Creative Infrastructure Solutions

An article in the latest edition of the Economist entitled, "A Time for Renewal" describes several different ways that governors around the country are getting creative about raising funds to pay for their states' critical infrastructure needs.

The article shows how federal funding is increasingly tapped as the Highway Trust Fund, the source for most of the federal government's transportation infrastructure spending, is running dry. The Congressional Budget Office's most recent projections for the Highway Trust Fund show that the gas tax is not generating nearly enough to cover all of our highway and transit expenses, and this scenario will only get worse as Americans continue to drive less and buy more efficient cars. As the graph above shows, starting in 2015, the Highway Trust Fund will end the year with a negative balance, accruing larger and larger shortfalls as time goes on. Even this bleak situation will still require transferring tax dollars from the U.S. Treasury to cover shortfalls in 2013 and 2014.

Many states are not waiting around for policy makers in Washington, D.C. to figure out a solution to this federal funding problem. Many states are coming up with their own creative ways of raising new revenues within their own borders. Some states are increasing fees on users of the transportation system, either by increasing highway tolls or transit fares. Some are increasing their states' sales taxes or taxing specific things like sweets, alcohol or gambling. Others are turning to public-private partnerships.

In Chicago, Mayor Rahm Emanuel has created the Chicago Infrastructure Trust (CIT) to help attract private capital to pay for public infrastructure improvements. PBS recently published a great video primer on the CIT with Rahm Emanuel and his top aides describing it in their own words. View it here.