The effect of federal matching share for toll facilities on capital investment in the United States

A recent change in federal policy permits states to use toll financing to supplement traditional federal highway trust funds for transportation improvements. How states respond is influenced by the federal-aid program structure, particularly the financial leveraging effects of matching requirements for toll and nontoll projects. This paper uses a linear programming model to determine the optimum distribution of highway capital expenditures between toll and nontoll projects which maximizes the leverage of scarce state funds. The impact on capital expenditure and on the mix of projects of alternative match ratios, toll revenue levels and magnitudes of federal and state aid are examined. The results generally support the current matching share provisions of the federal-aid highway program.