public spending on transportation and water infrastructure, 1956 … · 2019-12-11 ·...

CONGRESS OF THE UNITED STATESCONGRESSIONAL BUDGET OFFICE

CBOPublic Spending on Transportation and

Water Infrastructure, 1956 to 2014

MARCH 2015

CBO

rs. Nominal (current-dollar) spending was ent spending that measure the prices of tion and water infrastructure.

ough September 30 and is designated by the

ing.

raph from Flickr, where it is attributed to tribution 2.0 license. The other three images

(www.cbo.gov/publication/49910).

www.cbo.gov/publication/49910

Notes

Except where noted otherwise, dollar amounts are expressed in 2014 dollaadjusted to remove the effects of inflation using price indexes for governmmaterials and other inputs used to build, operate, and maintain transporta

Spending is reported by federal fiscal year, which runs from October 1 thrcalendar year in which it ends.

Numbers in the text and figures may not add up to totals because of round

On the cover, the image of highway traffic is an altered version of a photogNCDOTcommunications and posted subject to the Creative Commons Atare ©Shutterstock.

Detailed spending tables are available online as a supplement to this report

http://www.cbo.gov/publication/49910

CBO

Summary 1

Prices of Materials and 1

Public Spending on Tra r 30 Years 2

Figure. Various Me 2

Introduction 2

What Types of Public I 3

What Major Federal Le 4

Why Does the Public S 4

What Are the Benefits o 5

How Is Public Spendin 6

Public Spending on Transpo

Exhibits 7–14

Federal Spending on Transp

Exhibits 15–18

State and Local Spending on

Exhibits 19–23

Public Spending on Transpo

Exhibits 24–29

Appendix 30

About This Document 32

Contents

Other Inputs Used for Transportation and Water Infrastructure Began to Rise Rapidly in 2003

nsportation and Water Infrastructure Has Been a Fairly Constant Share of Economic Activity fo

asures of Public Spending on Transportation and Water Infrastructure, 1985 to 2014

nfrastructure Spending Does This Report Address?

gislation Has Affected Spending on Transportation and Water Infrastructure?

ector Provide Transportation and Water Infrastructure?

f Federal Spending on Transportation and Water Infrastructure?

g on Transportation and Water Infrastructure Measured in This Report?

rtation and Water Infrastructure

ortation and Water Infrastructure

Transportation and Water Infrastructure

rtation and Water Infrastructure, by Type of Infrastructure

CBO

Exhibit Page Public Spending on Transp 7

1. Public Spending o 8

2. Public Spending o 56 to 2014 9


4. The Federal Gove er Infrastructure, by Category of Sp 11


6. Shares of Public S frastructure, by Level of Gover 13


Federal Spending on Trans 15

8. Federal Spending 16



State and Local Spending o 19

11. State and Local S 20

12. State and Local S 4 21

13. State and Local S 4 22

14. State and Local C 014 23

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CBO

LIST OF EXHIBITS iii

Exhib Page

Public 24

15. cture, 1956 to 2014 25

16. frastructure, 26

17. frastructure, 27

18. r Infrastructure, 28

19. r Infrastructure, 29

it

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d Water Infrastructure, by Type of Infrastructureation and Water Infrastructure as a Share of GDP, by Type of Infrastru

d for the Operation and Maintenance of Transportation and Water In4

d for the Operation and Maintenance of Transportation and Water In6 to 2014

d State and Local Governments’ Spending on Transportation and Wate4

d State and Local Governments’ Spending on Transportation and Wate6 to 2014

CBO

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SummPublic ding by fedelocal go transportatinfrastr 416 billion of that from state anments: 320 billion,govern for $96 bill

This re formation osix type on and wate

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Such sp be divided incategor purchase phrelated (as well as thother in r improvinging stru ment alread

of highways or fewer airport runways, e.

surements provide different perspectives in public spending on transportation nfrastructure, especially for the 2003–d. Adjusting nominal spending to effects of inflation using the gross roduct (GDP) price index can be help-amining changes in the allocation of ary resources over time. Because prices omy as a whole rose at less than half of prices of infrastructure-related materials to 2014, real infrastructure spending ith the GDP price index rose by 15 per-ntrast, measured as a percentage of ding on transportation and water re fell by 5 percent during that period.

e in real public spending (adjusted using re-specific price indexes) on transporta-

ater infrastructure between 2003 and red almost exclusively within the cate-ital purchases, which fell by 23 percent se years. The construction and rehabili-ghways, in particular, declined over By contrast, real public spending for

aryspending—spenvernments—onucture totaled $ spending came They provided $ment accounted

port provides ins of transportati

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ter resources, an

ter utilities.

ending can also ies—spending toto infrastructureputs necessary foctures and equip

e labor and and rehabilitat-y in place) and

indexes. Such measurements most comprehen-sively illustrate changes in real purchases over time, with a decrease in real spending representing fewer

during thotation of hithe period.

and the federal ion.

n spending for r infrastructure:

to two broad ysical capital

Prices of Materials and Other Inputs Used for Transportation and Water Infrastructure Began to Rise Rapidly in 2003In 2003, the average price of materials (asphalt, concrete, and cement, for example) and other inputs used to build, operate, and maintain trans-portation and water infrastructure began to rise rapidly. Nominal public spending on that infra-structure increased by 44 percent between 2003 and 2014, but because prices of materials and other inputs rose more quickly than nominal spending, real (inflation-adjusted) public purchases decreased, falling by 9 percent from their peak in 2003 to their level in 2014 (see the figure on page 2).

This report is concerned primarily with real spend-ing as calculated using infrastructure-specific price

2014 perioremove thedomestic pful when exreal budgetin the econthe rate of from 2003adjusted wcent. By coGDP, speninfrastructu

The declininfrastructution and w2014 occurgory of cap

Public Spending on Transportation anWater Infrastructure, 1956 to 2014

ral, state, and ion and water in 2014. Most d local govern-

spending to operate and maintain infrastructure. In 2014, spending for capital accounted for 43 percent of total public spending on transporta-tion and water infrastructure, and spending for operation and maintenance for 57 percent.

lane-miles for exampl

Other meaon changesand water i

CBO

MA N AND WATER INFRASTRUCTURE, 1956 TO 2014 2

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and

ovided in previous reports, the most was published in November 2010.1

sions in the past, infrastructure een boosted by major legislation, oward specific types of infra-public sector typically undertakes for reasons related to economic gh a variety of other concerns, oting equity, may also serve as the Congressional Budget Office’s ic investment has raised overall eco-although the effects on output of

estments have varied widely.

Real Spending Using theGDP Price Index

Nominal Spending

Spending as aShare of GDPReal Spending UsingInfrastructure-SpecificPrice Indexes

Percentage Change, 2003–2014

44

15

-5-9

nal Budget Office, Public Spending on on and Water Infrastructure (November 2010), v/publication/21902.

percentage points lower than the peak of percent in 1959. That share rose briefly in

09 and 2010, to 2.7 percent, as a result of the porary increase in federal outlays brought about

IntroductionThis report provides information on spending for transportation and water infrastructure funded by federal, state, and local governments; it updates

particular inv

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ration and maintenance of infrastructure ed its historical tendency to grow, rising by percent over that period, primarily because ases at the state and local level.

gh all levels of government have spent less, terms, on transportation and water infra-re in recent years than in the past, the greatest on has occurred at the federal level. Adjusted ation, federal purchases have fallen by about ent since 2003, while purchases by states and s have fallen by about 5 percent. The signifi-

fference between those declines reflects the at a much larger portion of federal infra-re spending than of state and local spending pital and that capital has become much more ve to purchase over the period relative to on and maintenance services.

sts of building transportation and water ucture in the future will depend on a num-actors, but at least one development—the decline in the price of oil—suggests that osts might soon increase at a slower rate. ly is petroleum used as fuel in construction s, it also is an important component of the used to build highways and runways.

