Tolls: A Necessary Source for Infrastructure Funding
Editorial StaffThe Facts -
- The Biden administration has boosted U.S. infrastructure development with a $1.2 trillion investment.
- Infrastructure funds tend to have the most impact on projects unlikely to be financed locally or privately.
- Many believe the fairest way to fund large-scale infrastructure projects is to get direct payment from the users.
Physical Infrastructure and the Economy
Physical infrastructure plays a crucial role in a country's economy. Yet, funding these projects often sparks debate. President Joe Biden's administration is attempting to address these issues with the $1.2 trillion Infrastructure Investment and Jobs Act.
Infrastructure Investment & Job Creation
The Investment Act has accelerated the speed of infrastructure improvements. $454 billion has already been distributed, funding over 56,000 projects. Notably, state and local authorities manage 90% of the funding, ensuring critical needs are met. The Act has significant impact on projects unlikely to be financed privately, such as the replacement of lead pipes and broadband expansion in rural areas.
User-Paid Infrastructure Projects
One method for funding infrastructure projects is through user fees like the gasoline tax. However, political challenges prevent its increase. Alternatives include toll roads and variable-fee express lanes, particularly in fast-growing states like Georgia, Florida and Texas.
Private Investment in Infrastructure
Private capital is willing to invest in robust transportation projects. Companies like Ferrovial SE are eager to finance and build toll projects, a trend seen as the company shifts its focus to North America. Despite some losses in past U.S projects, the company believes it now has a better understanding of revenues and traffic behavior.
Success of Express Lanes
Express lanes have proven successful for Ferrovial, with traffic surpassing the company’s estimates. As of 2019, 22 express toll lane ventures were operating in the U.S, with more planned in states like Georgia and Tennessee.
The Future of Infrastructure
More toll road and express lane projects are expected as states seek to keep infrastructure ahead of growth. These options could alleviate transportation budget strains, reducing dependency on future large-scale infrastructure bills from Congress.
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