Highway Costs and the Efficient Mix of State and Local Funds

David Levinson and Bhanu Yerra

No 200205, Working Papers from University of Minnesota: Nexus Research Group

Abstract: Transportation networks and governments are both hierarchically organized. In some states most highways are financed by state governments, while in other states similar roads are financed locally. Larger governments attain scale economies. However they also tend to be more bureaucratic and have higher operating costs, all else equal, due to problems such as span of control. This study relates highway expenditure with share of expenditure by state government so that a basis for determining how governments should share expenditure on all roads in a state to attain efficiency in highway costs. For each state three different costs are considered: capital outlay, operations and maintenance, and total costs. Two government layers are considered: state (including federal contributions) and local government. A series of regression models to predict different highway expenditures as a function of utilization, capacity, and funding shares are estimated. We find that there is a share of expenditures by each level of government which results in a minimum expenditure for each funding category (capital, operating). That minimum is not very far from typical state/local mixes found in many states. The results of this study can be applied in formulation of efficient network financing arrangements. Policies can be formulated that can help adjust the financial responsibilities of transportation networks between government layers.

JEL-codes: H11 R41 R42 R48 (search for similar items in EconPapers)
Date: 2002
References: View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Published in Transportation Research Record: Journal of the Transportation Research Board 1812 27-36

Downloads: (external link)
http://hdl.handle.net/11299/179891 First version, 2007 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nex:wpaper:hierarchy

Access Statistics for this paper

More papers in Working Papers from University of Minnesota: Nexus Research Group Contact information at EDIRC.
Bibliographic data for series maintained by David Levinson ( this e-mail address is bad, please contact ).