Sustainable Revenue for Transportation: Policy Reform Options
Rethinking investment policies, revenue sources
Performance metrics
MPC supported the 2012 federal transportation authorization, MAP-21, because for the first time ever, it required the establishment of national goals, performance measures and accountability in planning and funding transportation investments. It is critical that Congress build on MAP-21 and the more recent legislation, FAST, to increase revenues and make additional, significant policy changes to improve our nation’s transportation infrastructure.
In Illinois, transportation spending is not tied by law to statewide goals or performance measures, nor are agencies required to coordinate to achieve the highest return on an investment. MPC is a strong advocate for a statewide, data-based approach that prioritizes the most effective, accountable and transparent investments. Simultaneously, we are advocating for new revenue options to allow Illinois to invest in transportation improvements that commuters and businesses desperately need.
A merit-based process for prioritizing transportation projects in Illinois will provide:
- Accountability: Given Illinois’ fiscal state, it is critical to reap the highest value for every taxpayer dollar spent. Merit-based budgeting would achieve this by requiring all projects that vie for capital funding to be weighed against criteria based on statewide goals.
- Transparency: A statewide, data-rich, outcomes-based approach to prioritizing infrastructure investments will make it clearer to Illinois taxpayers why their tax dollars are being funneled toward a specific project.
- Strong return on investment: Setting forth a process for prioritizing projects will ensure taxpayers receive the best return on their investment. Strategically investing precious tax dollars rather than spending them will improve quality of life, clean the air and generate much-needed economic development.
- A more level playing field: A more open and honest way of making capital investment decisions in Illinois means all communities’ projects would be measured against the same yardstick: The “have-nots” will have as good a chance to compete as the “have-lots.”
Federal revenue options
The federal government plays an essential role in funding transportation capital investments in Illinois and in other states. The Chicago region’s 5-year public transit capital plan, for example, is overwhelmingly reliant on grants from the federal government. The 2015 federal transportation authorization, however, did not increase funding for transportation significantly. Moreover, it relies on a transfer of general fund dollars rather than revenue from the motor fuel tax, which has not been increased at the federal level since 1993.
Several new revenue sources are necessary to fund the federal contribution to transportation capital funding. The following options are reliable and sustainable:
- Increase the federal motor fuel tax and index it to inflation to ensure that this revenue source remains steady over time.
- Implement a vehicle miles traveled tax to account for the decreasing returns of a per-gallon motor fuel tax as vehicle efficiency increases.
- Allow tolling of existing roads. Federal law limits states’ and regions’ abilities to use congestion pricing—a powerful tool to manage vehicular traffic while improving transportation options—by failing to reauthorize several programs and by effectively prohibiting states from tolling existing Interstate lanes. As one remedy, MPC supports U.S. Sen. Mark Kirk’s (R-Ill.) Lincoln Legacy Infrastructure Development Act, which not only would advance congestion pricing but also encourages public-private partnerships to fund transportation improvements.
- Restore selection criteria to TIFIA. MAP-21 unfortunately eliminated one of the greatest strengths of a competitive loan fund known as the Transportation Infrastructure Finance and Innovation Act (TIFIA): project selection criteria. MPC supports reinstating these criteria to ensure TIFIA loans support only the most innovative nationally or regionally significant projects.
Illinois and regional revenue options
In addition to the revenue options MPC is proposing in response to Illinois’ $43 billion state transportation infrastructure shortfall, several additional sources are available to fund transportation at the state and regional level. These sources would provide an essential augmentation of revenues to pay for road, bridge and transit maintenance and construction.
- Broaden the sales tax base to include services, which should be accompanied by a reduction in the overall rate. This would make Illinois more competitive with neighboring states, which have a broader sales tax base but a lower rate.
- Implement Transit Facility Improvement Areas, a type of financing district along transit corridors. Increases in property tax revenues that result from transportation investments are used to fund the infrastructure.
- Implement variable-priced parking in neighborhoods throughout the region so that parking supply is more closely matched to demand. Variable-priced parking can also reduce congestion by allowing people to find parking spaces more easily and encouraging them to try other modes of transportation, such as walking, biking and transit.
- Expand the use of congestion pricing on the existing system, in order to ensure congestion-free travel options are available along the region’s major highways. New lanes on I-55, the Stevenson Expressway, could be the region’s first step in this direction.
