Conditions and Performance Chapter Listing

Conditions and Performance Home Page

Introduction

Summary

Highway and Bridge Finance

Transit Finance

Highway Capital Outlay Expenditures - Trends

The Federal share of capital outlay exceeded 40 percent in 1959. It has remained above this level ever since, peaking at 58.3 percent in 1981. Since 1987, the Federal share has remained in a range of 41 to 46 percent. Since 1995, the Federal share has fallen from 42.6 percent to 41.1 percent. [See Exhibit 6-15].

Exhibit 6-15

Federal Share of Highway Capital Outlay, 1957-1997

The Federal share of capital outlay is expected to increase during the middle years of TEA-21, as Federal funding will rise significantly. Due to the nature of the Federal-aid highway program as a multiple-year reimbursable program, the impact of increases in obligation levels phases in gradually over a number of years. The largest percentage increases in cash expenditures for highways by the Federal Government are expected to occur in 1999, 2000, and 2001. Federal cash expenditures for highways are projected to increase in 2002 and 2003 as well, but at a slower pace. Based on these projections, the Federal share of capital outlay is likely to increase from 1998 through 2001, and then decline somewhat. The Federal share in 2003 may be higher than that of 1997, but that increase will depend on how quickly States and local governments elect to increase their own highway capital funding.

Cash expenditures from the Highway Account of the HTF were lower in 1998 than in 1997, so it appears that the Federal share of capital outlay will decline below the 41 to 46 percent range that has been observed since 1987. The Federal share is expected to return into that range for the 1999-2003 period.

Improvement Type Trends

The 1997 C&P report indicated that there had been a significant change in the distribution of capital improvements from 1993 to 1995, as capacity expansion declined as a percentage of the total, while the share used for system preservation and other improvements increased. This trend was partially reversed between 1995 and 1997, as expenditures for system expansion grew more quickly than those for system preservation or system enhancements. In 1997, 47.6 percent of capital outlay was used for system preservation, down from the 1995 level of 50.0 percent, but higher than the 44.7 percent in 1993. System enhancement's share (8.0 percent) declined from its 1995 peak (9.2 percent), but remains higher than the 1993 level (6.0 percent). [See Exhibit 6-16]

Exhibit 6-16

Distribution of Highway Capital Outlay by Improvement Type: 1993, 1995 and 1997

Expenditures for the construction of new roads and bridges had been falling steadily in recent years, both in percentage terms and actual dollar amounts. The decline in actual dollar amounts stopped in 1996, and the decline in percentage terms stopped in 1997, as new construction's share of total capital outlay climbed to 15.6 percent from 15.2 percent in 1995. This is still well below the 22.8 percent in 1993. Expenditures for the expansion of existing roads increased to 28.8 percent of total capital outlay in 1997, up from 25.6 percent in 1995 and 26.6 percent in 1993.

It is difficult to predict what changes in highway capital investment patterns may occur between 1997 and 2003 under the Transportation Equity Act for the 21^st Century (TEA-21). This legislation gives States a great deal of flexibility to address their system deficiencies, and States are likely to pursue different investment strategies.