Knowledge Resources

Innovative funding can have a significant impact on a region trying to support its transportation facilities. Almost every transportation agency identifies inadequate funding as a major concern. At the same time, virtually every agency acknowledges that funding constraints are a major impetus for advancing management and operations (M&O) strategies. Planners often become champions for M&O strategies only when they recognize a serious discrepancy between available funds and the cost of new capital investments necessary to maintain regional mobility. This does not imply that planners should wait for budget crises before offering regional leadership on management and operations coordination, nor does this imply that practitioners should choose between funding roadway construction or operational improvements.

Experienced ITS professionals offer the following strategies for discovering innovative funding resources:

• Institute land development impact fees to help fund management and operations (M&O) strategies and ITS. An innovative funding strategy is to use "impact fees" levied on land developers to fund operations equipment, such as monitoring cameras and signal timing improvements. The practice of requiring developers to fund transportation improvements as a way to mitigate the transportation impacts of their projects is well established, but relying on this as a source of M&O improvements is relatively new. This funding opportunity may also prompt local governments to more thoroughly identify M&O needs so that individual funding sources can be used together to support an integrated operations approach. This is critical, since operations must typically be applied on a system-wide rather than localized basis.
• Replace select discretionary transportation funds with impact fees for large developments. In Montgomery County, MD, an impact fee for large developments has replaced the use of some discretionary transportation funds. The county's public works department is using these impact fees to fund operations equipment, including dynamic message signs and detection equipment. In one instance, a major development funded a dynamic message sign that indicates when transit parking facilities at central rail stations are full, encouraging drivers to use parking lots at stations located further from the region's core. This new funding source has also helped to promote coordination between planning and operations.
• Demonstrate how transportation management strategies will mitigate development-related transportation impacts before requiring developer-funded improvements. Developer concessions can provide an important source of revenue and encourage more detailed planning for M&O programs. In order to require developer-funded improvements, local governments typically must demonstrate how the management strategies can mitigate transportation impacts, such as improvements in traffic flow on a particular corridor.
• Use a portion of a roadway's capital investment funds to help finance management and operations (M&O) strategies and ITS. One approach to fund certain operations strategies and ITS is to allocate part of a project's initial capital investment for M&O strategies that support the regional transportation vision and goals and/or enhance the project's effectiveness (e.g., ITS equipment that enhances corridor management activities). The Hampton Roads, VA region incorporated ITS into the metropolitan planning organization's (MPO) project selection process for the regional Surface Transportation Program and the CMAQ funding program. ITS projects were scored for their capacity to support planning objectives. Their experience suggests the following lesson:
  • Fund ITS plans and projects using capital investment funds. In Hampton Roads, several ITS plans and projects have been funded by using capital investment funds, including a regional roadway information system, a centralized traveler information system, signal system upgrades, and implementation of the local Smart Traffic Center. They have also included ITS as a distinct element of the MPO's long-range plan. The current draft of the region's 2026 Plan includes long-range investments for future ITS projects.
  Developing and utilizing new funding mechanisms can help to create bridges between planners and operations managers. Planners and operators increasingly recognize that funds for management and operations associated with a particular project or corridor are best secured in coordination with allocations for major new construction or rehabilitation. Working together, planners and operators can make the case that proper management of new transportation facilities will maximize the long-term benefits of the initial investment and in turn promote the productivity and efficiency of the overall transportation system. Innovative funding such as using capital investment funds, as was done in Hampton Roads, promotes this approach and has significant impacts on the facilities in the region.
• Leverage funding constraints to enhance the focus on management and operations (M&O) solutions in the transportation investment decision-making process. The Washington State DOT had to address a severe disparity between transportation needs and revenues in its 20-year transportation plan. The plan prioritized investment choices as follows:
  • Maintenance, traffic operations, and preservation activities are top priorities and are first in line for available revenues.
  • Highway safety, environmental retrofit, economic initiatives, and a Puget Sound core system of high occupancy vehicle (HOV) lanes are high priorities and are second in line for available revenues.
  • Revenues remaining after the above priorities are addressed go to other highway mobility improvements.
  Traffic operational solutions are considered as the first step in addressing a congestion problem identified in the plan. The stated goal of operational strategies is to reduce delay of both people and freight on the State's system. The plan defines operational strategies to include traveler information systems, safety enhancements, ramp metering in peak hours, service patrols and incident response teams, signal timing and HOV lanes, and improving advanced technology applications for commercial vehicles.

This lesson emphasizes that periods of severe funding shortfalls should be seen as opportunities to educate a broader regional constituency about M&O solutions and the services that ITS can enable. Planning and operations coordination can be strengthened when transportation management strategies are viewed as a potential source of transportation dollars. Advancing management and operations strategies has a significant impact on the transportation needs of a region. Focusing on M&O solutions and implementing ITS solutions will promote a region's goals of improving mobility, productivity, and efficiency of the transportation system.