ABSTRACT
This chapter explores the variation across states in size, condition, and financing of the nation’s highway system and suggests ways to build and maintain the system to meet the needs of the 21st century economy. It provides preliminary evidence of how the differences lead to regional differences in the net return to highway capital. The chapter examines the decentralized approach to financing highways and the selection of highway projects. It also explores evidence of the extent to which this mechanism allows for states and local entities to pursue the sometimes conflicting goals of meeting local demand by businesses and residents for transportation services and providing for an efficient national highway system. A hallmark of the nation’s highway system is the federal-state partnership in which states select the projects they wish to undertake and the federal government matches state funding by up to 90 percent of total project costs on eligible highway projects.
