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Overview of State Economic Development Highway Programs (Task A-B Report)

Part 3: Other State Policies And Activities

Beyond programs that explicitly allocate funding for road and highway investment to address economic development goals, many states have policies that effectively promote the use of other program funds for these purposes. These policies can be classified into three groups:

The remainder of this Chapter provides brief summaries of these state policies.

3.1 Set-Asides for Discretionary Economic Development Related Projects

Staff of the following state transportation departments report that their agencies have special funding for road or highway projects that support economic development, although this funding is not part of a formally operating economic development highway program. However, each of them has some form of set-aside financing that effectively supports these types of projects. They are: Kentucky, Pennsylvania, and South Carolina. These states funding arrangements are profiled on the pages that follow.

States with Existing Economic Development Highway Programs

Kentucky Transportation Cabinet

Program Category

Economic Development set-aside


To fund economic development and industrial access projects.

Program Requirements

The Cabinet is investigating the possibility of developing objective criteria for the selection and prioritization of all projects contained in the six-year road plan. The Economic Development Cabinet would be responsible for any selection criteria. The current statute requires that the Transportation Cabinet program at least two million dollars for industrial development. The Transportation Cabinet can exceed that amount and select other projects as necessary.


Two million of state road funds are set aside annually to assist, for the most part, in industrial access projects. However, no measurable criteria have been established. For FY 2003, approximately $3.5 million have been committed.

Economic Development Projects FY 2002

County Projects Scope State Amount
Christian Construct an industrial access road from US 41 A approx. 0.17 miles north of JCT KY 756, extending westerly 0.5 miles with accompanying turn lane on US 41 A. $371,000
Daviess Construct an extension of airpark drive from end of existing roadway, extending approx. 1,000 feet to the south. $108,000
Edmondson Construct an 890' access road from US 31 W to the Edmondson county industrial park. $83,780
Knott Design and construct an access to star fire power plant consisting of bridge and roadway approaches adjacent to and north of KY 80 approx. 1.6 miles NE of the Perry county line area $298,500
Russell Construct an extension of progress drive in local industrial park to Brass company. $41,000
Simpson Construct an extension (1150 ft) of reasonouer drive in the Franklin-Simpson Industrial Park to serve the new facilities of U.S. Tobacco company. $125,500
Simpson Construct turn lanes on US 31 W North of Franklin to improve safety and access to the new Hormone-Motive manufacturing faculty. 1,442
Washington Initial surfacing of the existing 2900'access road serving the clear view commerce complex and construction of A3200' extension of existing access road. $723,000
Wayne Construct tapered right turnouts and restrype KY 90 at American Woodmark SW of Monticello near KY 834 at Donahue. $45,000
Total Funds   $1,797,222

Pennsylvania Department of Transportation

Program Category

Economic Development Set-aside


To fund transportation improvements that promote economic development and create new jobs through coordination with the Governor's Action Team on opportunities for new business in Pennsylvania.

Program Requirements

The Governor's Action Team, as part of the Department of Community and Economic Development, works with business interests, which are interested in locating new business/industry or expanding existing industry, thereby creating new jobs for Pennsylvanians. The Governor's Action Team assembles state resources and cooperation from various state agencies to assist business in making their location decisions. When transportation access or transportation improvements are necessary, the Department of Transportation becomes involved, working with the specific needs of the development. In most cases, a partnership arrangement is developed for cost sharing for the improvements.


$25 million in state capital dollars are annually set-aside within the Statewide Transportation Improvement Program. Projects are approved and programmed based on coordination with the Action Team and developers.

Economic Development Projects FY 2002

County Project Company Involved State Amount Jobs Assisted
Dauphin Hershey Park Drive Extension Hershey Foods $8,518,000 500
Chester PA 100 Improvements Vanguard *$320,000 6,000

* $14,680,000 in additional assistance is programmed in future years 

South Carolina Department of Transportation

Program Category

Economic Development Set-aside


South Carolina DOT reserves 1% of the state gas tax revenues (about $3 million) for funding economic development related transportation projects. The allocation of these funds is coordinated through the state's economic development office.

States without Any Existing Economic Development Highway Programs

Texas Department of Transportation. The Texas Transportation Commission reduces the minimum local matching funds requirements for highway improvement projects when the project is located in an economically disadvantaged county.

Minnesota Department of Transportation has designated an "Interregional Corridor System (IRC)" to enhance connections between the regional trade centers of Minnesota. The system is viewed as supportive of economic development in that it is designed to improve access for regional trade centers, but there is no special targeting to rural or economically depressed areas of the state. The IRC system encompasses 2,900 miles of highway connecting the State's important regional trade centers. The total cost to complete the IRC improvements analyzed by MnDOT is $389 million.

Vermont Department of Transportation operates a State Infrastructure Bank that has a distinct orientation towards supporting economic development projects.

Summary of State Set-Asides for Economic Development Related Projects

Minnesota Department of Transportation

Provides efficient connection among regional trade centers through Interregional Corridor System

Kentucky Transportation Cabinet

Sets aside $2 million for various industrial access projects

Pennsylvania Department of Transportation

Sets aside $25 million/year in state funds for Governor's Action Team economic development opportunities

Texas Department of Transportation

Adjusts the minimum local matching funds requirements for projects in economically disadvantaged counties

South Carolina Department of Transportation

Uses 1% of gas tax revenue (about $3 million) in coordination with the state economic development office for transportation projects in the economic development category

Vermont Department of Transportation

Operates state infrastructure bank oriented to support economic development projects

3.2 Economic Development Factor in Highway Investment Decisions

Staff of the following State Transportation Departments report that their agencies formally include economic development as a factor in decision-making for funding highway projects. Each of them differs, though, in how this factor is applied.

