Finance

Financing methods have profound, although indirect, impacts on the incentives to provide roads infrastructure and the organisations involved in Network Operations.

In many countries National tax is used for operating and maintaining national and regional networks. This National tax includes funds coming from the general State budget together with special fuel tax, or vehicle tax. Road network operations are funded through public bodies, although this may be divided between two or more agencies (for example the roads authority and traffic police).

Operations and maintenance tasks that are performed by a private company under contract are sometimes paid for on the basis of traffic volume managed. Payments are made from the national (or regional) budget (incomes and taxes) in order that the system appears free to the users.

In the case of concessions to private operators, operational costs are often covered by user fees (tolling), which also cover the repayment of the debt (principal and interest) and maintenance costs. (See Toll Collection)

In Europe, at the level of the European Union, several financing mechanisms exist which contribute to a maximum level of 50 % to road infrastructure expenses on fulfilment of European goals. A road network of strategic interest has been defined at the European level, the TERN (Trans-European Road Network). Faced with new challenges new ways of financing this network have been advocated:

• priority to the user-pays principle
• setting up of independent agencies (possibly private) with responsibilities as network operators
• strengthening of road administrations as regulators
• development of public/private partnerships

Countries such as the UK now have extensive experience of private funding of road infrastructure. ”Shadow tolling” is also considered. The concept of shadow tolling is to have the toll paid by the authorities (Government, Regional, Local) according to traffic volumes and certain criteria such as level of service.

The indirect impact of the financing method on the operation level of service in a given environment is very significant. In practice, the deployment of new ITS services is sometimes initiated after an institutional change linked to financing issues. (See Finance and Contracts)