Capital grants and recurrent subsidies: A dilemma in American transportation policy

Transportation policy in America distinguishes between capital expenditures and recurrent operating and maintenance costs. Federal policy and resources encourage capital-intensive projects, but traditionally have left to state and local governments the responsibility for maintaining and operating the facilities built with federal support. This has led to consistent underestimation of operating costs in the decision process leading to capital expenditures, and to overcapitalization of transportation networks. Today, faced with recurrent costs which strain local resources, there is pressure to broaden federal participation in operations and maintenance, and legislation is beginning to weaken the traditional distinctions between capital and recurrent expenditures.