal Financing and a Framework for Infrastructure Investments, 

GAO-02-1033 (September 2002), pp. 3–4, www.gao.gov/

new.items/d021033.pdf.

11. The goal is to account for offsetting collections from nonfederal 

sources. If an infrastructure program receives offsetting collections 

from a federal source—say, from another program for which it 

had supplied infrastructure services—then that spending should 

be reported as an infrastructure outlay elsewhere in the budget.

12. The Federal Credit Reform Act of 1990 requires that when federal 

direct loan or loan guarantee programs are established or modified, they receive budget authority to cover the credit subsidy that 

the government provides through them. The value of the estimated loan subsidies are entered as federal outlays on schedule C. 

When those loan subsidy estimates are reestimated, any difference 

between the original estimate and the reestimate (either positive or 

negative) is entered as an outlay. Credit subsidy reestimates for 

infrastructure loan subsidies are included in this report because 

they represent the degree to which the financial burden to the 

federal government from offering those subsides in the past was 

overstated or understated.

13. See Office of Management and Budget, Circular No. A-11: 

Preparation, Submission, and Execution of the Budget (July 2010), 

Section 84, pp. 2–3.

14. See Budget of the United States Government, Fiscal Year 2011: 

Analytical Perspectives, Chapter 17: “Aid to State and Local 

Governments” (October 2010), pp. 247–314. Information on 

individual grant and loan programs can be found in Office of 

Management and Budget and General Services Administration, 

2010 Catalog of Federal Domestic Assistance, available at 

www.cfda.gov/downloads/CFDA_2010.pdf.
44 PUBLIC SPENDING ON TRANSPORTATION AND WATER INFRASTRUCTURE

CBO

Table B-1. 

Characteristics of Spending for Infrastructure Capital and for 

Related Operation and Maintenance, by Level of Government

Continued

Level of Government

Category of Spending Federal State and Local

Capital Construction and Rehabilitation: 

Encompasses the design and production of fixed 

works and structures or substantial alterations to 

such structures or land. Includes new works and 

major additions, alterations, improvements to, and 

replacement of existing works. Excludes 

preliminary surveys, maintenance, repair, 

administration of such facilities, and other federal 

operating expenses.

Construction:

Includes the production of, additions to, 

replacement of, or major structural alterations to 

fixed works undertaken either on a contractual 

basis by private contractors or through a 

government’s own staff.

Purchase and Sale of Land and Structures: 

Includes the purchase or lease-purchase of land 

and structures for use by the federal government 

and sales of such land and structures. Includes 

office buildings, parkland, and forests but does not 

include land or structures acquired as temporary 

inventory (such as collateral on defaulted loans).

Purchase of Land and Existing Structures: 

Includes the acquisition of such assets by outright 

purchase, payments on capital lease purchase 

agreements, or installment purchase contracts. 

Also takes into account the costs associated with 

exercising eminent domain (including the purchase 

of rights-of-way) and tax or special assessment 

foreclosure. Covers all ancillary costs associated 

with such transactions (for instance, legal and title 

fees; surveying fees; appraisal and negotiation 

fees; damage claims; and nonconstruction-related 

site-preparation costs, including the razing of 

unwanted structures and the clearing, filling, and 

leveling of construction sites).

Major Equipment: 

Includes the purchase of equipment such as 

vehicles, ships, machine tools, and computers and 

other information technology hardware. Also 

includes equipment purchases called for by certain 

federal programs. Excludes routine purchases of 

ordinary office equipment or furniture and fixtures. 

Purchase of Equipment: 

Includes the purchase and installation of 

apparatus, furnishings, motor vehicles, and office 

equipment with a life expectancy of more than five 

years. Includes new equipment or replacements 

purchased outright or through capital lease or 

installment purchase contracts. Includes related 

expenditures (for example, transportation 

charges, installation fees, and taxes).
APPENDIX B PUBLIC SPENDING ON TRANSPORTATION AND WATER INFRASTRUCTURE 45

CBO

Table B-1. Continued

Characteristics of Spending for Infrastructure Capital and for 

Related Operation and Maintenance, by Level of Government

Source: Definitions for federal outlays come from Office of Management and Budget, Circular No. A-11: Preparation, Submission, and 

