Issue link: http://read.dmtmag.com/i/280096
Highway Funding 30 | www.cedmag.com | Construction Equipment Distribution | March 2014 on funding mechanisms other than the VMT fee to supplement the fuel tax. Vehicle registration, licensing, titling, and permitting fees generate some of the greatest revenues for states. Thir- teen states derive more revenue from these than from the fuel tax. Moreover, they represent a stable revenue source and do not require additional adminis- trative costs to implement. With recent technological advance- ments, states can also rely on tolling to increase roadway infrastructure fund- ing. Electronic tolling enables states to optimize revenue collection and reduce congestion through variable pricing. Tolling most efficiently funds individual road systems; it realistically cannot support an entire surface infrastructure budget. General funds also provide a large revenue source for transportation infra- structure funding, but states cannot rely on these funds because they are frequently shifted to nonroadway projects. The last widely used funding mechanism is various freight-related fees, given their revenue potential. However, state legislators must be cautious about increasing freight- based fees due to their downstream cost to consumers. Financing Mechanisms Can Incentivize Growth Political realities and economic diffi- culties make increasing investment difficult. In addition to boosting direct revenues for infrastructure, states should harness financing (strategic borrowing) mechanisms to spur transportation infrastructure growth. Compared to funding mechanisms, states employ fewer financing mecha- nisms – including state revolving funds (SRF); public-private partnerships (PPP); and bonds. Employing a diverse array of interrelated financing mechanisms is critical. For example, bond issuances often fund SRFs, which are collections of funds that partially fund PPPs and are also dedicated to granting low- interest loans to transportation infra- structure projects. Bond issues similarly can be involved in some PPP agree- ments. Employing all three financing mechanisms enhances the long-term availability of sustainable funds. Unfortunately, states simply do not use available financing mechanisms to their full potential. Most states do not have a state-funded SRF, which reduces their ability to (1.) create new roads without raising taxes or (2.) offer low-interest loans to roadway developers. SRFs can be successful if properly managed through interest rates maintained above the level of inflation, leveraged through bond issues to promote fund growth, and guided by an informed project selection process that includes a loan payback risk assessment. PPPs offer many of the same benefits as SRFs, with the added advantage of financing very large projects that ("Solving America's Infrastructure Crisis" continued from page 26)