The Federal Role in Surface Transportation Has Expanded to Include Broader Goals, More Programs, and a Variety of Program Structures

Although most surface transportation funds are still directed to highway  infrastructure, the federal role in surface transportation has broadened  over the past 50 years to incorporate goals beyond highway construction,  and federal surface transportation programs have grown in number and  complexity. 3). 4). 5). Over $2 billion of these additional funds will  have the same broad eligibility requirements and transfer provisions of the  Surface Transportation Program. While  program goals are numerous, they are sometimes conflicting and often  unclear—which contributes to a corresponding lack of clarity in the  federal role. Furthermore,  surface transportation programs often do not employ the best tools and  approaches available, such as rigorous economic analysis for project  selection and a mode-neutral approach to planning and investment. The largest transit and safety programs also  lack links to performance. Federal rules for transferring funds between highway programs are so  flexible that the distinctions between individual programs have little  meaning. Programs Do Not Employ the Best Tools and Approaches to Ensure Effective Investment Decisions

In some areas, federal surface transportation programs do not use the best  tools and approaches available. Tools to make better use of existing infrastructure have not been deployed  to their full potential, in part because their implementation is inhibited by  the current structure of federal programs. Officials from three state  departments of transportation also noted that inflexibilities in the use of  congressionally directed funds limit the states’ ability to implement  projects and efficiently use transportation funds by, for example,  providing funding for projects that are not yet ready for implementation or  providing insufficient funds to complete particular projects. Establish and clearly define the federal role in achieving each goal. Ensure fiscal sustainability. When a national competition is not  feasible, Congress could require a competitive selection process at the  state or local level, such as those required for the Job Access and Reverse  Commute Program. Finally, given the  scope of needed transformation, the shifts in policies and programs may  need to be done incrementally or on a pilot basis to gain practical lessons  for a coherent, sustainable, and effective national program and financing  structure to best serve the nation for the 21st century. Matter for Congressional Consideration

To improve the effectiveness of the federal investment in surface  transportation, meet the nation’s transportation needs, and ensure a  sustainable commitment to transportation infrastructure, Congress should  consider reexamining and refocusing surface transportation programs to  be responsive to these principles so that they:    have well-defined goals with direct links to an identified federal interest  institute processes to make grantees more accountable by establishing  more performance-based links between funding and program outcomes, institute tools and approaches to that emphasize the return on the federal  investment, and    address the current imbalance between federal surface transportation  revenues and spending. Appendix I: Objectives, Scope, and Methodology

We were asked to (1) provide an historical overview of the federal role in  surface transportation and the goals and structures of federal surface  transportation programs funded by the Highway Trust Fund, (2)  summarize conclusions from our prior work on the structure and  performance of these and other federal programs, and (3) identify  principles to help assess options for focusing the future federal role and  the structure of federal surface transportation programs. Highway safety and motor carrier safety grant programs are similarly  organized. Most of these discretionary grants provide  states with financial incentives for meeting specific performance or safety  activity criteria. Once  the federal interest and goals have been identified, the federal role in  relation to state and local governments can be clearly defined.
Why GAO Did This Study

Surface transportation programs need to be reexamined in the context of the nation's current unsustainable fiscal path. Surface transportation programs are particularly ready for review as the Highway Trust Fund faces a fiscal imbalance at a time when both congestion and travel demand are growing. As you requested, this report (1) provides an overview of the federal role in surface transportation and the goals and structures of federal programs, (2) summarizes GAO's conclusions about the structure and performance of these programs, and (3) provides principles to assess options for focusing future surface transportation programs. GAO's study is based on prior GAO reports, stakeholder reports and interviews, Department of Transportation documents, and the views of transportation experts.

What GAO Found

Since federal financing for the interstate system was established in 1956, the federal role in surface transportation has expanded to include broader goals, more programs, and a variety of program structures. To incorporate additional transportation, environmental and societal goals, federal surface transportation programs have grown in number and complexity. While some of these goals have been incorporated as new grant programs in areas such as transit, highway safety, and motor carrier safety, others have been incorporated as additional procedural requirements for receiving federal aid. Broad program goals, eligibility requirements, and transfer provisions give states and local governments substantial discretion for allocating most highway infrastructure funds. For transit and safety programs, broad basic grant programs are augmented by programs that either require a competitive selection process or use financial incentives to directly target federal funds toward specific goals or safety activities. Many current programs are not effective at addressing key transportation challenges such as increasing congestion and freight demand. They generally do not meet these challenges because federal goals and roles are unclear, many programs lack links to needs or performance, and the programs often do not employ the best tools and approaches. The goals of current programs are numerous and sometimes conflicting. Furthermore, states' ability to transfer highway infrastructure funds among different programs is so flexible that some program distinctions have little meaning. Moreover, programs often do not employ the best tools and approaches; rigorous economic analysis is not a driving factor in most project selection decisions and tools to make better use of existing infrastructure have not been deployed to their full potential. Modally-stovepiped funding can impede efficient planning and project selection and, according to state officials, congressionally directed spending may limit the states' ability to implement projects and efficiently use transportation funds. A number of principles can help guide the assessment of options for transforming federal surface transportation programs. These principles include: (1) ensuring goals are well defined and focused on the federal interest, (2) ensuring the federal role in achieving each goal is clearly defined, (3) ensuring accountability for results by entities receiving federal funds, (4) employing the best tools and approaches to emphasize return on targeted federal investment, and (5) ensuring fiscal sustainability. With the sustainability and performance issues of current programs, it is an opportune time for Congress to more clearly define the federal role in transportation and improve progress toward specific, nationally-defined outcomes. Given the scope of needed transformation, it may be necessary to shift policies and programs incrementally or on a pilot basis to gain practical lessons for a coherent, sustainable, and effective national program and financing structure to best serve the nation for the 21st century.