Alaska Department of Transportation uses economic impact justifications (to varying degrees) in selecting projects for the National Highway System (NHS), Alaska Highway System (AHS), Community Transportation Program (CTP), and Trails and Recreational Access for Alaska (TRAAK) programs. The CTP and TRAAK projects are scored against criteria that formally include a factor for economic justification, based on the scope of such economic effect. Thus, a project with state economic justification gets more points than one with only local jobs generated.

Delaware Department of Transportation. Based on its policies to support economic development, Delaware DOT has defined a set of objectives that incorporates: (a) identifying key projects and methods for economic development in partnership with local government units; (b) prioritizing projects based upon the project impact on economic vitality, examining opportunities to enhance air freight capabilities; (c) reestablishing local freight in selected areas; and (d) promoting public/private partnership for transportation projects.

Idaho Department of Transportation. Idaho DOT has planned several strategies to achieve its goal to carry transportation improvements in support of economic development by: (a) improving the coordination of statewide inter-modal goods movement; (b) improving the State's competitive edge in goods movement; and (c) integrating goods movement considerations into all transportation planning, programming, and project development.

Indiana Department of Transportation. Indiana DOT uses economic development as decision criterion on a project-to-project basis. It has also developed a "Major Corridor Investment-Benefit Analysis System" which is used by its staff to consider job and income creation impacts as well as standard benefit-cost measures in its assessment of proposed major corridor projects.

Kansas Department of Transportation. Besides having a formal economic development program for local roads, Kansas DOT has a System Enhancement Program, which funds local infrastructure projects based on a set of broad criteria of which 20% weight is given to economic development enhancement.

Maryland Department of Transportation gives attention to economic development on a project-to-project basis, so that projects that support economic development are programmed and developed.

Montana Department of Transportation. Montana DOT has adopted a series of policy actions and goals in support of economic development: (a) promoting access for export industries; (b) considering economic development priorities and role in transportation programming in coordination with the Department of Commerce; (c) engaging in multi-state and regional initiatives to facilitate international trade by participating in trade corridor initiatives; and (d) funding scenic byways and tourism access projects. To better assess needs for rural highway investment, the DOT is currently developing a highway reconfiguration assessment tool that considers economic development impacts of proposed projects.

Nebraska Department of Transportation annually performs a highway needs assessment that identifies state highway system needs over the next twenty years. Economic development is just one factor, along with many other factors, that is considered in the "needs assessment".

Nevada Department of Transportation considers the economic effect of highway projects by using benefit/cost analysis and regional economic models to quantify direct effects. The economic effects attempted to quantify are the multiplier value of highway construction spending, job creation, and generation of local and state taxes. Another important economic factor considered while developing NDOT's highway programs is the impact of transportation projects on the tourism industry of Nevada.

New Jersey Department of Transportation has a Division of Local Government Service and Economic Development, and it includes economic development as a factor in allocating Federal Aid program funds to transportation projects.

New Mexico Department of Transportation does not have any formal economic development program, but does consider economic development as a factor in its transportation projects selection process.

North Dakota Department of Transportation. The "Trans Action Plan" of North Dakota DOT (still in its draft stage) engages both the local government bodies and private sectors in examining and identifying opportunities for collaborations that support economic competitiveness by: (a) considering economic competitiveness at all major decision points; (b) producing a modal that quantifies the economic impacts of load limits; (c) conducting a study to determine the feasibility and opportunity modal freight service in North Dakota; and (d) developing a proposal to establish a transportation infrastructure and technical assistance fund program to facilitate economic development and competitiveness.

Ohio Department of Transportation has a "Transportation Review Advisory Council" (TRAC), which developed a scoring methodology to identify major new capacity projects (over $5 million) that directly create new economic development or job retention that would not have occurred otherwise. The Ohio Department of Development (ODOD) together with ODOT performs the scoring of economic development factors.

Rhode Island Department of Transportation considers economic impacts as an important factor in its TIP selection process.

Summary of States Using Economic Development as a Highway Decision Factor

Alaska Department of Transportation Uses economic development justification to select projects
Delaware Department of Transportation Incorporated a set of objective supporting economic development policies
Idaho Department of Transportation Planned several strategies to support economic development goals
Indiana Department of Transportation Includes economic development as decision criteria from project to project basis
Kansas Department of Transportation Gives 20% weight to economic development enhancement in project selection
Maryland Department of Transportation On project to project basis selects economic development projects and programs
Montana Department of Transportation Adopted a series of policies and actions to support economic development
Nebraska Department of Transportation Considers economic development just as one factor, along with many other factors, in its annual highway need assessment program.
Nevada Department of Transportation Uses benefit/cost analysis and REMI models to consider the economic effect of highway projects
New Jersey Department of Transportation Includes economic development as a category factor in selecting Federal Aid Highway projects
New Mexico Department of Transportation Considers economic development factor in transportation projects selection process
North Dakota Department of Transportation Intends to engage local government and private sectors in examining and identifying collaborative economic development opportunities
Ohio Department of Transportation Uses a scoring methodology to identify economic development projects
Rhode Island Department of Transportation Considers economic impact as an important factor in selecting projects

Note: Kansas DOT also has a formal highway economic development program

3.3 Policies or Programs in Development

The following State transportation agencies do not have any formal economic development program, but report that they are currently undertaking efforts to explore the possibility of adopting some form of highway related economic development program: (1) California Department of Transportation; (2) Colorado Department of Transportation; and (3) Utah Department of Transportation.

Updated: 5/4/2012
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