TRANSPORTATION FINANCING - August 2008


The September 6 issue of The New York Times carried a lengthy article by reporters David Stout and Matthew Wald entitled “Highway Fund Shortfall May Halt Road Projects.” They detail the difficult issue of federal and state transportation financing, which is heavily dependent on gasoline and motor fuel gross receipts taxes.

To her credit, Governor Rell has supported the Board’s recommendation that the State study the reinstitution of tolls, using modern cashless collection technology, and the State will also study the concept of congestion pricing, that is, varying tolls based on traffic congestion levels.

The transportation finance bonds Connecticut has issued routinely require that the revenues collected in the Special Transportation Fund be at least two times the required interest and principal payments on the bonds.  The primary sources of revenue for this Fund are gasoline and other taxes heavily based on fuel consumption and automobile usage.  If fuel and automobile consumption decline, the State’s ability to cover the existing bond carrying charges or to issue new bonds will be compromised.  That is why new and more diversified sources of revenue will be needed, particularly revenue sources not dependent on fuel consumption.

But even the imposition of tolls on Connecticut interstate highways will not address the broad range of transportation financing issues.  All states will see a reduction of federal funds because of the problems with the Federal Highway Trust Fund.  So new and creative techniques will be needed to finance and expand transportation capability.

There is no single “silver bullet” solution, but there are multiple solutions with significant cumulative impact.  The least expensive way to reduce the gap between the demand for transportation and existing capacity is to invest in demand reduction strategies. Virginia uses a web-based program to match commuters with space in their motor vehicles with individuals looking for rides.  This is a very inexpensive way to take motor vehicles off the roads.  Building bicycle paths and providing secure access to trains and workplaces are great solutions for parts of the country that have transportation corridors which can have a part of the corridor dedicated to non-motorized transport.  San Francisco is piloting a program which uses inexpensive and readily-available GPS technology to help people cruising for a parking space in a congested area know where parking is available.

I also like the idea of having delivery vans serve multiple retailers who would otherwise have individuals coming into the store to pick up a single item.

Finally, there are private sector companies like Cisco, Verizon, ATT, Research in Motion and T-Mobile that would welcome the opportunity to work with communities to devise effective telecommuting strategies which use state-of-the-art wireless technology.  I know this works because about 8% of Pitney Bowes call center workers reporting to our Wisconsin, Washington, and Connecticut facilities now work at home.

We also need to recognize that accidents cause congestion, and cost a great deal in terms of public safety and transportation resources.  They also increase motor vehicle insurance costs as well.  Camera-based technologies that detect moving violations, which are deployed in many places, including Southern California, Arizona, and the City of Chicago, significantly reduce accidents in the areas in which they are used.

There are many other small steps we could take to reduce this capacity-demand gap, most of which would cost far less than the major highway construction projects we cannot readily afford with our current financing methodologies.  We need to think differently about the problem of transportation financing.