Spending on Transportation and Infrastructure Has Been a Fairly nt Share of Economic Activity for rs

are of GDP, public spending on transporta-d water infrastructure over the past three s has hovered at about 2.4 percent, which is

Various MeasWater InfrastIndex, 2003 = 100

Source: Congress

Note: GDP = gros

by the enacting oReinvestment Acterms, total feder2009 to 2014 wewhich was spent the caps on federBudget Control amended may hafederal infrastrucgrowth of discretlaw, those caps w

1985 1990

20

40

60

80

100

120

140

160

ional Budget Office.

s domestic product.

f the American Recovery and t of 2009 (ARRA). In nominal al outlays under ARRA from re $55 billion, about one-half of in 2009 and 2010. More recently, al funding established in the Act of 2011 and subsequently ve exerted downward pressure on ture spending by limiting the ionary spending; under current ill remain in effect through 2021.

information prrecent of whichOn several occaspending has boften directed tstructure. The such spending efficiency, thouincluding prommotivation. In view, that publnomic output,

0 1995 2000 2005 2010

PUBLIC SPENDING ON TRANSPORTATIO

ures of Public Spending on Transportationructure, 1985 to 2014


CBO

MA ION AND WATER INFRASTRUCTURE, 1956 TO 2014 3

WSpToCBtratogfor

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B

B

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ent facilities) and equipment (such railcars), as well as expenditures ovement and rehabilitation of struc-

ipment already in place. Operation ance costs include not only the costs necessary operating services (such ring the air traffic control system) aining and repairing existing lso the costs of funding various ructure-related programs (education ch as those on highway safety, or development programs directly nsportation and water infrastructure, .

ures—tax revenues that governments hey offer tax reductions for certain ivities—are excluded from spending report. The revenue forgone for tax-ds, which state and local governments finance infrastructure projects, is one ch an expenditure because those nvestors to exclude from their income the interest earned on them. estimates in this report do not xpenditures for infrastructure, evi-ts that they amounted to between d $6 billion in 2012 (estimates of tax at the state level are not available).6

2.

3. ny of Joseph Kile, Assistant Director for mic Studies, Congressional Budget Office, enate Committee on Finance, The Status of the ust Fund and Options for Financing Highway ay 6, 2014), pp. 11–13, www.cbo.gov/

/45315, and Congressional Budget Office, Infrastructure Investment With Tax-Preferred ober 2009), www.cbo.gov/publication/41359.

eligible for assistance under the Federal-Aid Highway program—the 160,000-mile network of the National Highway System (of which the Interstate Highway System is a subset) and 1 million additional miles of urban and rural roads.

5. Although many of the costs associated with maintaining harbors and navigation channels are included in the water transportation category, all spending by the Army Corps of Engineers for water navigation projects is included in the water resources category.

Highway TrSpending (MpublicationSubsidizing Bonds (Oct

Aviation—airport terminals, runways, taxiways, and the air traffic control system; and

capital and spending for operation and mainte-nance—based on the purpose it serves. Capital spending includes outlays for the purchase of new structures (such as highways, dams, and waste-

forgo when teconomic acttotals in this preferred bonoften issue toexample of subonds allow itax liabilitiesAlthough theinclude tax edence sugges$4 billion anexpenditures

For information on spending for other types of infra-structure, including energy and telecommunications infrastructure (which is provided primarily by private-sector firms) and school facilities and equipment (which are provided largely by state and local governments), see Congressional Budget Office, Issues and Options in Infrastructure Investment (May 2008), www.cbo.gov/publication/19633.

Although this report uses a broad definition of highway that includes all roads, in the context of federal spending the term is often used to refer only to those roads that are

4. Freight rail infrastructure is typically owned and operated by the private sector, but the public sector is responsible for oversight of the freight rail system. The Surface Transportation Board, a federal agency, is charged with resolving railroad rate and service disputes as well as with reviewing proposed railroad mergers. Since 2010, the federal government has provided funds for a range of transportation infrastructure projects, including some freight rail corridor improvements, through the TIGER (Transportation Investment Generating Economic Recovery) grant program. State and local governments do not report their expenditures for freight rail to the Census Bureau but do report expenditures for passenger rail under the mass transit category.

6. See testimoMicroeconobefore the S

RCH 2015 PUBLIC SPENDING ON TRANSPORTAT

hat Types of Public Infrastructure ending Does This Report Address? examine trends in infrastructure spending, O has compiled data on public spending on

nsportation and water infrastructure, which ether account for the bulk of federal spending infrastructure.2

ansportation infrastructure includes the lowing types of infrastructure:

Highways—national, state, and local roads, including bridges and tunnels;3

Mass transit and rail—buses, subways, commuter rail systems, and the intercity passenger system run by Amtrak;4

B Water transportation—waterways, ports, and the equipment used to support sea-borne traffic (such as Coast Guard vessels).5

Water infrastructure comprises two main types of infrastructure:

B Water resources—water containment systems (dams, levees, reservoirs, and watersheds) and sources of freshwater (lakes and rivers); and

B Water utilities—supply systems for distributing potable water as well as wastewater and sewage treatment systems and plants.

Spending for all types of infrastructure can be further divided into two categories—spending for

water treatmas buses andfor the imprtures and equand maintenof providingas administeand of maintcapital but aother infrastprograms, suresearch andrelated to trafor example)

Tax expendit






CBO

MA SPORTATION AND WATER INFRASTRUCTURE, 1956 TO 2014 4

WSpInOnhastrtypAcIningSimincAcwathfedectRefedwa

Inonthagraan20tramoa f

nd other natural resource projects provide s benefits, such as flood control and recre-to a wide range of consumers, making it know whom, and how much, to charge se services. And in some cases—building itional home in an area protected by a dam, mple—those services can be provided to itional consumer at no extra cost.

er reason for governments to provide trans-on and water infrastructure is that some f infrastructure generate economies of scale at only one firm could profitably provide ervices, rendering competition impractical. sult, the public sector often chooses to e (or at least to regulate) such “natural olies.”

e cases, the economic benefits of a transpor-or water infrastructure project—promoting erce, for example—may extend beyond the where that infrastructure is built and beyond ple who use it directly. Thus, the incentives

private sector to provide such infrastructure e limited, and relying on private companies o may result in less of that type of infra-re than is socially desirable. In such cases, it

e preferable for governments to supply the ructure and cover the costs through general n.

asons for investing in infrastructure projects e shared by all levels of government, but the ive contributions that the federal govern-nd state and local governments make to rojects vary greatly. In terms of economic cy, whether the federal government or state

7.

those pefficien

funding cuts if those caps are not met. There are separate caps for defense and nondefense programs.

the Federal Budget (June 2014), www.cbo.gov/publication/45416.

s. More recently, the American Recovery and investment Act of 2009 temporarily boosted eral spending on a variety of transportation and ter infrastructure.

