Certain important factors have significantly impacted both total public spending and highway spending. It became apparent in the late 1980's and early 1990's that the existing financing model, which was largely trust fund-based, would not be sufficient to finance needed highway projects. On the other hand, the demand for highway investment continued to accelerate. In response to this need, a new financing model began emerging in US highway financing. The Federal Highway Administration, the States, local governments, and the private sector co-operated in the development of this model. Federal ISTEA legislation, FHWA policy research and Innovative Finance efforts, and AASHTO support were crucial in the development of the emerging model. This new model was innovative in its approach, provided for new partnerships, and sought out efficient solutions. The new options included increased options to the traditional highway financing model. The emerging options included changes to traditional bond financing and toll financing, the introduction of transportation revolving funds/ infrastructure banks, increased emphases on public-private partnerships, and cash management tools. The new emerging model seems to be effective as highway financing is increasing in total, and in the emerging areas as well. The funding levels under the emerging model, however, are not likely to substitute for major financing increases required to meet highway financing needs. This will require a change in public attitude on the highway finance levels. State Infrastructure Banks, lines of credit, and tax code changes hold promise as additional highway financing options in the future. Accurate and timely financial information is crucial in evaluating the emerging options. (A)
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