NACo report finds county transportation project funding ‘increasingly inadequate’

| February 25, 2014

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A report released Monday by the National Association of Counties (NACo) finds that “federal and state funding for county transportation projects is increasingly inadequate.”

The report, “The Road Ahead: County Transportation Funding and Financing,” which focuses on county-owned roads and bridges, notes that counties build and maintain 45 percent of public roads and 230,690 bridges in addition to their work with a third of U.S. transit and airport systems.

The report points to Federal Highway Administration data, which shows that federal and state funding for local highway projects fell 10 percent between 1998 and 2011. According to the report, that is equal to 16 percent of Moving Ahead for Progress in the 21st Century Act (MAP-21) National Highway Performance Program (NHPP) and the Surface Transportation Program (STP) funding for federal-aid highways, considering that local governments are responsible for 43 percent of the federal-aid highways.

In addition to receiving less funding, local agencies face increased costs for transportation projects, more traffic and limited ways to generate revenue, according to the report.

The cost of construction rose 44 percent between 2000 and 2013, which the report attributes to “fast changing economic environments… especially in states with rapidly expanding oil and gas industries.”

The report also notes that 43 states have limitations on county-collected property taxes — 38 of which “impose statutory limitations on property tax rate, property tax assessments or both.” In 12 states, counties can collect local gas taxes, which are often limited to a maximum rate and require additional approvals.

While some counties are finding other ways — including local sales taxes– to fund local transportation projects, the report shows that they don’t cover business and residential needs. In 29 states, counties are authorized to collect local option sales taxes for transportation, and in 15 of those states, voters have approved taxes for road projects.

In Pennsylvania and Ohio, state and local governments have formed partnerships that allow counties “to pool resources and materials to save money on transportation projects,” while some in states, including Iowa, Missouri and Nevada, counties are using tax increment financing, special assessment districts, development impact fees and other land value capture options to invest in transportation projects. Other counties, such as Miami-Dade County, have been able to use public-private partnerships (PPPs or P3s) to fund projects.

According to the report, reauthorization of the highway funding bill offers a chance for counties to discuss their role in the national transportation network.

The current bill, MAP-21, will expire in September.

To download the full report, click here. An interactive map is available at uscounties.org/county-transportation-funding.

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