2011, the Budget Control Act established caps discretionary funding for nondefense programs t have lowered aggregate funding for those pro-ms relative to what it would have been had nual funding grown at the rate of inflation after 11.7 Roughly half of the federal funding for nsportation programs (including nearly all rail, st aviation, and some transit programs but only

ew highway programs), as well as most of the

water infrastructure because that infrastructure exhibits characteristics of public goods. For example,

monop

In somtation commplaces the peofor themay bto do sstructumay binfrasttaxatio

The remay brespectment a

More precisely, the act limits budget authority (the authority to incur financial obligations) for programs funded by annual appropriations by triggering automatic

8. The budget authority for almost all federal highway programs, most transit programs, and some aviation pro-grams, however, is classified as mandatory and therefore is not subject to the caps on discretionary budget authority. Furthermore, although funding for those programs is mandatory, outlays under those programs are classified as discretionary, so neither are they subject to the automatic enforcement procedures—known as sequestration—that would reduce mandatory outlays if the caps were not met. Because of that split budgetary treatment, nearly all fed-eral spending for highway programs and most federal spending for transit programs is exempt from the provi-sions of the Budget Control Act of 2011 and from most of the standard mechanisms that the Congress uses to exert budgetary control. For more information about the budgetary treatment of highway and transit programs, see Congressional Budget Office, The Highway Trust Fund and the Treatment of Surface Transportation Programs in

RCH 2015 PUBLIC SPENDING ON TRAN

hat Major Federal Legislation Has Affected ending on Transportation and Water frastructure? several occasions in the past, legislative action

s prompted significant increases in federal infra-ucture spending, often directed toward specific es of infrastructure. The Federal-Aid Highway t of 1956, which authorized construction of the terstate Highway System, caused federal spend- on highways to rise in the 1950s and 1960s. ilarly, federal spending on water utilities

reased in the mid-1970s, after the Clean Water t of 1972 committed federal funds to improving ter quality. The Transportation Equity Act for e 21st Century, enacted in 1998, increased eral support for highways and mass transit proj-

federal funding for water programs, is classified as discretionary and therefore is subject to the caps.8 Under current law, those caps will be in place through 2021.

Why Does the Public Sector Provide Transportation and Water Infrastructure?Federal, state, and local governments spend resources to provide transportation and water infrastructure to their citizens for several reasons related to economic efficiency, though other con-cerns, such as promoting equity, may also motivate them to do so.

It may be difficult or economically inefficient to charge consumers for use of transportation and

dams avariouation, hard tofor thoan addfor exaan add

Anothportatitypes osuch ththose sAs a reoperat



CBO

MA NSPORTATION AND WATER INFRASTRUCTURE, 1956 TO 2014 5

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s on individual infrastructure projects onsiderably, they are typically higher when tructure-spending decisions are based on the pated economic effects of proposed projects.

ber of factors make it difficult to determine precision the impact that public infrastructure cts have on the economy. When economic rmance and public spending on infrastructure easured at an aggregate level, it is difficult to guish the effects of infrastructure projects those of other developments in the economy ccur simultaneously. It can also be difficult down exactly when infrastructure spending s to benefit the economy or to estimate how the benefits last. Another challenge to esti-g the impact of public spending on infra-ure is that, to the extent that such spending the price of materials and other inputs for ruction, it can reduce private capital invest-.10 Finally, in some cases, increases in federal ys for infrastructure cause state and local nments to reduce their spending on infra-ure projects and to use those funds for other ses; but in other cases, particularly when

and local governments must meet matching

frastructure spending financed by government rrowing also affects the economy in the long run by ucing national saving (the total amount of saving households, businesses, and governments) and hence

e funds that are available for private investment in oductive capital. See Jonathan Huntley, The Long-Run fects of Federal Budget Deficits on National Saving and ivate Domestic Investment, Working Paper 2014-02 ongressional Budget Office, January 2014), w.cbo.gov/publication/45140.

hough those benefits are generally difficult to antify.9 From a purely economic perspective, the

See Congressional Budget Office, Federal Investment (December 2013), www.cbo.gov/publication/44974.

(Cww

e citizens of a given state or locality to their pective state or local governments.

some cases, however, the federal government ght choose to provide funding for infrastructure at offered only local benefits as a way to address er policy goals, including promoting equity. For

ample, there are certain types of facilities, such as ose that provide clean drinking water, to which e federal government may want to guarantee ual access for all citizens, regardless of their ome.

at Are the Benefits of Federal Spending on ansportation and Water Infrastructure?ost federal spending on transportation and water rastructure benefits society on an ongoing basis, en by improving economic productivity,

sector or by state and local governments alone or that would have received smaller amounts of investment from those sectors than warranted by the broad public benefits they provide. According to CBO’s review of the literature on the economic effects of infrastructure spending, returns on investment in public capital projects in the United States, where the infrastructure network is well developed, are generally positive; however, they are lower than they once were because returns from additional spending on a mature infrastructure network are typically smaller than those derived from the initial investments that established that network in the first place. In addition, although

matinstructraisesconstmentoutlagoverstructpurpostate

9. Other types of federal spending—investment in research and development or in education and training, for example—also provide long-term benefits to the economy.

10. InboredbythprEfPr

RCH 2015 PUBLIC SPENDING ON TRA

d local governments should fund certain infra-ucture projects depends to a large extent on ether that funding benefits the nation as a ole or only particular states and localities. If

ose who benefit from a project do not bear its l costs, too large a project might be undertaken, too many infrastructure services consumed rela-e to the resources used to provide the project or vices. By contrast, if those who bear the costs a project receive only some of the benefits, too all a project might be undertaken. To avoid

ose problems, the federal government could oose to fund projects undertaken by particular tes or localities that were expected to generate nefits for taxpayers nationwide, while leaving the ding of projects that produced benefits only for

availability of transportation infrastructure lowers the costs to firms of obtaining inputs for the goods and services they produce and of delivering those products to their customers, increasing the produc-tivity of the labor and capital at work in those firms. Federal spending on infrastructure can also provide noneconomic benefits to society—for example, clean drinking water and adequate sanita-tion improve public health. But even such broad noneconomic benefits may have economic advan-tages; for example, improved public health can lead to more productive workers.

In CBO’s view, the federal government has raised productivity by funding infrastructure projects that either would not have been pursued by the private

returnvary cinfrasantici

A numwith projeperfoare mdistinfrom that oto pinbeginlong



CBO

MA PUBLIC SPENDING ON TRANSPORTATION AND WATER INFRASTRUCTURE, 1956 TO 2014 6

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return (lowering overall productiv-ively, yield a greater return than a ent made by the private sector.

c Spending on Transportation frastructure Measured in blic spending on infrastructure, he method used in its previous sportation and water infrastructure, tions. As in the past, federal spend-rom the Office of Management and ta on state and local governments’ om the Census Bureau.11 However, us reports included only those years

for which such data were available, in this report CBO provides estimates of spending by state and local governments in years for which such data are not yet available (2013 and 2014).

