This paper analyses non-traditional and innovative means of funding several highway projects. In many parts of the United States, indeed throughout the world, the public transportation capital stock has been allowed to deteriorate to the extent that its lack of availability poses a serious impediment to economic progress. The solution, it has been said, is greater use of so-called non- traditional means of funding, especially greater financial participation by the private sector through beneficiary charges and joint development. But it has not been clear whether these schemes represent fiscal innovation or last-ditch attempts by public officials which end up giving away the last margin of transport capacity at bargain prices. This paper addresses this issue by examining the rationale and financial policy considerations involved in the use of these new funding mechanisms. Several case studies are used to aid the discussion. The analysis is that there are valid reasons for resorting to these mechanisms as a supplement to traditional direct user charges but that there are issues involving distributional effects and risks that must be carefully explored in each circumstance.
Abstract