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Transportation Finance

Current Projects
Future Transportation Financing Options: Challenges and Opportunities

Principal Investigator: Karen Glitman (UVM Transportation Research Center)
Funding Agency: US DOT
Partner: Snelling Center for Government

Project Summary

The funding of America's transportation system is a complex process that includes a number of stakeholders, both private and public. Financing options for rural states have not been at the forefront of the national debate. This project aims to understand all the financing options under consideration and to assess their viability in rural states.

The cost to maintain, or preserve, the current national transportation system is well documented and has eclipsed the amount of funds available under the current financing structure. In short, our transportation system is failing and so is the national system of funding it. Much of the current literature on transportation funding warns that failure to fund transportation infrastructure can lead to major consequences, as transportation plays a significant role in the national, state, and local economies for access to jobs, recreation, education, healthcare, and shipping goods. This situation is also true in Vermont where the challenges of small population, small tax base, rural setting and aging infrastructure have exacerbated the problem.

The federal gas tax (and most state gas taxes) is a fixed amount per gallon, not indexed for inflation. This has been long known as a weak revenue structure to transportation professionals. New environmental, economic and transportation policies are seeking to increase fuel efficiency for vehicles and are encouraging alternative fuels. The success of these policies will cause revenues from the gas tax to decrease. This paradox of conflicting policies is not widely observed in the public discourse. As the public becomes increasingly engaged in the debate over how the post-gas tax transportation system will be funded there is a need to construct a better framework so that the current financing structure and options can be readily displayed and made accessible to the public and to policy makers.

The Elements and Outcomes of Varying Financing Scenarios on the Overall Cost of Transportation Capital Programs

Principal Investigator: Dr. Richard Sicotte (Department of Economics)
Co-Investigator: Karen Glitman (UVM Transportation Research Center)
Funding Agency:

Project Summary

This project explores the economic forces that are in play in transportation capital programs. The goal is to inform decision makers so that they can better determine the most efficient means of increasing funding for transportation capital programs without unduly affecting costs.

Two factors have been widely discussed in the transportation sector over the last year. First, as we delay maintenance due to limited resources, the unit cost of fixing our infrastructure increases rapidly. That is, delayed maintenance leads to more costly repairs. Second, based on asset management principles, the costs to maintain our infrastructure at the desired level now exceeds our revenue sources for transportation. This project aims to develop a model to show the optimal rate of increase in transportation expenditures over time to most efficiently and cost effectively meet the infrastructure needs. The underlying assumption is that a tripling of the capital program in one year will not result in a tripling of the projects delivered and will, in fact, negatively affect project cost.