This report also includes CBO’s estimates of state and local spending on water resources for all years after 1990, the last year for which such data are available; previous reports did not include any information on such spending for those years. The Census Bureau does report state and local spending on water resources, but it does so only within a broad category for other natural resources. The estimates provided here are based on the trend over time for that broader spending category applied to the 1990 data on spending for water resources. As a result of including those estimates, the amounts of total infrastructure spending reported here for 1991 and subsequent years differ from those pub-lished in previous CBO reports (see the Appendix for details).

n of the method CBO uses to calculate ng on infrastructure, see Congressional , Public Spending on Transportation and ucture (November 2010), Appendix B, /publication/21902.

te entities. At the low end, CBO estimates that eral investment has a net return of zero—that is,

at it has no effect on future private-sector output. e actual net return for a particular investment

uld lie outside that range because a project might

11. For a discussiopublic spendiBudget OfficeWater Infrastrwww.cbo.gov

RCH 2015

uirements to receive federal grants, increased eral outlays lead state and local governments to rease their investments as well. Thus, it can be ficult to estimate the net return on federal rastructure investments.

light of the uncertainty surrounding estimates the size of infrastructure returns, CBO uses a ge of returns when estimating the effects of eral capital spending on transportation and ter infrastructure (as it does when estimating the ects of other types of federal investment). At e high end, CBO estimates that capital spending infrastructure by the federal government yields e same average return, in the form of subsequent ivate-sector output, as similar spending by pri-

have a negativeity) or, alternatsimilar investm

How Is Publiand Water InThis Report?To measure puCBO applied treports on tranwith two exceping data came fBudget, and daexpenditures frwhereas previo


CBO

lic Sp ing on Transportation and ter Infrastructure

Pub
endWa

CBO

MA LIC SPENDING ON TRANSPORTATION AND WATER INFRASTRUCTURE, 1956 TO 2014 8

Ex

Pu

So d the Census Bureau.

a.

b. reshwater (lakes and

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250 300

ion)

on)

In 2014, public spending on transportation and water infrastructure totaled $416 billion. That total includes spending by federal, state, and local governments for capital (structures and equipment) as well as their spending for operation and maintenance.

Transportation infrastructure accounted for about two-thirds ($279 billion) of all public spending on transportation and water infra-structure. Highways (interstate and local roads) claimed $165 billion, or about 60 percent of that spending on transportation (representing 40 percent of all public spending on trans-portation and water infrastructure). After highways, the amount of public spending allocated to other types of transportation infra-structure was much lower, with the second-highest recipient, mass transit, accounting for less than 25 percent of outlays for trans-portation (or 16 percent of total spending on transportation and water infrastructure).

The remaining one-third ($137 billion) of total public spending on transportation and water infrastructure went to water infra-structure. At $109 billion (or 26 percent of the total), spending on water utilities (water sup-ply and wastewater treatment facilities) was second only to highways as a share of total public infrastructure spending.

urce: Congressional Budget Office based on data from the Office of Management and Budget an

Includes water supply and wastewater treatment facilities.

Includes water containment systems (dams, levees, reservoirs, and watersheds) and sources of frivers).

Billions of Dollars

0 50 100 150 200

RCH 2015 PUB

hibit 1.

blic Spending on Transportation and Water Infrastructure, 2014

Water

ansportation Highways($165 billion)

Aviation($36 billion)

Mass Transit($65 billion)

WaterTransportat

($10 billion

Rail($3 billi

Water Utilitiesa

($109 billion)

Water Resourcesb

($28 billion)

CBO

MA N AND WATER INFRASTRUCTURE, 1956 TO 2014 9

Ex

PuAlBill

So Bureau, and the

No

a. ild, operate, and

b.

1 6 20110

100

200

300

400

500

e 1950s to 2003, federal purchases tion and water infrastructure rose

y. Since 2003, the prices of materi-concrete, and cement, for example) puts used to build that infrastruc-wn much more rapidly than prices

my as a whole, but public spending pace with those rising prices.

he sharp increase in the cost of e, converting infrastructure spend-minal to real terms using e-specific price indexes provides a spective than does using a single, e price index. Estimates based on e-specific price indexes more accu-

rately show changes in the amount of infra-structure purchased over time. But, by allowing for standardization and more meaningful comparisons across all types of public spending, estimates made using price indexes for the goods and services that make up the nation’s GDP better illustrate changes in the allocation of budgetary resources over time.

The two different adjustments sometimes indi-cate contradictory trends. Whereas estimates adjusted with the GDP price index show that public spending on infrastructure rose by 15 percent from 2003 to 2014, estimates based on the infrastructure-specific indexes indicate that such spending declined by about 9 percent over that same period (although that decline was temporarily reversed in 2009 and 2010 when federal outlays rose under ARRA).

Whether adjusted to real dollars using infrastructure-specific indexes or the GDP price index, public spending has generally fallen since 2011.

urce: Congressional Budget Office based on data from the Office of Management and Budget, the CensusBureau of Economic Analysis.

te: GDP = gross domestic product.

Those price indexes for government spending measure the prices of materials and other inputs used to bumaintain transportation and water infrastructure.

That price index measures the prices of goods and services that make up the nation’s GDP.

956 1961 1966 1971 1976 1981 1986 1991 1996 2001 200

GDP Price Indexb

RCH 2015 PUBLIC SPENDING ON TRANSPORTATIO

hibit 2.

blic Spending on Transportation and Water Infrastructure Under ternative Adjustments for Inflation, 1956 to 2014ions of 2014 Dollars

Based onInfrastructure-Specific

Price Indexesa

Based on the

2003 to 2014

9 Percent Decrease

15 Percent Increase

From the latof transportafairly steadilals (asphalt, and other inture have groin the econodid not keep

Because of tinfrastructuring from noinfrastructurdifferent pereconomywidinfrastructur

CBO


Ex

Pu d Water Infrastructure as a ShPer

So et, the Census Bureau, and the

No

1 2001 2006 20110

0.5

1.0

1.5

2.0

2.5

3.0

3.5

Public spending on transportation and water infrastructure accounted for 2.4 percent of GDP in 2014, down from 3.0 percent in 1959 (its largest share since construction of the Interstate Highway System began in 1956). Measured as a share of GDP, public spending over the past three decades has been fairly sta-ble at 2.4 percent, although a combination of relatively slow growth in the economy and the higher federal outlays under the American Recovery and Reinvestment Act temporarily boosted spending to 2.7 percent from 2009 to 2010.

urce: Congressional Budget Office based on data from the Office of Management and BudgBureau of Economic Analysis.

te: GDP = gross domestic product.

956 1961 1966 1971 1976 1981 1986 1991 1996

RCH 2015

hibit 3.

blic Spending on Transportation anare of GDP, 1956 to 2014centage of GDP

CBO

MA LIC SPENDING ON TRANSPORTATION AND WATER INFRASTRUCTURE, 1956 TO 2014 11

Ex

Th on Tr

So nd the Census Bureau.

Federal, state, and local governments spent $181 billion—43 percent of total public infrastructure spending—on capital in 2014. Spending for operation and maintenance was $235 billion, or 57 percent of public spending on infrastructure.

Spending for capital includes the purchase of new structures (such as highways or dams) and equipment (such as buses or railcars), as well as the improvement and rehabilitation of struc-tures and equipment already in place. Spend-ing for operation and maintenance includes the costs of providing services (administering the air traffic control system, for example), carrying out minor repairs to maintain existing capital, and engaging in various other activi-ties, such as research and development.

The federal government and state and local governments allocate resources among catego-ries of infrastructure spending differently. Both are important suppliers of capital: In 2014, state and local governments accounted for 62 percent of capital spending, and the federal government accounted for the remaining 38 percent. But state and local governments provide far more of the spending for the opera-tion and maintenance of infrastructure, accounting for 88 percent of that spending in 2014.

urce: Congressional Budget Office based on data from the Office of Management and Budget a

$112 Billion (62%)

Governments:$208 Billion

(88%)

RCH 2015 PUB

hibit 4.

e Federal Government’s and State and Local Governments’ Shares of Spendingansportation and Water Infrastructure, by Category of Spending, 2014

FederalGovernment:$69 Billion

(38%)State and LocalGovernments:

FederalGovernment:$27 Billion

(12%)

State and Local

Capital($181 Billion)

Operation and Maintenance($235 Billion)

CBO

MA DING ON TRANSPORTATION AND WATER INFRASTRUCTURE, 1956 TO 2014 12

Ex

PuCaBill

So reau, and the

a. that measure

b. that measure perate and

1 20110

50

100

150

200

250

Since 2003, real purchases of capital (adjusted using indexes specific to the cost of building that capital) have declined by about one-quarter as the prices of materials and other inputs used to build transportation and water infrastructure have rapidly increased. By con-trast, real spending for operation and mainte-nance (adjusted using indexes that measure changes in the cost of providing those specific services) increased by 6 percent from 2003 to 2014. As a result of those divergent trends, the difference between spending for operation and maintenance ($235 billion) and spending for capital ($181 billion) reached $54 billion in 2014.

