While there is never enough money to address the needs, there is not a transportation agency in the Nation that is not struggling with the lack of funding, largely due to the Pandemic 2020-present whether it’s fuel taxes, general funds, bonds, public-private-partnerships, wheel taxes, vehicle registrations, or other funding sources (American Society of Civil Engineers, 2020; Stofan, 2021; NPR, 2020; Jimenez, 2020). Still, are we talking about infrastructure the right way? That is, are we talking to and the about the people that use it (Milberg, 2021)?
In 2019 the U. S. federal government spent $96 billion on building and updating infrastructure, $67 billion was transferred to states. In 2017, the most recent data available, state and local infrastructure spending totaled $162 billion excluding these federal transfers. At the same time there has been a shift toward increased spending on operations and maintenance and away from spending on new capital projects. Some estimates are that roughly 2/3 of dollars go to keep infrastructure functioning (i.e. maintenance, repair, replacement, or system preservation) while roughly 1/3 of dollars go to upgrades (i.e. new capital projects). While this allocation can be disputed depending on the audience and perspective, keeping infrastructure functioning (system preservation) is the highest and best use of dollars and most economical in serving the public good. How dollars are best allocated for system preservation and new capital projects needs to be continually assessed, typically on an annual basis in conjunction with needs assessments and specific criteria. The current (2017) American Society of Civil Engineers, or ASCE, Report Card identifies an estimated $2 trillion gap in the $4.6 trillion needs required to achieve a state of good repair over the next 10 years (American Society of Civil Engineers, 2017). For surface transportation alone the gap is estimated to be $1.1 trillion gap in the over $2 trillion needs over the next 10 years. Perhaps more sobering, the world is facing a $15 trillion infrastructure gap by 2040 (George, et al, 2019).
Since the creation in 1919 by the State of Oregon, the fuel tax has been the primary federal and state funding mechanism for transportation/mobility infrastructure for over 100 years. The past two decades have seen a decline in those fuel tax revenues as a result of little or no increase in many fuel taxes, improving fuel efficiency, alternatives fuels, and now a pandemic. To close those gaps, general funds, wheel taxes, vehicle registrations, bonds, and other sources have been used. Still the gaps exist.
A question: should the US align with the UN’s “people first” model for public-private infrastructure projects? The model evaluates projects on five criteria (United Nations Economic Commission for Europe, 2016):
- Increasing access and promoting equity
- Improving environmental sustainability
- Improving project economic effectiveness
- Ensuring replicability
- Engaging all stakeholders
While there is important movement in this direction, it probably comes down to whether the needs of all stakeholders can be reconciled—consultants, builders, financiers, politicians, businesses, the public and others—that oversee infrastructure development and come to consensus on what they are doing. These can be powerful interests and getting people to work together, much less collaborate and come to consensus, will continue to be a challenging task to scale up the funding to meet growing needs.
So, what is the likely funding source for the future? That is unknown. A few years ago many believed that a Vehicle Miles Traveled (VMT) tax being tested over the past two decades in Oregon and other states would prevail and might yet. However, emerging technologies, declining personal car ownership, electric vehicles, alternatives fuels, remote work, changing business models, sustainability, climate change, access, equity and social justice, and future physical infrastructure needs may warrant new funding sources. Regardless, it is clear a new, reliable, and sustainable transportation/mobility funding model is needed that balances urban, rural, and multimodal needs and with an eye to the future. This includes a review of criteria for allocating funds, taking into account the needs of urban and rural communities, connecting roads and modes, and the capabilities of smaller communities who do not have the staffs to accommodate the substantial federal processes. The federal government must partner with states, communities, and other partners and entities to make funding and its allocation as effective and efficient as possible. While traffic is much higher with more costly infrastructure needs in urban areas, there are also critical needs in rural areas although there is less traffic (NAFB, 2021).
