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At the start of Chapters II through VIII, each of which deals with a single infrastructure system, a brief paragraph summarizes the problems affecting that system and the associated costs, the federal government's current and possibly altered participation, and the application of several policy strategies. Unless otherwise noted, all dollar figures are expressed in constant 1982 dollars. All dates are fiscal years unless specified as calendar years. In some tables, details may not add to totals because of rounding. |
The nation's long-term economic growth will depend heavily on the adequacy of its public works infrastructure. In the past several years, much attention--both public and Congressional--has been drawn to the declining condition of infrastructure systems and to those systems' capacity to accommodate future economic and population growth. This study, undertaken at the request of the Senate Committee on the Budget, assesses the needs of seven infrastructure systems and the costs of meeting those needs. The primary focus of the analysis is on the cost effectiveness of infrastructure investment, a concern made particularly pressing by the constraints now affecting the federal budget. In this context, the paper considers how current federal policies and funding levels may or may not mesh with infrastructure needs anticipated over the coming decade, how possible policy changes might bring about improved cost effectiveness, and how changes at the federal level could affect state and local governments and the private-sector beneficiaries of infrastructure services.
The study was prepared by David L. Lewis, Richard R. Mudge, Kenneth
Rubin, and Suzanne Schneider of CBO's Natural Resources and Commerce Division
under the supervision of David L. Bodde. Johanna Zacharias assisted in
drafting and edited the manuscript. The authors owe special thanks to Angela
Z. McCollough and Kathryn Quattrone for their skill and diligence in typing
the many drafts and preparing the paper for publication. Many people offered
valuable comments on drafts, particularly Everett M. Ehrlich, Debra F.
Goldberg, Robert W. Hartman, Anne E. Hoffman, Daniel Koretz, Kathleen Kelly,
Patrick 3. McCann, Pearl Richardson, and Robert Sunshine of CBO, and G.
William Hoagland and other members of the Senate Budget Committee staff.
Graphic illustrations were prepared by Andy Hem-street. In keeping with
CBO's mandate to provide objective analysis, the study offers no recommendations.
Alice M. Rivlin
Director
April 1983
CHAPTER I. CONSIDERING PUBLIC WORKS INVESTMENT--FRAMEWORK AND OVERVIEW
CHAPTER II. HIGHWAYS
CHAPTER III. PUBLIC TRANSIT
CHAPTER IV. WASTE WATER TREATMENT
CHAPTER V. WATER RESOURCES--MULTIPURPOSE DAMS AND NAVIGATION WORKS
CHAPTER VI. AIR TRAFFIC CONTROL
CHAPTER VII. AIRPORTS
CHAPTER VIII. MUNICIPAL WATER SUPPLY
| TABLES | |
| I-1. | FEDERAL SHARE OF ANNUAL CAPITAL INFRASTRUCTURE COSTS UNDER CURRENT AND REVISED POLICIES, 1983-1990 |
| I-2. | ESTIMATED ANNUAL CAPITAL NEEDS FOR SELECTED INFRASTRUCTURE PROGRAMS UNDER CURRENT POLICY, 1983-1990 |
| I-3. | APPLICATION OF FEDERAL STRATEGIES TO INFRASTRUCTURE SYSTEMS |
| II-1. | MAJOR PARTS AND PHYSICAL STATUS OF THE NATION'S HIGHWAYS, BY FINANCING SOURCE |
| II-2. | RETROSPECTIVE OF PAVEMENT CONDITIONS ON THE FEDERAL-AID HIGHWAY SYSTEM FROM 1981 |
| II-3. | INCREASES IN OPERATING COSTS AS A FUNCTION OF PAVEMENT CONDITION, BY VEHICLE TYPE |
| II-4. | CUMULATIVE COSTS ASSOCIATED WITH MAJOR NATIONAL HIGHWAY NEEDS OF THE FEDERAL-AID SYSTEM |
| II-5. | FEDERAL HIGHWAY PROGRAM UNDER THREE OPTIONS--AVERAGE ANNUAL AUTHORIZATION, 1983-1986 |
| III-1. | FEDERAL CAPITAL GRANTS FOR PUBLIC TRANSIT, 1982 |
| III-2. | DISTRIBUTION OF TRANSIT USE AND FEDERAL AID BY CITY AND POPULATION |
| III-3. | ANNUAL PUBLIC TRANSIT REPAIR, MODERNIZATION, REPLACEMENT, AND ADDITIONAL CAPACITY NEEDS UNDER CURRENT POLICY, 1983-1990 |
| III-4. | FEDERAL INVESTMENT IN MASS TRANSIT BASED ON LOW ESTIMATE OF NEEDS, 1983-1990 |
| IV-1. | ESTIMATED FEDERAL AND NONFEDERAL CAPITAL OUTLAYS FOR WASTEWATER FACILITIES UNDER CURRENT POLICY |
| V-1. | EFFECTIVE NONFEDERAL COST SHARES OF FEDERAL WATER RESOURCES DEVELOPMENT, BY AGENCY |
| V-2. | CAPITAL NEEDS ESTIMATE FOR WATER RESOURCES, 1983-1990 |
| VI-1. | FEDERAL CAPITAL AND OPERATING EXPENDITURES FOR AIR TRAFFIC CONTROL UNDER CURRENT POLICY |
| VI-2. | PROSPECTIVE COSTS OF IMPLEMENTING THE NATIONAL AIRSPACE SYSTEM PLAN, 1983-2005 |
| VI-3. | PROSPECTIVE BENEFITS FROM THE NATIONAL AIRSPACE SYSTEM PLAN, 1983-2005 |
| VI-4. | ECONOMIC EVALUATION OF THE NATIONAL AIRSPACE SYSTEM PLAN UNDER ALTERNATIVE ASSUMPTIONS |
| VI-5. | PROJECTED FEDERAL CAPITAL EXPENDITURES FOR AIR TRAFFIC CONTROL WITH FAA PLAN ALONE AND SUPPLEMENTED WITH USER FEES |
| VII-1. | FEDERAL CAPITAL EXPENDITURES ON AIRPORTS UNDER CURRENT POLICY |
| VII-2. | ANNUAL AIRPORT CAPITAL NEEDS, 1983-1990 |
