Innovative Highway Finance Options

Construction, operation and maintenance of West Virginia’s roads and highways is becoming increasingly challenging. A variety of factors currently complicate the planning process and slow construction, challenge operations and delay maintenance. These challenges are primarily driven by the economic and population changes that affect the State. This study reviews financing options for highway construction that present key challenges and opportunities to the West Virginia Division of Highways. In particular, the author reviews the current method of providing financing for public goods within the State. This analysis includes a description of the basic highway funding process and outlines the motivation for the State’s adoption of this financing mechanism. Extensive simulations of tax rate changes follows this on the maintenance and construction of highways under current federal law. This section provides key estimates of tax elasticity’s for the State’s major tax instruments as well as other results of importance for policymakers. Importantly, the author discusses the efficacy of adding direct tax increases or instruments in support of highway construction, operation and maintenance. The next section describes innovative financing as described by the U.S. Department of Transportation’s recent experiments in highway financing. This suite of innovative finance options primarily represent the relaxing or adjustment of administrative rules on matching funds. The limits to their application to West Virginia are discussed. The major innovation in financing that offers possibilities to West Virginia are Public Private Partnerships. To better understand the issues involved in Public Private Partnerships, this section describes the issue in some detail with a focus on highway construction and operations. Finally, the long run viability of the current financing system will require adjustment of taxation policy to better align highway demand with the changing technology that is available to motorists and government. This section describes issues involving gas taxes and road pricing and their impact on the financing of West Virginia’s highways.


  • English

Media Info

  • Media Type: Print
  • Edition: Final Report
  • Features: Appendices; Figures; References; Tables;
  • Pagination: 45p

Subject/Index Terms

Filing Info

  • Accession Number: 01056132
  • Record Type: Publication
  • Report/Paper Numbers: TRP 99-33
  • Created Date: Aug 29 2007 4:56PM