THE 1956 RHODE ISLAND HIGHWAY FINANCE STUDY

THE 1956 RHODE ISLAND HIGHWAY FINANCE STUDY WAS DIRECTED PRIMARILY TOWARD PROVIDING ANSWERS TO TWO BROAD QUESTIONS IMPORTANT FOR STATE FISCAL PLANNING, AS FOLLOWS: (1) WHAT METHOD OF FINANCING THE PROPOSED LONG-RANGE STATE HIGHWAY PROGRAM WOULD REQUIRE THE LOWEST ADDITIONAL REVENUE REQUIREMENTS CONSISTENT WITH SOUND FINANCIAL PRACTICE, AND WHAT WOULD THE ADDITIONAL REVENUE REQUIREMENTS BE? AND (2) SHOULD THE STATE PROVIDE ADDITIONAL ASSISTANCE TO LOCAL COMMUNITIES FOR HIGHWAY PURPOSES, AND IF SO, ON WHAT BASIS COULD IT BEST BE ALLOTTED TO ASSURE ADEQUATE LOCAL HIGHWAYS? THE STUDY WAS A PRAGMATIC APPROACH IN A GENERAL FUND STATE, FOR DETERMINATION OF THE ADDITIONAL REVENUE REQUIREMENTS AND SELECTION OF THE FINANCING METHOD, THREE BASIC ELEMENTS WERE NEEDED - ENGINEERING DATA, REVENUE PROJECTIONS, AND ASSUMPTIONS AS TO THE PATTERN OF FEDERAL AID. ENGINEERING DATA COMPILED BY THE RHODE ISLAND DEPARTMENT OF PUBLIC WORKS UNDER THE GUIDANCE OF THE AUTOMOTIVE SAFETY FOUNDATION PROVIDED TOTAL COSTS OF THE PROPOSED HIGHWAY PROGRAM OVER A 34-YEAR PERIOD UNDER ALTERNATIVE ASSUMPTIONS OF A 10- AND A 15-YEAR CATCH-UP PROGRAM. IT WAS ASSUMED THAT FEDERAL AID WOULD REPRESENT 90 PERCENT OF CONSTRUCTION COSTS ON THE INTERSTATE SYSTEM, AND WOULD REMAIN UNCHANGED ON OTHER FEDERAL AID SYSTEMS. REVENUE PROJECTIONS WERE BASED ON HIGHWAY USER TAXES ONLY. IT WAS IMMEDIATELY OBVIOUS THAT THE ONLY WAY REVENUE REQUIREMENTS COULD BE KEPT DOWN DURING THE CRITICAL CATCH-UP PERIOD WOULD BE TO COVER PEAK CONSTRUCTION COSTS BY BORROWING, TO BE REPAID LATER WHEN PROGRAM COSTS WERE LOWER AND PROJECTED REVENUES HIGHER. IN RHODE ISLAND, CITY ARTERIAL STREETS, AS DEFINED IN THE ENGINEERING STUDY, HAVE CUSTOMARILY BEEN A CITY RATHER THAN A STATE RESPONSIBILITY. BECAUSE OF THEIR OBVIOUS IMPORTANCE TO THE STATE HIGHWAY SYSTEM, HOWEVER, IT WAS FELT THAT ADDITIONAL AID TO CITIES SHOULD BE RELATED TO PROGRAM REQUIREMENTS FOR CITY ARTERIAL STREETS. NEVERTHELESS, IN GENERAL IT APPEARED THAT ABILITY TO PAY SHOULD BE THE MEASURE OF HIGHWAY AID TO LOCAL COMMUNITIES. A FORMULA WAS TESTED BASED ON AID TO THE CITIES, AS A GROUP, AT 50 PERCENT OF AVERAGE ANNUAL PROGRAM COSTS FOR CITY ARTERIAL STREETS, AND AID TO THE TOWNS, AS A GROUP, IN AN AMOUNT WHICH EQUALIZED THE NET REMAINING AVERAGE ANNUAL PROGRAM COSTS TO THE CITIES AND TO THE TOWNS IN TERMS OF MILLS PER DOLLAR OF EQUALIZED VALUATIONS. THE EFFECT OF THIS WAS TO REDUCE CITY REQUIREMENTS FOR HIGHWAYS DURING THE CATCH-UP PERIOD 7.5 PERCENT BELOW RECENT EXPENDITURE LEVELS, AND TO REQUIRE A 6.5 PERCENT AVERAGE INCREASE FOR THE TOWNS. THIS WAS CONSIDERED A SATISFACTORY RESULT, SINCE THE CITIES HAD BEEN SPENDING RELATIVELY HEAVILY ON HIGHWAYS IN RECENT YEARS, WHILE THE TOWNS HAD SPEND RELATIVELY LITTLE. BOTH CITIES AND TOWNS IN RHODE ISLAND ARE HARD PRESSED FOR ADDITIONAL FUNDS. WITHOUT SUCH STATE AID, THE CITIES WOULD HAVE HAD TO INCREASE HIGHWAY EXPENDITURES BY 7.4 PERCENT, AND THE TOWNS BY 24.8 PERCENT. EQUALIZATION OF THE COST BURDEN SEEMED FAIR IN VIEW OF THE IMPORTANCE TO THE STATE AS A WHOLE OF A MODERN INTEGRATED HIGHWAY SYSTEM THROUGHOUT THE STATE. IF ADDITIONAL STATE AID TO CITIES AND TOWNS WERE MADE ON SUCH A BASIS, ADDITIONAL STATE REVENUE REQUIREMENTS FOR A 15-YEAR CATCH-UP WOULD BE INCREASED TO 26.4 PERCENT ABOVE THE BASE CURVE, ACCORDING TO THE 20-YEAR BOND AMORTIZATION PLAN, AS COMPARED WITH THE 16.5 PERCENT INCREASE REQUIRED FOR HIGHWAYS OF DIRECT STATE RESPONSIBILITY ALONE. /AUTHOR/

Media Info

  • Monograph Title: Allocating highway cost responsibility: report on studies in five states
  • Serial:

Subject/Index Terms

Filing Info

  • Accession Number: 00201565
  • Record Type: Publication
  • Files: TRIS, TRB
  • Created Date: Sep 23 1994 12:00AM