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Jul 18, 2013

Performance-Based Funding

Data-driven, collaborative planning should lead to clear transportation priorities.  Billions of transportation dollars are at stake each year in Illinois.  Taxpayers deserve to understand how priorities are set for investments in maintaining, modernizing, and expanding our roads, bridges, and transit. 

For decades, the purchasing power of the gas tax and other traditional funding sources has declined, while the need for maintaining and improving our transportation system continues to grow – as do its costs. Illinois allocates highway funds through an arbitrary formula called the "55/45 split."  Anywhere on this site that the icon appears, those road funds are allocated based on the formula, which directs only 45 percent to the Chicago area, although the region represents a much higher percentage of the Illinois population (65 percent)  and economy (70 percent).  Further, the State's investment decisions cannot be easily explained to the public.

The Chicago Metropolitan Agency for Planning (CMAP) believes taxpayers will support investing in a transportation system that improves their quality of life.  To accomplish this, Illinois needs to lead the national effort to implement "performance-based funding" of highway and bridge projects.

Although this website focuses on highways, CMAP believes the approach should apply to all modes of transportation. Working together, the State and region should clearly identify which projects deserve funding. And we should carefully document how these investment decisions serve the broader goals of mobility, prosperity, and quality of life.

 

State Highway Funding

How Illinois pays for projects.

Transportation projects have traditionally been paid for out of user fees like gas taxes and vehicle fees --- those who use the transportation system pay for its construction and upkeep.  The state highway program includes funding from both federal and state transportation user fees, chief among them the federal gas tax of 18.4 cents/gallon and the state gas tax of 19 cents/gallon.

The following graphic demonstrates a simplified flow of highway funds from these state and federal sources to the Illinois Department of Transportation (IDOT) highway program.  Note that this graphic only includes ongoing revenue sources.  Intermittent state bond programs provide additional resources for the state transportation system. Click on the pulsing circles below  for additional pop-up details.  For analysis of the two most recent state capital programs -- Jump Start and Illinois Jobs Now! -- please see this CMAP Policy Update.

Revenue Flow

  • Motor vehicle licenses
    • Standard vehicle registration fees are currently $101 for passenger vehicles and light trucks. Heavy truck fees vary by weight. Note that other registration fees, such as certificates of title, are not included in this flow chart.
  • Local MFT sharing
    • After a variety of diversions, 54.4% of the balance is allocated to local governments. Of this portion, 49.1% is distributed to municipalities based on population, 16.74% to counties over 1,000,000 in population, 18.27% to counties under 1,000,000 in population based on motor vehicle license fees received, and 15.89% to townships based on mileage of township roads.
  • MFT diversions
    • By law, the Motor Fuel Tax (MFT) Fund directs $420,000/month to the State Boating Act Fund, $3.5M/month to the Grade Crossing Protection Fund, and $30M/year to the Vehicle Inspection Fund. The MFT also covers administrative and supervision costs, refunds, the Court of Claims, and payments owed to other jurisdictions under the International Fuel Tax Agreement.
  • MFT split
    • After the above diversions and allocations to local governments, 37% of the remaining funds are sent to the State Construction Account Fund and 63% to the Road Fund.
  • MAP-21
    • The current federal transportation authorization law, MAP-21, apportions highway funds to States.
  • Motor vehicle licenses split
    • After deducting for debt service and other uses, including the $2 surcharge for the Illinois Department of Natural Resources and the $1 surcharge for Illinois State Police vehicles, 37% of the remaining funds are sent to the State Construction Account Fund and 63% to the Road Fund.

The 55-45 Split


How Illinois spends highway dollars.

The State of Illinois highway program is subject to a long-standing informal policy that directs 45 percent of transportation funds to northeastern Illinois and the remaining 55 percent downstate. This 55/45 Split is not a law -- it is an agreement established decades ago within the General Assembly and followed by the Illinois Department of Transportation (IDOT).

The arbitrary formula does not reflect the region's needs and its disproportionate contributions to overall Illinois economic output, population, travel, and tax receipts. This chart shows how northeastern Illinois contributes to the state's economy by five indicators -- each of which is a much higher than 45-percent portion of the Illinois total.

