managed. These evaluations provide evidence on whether the institutions and practices that govern finance have tended to promote prudent spending.

The fourth section examines how certain features of the existing finance system, including user fees, the practice of dedicating revenues from users to specified purposes, and the federal structure of the system, may affect government transportation programs. These features are relevant because they influence the cost-effectiveness of spending today and because they would require revision if new funding sources are introduced.


A standard set of criteria has evolved in past evaluations of tax alternatives and sources of funds for public infrastructure programs. Box 3-1 shows criteria from two sources, the Oregon Road User Fee Task Force study described in Chapter 1 and a study of funding alternatives prepared for the state departments of transportation through the National Cooperative Highway Research Program (NCHRP). The criteria proposed in the NCHRP study were derived from a review of about a dozen tax studies carried out by state governments mainly in the 1980s. The criteria in all the studies involve revenue adequacy, administrative feasibility or cost, and some fairness or equity concept. All the studies seem to accept as a premise that a dedicated revenue source is sought; that is, that transportation expenditures are to be funded by revenue from identified taxes or fees.

These lists together contain all the relevant considerations, but definition and application of some of the criteria have been difficult. Equity or fairness is given diverse and sometimes subjective definitions. As noted in Chapter 1, the concept of efficiency often is vaguely defined or missing. (It is missing from the Oregon study’s list, even though the study recommends congestion pricing.) Few if any of the original studies attempt to quantify efficiency impacts of alternative transportation tax or fee schemes.

The difficulty that governments have experienced in defining measures of fairness and efficiency that provide useful direction on highway funding is illustrated by the highway cost allocation studies. These studies have been conducted periodically since at least the 1950s by the federal government and by many states to determine the relative taxes or fees that should be charged to different classes of vehicles—in particular, to large trucks. To establish criteria for evaluating the federal highway user fee schedule, the federal studies have sought to follow the declaration of policy in the 1956 highway act, which created the Federal Highway Trust Fund: “if it hereinafter appears … that the distribution of the tax burden among the various classes of persons using the Federal-aid highways, or otherwise deriving benefits from such highways, is not equitable, the Congress shall enact legislation in order to bring about … such equitable distribution” (Highway Revenue Act of 1956, P.L. 627, June 29, 1956, Section 209). The federal study authors

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