That situation marks a break from past trends in the allocation of public infrastructure spending between capital and operation and maintenance. From the mid-1950s to the mid-1970s, capital spending exceeded operation and maintenance expenditures, reflecting in part the construction of dams and of the Inter-state Highway System in the 1950s and 1960s as well as the increase in federal grants to state and local governments in the 1970s under the Clean Water Act. Spending for capital was then roughly comparable to spending for oper-ation and maintenance from the mid-1970s to 2002, before the rising cost of construction materials, combined with only small increases in nominal capital spending, began to reduce real capital spending.

urce: Congressional Budget Office based on data from the Office of Management and Budget, the Census BuBureau of Economic Analysis.

Dollar amounts are adjusted to remove the effects of inflation using price indexes for government spendingthe prices of materials and other inputs used to build transportation and water infrastructure.

Dollar amounts are adjusted to remove the effects of inflation using price indexes for government spendingthe prices of goods and services consumed by governments, including materials and other inputs used to omaintain transportation and water infrastructure.

956 1961 1966 1971 1976 1981 1986 1991 1996 2001 2006

RCH 2015 PUBLIC SPEN

hibit 5.

blic Spending on Transportation and Water Infrastructure, by tegory of Spending, 1956 to 2014

ions of 2014 Dollars

Capitala

Operation and Maintenanceb

2003 to 20146 Percent Increase

23 Percent Decrease

CBO


Ex

Sh r the Operation and Maintenance of Tr Level of Government, 2014

So ureau.

Capital:$112 billion

(35%)

State and Local Governments($320 Billion)

In 2014, federal outlays accounted for about one-quarter of total public spending ($96 bil-lion) on transportation and water infra-structure, and state and local expenditures accounted for three-quarters ($320 billion).

The federal government and state and local governments differ in their allocation of infrastructure spending between capital and operation and maintenance. Over two-thirds (71 percent) of federal spending on infra-structure in 2014 was for capital, whereas only about one-third (35 percent) of state and local spending went to capital projects and two-thirds (65 percent) went to operation and maintenance.

urce: Congressional Budget Office based on data from the Office of Management and Budget and the Census B

Operation andMaintenance:$208 billion

(65%)

Capital:$69 billion

(71%)

RCH 2015

hibit 6.

ares of Public Spending for Capital and foansportation and Water Infrastructure, by

Operation andMaintenance:

$27 billion (29%)

Federal Government($96 Billion)

CBO


Ex

PuLeBill

So Census Bureau, and the

No ent spending that rtation and water

2006 2011

5

10

15

20

25

30

35

03 to 2014

cent Decrease

ent Decrease

The decline in real spending on transportation and water infrastructure in recent years has occurred at all levels of government, but it has been greatest at the federal level. Since 2003, federal spending has fallen by about 19 percent, and spending by states and localities, by about 5 percent.

Real federal spending on infrastructure has declined more than has real state and local spending because the share of federal spending devoted to capital is much larger than that of state and local governments and because real spending for capital has generally declined since 2003 as prices of materials and other inputs have risen significantly.

From the 1950s to the 1980s, the federal share of public infrastructure spending was typically much larger than it is today, reach-ing a high of 38 percent in 1977. But that share started to decrease in the 1980s, when state and local governments began to invest more in transportation and water infrastruc-ture while federal spending on infrastructure remained relatively stable. Since 1987, federal spending has accounted for roughly one-quarter of public spending on transportation and water infrastructure.

urce: Congressional Budget Office based on data from the Office of Management and Budget, the Bureau of Economic Analysis.

te: Dollar amounts are adjusted to remove the effects of inflation using price indexes for governmmeasure the prices of materials and other inputs used to build, operate, and maintain transpoinfrastructure.

1956 1961 1966 1971 1976 1981 1986 1991 1996 20010

0

RCH 2015

hibit 7.

blic Spending on Transportation and Water Infrastructure, by vel of Government, 1956 to 2014ions of 2014 Dollars

0

0

0

0

0

0

State and LocalGovernments

Federal Government

20

19 Per

5 Perc

CBO

Federal Spending on Transportation and Water Infrastructure

CBO

MA N TRANSPORTATION AND WATER INFRASTRUCTURE, 1956 TO 2014 16

Ex

Fe

So

No

10

1

2

3

4

5

6

0

20

40

60

80

100

120

140

In 2014, the federal government spent $96 billion on transportation and water infra-structure, marking a decline in real federal spending of 21 percent from its high of $122 billion (in 2014 dollars) in 2002.

In the past, significant increases in federal spending on infrastructure often followed significant legislative action. Spending on highways increased under the Federal-Aid Highway Act of 1956 when the federal govern-ment funded construction of the Interstate Highway System. Likewise, spending on water utilities (for water supply and wastewater treat-ment facilities) increased in the mid-1970s when the federal government provided grants

state and local governments under the Clean ater Act of 1972. In the late 1990s, spending

n highways and mass transit increased under e Transportation Equity Act for the 21st entury. The most recent spike in federal ending on transportation and water infra-ructure occurred under the American ecovery and Reinvestment Act. ARRA mporarily boosted federal outlays for infra-ructure by $55 billion, in nominal terms, ver the 2009–2014 period; about one-half of at amount was spent in 2009 and 2010.

ederal outlays for transportation and water frastructure in 2014 accounted for 2.7 per-nt of total federal spending, which is only ightly below its average of 3 percent during e past three decades but less than one-half of

s peak of almost 6 percent in 1965.

urce: Congressional Budget Office based on data from the Office of Management and Budget and the Census Bureau.

te: Dollar amounts are adjusted to remove the effects of inflation using price indexes for government spending that measure the prices of materials and other inputs used to build, operate, and maintain transportation and water infrastructure.

956 1961 1966 1971 1976 1981 1986 1991 1996 2001 2006 2011

As a Percentage of Total Federal SpendingtoWothCspstRtestoth

Finceslthit

RCH 2015 PUBLIC SPENDING O

hibit 8.

deral Spending on Transportation and Water Infrastructure, 1956 to 2014

In Billions of 2014 Dollars

CBO

MA G ON TRANSPORTATION AND WATER INFRASTRUCTURE, 1956 TO 2014 17

Ex

FeTyPer

So

a.

b.

0

25

50

75

0

25

50

75

10

25

50

75

Federal spending on transportation and water infrastructure is highly concentrated among a few types of infrastructure. In 2014, three types of transportation infrastructure accounted for four-fifths of that spending—48 percent went to highways; 17 percent, to aviation; and 16 percent, to mass transit and rail. Water-related infrastructure accounted for a considerably smaller share of federal infrastructure spending, with water resources claiming 10 percent of those outlays and water utilities and water transportation claiming 5 percent and 4 percent, respectively.

Over the past two decades, the allocation of g among types of infrastructure airly stable, although mass ’s share has risen slightly and allen.

ere were a few dramatic shifts in n of federal dollars among infra-. In the late 1950s, the share of ucture funding allotted to r water resources dropped sig-e funding for highways rose s construction of the Interstate m began. Another such shift passage of the Clean Water Act raised the share of federal

spending devoted to water utili- 15 percent and 20 percent for de.