| VII-3. | LANDING FEES AT FIVE MAJOR U.S. AIRPORTS IN 1978, BY AIRCRAFT TYPE |
| VII-4. | SELECTED POTENTIAL AIRPORT EXPANSION POSTPONEMENTS AS A FUNCTION OF GENERAL AVIATION USE |
| VIII-1. | ESTIMATED ANNUAL CAPITAL NEEDS BY 1990--SHORTFALLS AND REGIONAL IMPLICATIONS FOR 756 URBAN WATER SUPPLY SYSTEMS |
| FIGURES | |
| II-1. | PAVEMENT CONDITIONS AS A FUNCTION OF AGE |
| II-2. | CAPITAL INVESTMENT AS A PROPORTION OF TOTAL PUBLIC HIGHWAY SPENDING, 1950-1982 |
| III-1. | TOTAL FEDERAL FUNDING FOR PUBLIC TRANSIT CAPITAL GRANTS, 1965-1983 |
| IV-1. | FEDERAL, STATE, AND LOCAL SPENDING FOR WASTEWATER SERVICES, 1960-1982 |
| V-1. | FEDERAL, STATE, AND LOCAL SPENDING FOR WATER RESOURCES, 1960-1982 |
| V-2. | STATE FUNDING FOR WATER RESOURCES PROJECTS BY SOURCE, 1981-1982 |
| VI-1. | ACTUAL AND PROJECTED FEDERAL CAPITAL SPENDING ON AIR TRAFFIC CONTROL, 1960-1987 |
| VII-1. | THE FEDERAL, STATE, AND LOCAL SHARES OF PUBLIC SPENDING ON AIRPORTS, 1960-1980 |
| VII-2. | ACTUAL AND PROJECTED FEDERAL CAPITAL SPENDING ON AIRPORTS BY TYPE OF AIRPORT, 1960-1987 |
| VIII-1. | FEDERAL AND NONFEDERAL SPENDING ON MUNICIPAL WATER SUPPLY, 1960-1982 |
The nation's public works infrastructure--defined here as including highways, public transit systems, wastewater treatment works, water resources, air traffic control, airports, and municipal water supply--is suffering from growing problems of deterioration, technological obsolescence, and insufficient capacity to serve future growth.1 The nature, extent, and severity of these problems vary widely among the systems considered. But attention on them has converged at a time when tight budgetary constraints are forcing the federal government, the states, and the localities to review spending priorities and to make difficult decisions about what they can and cannot undertake.
At the federal level, capital spending for public works is projected to average more than $24 billion a year between 1983 and 1990 (see Table I-1).2 If current programs are maintained without change, these outlays would fall somewhat short of meeting needs as they are defined by the agencies with a role in providing these services.3 Meeting needs under federal programs as they are now structured would raise annual federal spending to about $28 billion--or more, if needs are interpreted as reflecting a broader federal responsibility. At the same time, however, federal policies could be altered in a way that could bring the total federal costs to a lower level than under current programs--albeit with important implications for the states and localities that participate in providing public works and for the private-sector beneficiaries of infrastructure services.
The structure of many current federal programs tends not to encourage selection of the most efficient projects. Many also channel federal money toward projects that are of greater local interest than of overall nationwide benefit. Further, many federal programs were designed for important goals that have now been met--building a national network of highways, for example, or fostering regional development of agriculture, or constructing a system of locks and dams. Today, however, the more pressing needs are maintenance and repair.
Revised programs that emphasized investments with clear national significance and that reduced the current bias toward capital-intensive undertakings could improve the cost effectiveness of federal spending. One mechanism to help guide cost-effective investment is increased use of user fees, which can either raise money for needed projects or dampen demand, in turn diminishing needs. Under policies redesigned to reflect these considerations, federal costs to meet the nation's infrastructure needs could in fact be reduced to about $20 billion a year--$4 billion less than current spending.
Though such changes could bring about more cost-effective investments and with them, reduced federal spending, they might have to be coupled with other major nonfederal changes. State and local commitments to public works spending might have to rise. Users of services might have to pay more than they do now. And the levels of service now available might have to be diminished.
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1. The concept of infrastructure can be applied broadly to include such social facilities as schools, hospitals, and prisons, and it often includes industrial capacity as well. The seven systems considered in this study share the common characteristics of capital intensiveness and high public investment at all levels of government. They are, moreover, directly critical to activity in the nation's economy.
2. Unless otherwise noted, all dollar figures cited in this study are expressed in 1982 dollars.
3. Needs are inherently difficult to quantify. They can depend on levels and quality of services, valuations of time, health, and safety, and other concerns. The composition of needs estimates is described in each chapter.