Summary: Public spending on highways and bridges totaled about $40 billion in 1993, the most recent year for which data are available. The Department of Transportation (DOT), however, believes that this investment falls far short of what is needed. DOT estimates that an additional $16 billion is needed each year simply to maintain--not improve--the nation's highways at 1993 levels. Postponing investment can increase costs. DOT estimates that deferring $1 in highway resurfacing for just two years can require $4 in highway reconstruction costs to repair the damage. To stretch limited federal funds, Congress has authorized some innovative financing mechanisms, including a State Infrastructure Bank Pilot Program in up to 10 states. These banks are intended to complement traditional transportation grant programs and provide states with greater flexibility to offer many types of financial assistance, such as loans and subsidized interest rates, and provide bonds or other debt-financing security tailored to fit a project's specific needs. This report provides an early snapshot of states' interest in establishing these banks. GAO identifies (1) the degree of states' interest in the pilot program and how states might use the banks and (2) the benefits and the barriers to states' using the banks. GAO also summarizes information on states' interest in using other innovative financing mechanisms that are contained primarily in the National Highway System Designation Act of 1995.