Includes water containment systems (dams, levees, reservoirs, and watersheds) and sources of freshwater (lakes and rivers).


Water Resourcesa Water Utilitiesb

956 1964 1972 1980 1988 1996 2004 2012 1956 1964 1972 1980 1988 1996 2004 2012

federal spendinhas remained ftransit and railaviation’s has f

Before then, ththe distributiostructure typesfederal infrastrdams and othenificantly whilsubstantially aHighway Systeoccurred after in 1972, whichinfrastructure ties to betweenroughly a deca

RCH 2015 PUBLIC SPENDIN

hibit 9.

deral Spending on Transportation and Water Infrastructure, by pe of Infrastructure, 1956 to 2014cent

Highways Mass Transit and Rail

Aviation Water Transportation

CBO

MA SPORTATION AND WATER INFRASTRUCTURE, 1956 TO 2014 18

Ex

FeCaBill

So Bureau, and the

a. g that measure

b. g that measure operate and

1 6 20110

20

40

60

80

100

e 1956, federal infrastructure outlays have e primarily to capital projects. In 2014, tal spending was $69 billion, more than e the $27 billion that went to operation maintenance. The largest share of that tal spending went to highway construction rehabilitation (66 percent), and the largest e of spending for operation and mainte-ce went to the administration of the air ic control system (36 percent).

r the last six decades, federal spending for tal has fluctuated much more than spend-for operation and maintenance. Spikes in tal spending were often caused by new hases in federal infrastructure policy—

an interest in funding highways under the Federal-Aid Highway Act of 1956 or water utilities under the Clean Water Act of 1972, for example. After growing by more than 7 percent annually from 1998 to 2002, when it peaked at $97 billion, real federal spending for capital began a steep decline, attributable primarily to the increase in prices for materials used in construction that began in 2003. For the period between 1956 and 2014, capital spending increased at an average annual rate of 2.6 percent.

By contrast, spending for operation and main-tenance grew at a relatively stable rate over the 1956–2014 period, with an average increase of 3.0 percent per year. However, such spending spiked in 1981 as a result of the settlement of litigation related to the federal government’s acquisition of the assets of Conrail (a freight railroad).

urce: Congressional Budget Office based on data from the Office of Management and Budget, the Census Bureau of Economic Analysis.

Dollar amounts are adjusted to remove the effects of inflation using price indexes for government spendinthe prices of materials and other inputs used to build transportation and water infrastructure.

Dollar amounts are adjusted to remove the effects of inflation using price indexes for government spendinthe prices of goods and services consumed by governments, including materials and other inputs used to maintain transportation and water infrastructure.

956 1961 1966 1971 1976 1981 1986 1991 1996 2001 200

RCH 2015 PUBLIC SPENDING ON TRAN

hibit 10.

deral Spending on Transportation and Water Infrastructure, by tegory of Spending, 1956 to 2014


Operation andMaintenanceb

Capitala

Sincgoncapitwicandcapiandsharnantraff

Ovecapiing capiemp

CBO

Sta nd Local Spending on spor ion and Water Infrastructure
Tran
te atat

CBO


Ex

St and Water Infrastructure, 1956 to 2014Bill

So and Budget and the Census Bureau.

No

1 996 2001 2006 20110

50

100

150

200

250

300

350

In 2014, state and local governments spent $320 billion on transportation and water infrastructure. That amount represented a decline of 5 percent from the peak in real spending in 2003.

Real state and local spending on transportation and water infrastructure has risen at an average annual rate of 1.7 percent since 1956, but its growth has not been steady. During some peri-ods—the years from 1973 to 1977 and from 2004 to the present, for example—annual spending was more likely to fall or remain flat than to rise. In contrast, between 1956 and 1972 and again between 1978 and 2003, such spending tended to increase each year.

[O underlying this figure. The only vis $308.4 billion as shown in the fig

urce: Congressional Budget Office based on data from the Office of Management

te: State and local spending is net of federal grants and loan subsidies.

956 1961 1966 1971 1976 1981 1986 1991 1

n September 5, 2017, CBO discovered various small errors in the dataible difference is that in 2011, the value should be $314.9 billion, not ure.]

RCH 2015

hibit 11.

ate and Local Spending on Transportation ions of 2014 Dollars

CBO


Ex

St cture, by TyPer

So

No

a.

b.

ansit and Rail

ransportation

0

25

50

75

0

25

50

75

10

25

50

75

Highways and water utilities account for by far the largest shares of infrastructure spending by state and local governments. In 2014, states and localities allocated 37 percent of their infra-structure spending to highways and 33 percent to water utilities. (State governments direct most of the highway spending, and local gov-ernments are almost exclusively responsible for spending on water utilities.) Significantly smaller shares of states’ and localities’ infra-structure spending go to mass transit and rail (17 percent), aviation (6 percent), and water resources (6 percent). Only about 2 percent of state and local spending on infrastructure goes to water transportation.

n of state and local spending of infrastructure has changed sig-r the past six decades. The share oing to highways has dropped ent in 1956 to 37 percent today, s going to all other types of infra-ept water transportation have same period.





Water Utilitiesb

1956 1964 1972 1980 1988 1996 2004 2012956 1964 1972 1980 1988 1996 2004 2012

Water Resourcesa

The allocatioamong typesnificantly oveof spending gfrom 66 percand the sharestructure excrisen over the

RCH 2015

hibit 12.

ate and Local Spending on Transportation and Water Infrastrupe of Infrastructure, 1956 to 2014cent

Highways Mass Tr

Aviation Water T

CBO


Ex

StCaBill

So au, and the

No

a. at measure rate and

b. at measure

1 20110

50

100

150

200

250

o 2014

t Decrease

t Increase

At $208 billion, state and local governments’ spending for the operation and maintenance of infrastructure in 2014 was almost twice as large as their spending on capital ($112 billion).

The difference between spending for capital and for operation and maintenance began to widen in 2003, when purchases of capital by states and localities (adjusted for changes in the price of infrastructure) began a persistent decline. As a result, purchases of capital by state and local governments were 21 percent lower in 2014 than they had been in 2003. Over that same period, however, spending for the operation and maintenance of infra-structure by state and local governments grew by 6 percent.

Since 1956, state and local governments’ expenditures for the operation and mainte-nance of infrastructure have grown at an aver-age annual rate of 2.4 percent, roughly three times faster than the 0.9 percent average annual growth rate of spending on capital. As a result, although state and local governments spent more for capital than for operation and maintenance in 1956, state and local spending for operation and maintenance has exceeded capital spending each year since 1973.

urce: Congressional Budget Office based on data from the Office of Management and Budget, the Census BureBureau of Economic Analysis.


Dollar amounts are adjusted to remove the effects of inflation using price indexes for government spending ththe prices of goods and services consumed by governments, including materials and other inputs used to opemaintain transportation and water infrastructure.

Dollar amounts are adjusted to remove the effects of inflation using price indexes for government spending ththe prices of materials and other inputs used to build transportation and water infrastructure.