Execution of the Budget (July 2010), Section 84, pp. 6–14. The capital outlays defined in this table represent the major types of 

federal physical investment and do not necessarily include all capital infrastructure described in this study. Definitions used by the 

Census Bureau for state and local expenditures can be found under codes F (Construction), G (Purchase of Land and Existing Structures), K (Purchase of Equipment) and E (Current Operations) at www.census.gov/govs/www/06classificationmanual/chapter05

-2.html#p2c5table.51.

a. Offsetting collections are payments to the government that are credited to expenditure accounts and typically allow spending out of that 

account without an appropriation by the Congress. (Offsetting collections from the sale of physical assets are entered as negative 

amounts for the corresponding physical assets—that is, as negative outlays). This accounting mechanism is a residual balancing entry 

to ensure that the sum of all items in schedule C equals total budget authority and outlays net of offsetting collections. Includes transactions related to credit liquidating accounts.

local level, CBO adjusted data on annual state and local 

spending so that it conformed with the 12-month period 

spanned by the federal fiscal year. The public spending on 

infrastructure reported by this paper does not include 

interest payments or other financing costs.

Making Fiscal Years Conform. Most state governments 

and many localities observe a fiscal year that begins on 

July 1 and ends on June 30 of the following year.15 The 

federal government followed that practice through fiscal 

year 1976. That fiscal year was followed by a transitional 

quarter, after which the federal fiscal year began on October 1. Starting in federal fiscal year 1977, that modification created a mismatch between the federal fiscal year 

Level of Government

Category of Spending Federal State and Local

Operation and 

Maintenance

Research and Development: 

Includes basic and applied research and 

development. (The latter form of R&D is defined as 

the systematic application of knowledge or 

understanding, directed toward the production of 

useful materials, devices, and systems or 

methods.) Includes the design, development, and 

improvement of prototypes and new processes to 

meet specific requirements.

Research and Development: 

Included in Current Operations (see below).

Education and Training: 

Includes programs whose primary purpose is 

education, training, and vocational rehabilitation.

Education and Training: 

Included in Current Operations (see below).

Noninvestment Activities: 

Includes federal spending for grants and loan 

subsidies not classified as investment spending 

(for example, administrative expenses related to 

grant and loan subsidy programs). For spending 

that the federal government does on its own 

account, includes outlays for all other 

noninvestment activities, including offsetting 

collections.a

Current Operations: 

Includes direct expenditures for compensation of 

state and local officers and employees and for 

supplies, materials, and contractual services. 

15. For details, see the latest publicly available technical documentation, available at www.census.gov/govs/www/

06censustechdoc.html.
46 PUBLIC SPENDING ON TRANSPORTATION AND WATER INFRASTRUCTURE

CBO

and the state and local fiscal years, which could cause 

errors in measuring state and local spending net of federal 

grant and loan subsidies for a particular year. To make 

state and local expenditures more comparable with federal outlays after 1976, CBO—following the methods 

used in its previous studies—adopted an alternative fiscal 

year for state and local governments that begins on October 1 and ends on September 30 of the following year. 

(Public spending on transportation and water infrastructure during that transitional quarter is reported in the 

detailed data provided on CBO’s Web site as a supplement to this paper.)

For example, of the infrastructure expenditures reported 

for states and localities during fiscal year 2007 (which, 

as defined by this study, is constructed to run from 

October 1, 2006, to September 30, 2007), 75 percent 

come from the actual state and local fiscal year of 2007 

(July 1, 2006, to June 30, 2007) and the remaining 25 

percent come from the following state and local fiscal 

year (July 1, 2007, to June 30, 2008).

That procedure reduces potential errors—particularly in 

the sequencing of federal grants and loan subsidies and 

their use by states and localities—caused by the inexact 

match between the two types of fiscal years. However, it 

means that although expenditure data from the Census 

Bureau’s survey of State and Local Finances run through 

state and local fiscal year 2008, those data allow a match 

with federal outlays only through 2007.

