A lot of the push for increased federal transportation funding has been generated over the years by projections from the Federal Highway Administration and two national commissions, based largely on numbers from FHWA's biennial Conditions & Performance report. The latest C&P report, 2013 Status of the Nation's Highways Bridges, and Transit Conditions and Performance, was released late in February and contains some welcome good news. Not only have highway and bridge conditions continued to improve, but total federal, state, and local highway and bridge capital spending has finally reached a level sufficient to maintain current conditions, if present spending levels are maintained. Improving both conditions and performance (i.e., eliminating the backlog of deficient bridges and achieving significantly reduced congestion) will still require increased investment—but not as much as estimated in previous reports.
First let's look at the numbers. Because of the time it takes to collect and analyze the data and run FHWA's models, there's a several-year lag between the data used in the C&P report and the year it comes out. This 2013 report relies on 2010 data. Total U.S. highway and bridge capital spending in 2010 was $88.3 billion in regular funding plus $11.9 billion in stimulus (Recovery Act) money. The report's new estimate of the annual amount needed to maintain current conditions and performance is $65.3 billion to $86.3 billion. As far as I know, this is the first time in the history of the C& P report that actual capital spending exceeded what FHWA estimates as needed to keep things from getting worse. That is very good news. (The reason for the range in the estimated annual investment is that two different projections of annual growth in vehicle miles of travel—VMT—were used). I discuss below why I think the lower estimate is the better one.
What accounts for this major change? First, highway construction costs have come down, FHWA reports, by 18% between 2008 and 2010, so each billion dollars goes further than it used to. Second, for the 30-year projection on which annual investment needs are based, the expected rate of growth in VMT is lower than what FHWA has used before, reflecting the apparent maxing out of VMT per capita, meaning that future VMT growth will be driven by some combination of population growth (personal travel) and economic growth (goods-movement).
And as noted in a Reason Foundation report by David Hartgen last year, U.S. highways and bridges are not "crumbling." As the C&P report documents, highway capital spending increased by 36.6% in real (inflation-adjusted) terms between 2000 and 2010. And that has led to significant improvements. For example, on the entire federal-aid highway system, the percentage of pavements with "good" ride quality increased from 42.8% in 2000 to 50.6% in 2010. And on the more important subset defined as the National Highway System, the fraction "good" went from 48% in 2000 to 60% in 2010. Structurally deficient bridges on the NHS decreased from 6% in 2000 to 5.1% in 2010. The report includes a lot more data along these lines, including a 21.6 decrease in the annual number of highway fatalities.
But the highway system still includes very serious congestion in urban areas and on some long-distance Interstates. What will it take to improve things? FHWA models a number of scenarios, but I will limit this discussion to the overall highway system, not the subsets like NHS. Two different "Improve" scenarios are employed: one based on implementing all improvements with a benefit/cost ratio of 1.0 or greater and the other requiring a higher B/C threshold of 1.5 or greater. Both were run for the two different estimates of annual VMT growth: 1.36% and 1.85%. Given political funding realities, the B/C of 1.5 is a more realistic threshold, and as I explain below, the lower VMT growth rate is far more defensible. So for that set of model runs, the average annual highway and bridge capital investment is estimated at $93.9 billion. That compares with the actual (not including stimulus funds) total in 2010 of $88.3 billion. That is an increase of just $5.6 billion. For once we have a projection of needed investment that is within the realm of actually being possible!
Now let's get back to the estimated VMT growth rate. The higher one is based on a set of forecasts provided to FHWA by state DOTs. The lower one is FHWA's own estimate, which FHWA says is "based on a continuation of regional trends over the last 15 years." Even that low estimate is being trashed by anti-highway groups like PIRG and Streetsblog USA. Their material routinely conflates the widely acknowledged peaking of VMT per capita with an alleged halt in total VMT growth. But there are good reasons to expect that continued economic and population growth will lead to continued growth in total VMT—albeit at a lower rate than in the 1960s through 1990s. A rigorous analysis by Starr McMullen and Nathan Eckstein of Oregon State University found a strong causal relationship between economic growth and VMT growth (Transportation Research Record No. 2297, 2012, pp. 21-28). A VMT forecasting model developed by DOT's Volpe Center in 2011estimated VMT growth rates state by state, for light vehicles and heavy vehicles. I used their approach in my 2013 Reason policy study "Interstate 2.0." My state numbers (unweighted by population) averaged 1.19% for light (personal) vehicles and 2.53% for heavy vehicles (trucks), and since light vehicles account for nearly 90% of total VMT, the weighted average was 1.33%—very close to the C&P report's 1.36%.
And contrary to PIRG and other anti-highway folks, total VMT has begun growing again, increasing 0.6% last year as the economy finally emerges from the worst recession since the Great Depression. And that increase has been showing up in data collected and reported by INRIX. Its 2013 "Traffic Scorecard Report," released March 5th, found that traffic congestion increased by 6% in 2013, with the largest increases in metro areas whose economies are doing the best (e.g., booming San Francisco up 13% and Austin up 9%). These congestion increases are a leading indicator that VMT growth is resuming.
This article also appears in Robert Poole’s Surface Transportation News #125.