
Turkey Hill Road, Red Hook, New York
How does transportation funding work?
We would love to say that transportation funding flows seamlessly across political boundaries, moves easily between purposes, and quickly meets our priorities – but that’s not the case, and it’s important to recognize that reality. Whether sourced from federal, state, or local government, transportation funding brings various requirements, typically intended to provide checks and balances. These requirements differ by the funding agency, source, and purpose. They can add time to projects and create unforeseen costs that can frustrate project sponsors and the public alike. Yet, this is the framework we operate under and one that is unlikely to change during the span of Moving Dutchess Forward.
The fundamental point we should understand is that no single source completely funds our transportation system, nor does a single agency manage it. Maintaining and expanding access – by fixing roads, repairing bridges, building sidewalks, purchasing buses, and operating trains – requires many partners.
The Federal, State, & Local Role in Transportation Funding
There are three basic buckets of transportation funding: federal, state, and county/local; and three primary purposes that this funding can support: roads (including bridges, sidewalks, and multi-use paths), transit (bus, rail, and ferry), and planning. For each of these buckets and purposes, funding flows to agencies and projects in different ways – and whether by design or default, this creates silos. We don’t say this in a critical way, but to recognize that these silos exist and form the context for how we talk about transportation funding.
The Federal Role
Federal funding, primarily administered through the Federal Highway Administration (FHWA) and Federal Transit Administration (FTA), funds roads (some, but not all), transit (regardless of form), and transportation planning (what we do at the DCTC). The federal government’s role is intended to support projects and services that further national goals such as protecting public health, safety, and welfare, promoting economic competitiveness, and maintaining a strong national defense. How this happens varies by the two federal agencies and the programs they administer.
Roads
Federal funds support projects on public roads, bridges, and other infrastructure (e.g. sidewalks, shared-use paths, etc.) that are deemed federal-aid eligible, meaning they are of a high enough classification or purpose that warrants federal investment. These funds are authorized (typically every five or more years, through a federal transportation bill) and appropriated annually by Congress to states, who then distribute the funds through their respective DOTs (e.g. NYSDOT) and MPOs (e.g. DCTC). The funds are tied to specific programs with specific eligibility requirements. For example, the National Highway Performance Program (NHPP), which makes up a large share of available FHWA funding, can only support projects on the National Highway System (such as I-84 and the Taconic State Parkway). Because of the federal focus on major facilities, a large share of FHWA funding supports state projects, with a smaller share available for county and local projects. Federal funding also tends to support more road and bridge projects, and fewer walking and bicycling projects.
Transit
Federal funds support capital costs (e.g. buying a bus) and operational costs (e.g. driving that bus) for public transit operators of all kinds, including bus, rail, and ferry. Federal transit funds, like highway funds, are authorized and appropriated by Congress, but the FTA uses a formula to allocate most of the funds directly to Census-defined urbanized areas, rather than to states. The MPOs within those urbanized areas must suballocate the funds to transit operators. For us, funds are first allocated to the Poughkeepsie-Newburgh Urbanized Area, which includes four counties: Dutchess, Orange, and Ulster in New York, and Passaic in New Jersey. The MPOs then suballocate the funds to local transit operators. In Dutchess, this includes County Public Transit and the Metropolitan Transportation Authority (MTA).
Planning
Federal funds also support planning work, including our three core documents (which include Moving Dutchess Forward). Planning funds stem from separate FHWA and FTA programs and are allocated by Congress to the states, who suballocate the funds to MPOs. We program the funds in our annual Planning Program, where we identify specific planning tasks that will use the funds.
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FEDERAL SURFACE TRANSPORTATION LAWS: MORE THAN JUST ACRONYMS
The FAST Act, MAP-21, SAFETEA-LU, TEA-21, ISTEA…all shorthand for the succession of federal transportation laws that have been passed by Congress since 1991. But they have more than catchy names in common; they have established a (mostly) consistent focus and scope for federal highway and transit funding across the nation. They also provide a means for federal funding to filter down to states and MPOs.
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WHERE DO MOST FEDERAL TRANSPORTATION FUNDS COME FROM?
The Highway Trust Fund (HTF) provides the majority of federal highway and transit funding to states. The HTF was created in 1956 as a user-sourced fund to build the Eisenhower Interstate System. HTF revenues come from fees on gasoline, diesel, special fuels, tires, and large trucks. These include a gasoline tax of 18.4 cents per gallon and a diesel tax of 24.4 cents per gallon – but the buying power of these fees, last updated in 1993, has eroded over almost 30 years.