956 1961 1966 1971 1976 1981 1986 1991 1996 2001 2006

Capital

RCH 2015

hibit 13.

ate and Local Spending on Transportation and Water Infrastructure, by tegory of Spending, 1956 to 2014


Operation andMaintenancea

b

2003 t

21 Percen

6 Percen

CBO

MA TATION AND WATER INFRASTRUCTURE, 1956 TO 2014 23

Ex

StW

So

No

0

10

20

30

40

50

60Per

0

50

100

150

200

250Bill

h state and local governments rely pri-n their own revenues to purchase capi-ral grants also are an important source . In some cases, particularly those in deral grant programs require state and

vernments to match a portion of the unds, federal grants encourage state l governments to increase their spend-apital infrastructure. In other cases, , grants have the opposite effect: State l governments may spend less on cture if the capital projects they were d in pursuing could be covered by fed-ts rather than their own revenues.

many grant programs offer state and some discretion in how to their spending may not con-ederal priorities as spending vernment undertakes

l grants have accounted for of the capital spending on tates and localities. That ably larger from the mid- mid-1980s as a result of water utilities after passage r Act in 1972.

956–2014 period, even when federal support for so extensive, federal grants support state and local ays. In 2014, just under billion spent by state and

on highway capital was pro-ral grants.

[Ovisno


te: Federal grants include the value of federal loan subsidies for the purchase of transportation and water infrastructure capital.

Percentage From Federal Grants

1956 1961 1966 1971 1976 1981 1986 1991 1996 2001 2006 2011

cent

local goveruse federalform as clothat the feddirectly.

Since 1960one-third oinfrastructushare was c1970s throfederal supof the Clea

Throughouduring thawater utilitwent primspending oone-half oflocal govervided throu

n September 5, 2017, CBO discovered various small errors in the data underlying this figure. The only ible difference is that in 2011, the value for the percentage from federal grants should be 37.42 percent, t 38.09 percent as shown in the figure.]

RCH 2015 PUBLIC SPENDING ON TRANSPOR

hibit 14.

ate and Local Capital Spending on Transportation and ater Infrastructure, by Source of Funds, 1956 to 2014

By Sourceions of 2014 Dollars

State and LocalRevenues

Federal Grants

Althougmarily otal, fedeof fundswhich felocal gofederal fand locaing for choweverand locainfrastruinteresteeral granBecause

nments funds, sely to feral go

, federar morere by sonsiderugh theport forn Wate

t the 1t decadeies was arily to n highwthe $92

nmentsgh fede

CBO

lic Sp ding on Transportation and W nfras cture, by Type of Infrastructure

Pubater I

entru

CBO


Ex

PuShPer

So

No

a.

b.

il

n

0

0.5

1.0

1.5

2.0

0

0.5

1.0

1.5

2.0

0

0.5

1.0

1.5

2.0

Measured as a share of GDP, public spending on transportation and water infrastructure gradually declined from a high of 3.0 percent in 1959 to 2.4 percent in 2014 (see Exhibit 3 on page 10). Of all public spending on water and transportation infrastructure, spending on highways consistently accounted for the largest share of GDP throughout the 1956–2014 period, though it fell from its peak of almost 2 percent in 1959, during the construction of the Interstate Highway System, to just under 1 percent in 2014. By contrast, as a share of GDP, public spending on water utilities—the type of infrastructure that has consistently claimed the second-largest portion of total

ucture spending—rose slightly, nt in 1956 to 0.6 percent in

g on each of the other types of mass transit and rail, aviation,

tation, and water resources—has en less than 0.5 percent of GDP. on mass transit and rail and on creased slightly over time, while of public spending on water

and water resources has constant.

urce: Congressional Budget Office based on data from the Office of Management and Budget, the Census Bureau, and the Bureau of Economic Analysis.

te: GDP = gross domestic product




1956 1964 1972 1980 1988 1996 2004 2012 1956 1964 1972 1980 1988 1996 2004 2012

public infrastrfrom 0.5 perce2014.

Public spendininfrastructure—water transporconsistently beReal spendingaviation has inthe GDP sharetransportationremained fairly

RCH 2015

hibit 15.

blic Spending on Transportation and Water Infrastructure as a are of GDP, by Type of Infrastructure, 1956 to 2014centage of GDP

Highways Mass Transit and Ra

Aviation Water Transportatio

CBO


Ex

Pu nd Maintenance of Tr Infrastructure, 2014

So ensus Bureau.

a.

b. ter (lakes and

Wa

Ma

160 180

44%

Operation and Maintenance

In 2014, the share of spending for operation and maintenance was greater than the share of spending for capital for five of the six types of infrastructure. For water utilities, mass transit and rail, aviation, and water resources, approximately two-thirds of spending was for operation and maintenance. For water trans-portation infrastructure, 60 percent went to operation and maintenance.

Highways are the only type of infrastructure for which more than half of public spending in 2014 went to capital—the construction of new highways, rehabilitation of existing roads, and purchases of equipment. Capital purchases accounted for 56 percent of spend-ing o and spending for operation and m made up the remaining 44 pe

[O alue of capital spe figure; the pe ted.]

urce: Congressional Budget Office based on data from the Office of Management and Budget and the C


Includes water containment systems (dams, levees, reservoirs, and watersheds) and sources of freshwarivers).

ter Transportation

0 20 40 60 80 100 120 140

40%

60%

Billions of Dollars

n September 5, 2017, CBO discovered an error in the data underlying this figure. The vnding for mass transit and rail should be $25.1 billion, not $25.7 billion as shown in the

rcentages of spending shown for capital and for operation and maintenance were unaffec

RCH 2015

hibit 16.

blic Spending for Capital and for the Operation aansportation and Water Infrastructure, by Type of

Water Resourcesb

Aviation

ss Transit and Rail

Water Utilitiesa

Highways

36% 64%

37% 63%

37% 63%

33% 67%

56%

Capital

n highways, aintenance

rcent.

CBO


Ex

Pu ntenance of Tr tructure, 1956 to 2014Bill

So

a.

b.

c.

d.

5

10

15

5

10

15

5

10

15

ass Transit and Rail

ater Transportation

Spending for the operation and maintenance of all types of transportation and water infra-structure has increased steadily since 1956. Spending for capital—particularly for mass transit and rail, for aviation, and for water util-ities—has also increased since then, but it has typically done so at a lower rate.

Despite sharp fluctuations in real capital pur-chases for highways from 1956 to 2014, high-ways are the only type of infrastructure for which capital spending exceeded spending for operation and maintenance every year over the period. However, the difference between spend-ing for the two categories, measured in real terms, diminished between 2002 and 2014.

primarily attributable to the near ices for materials used in con-ough nominal capital spending ose by nearly 40 percent over t increase was outstripped by reases.


Dollar amounts are adjusted to remove the effects of inflation using price indexes for government spending that measure the prices of materials and other inputs used to build transportation and water infrastructure.Dollar amounts are adjusted to remove the effects of inflation using price indexes for government spending that measure the prices of goods and services consumed by governments, including materials and other inputs used to operate and maintain transportation and water infrastructure.Includes water containment systems (dams, levees, reservoirs, and watersheds) and sources of freshwater (lakes and rivers).Includes water supply and wastewater treatment facilities.

0

0

1956 1964 1972 1980 1988 1996 2004 20120

0

0

0

1956 1964 1972 1980 1988 1996 2004 2012

Water Resourcesc Water Utilitiesd

That decline isdoubling of prstruction: Althon highways rthe period, thathose price inc

RCH 2015

hibit 17.

blic Spending for Capital and for the Operation and Maiansportation and Water Infrastructure, by Type of Infrasions of 2014 Dollars

0

0

0

0

Operation andMaintenanceb

Capitala

0

0

Highways M

Aviation W

CBO


Ex

Th on Tr 14

So sus Bureau.

a.

b. r (lakes and

Wa

Ma

160 180

In 2014, the federal government spent less than state and local governments on each type of infrastructure. Its shares of total public spending were largest for aviation (44 percent), water transportation (43 percent), and water resources (35 percent). Most of the federal government’s share of spending for aviation went to operating and maintaining the air traf-fic control system (about $10 billion). Federal spending for water transportation includes some of the costs associated with maintaining harbors and navigation channels; however, because all of the Army Corps of Engineers’ projects are classified as spending for water resources, many navigation projects are associated with that type of infrastructure.