The funding space is also changing. Black Rock Chairman and Chief Executive Officer, Larry Fink, in his 2020 letter to CEOs has stated “In the near future—and sooner than most anticipate—there will be a significant reallocation of capital” (Fink, 2020). This is driven by their investors demand for investments that are sustainable and that will limit climate change. Black Rock is the world’s largest asset manager with $17 trillion under management, has said its clients are looking to double their environmental, societal, and governance (ESG) investments in the next five years. Institutional investors have said they will stop investing in companies that are not sustainable (CISION PR Newswire, 2021; Losavio and Tsai, 2021). This has implications for transportation, infrastructure, and mobility. To that extent it is not a surprise that stocks such as Tesla experienced dramatic growth in 2020 as investors look for positive and sustainable environmental, societal, governance, and economic outcomes.
American Society of Civil Engineers, ASCE. (2017). ASCE. Retrieved February 14, 2021, from https://infrastructurereportcard.org/wp-content/uploads/2016/10/2017-Infrastructure-Report-Card.pdf
American Society of Civil Engineers, ASCE. (2020). Status Report: Covid-19’s impacts on America’s infrastructure. ASCE. Retrieved February 14, 2021, from https://www.infrastructurereportcard.org/wp-content/uploads/2020/06/COVID-19-Infrastructure-Status-Report.pdf
CISION PR Newswire. (2021, January 7). The $120 trillion investment trend transforming Wall Street. CISION. Retrieved February 14, 2021, from https://www.prnewswire.com/news-releases/the-120-trillion-investment-trend-transforming-wall-street-301202526.html
Fink, L. (2020). Larry Fink’s 2020 letter to CEOs: A fundamental reshaping of finance. BlackRock. Retrieved February 14, 2020, from https://www.blackrock.com/us/individual/larry-fink-ceo-letter
George, A., R. Kaldany, J. Losavio. (2019, April 11). The world is facing a $15 trillion infrastructure gap by 2040. Here’s how to bridge it. World Economic Forum. Retrieved February 14, 2021, from https://www.weforum.org/agenda/2019/04/infrastructure-gap-heres-how-to-solve-it/
Jimenez, F. (2020, September 17). Impact of COVID-19 on state transportation revenues. LAO-Legislative Analyst’s Office. Retrieved February 14, 2021, from https://lao.ca.gov/Publications/Report/4268
Losavio, J. and O. Tsai. (2021, January 18). 4 big infrastructure trends to build a sustainable world. World Economic Forum. Retrieved February 14, 2021, from https://www.weforum.org/agenda/2021/01/four-big-infrastructure-trends-for-2021/
Milberg, E. (2021, January 8). Are we talking about infrastructure the right way? SmartBrief. Retrieved February 14, 2021, from https://www.smartbrief.com/original/2021/01/are-we-talking-about-infrastructure-right-way
NAFB. (2021, January 30). Rural coalition sends letter to Biden on infrastructure. KTIC. Retrieved February 14, 2021, from https://kticradio.com/agricultural/rural-coalition-sends-letter-to-biden-on-infrastructure/
NPR. (2020, August 3). States are broke and many are eyeing massive cuts. Here’s how yours is doing. NPR KIOS. Retrieved February 14, 2021, from https://www.npr.org/2020/08/03/893190275/states-are-broke-and-many-are-eyeing-massive-cuts-heres-how-yours-is-doing
Stofan, J. (2021, February 9). Bumpy road ahead for Florida transportation projects. News4Jax. Retrieved February 14, 2021, from https://www.news4jax.com/news/florida/2021/02/09/bumpy-road-ahead-for-florida-transportation-projects/
United Nations Economic Commission for Europe-UNECE. (2016, July). Promoting people first public-private partnerships (PPPs) for the UN SDGs. Inter-Agency Task Force on Financing for Development. Retrieved February 14, 2021, from https://www.un.org/esa/ffd/wp-content/uploads/2016/01/Promoting-People-first-Public-Private-Partnerships-PPPs-for-the-UN-SDGs_UNECE_IATF-Issue-Brief.pdf