Costs as Financed Versus Current Resource Costs. CBO’s 

estimates of infrastructure spending by the federal government and by state and local governments do not 

include payments of interest on debt issued to finance 

public infrastructure. The inclusion of interest payments 

would reflect the full capital cost of investment and 

thereby measure the costs of infrastructure as financed. 

By excluding interest payments, CBO was able to measure the current resource costs of infrastructure, which are 

the most appropriate gauge of infrastructure spending for 

analyses of how efficiently society currently chooses to 

allocate its resources. Costs as financed reflect the burden 

imposed on society as a result of past and current decisions (say, to obtain a given amount of infrastructure services over time).16

Data Sources

In most cases, CBO obtained data on federal infrastructure spending from OMB; when satisfactory information 

was not available, CBO relied on supplementary historical data reported with the President’s budget request. For 

information on state and local infrastructure spending, 

CBO obtained data from the Census Bureau. When calculating state and local infrastructure spending that was 

funded solely by state and local governments, CBO subtracted the value of grants and loan subsidies provided by 

the federal government for infrastructure spending. CBO 

adjusted each series of data in order to express spending 

in real (or constant dollars) and to make fiscal years consistent across levels of government. 

Federal Infrastructure Spending

CBO’s estimates of federal infrastructure outlays from 

1998 to 2009 were derived directly from data collected 

by OMB on schedule C. To identify federal infrastructure 

spending both for this study and for earlier studies, CBO 

relied heavily on the budget subfunction assigned to each 

federal account, which in turn is based on the primary 

purpose served by that program. The following are the 

most relevant budget subfunctions:

B Water Resources, 301;

B Ground Transportation, 401;

B Air Transportation, 402; and 

B Water Transportation, 403.17

In a few instances, adjustments to OMB’s schedule C 

data—based on information from the President’s budget—were required. Additionally, to obtain a complete 

picture of federal infrastructure spending, it was necessary 

16. See Congressional Budget Office, Future Investment in Drinking 

Water and Wastewater Infrastructure (November 2002). As part of 

its State and Local Finances series, the Census Bureau publishes 

data on interest payments by states and localities on debt issued 

for water and transit projects. See Census Bureau, Federal, State 

and Local Governments: Government Finance and Employment 

Classification Manual, Table 5.1: “Description of Character and 

Object Categories,” available at www.census.gov/govs/www/

06classificationmanual/chapter05-2.html#p2c5table51 and Table 

5.2: “Function and Object Code Validity, by Level and Type of 

Government,” available at www.census.gov/govs/www/

06classificationmanual/chapter05-2.html#p2c5table52.
APPENDIX B PUBLIC SPENDING ON TRANSPORTATION AND WATER INFRASTRUCTURE 47

CBO

to augment or otherwise adjust OMB’s data in the following categories:

B Mass Transit. Capital outlays reported on OMB’s 

schedule C as grants to state and local governments for 

investment in mass transit have been distributed 

across capital and operation and maintenance categories each year on the basis of the way recipient mass 

transit systems reported that they had used that federal 

funding. That information is found in 2010 Public 

Transportation Fact Book, 61st Edition (Washington, 

D.C.: American Public Transportation Association, 

April 2010), Appendix A (Historical Tables), Table 37 

(Capital Funding Sources), and Table 41 (Operating 

Funding Sources), available at www.apta.com/. 

B Rail. Capital outlays reported on OMB’s schedule C 

for investment in Amtrak have been distributed across 

capital and operation and maintenance categories each 

year based on outlays reported, respectively, for the 

accounts “Capital and Debt Service Grants to the 

National Railroad Passenger Corporation” and 

“Operating Subsidy Grants to the National Railroad 

Passenger Corporation” as found in the Budget of the 

United States Government: Appendix, “Detailed Budget 

Estimates by Agency: Department of Transportation, 

Federal Railroad Administration,” various years.

Outlays for the Surface Transportation Board are 

assumed to apply entirely to federal rail spending. 

B Water Resources. Spending for “Water Resources 

Investigations” by the U.S. Geological Survey are obligations as reported in Budget of the United States Government, Appendix, “Detailed Budget Estimates by 

Agency: Department of the Interior,” various years.

