Advancing a Multimodal Transportation System

Every mode of transportation requires substantial public subsidy, and highways are no exception.

As this report shows, 40 percent of all National Highway System miles fail to generate sufficient user fee revenues to cover their long-term maintenance costs, even when initial construction and inflation costs are removed from the analysis. This is not an argument in favor of shuttering nearly half of all major roadways.

Clearly, the benefits derived from a large roadway network are greater than the productivity of any one part. At the same time, however, economic research clearly demonstrates a decline in marginal productivity from additional highway investments.

In effect, we have realized the benefits that come from creating a comprehensive national network, and subsequent highway investments yield only modest gains at the expense of more-productive projects.

This reality has profound implications for state and federal transportation policy.

Most notably, this research indicates that objective measures of need and return on investment should drive expenditure decisions without regard for the money source. For states, this means removing statutory or constitutional prohibitions on the use of user fee revenues. At the federal level, this means providing greater programmatic flexibility and establishing a multimodal fund.

The new fund would ensure that beneficial projects no longer sit on the shelf because of a historical holdover that omits freight, passenger rail, and intermodal projects, among others, from the federal program.

Failure to undertake these reforms will mean that limited resources flow disproportionately to low-productivity highway investments. Without greater modal balance, the transportation system will face even greater congestion and economic loss. In short, the stakes are too high to continue with a business-as-usual approach.