Targeted spending could benefit vital infrastructure.

(Editor's note: Investment in critical infrastructure is gaining increased attention at the federal, state and local levels around the U.S. Engineering360 presents an ongoing series of articles that look at projects, approaches, technologies and engineering challenges that lie at the heart of this push to modernize existing infrastructure and build for future needs.)

Transportation and water infrastructure funding and finance in the United States are not nearly as dire as some believe, says a report by RAND Corp. It says a national consensus on infrastructure priorities, accompanied by targeted spending and selected policy changes, is needed.

The report says that although much of the nation's transportation and water infrastructure is adequately maintained, a 2.5 percent to 3 percent annual spending increase above the more than $235 billion spent annually by local, state and federal agencies largely would eliminate existing maintenance backlogs by 2030.

(Read "Built in the U.S.A.: Replacing 559 Bridges in 3 Years.")

State and local governments shoulder most of the burden of building and maintaining infrastructure like roads, highways, bridges, water and sewage treatment, storm water systems, airports and ports. The RAND study says such infrastructure projects need federal support through tax-advantaged financing, efficiency improvements in regulatory processes, and research and development.

For example, the report says the federal government should focus on maintaining and modernizing vital federal infrastructure and on targeting “nationally significant projects” that are beyond the capacity of individual states and cities.

These may include re-engineering connections among regional highway and rail lines, port-rail-highway junctions, airport modernization, major dam repairs and infrastructure on military installations, in national parks and other publicly managed recreational areas.

(Read "Built in the U.S.A.: Inches to Protect a City from Floods.")

Federal assistance can be through direct spending or through the tax code, the report says. To help ensure that state and local governments have reliable and sustained access to capital from a broad class of investors, Congress could preserve the federal tax exemption on interest earned from municipal bonds for at least the next decade, reinstate taxable Build America Bonds and experiment with other financing alternatives that keep capital flowing to local and state infrastructure investment, including investment through public-private partnerships.

In addition, federal capital funding could include requirements to make projects resilient to natural disasters and climate change in order to reduce future spending on disaster assistance.

The Wall Street Journal reported that Trump administration officials are finalizing a plan to earmark $200 billion to spur investment in a $1 trillion infrastructure package, and could push toward adoption of a plan in early 2018.

The report, “Not Everything Is Broken: The Future of U.S. Transportation and Water Infrastructure Funding and Finance,” was written by Martin Wachs, Benjamin Miller, Scott Davis and Katherine Pfrommer.