Although the federal government spent sub-stantially more on highways than on any other type of infrastructure, its share of total public spending on highways—at 28 percent—was much smaller than its share of spending on aviation, water transportation, and water resources. The federal share of spending on mass transit and rail infrastructure was slightly smaller, 23 percent, and its share of spending on water utilities was only 4 percent.

urce: Congressional Budget Office based on data from the Office of Management and Budget and the Cen


Includes water containment systems (dams, levees, reservoirs, and watersheds) and sources of freshwaterivers).

ter Transportation

0 20 40 60 80 100 120 140

43%

57%

Billions of Dollars

RCH 2015

hibit 18.

e Federal Government’s and State and Local Governments’ Spending ansportation and Water Infrastructure, by Type of Infrastructure, 20

Water Resourcesb

Aviation

ss Transit and Rail

Water Utilitiesa

Highways

35% 65%

44% 56%

23% 77%

4% 96%

28% 72%

Federal State and Local Governments

CBO


Ex

Th nts’ Spending on Tr structure, 1956 to 2014Bill

So

No

a.

b.

0

50

100

150

0

50

100

150

10

50

100

150

Mass Transit and Rail

Water Transportation

Real spending on transportation and water infrastructure by state and local governments increased much more between 1956 and 2014 than did real spending on such infrastructure by the federal government (see Exhibit 7 on page 14). For highways and aviation—and, to a lesser extent, water transportation—spending by state and local governments and spending by the fed-eral government generally followed similar paths. By contrast, for mass transit and rail and water utilities—and, to a lesser extent, water resources—spending by state and local govern-ments increased much faster than spending by the federal government, especially since the mid-1970s. The demands of population growth

ructure pushed up state and water infrastructure, as did of the Clean Water Act of period during the 1970s, on water utilities also rose as a n Water Act.


te: Dollar amounts are adjusted to remove the effects of inflation using price indexes for government spending that measure the prices of materials and other inputs used to build, operate, and maintain transportation and water infrastructure.



956 1964 1972 1980 1988 1996 2004 2012 1956 1964 1972 1980 1988 1996 2004 2012


and aging infrastlocal spending onthe requirements1972. For a brieffederal spending result of the Clea

RCH 2015

hibit 19.

e Federal Government’s and State and Local Governmeansportation and Water Infrastructure, by Type of Infraions of 2014 Dollars

State and LocalGovernments

FederalGovernment

Highways

Aviation

CBO

In this Congressional Bprovid tion on public spetranspo d water infrastrucspendi re available on CBsupple is report.

This re ds information propreviou the most recent of publish ember 2010.1 CBOsimilar d in those previouNamel tained data on fedethe Of agement and Budon stat governments’ outlCensus then converted th(curren ata to real (inflationusing t rice indexes createof Econ lysis that track govditures ment. One set of inthe pri rials and other inpand loc ents to build tranwater i re and is applied to

data on federal outlays are available through l fiscal year 2014. The most recent Census u data include state and local spending on tructure only through 2012.2 Thus, to report ost current public spending on infrastructure le, CBO used two additional sources of data the Census Bureau to estimate state and local ing through federal fiscal year 2014. To esti-state and local spending for capital, CBO used ensus Bureau’s survey of construction spend- states and localities, which includes con-ion of each type of infrastructure considered Annual rates of change in infrastructure ruction by state and local governments were d to the most recent data on state and local ing to estimate spending through 2014. To ate state and local spending for the operation aintenance of infrastructure, CBO followed a r procedure using data from the Bureau of

1. Con udget Office, Public SpTra d Water Infrastructurewww blication/21902.

te and local fiscal years typically begin and end three nths earlier than federal fiscal years. CBO adjusts data

infrastructure spending by state and local governments federal fiscal years so that they are comparable with data federal spending.

report, thees informartation an

ng tables ament to th

port extens reports, ed in Nov

to that usey, CBO obfice of Mane and local Bureau. Itt-dollar) dwo sets of pomic Ana

and investces of mateal governmnfrastructu

gressional Bnsportation an

.cbo.gov/pu
(November 2010), to
on

vided in which was used a method

s reports. ral outlays from get (OMB) and ays from the ose nominal -adjusted) data

d by the Bureau ernment expen-dexes measures

uts used by state sportation and nominal capi-

The method used in this report differs from that used in past reports in two important ways, however.

First, in its previous studies, CBO reported public spending on infrastructure only for those years for which such data were available for all levels of gov-ernment. Because state and local spending data are released by the Census Bureau a few years after that spending occurs, the most recent spending data in past reports were always a few years old at the time of publication. By contrast, this report provides estimates of state and local spending on infrastruc-ture through the most recent fiscal year for which data on federal infrastructure outlays are available. That allows estimates of public spending on trans-portation and water infrastructure to be reported as currently as possible.

possibfrom spendmate the Cing bystructhere. constappliespendestimand msimila

ending on

2. Stamoon

Appendix

udget Office nding for ture. Detailed O’s website as a

tal spending to convert it to constant dollars; the other set measures the prices of materials and other inputs used to operate and maintain that infra-structure and is applied to spending for operation and maintenance.

OMBfederaBureainfrasthe m


CBO


Ec xpenditures by r, those data are

The other change in method pertains to how CBO reports spending for water resources by state and local governments. Previous CBO reports did not provide such information for years after 1990 because those data were not available. Although spending for most other types of infrastructure is identified separately by the Census Bureau, water resource spending is included in a broad category for other natural resources. In this report, water resource spending by state and local governments is

estimated for 1991 and subsequent years by apply-ing the annual rates of change for that broader cat-egory to the 1990 data on water resource spending. As a result of that change, beginning with 1991, the annual spending reported in this document differs from the corresponding values found in previous CBO reports.

3. cal y Adjusted” a.gov/3cJWml; 3.9.5. nd Gross Accounts Tables sa.gov/6qvT.

RCH 2015

onomic Analysis on consumption e state and local governments; howeve not infrastructure specific.3

See Census Bureau, “Value of State and LoConstruction Put in Place—Not Seasonall(updated December 2, 2014), http://go.usand Bureau of Economic Analysis, “Table Government Consumption Expenditures aInvestment,” National Income and Product (updated December 23, 2014), http://go.u

http://go.usa.gov/3cJWml

http://go.usa.gov/6qvT

CBO

About This Document

te Finance

ion wrote the Sperl of CBO

pared the CBO’s

This Congressional Budget Office report was prepared at the request of the Ranking Member of the SenaCommittee. In keeping with CBO’s mandate to provide objective, impartial analysis, the report makes norecommendations.

Nathan Musick of CBO’s Microeconomic Studies Division and Amy Petz of CBO’s Budget Analysis Divisreport with guidance from Joseph Kile and Chad Shirley. Wendy Edelberg, Leo Lex, Sarah Puro, and Jon provided useful comments.

Jeffrey Kling, John Skeen, and Robert Sunshine reviewed the report; Bo Peery edited it; Jeanine Rees prereport for publication; and Maureen Costantino designed the cover. An electronic version is available on website (www.cbo.gov/publication/49910).

Douglas W. Elmendorf Director

March 2015


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