Transportation plays a vital role in the U.S. economy, providing jobs and income and supporting economic activity. As measured by transportation-related final demand, in 1998 transportation contributed $930.5 billion in constant 1996 dollars or about 11 percent to the countrys gross domestic product. For-hire transportation industries employed about 4.4 million workers or 3.5 percent of the total U.S. civilian labor force in that same year (Bureau of Transportation Statistics, 2001). Transportation also generates revenues for all levels of government (federal, state, and local), which in turn spend or invest the funds on transportation infrastructure, improvement and maintenance, and operations support.
The level of government transportation finance is substantial. In constant 1996 dollars, government agencies generated $118.9 billion in revenues and spent $144.7 billion in fiscal year (FY) 1999. About one-third of this activity takes place at the federal level, about one-half at the state level, and the remainder occurs within local governments. Moreover, considerable funds are transferred among the three levels of governments each year. For example, federal grants to state and local governments reached $26.3 billion (chained 1996 dollars) in FY 1999 for transportation-related programs. These federal grants-in-aid are a form of intergovernmental transfers and provide a substantial source of funding for state and local governments.