B Water Transportation. The Coast Guard’s operating 

expenses are expressed in the form of obligations and 

are taken from that program’s account in the Budget of 

the United States: Appendix, Department of Homeland 

Security for the following activities: search and rescue; 

marine safety; aids to navigation; and ice-breaking 

operations.18

B Water Supply and Wastewater Treatment. Community 

Development Block (or Formula) Grants (CDBG) for 

this type of infrastructure are assumed to be purely 

capital spending in the form of program 

disbursements for “Water/Sewer Improvements” and 

are reported at www.hud.gov/offices/cpd/

communitydevelopment/budget/disbursement

reports/profiles/National_Expenditure_FY09.xls. 

Rural Community Advancement grants and loan subsidies for this infrastructure type are either obligations 

or outlays and are taken from the Budget of the United 

States Government: Appendix, “Detailed Budget Estimates by Agency: Department of Agriculture,” various 

years.

Spending for “Clean and Safe Water” by two programs 

of the Environmental Protection Agency—Science 

and Technology, and Environmental Programs and 

Management—is in the form of obligations, as 

reported in Budget of the United States Government: 

Appendix, “Detailed Budget Estimates by Agency: 

Environmental Protection Agency,” various years.

CBO assembled most of the federal data for the 1980–

1997 period from information collected by OMB on 

schedule C. In a few instances, OMB’s data conflicted 

with those shown in various parts of the President’s budget. In those cases, CBO used the data from the budget.

Before 1980, CBO primarily relied on historical data 

from OMB to calculate federal spending for infrastructure. OMB’s historical data show federal outlays for 

individual budget accounts broken down into grant and 

nongrant spending.

17. See Office of Management and Budget, Circular No. A-11: 

Preparation, Submission, and Execution of the Budget (July 2010), 

Exhibit 79A, Section 79, p. 9. Additionally, some federal programs that fund infrastructure—notably water supply systems 

and wastewater treatment plants—are classified under budget 

subfunctions other than those listed above. For example, the State 

and Tribal Assistance Grants administered by the Environmental 

Protection Agency are classified in Subfunction 304 (Pollution 

Control and Abatement). For further discussion, see Government 

Accountability Office, Freshwater Programs: Federal Agencies’ Funding in the United States and Abroad, GAO-05-253 (March 2005), 

available at www.gao.gov/new.items/d05253.pdf.

18. The Army Corps of Engineers’ projects to support water navigation are included in the water resources category of infrastructure 

spending along with all other infrastructure spending by that 

agency.
48 PUBLIC SPENDING ON TRANSPORTATION AND WATER INFRASTRUCTURE

CBO

The historical data did not separate outlays into capital 

expenditures and spending for operation and maintenance. CBO took the data on capital expenditures 

from the Budget of the United States Government, in particular the “Historical Tables,” “Special Analyses,” and 

“Appendix.” Because of apparent inconsistencies in the 

principal sources of data, CBO gathered spending data 

for the aviation and rail categories from the federal budget’s appendix and classified them by type of spending on 

an account-by-account basis.

State and Local Infrastructure Spending

CBO obtained all data on state and local expenditures 

from the Census Bureau’s State and Local Government 

Finance series, which is available at www.census.gov/govs/

estimate. To obtain state and local spending, net of federal grants and loan subsidies, CBO subtracted the value 

of federal grants and loans for each type of infrastructure 

from the corresponding level of total spending by states 

and localities.

The types of infrastructure described in this study—specifically as pertains to spending by states and localities—

are defined below. Examples of what is included and 

excluded in each category are provided at the Internet 

address for each entry:

B Highways and Roads

Highways: www.census.gov/govs/www/

classfunc44.html.

• Definition: Maintenance, operation, repair, and 

construction of nontoll highways, streets, roads, 

alleys, sidewalks, bridges, tunnels, ferry boats, viaducts, and related structures.

Toll Roads: www.census.gov/govs/www/

classfunc45.html.

• Definition: Maintenance, operation, repair, and 

construction of highways, roads, bridges, ferries, 

and tunnels operated on a fee or toll basis. 

B Mass Transit

www.census.gov/govs/www/classfunc94.html.

• Definition: Operation, maintenance, and construction of public mass transit systems, including 

subways, surface rail, and buses.

