Federal Highway Assistance Funds in the State Infrastructure Bank Programs: Mechanisms,Merits, and Modifications

In response to the declining financial resources for state transportation infrastructures, the National Highway System Designation Act of 1995 (P. L. 104–159) authorized the establishment of the State Infrastructure Bank (SIB) Pilot Programs. This paper shows how the federal assistance funds deposited into the SIB equity fund can maximize state highway resources through a simulation. From 1998 to 2003, one dollar of the federal funds augmented state highway expenditures by 5.24 dollars in a specific year in contrast to the original intention of perpetuating state highway spending. This study further suggests ways to modify and improve the current SIB mechanism.