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COMMUNITY DEVELOPMENT BLOCK GRANTS
We work closely with County Planning’s Community Development Division to promote accessibility and support investments in disadvantaged communities. Like us, they manage federal funds, but through HUD programs such as Community Development Block Grants (CDBG). In recent years, CDBG funds have been used to construct sidewalks and add crosswalks – though at a smaller scale than federal or state transportation programs.
The State Role
New York State provides a large amount of funding for transportation projects and services – though in a different way than the federal government, based on the state agencies involved and the forms of travel addressed. The State plays a central role in many aspects of transportation, including roads and bridges, bus and rail transit, walking and bicycling facilities, rail and maritime freight, aviation, and even licensing. Because of its reach and flexibility in how funds are used, the State can have an even greater influence on our transportation system than the federal government.
Roads
State funds for roads, bridges, and other infrastructure are generated through a mix of tax revenue, municipal bonds, and fees, and approved in the annual state budget. Much of this funding flows through NYSDOT to its regions (e.g. Region 8 in the Hudson Valley), typically in the form of State Dedicated Funds, which support many system-wide maintenance projects on state highways (repaving roads, painting bridges, replacing signs and signals, etc.). State funds also supplement federal funding for NYSDOT-sponsored federal-aid projects as well as county and local federal-aid projects. The State also allocates special funding – such as the Consolidated Local Street and Highway Improvement Program (CHIPS) and PAVE-NY – directly to counties and local municipalities for road maintenance.
Transit
State funds play an equally important role in supporting public transit operators, which in our area include the MTA/Metro-North Railroad and County Public Transit. Besides providing capital funds to transit operators, the State allocates funds through its annual Statewide Transit Operating Assistance (STOA) program, which reimburses operators for passenger trips and vehicle miles. As with FHWA-funded projects, the State also supplements local match requirements for FTA-funded capital projects such as replacing buses, repairing garages, and purchasing bus shelters.
Planning
The State uses state funds, toll credits, and in-kind services to provide the required match for the federal planning funds that we use for our planning work.
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NEW YORK STATE BRIDGE AUTHORITY
The Bridge Authority plays a vital role in our transportation system, maintaining three Hudson River crossings in Dutchess County. It is a self-supporting public benefit corporation that relies on toll revenues to fund operations and maintenance activities, as well as some capital improvements (though bonds are usually used for these). The Bridge Authority has a Board of Commissioners that approves an annual budget and five-year capital plan.
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METROPOLITAN TRANSPORTATION AUTHORITY
The Metropolitan Transportation Authority (MTA), which operates Metro-North Railroad in our area, receives revenue from the FTA, MTA bonds, ticket sales, rents, and local subsidies. These are used to support capital and operating expenses. The MTA develops a 20-year Capital Needs Assessment that identifies needed investments for tracks, structures (bridges, tunnels, etc.), and rolling stock (trains). They also approve a five-year Capital Program to identify specific projects. This usually focuses on train replacements, track maintenance, and structures, as well as improvements to stations, power-related equipment, and signal and communications equipment.
The County & Local Role
Dutchess County and local cities, towns, and villages also provide funding for our transportation system, but at a smaller scale than the federal and state government. County and local funds are often used for basic maintenance work or as required matches for federal funds.
Roads
County and local funds, primarily from tax revenues and municipal bonds, mostly support road and bridge repairs on county and local facilities. The funds are appropriated through annual budget processes or as part of multi-year capital programs (e.g. the County’s 5-year Capital Program). If the county or a local municipality is using federal funds for a project, they must also contribute a local match (20 percent of the total cost). Counties and local municipalities also receive CHIPS and PAVE-NY funding from the State.
Transit
County funds support capital and operational expenses for the bus services provided by County Public Transit. These funds come from tax and fare revenue, and through municipal bonds for major capital expenses (e.g. buying buses or garage repairs). Some local funds are used to support demand-response services such as Dial-A-Ride.
Planning
County funds are used to match the federal funds that support our transportation planning work.
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PUBLIC PRIVATE PARTNERSHIPS…A FUNDING TOOL FOR SPECIAL PROJECTS
We’ve long aspired to leverage private investment to improve our transportation system, and there have been some cases where it has worked well. The Route 9 underpass at Marist College in Poughkeepsie is a good local example of public and private entities (NYSDOT and Marist) pooling funds to build a transformative project. We’ll continue to explore this funding tool for other special projects.
The Takeaway
Each level of government plays a role in funding transportation projects and services that improve safety, reliability, and access to basic needs. How this happens varies by agency and funding program. Frequently, one funding source is better than others to complete a particular project or support a specific service. But truly transformative projects often require more than one agency or funding stream.