B Aviation 

www.census.gov/govs/www/classfunc01.html. 

• Definition: Provision, operation, construction, 

and support of airport facilities serving the public 

at large on a scheduled or unscheduled basis and 

the regulation of the airline industry.

B Water Transportation

www.census.gov/govs/www/classfunc87.html.

• Definition: Provision, construction, operation, 

maintenance, and support of public waterways and 

harbors, docks, wharves, and related marine terminal facilities and the regulation of the water transportation industry.

B Water Supply and Wastewater Treatment

Water Supply: www.census.gov/govs/www/

classfunc91.html.

• Definition: Operation, maintenance, and construction of public water supply systems, including 

production, acquisition, and distribution of water 

to the general public or to other public or private 

utilities, for residential, commercial, and industrial 

use.

Sewerage: www.census.gov/govs/www/

classfunc80.html.

• Definition: Provision, maintenance, and operation 

of sanitary and storm sewer systems and sewage 

disposal and treatment facilities.
APPENDIX B PUBLIC SPENDING ON TRANSPORTATION AND WATER INFRASTRUCTURE 49

CBO

The Bureau of the Census does not report state and local 

expenditures on freight rail (it places passenger rail in the 

mass transit category); and, after 1990, it has not 

reported water resource expenditures in a manner consistent with this study’s definition. As a result, the public 

spending on water resources reported by this paper since 

1991 does not include state and local expenditures on 

that infrastructure.

Data on current and historical infrastructure expenditures at the national and state level are available at 

www.census.gov/govs/estimate/. More detailed data, such 

as expenditures on capital and operation and maintenance for each type of infrastructure and by level of government, are available in the file “State by Level 

of Government—Public Use Format.” Additional information is provided by Bureau of the Census, Federal, 

State, and Local Governments: Government Finance, 

and Employment Classification Manual (November 2000), 

available at www.census.gov/govs/classification/

index.html. 

Converting Nominal Spending into Real Spending

CBO’s estimates of real (inflation-adjusted) infrastructure 

spending use price indexes from the Bureau of Economic 

Analysis (BEA) to convert current-dollar (or nominal) 

spending into constant-dollar (or real) values. Those calendar year indexes are modified to correspond to federal 

fiscal years by appropriately weighting index values in 

adjacent years:

B For public spending on infrastructure capital by the 

federal government or by state and local governments, 

price indexes reflect the cost of state and local investment in new structures and are taken from Tables 

5.8.4A and 5.8.4B, “Price Indexes for Gross Government Fixed Investment by Type,” available at

www.bea.gov/national/nipaweb/SelectTable.asp

?Selected=N#S5. Over 80 percent of federal outlays 

for infrastructure capital take the form of grants and 

loan subsidies to states and localities, which then 

spend those funds; additionally, over 80 percent of 

such spending on most of the types of infrastructure 

discussed in this study is for structures rather than for 

equipment.

B Because BEA’s index values for infrastructure investment in 2009 had not been published when this 

paper’s spending data were compiled, nominal spending was adjusted by applying the 2009 value of two 

other indexes—one from BEA and the other from the 

Bureau of Labor Statistics (BLS):

• For highways, mass transit, rail, and aviation, the 

Producer Price Index that was reported by BLS for 

Material and Supply Inputs to Highway and Street 

Construction, available at www.bls.gov/data/.

• For all other infrastructure categories, see the BEA 

price series State and Local Gross Investment in 

Structures found in Table 3.9.4: “Price Indexes for 

Government Consumption Expenditures and 

Gross Investment,” available at www.bea.gov/

national/nipaweb/SelectTable.asp?Selected=N#S5.

B For public spending on operation and maintenance, 

the price indexes are taken from Table 3.9.4: “Price 

Indexes for Government Consumption Expenditures 

and Gross Investment,” available at www.bea.gov/

national/nipaweb/SelectTable.asp?Selected=N#S5. 

The price index for state and local government consumption is applied to net spending on operation and 

maintenance by those levels of government and to 

operation and maintenance spending in the form of 

grants and loan subsidies by the federal government. 

The price index for federal consumption is applied to 

all other federal spending on operation and maintenance. Index values were available through 2009.