By Dr. Alison Premo Black, chief economist, ARTBA

Highway capital spending is not keeping pace with rising project costs or system demand, according to the 23rd edition of the U.S. Department of Transportation’s (U.S. DOT) Status of the Nation’s Highways, Bridges, and Transit Conditions and Performance report to Congress.

The report, based on 2014 data, examines the condition, performance, and investment in the nation’s highway, bridge and transit systems from 2004 to 2014, as well as a 20-year outlook of the cost to maintain or improve these assets. The look forward is based on a series of models that prioritize projects based on their cost-benefit ratio, making the most beneficial improvements first.

The report found that highway capital spending declined an average of 0.1 percent per year between 2004 and 2014, failing to keep pace with changes in construction costs.  Over the same time period, the demand on the system grew—vehicle miles traveled increased at an average rate of 0.2 percent.

As a result, the miles of roadway in “good” condition declined from 43 percent to 38 percent. One in five miles of roadway that qualify for the federal-aid program are rated in “poor” condition.  A large portion of transit facilities (36.4 percent) and systems (21 percent) are in “poor” condition.

States continue to focus on “fix it first” approach, with nearly two-thirds of highway capital spending—62 percent—on system rehabilitation. Just 12 percent of capital outlays were for new roads and bridges and another 12.5 percent was to add capacity to existing roadways. Average spending on highway rehabilitation increased at an annual rate of 6.1 percent between 2004 and 2014, while spending on new roads declined at a rate of -1.3 percent per year.

The report identified a backlog of $786.4 billion in highway and bridge work across the country and $98 billion in transit work. The baseline spending level in the report, including federal, state and local funds, was $11.3 billion for transit and $105.4 billion for highways and bridges.

U.S. DOT estimates that the annual cost over the next 20 years to maintain the current system conditions and performance would be $102.4 billion in 2014 dollars for highways.  Considering expected inflation, ARTBA estimates that annual level would average at least $131 billion per year, an increase of 24 percent over 2014 spending levels.

To make all cost-beneficial improvements the annual cost, in 2014 dollars, would be $135.7 billion. ARTBA estimates this would average $174 in nominal terms to keep pace with inflation, an increase of 65 percent over the baseline.   Maintaining a state of good repair for transit would cost $18.4 million per year, or $23.6 billion adjusted for inflation—more than double what was spent in 2014.