Furthermore, traffic congestion is extremely intense in northeastern Illinois; the region has more than four times the vehicle miles traveled per lane mile than the rest of the state. The Chicago region consistently ranks as one of the most congested metropolitan areas in the United States.

Picking Projects

How Illinois selects projects for funding.

Across Illinois, pressing transportation needs far exceed our state's available resources. In the context dictated by an arbitrary 55/45 split, IDOT must make difficult tradeoffs among various types of projects, relying on the assessment methods described below.

While maintenance projects have specific goals and merit-based decision-making, modernization and expansion projects use more generalized goals with no transparent process for determining how tradeoffs lead to project prioritization. It is unclear which data the Department uses to evaluate modernization and expansion projects or how these data enter into the decision-making process. Additionally, relevant stakeholders, including metropolitan regions, do not participate in these processes.

IDOT Project Selection Process

  • Maintenance Projects

    • FY 2014-19 Total

      • $4.9 billion (71% of State program)

    • Specific Goals

      • Roads: 90% either adequate or accruing status

      • Bridges: 93% either adequate or accruing status

    • Data Used

      • Roads: survey of pavement conditions

      • Bridges: inspection of substructures, decks, and superstructures

    • Assessment Categories

      • Backlog*

      • Accruing**

      • Adequate***

  • Modernization and Expansion Projects

    • FY 2014-19 Total

      • $2.0 billion (29% of State program)

    • General Goals

      • Congestion mitigation

      • Improve traffic flow

      • Economic needs

      • Safety needs

      • Political support

NOTE: The above FY 2014-19 data refers to the state highway program.  Based on IDOT's classification, the Maintenance Projects column of this chart includes two categories: System Maintenance and Bridge Maintenance.  The Modernization and Expansion Projects column includes the IDOT categories "Congestion Mitigation" and "System Expansion."

*IDOT refers to Backlog as "needs improvement." 

** IDOT refers to Accruing as "expected to deteriorate to Backlog status" over a five- or six-year period.

*** IDOT refers to Adequate as "not in need of immediate improvement and not expected to deteriorate to Backlog status" within a five- or six-year period.

Problems and Solutions

Why good investment decisions matter

Based on extensive discussions and analysis, CMAP has identified the following three areas of improvement for current transportation programming practices in Illinois. This performance-based funding approach will enable transparent, data-driven investment decisions and consistent collaboration among stakeholders.

  • PROBLEM: Big money is at stake without adequate understanding of the decision-making process.

    SOLUTION: IDOT should make public the data that it uses to make investment decisions and describe how it manages tradeoffs among various criteria.

  • PROBLEM: The 55/45 split is arbitrary. It can allow one large project in the region to crowd out other priorities, including those shared by the state (IDOT) and region (CMAP).

    SOLUTION: End the 55/45 split. IDOT should evaluate all projects across the entire state based on their merits, as it already does among its downstate districts.

  • PROBLEM: Local input and regional planning are not formalized in IDOT's program development.

    SOLUTION: Early in developing its highway program, IDOT should ensure consistency with regional plans and weigh the priorities of metropolitan regions in the selection of expansion and modernization projects. This approach would facilitate the implementation of GO TO 2040 and other regions' publicly agreed upon long-range plans.

A better way to choose highway projects

How perfomance-based funding works.

Performance-based funding uses a variety of performance measures to assist in prioritizing and selecting projects for funding. This data is used as part of a transparent, public process that also relies on the professional judgment of transportation stakeholders and, in some cases, the general public.

Because transportation dollars are scarce, it is especially important to ensure that they are spent wisely and transparently. Performance-based funding promises a more credible and accountable process for programming road and highway projects.

CMAP recommends that IDOT organize its highway funds into three broad categories: maintenance, modernization, and expansion. Each of these categories, or "buckets", would have clear, transparent criteria to use in evaluating projects, and projects' scores would be publicly reported. Using these rankings as well as the input of local agencies, decision-makers would make final selections of projects for funding.

Resources

Learn more

CMAP has produced a number of materials on performance-based funding. The Technical Background is a compendium of all CMAP staff efforts on the topic to date. The CMAP Issue Briefs and Policy Updates provide information on a number of relevant topics. And the Volpe Peer Exchange summary provides more detail on case studies.

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