AN INVESTIGATION OF THE ALLOCATION OF STATE HIGHWAY CONSTRUCTION EXPENDITURES IN TEN STATES AND RECOMMENDATIONS OF A SYSTEM OF FINANCIAL PLANNING AND CONTROL FOR SUCH EXPENDITURES By John L. McKeever AN ABSTRACT OF A THESIS Submitted to MICHIGAN STATE UNIVERSITY in partial fulfillment of the requirements for the degree of ’ DOCTOR OF PHILOSOPHY Department of Accounting and Financial Administration 1961 flaw Approved ABSTRACT AN INVESTIGATION OF THE ALLOCATION OF STATE HIGHWAY CONSTRUCTION EXPENDITURES IN TEN STATES AND RECOMMENDATIONS OF A SYSTEM OF FINANCIAL PLANNING AND CONTROL FOR SUCH EXPENDITURES by John L. McKeever Objectives of the Study State highway department officials are striving to overcome serious road deficiencies that exist at present in the various state highway systems—interstate, primary, secondary, and urban ex- tensions. It is a major thesis of this study that currently utilized management procedures will not enable many state highway depart- ments to accomplish their construction objectives. The dissertation has dual objectives: 1. To study, evaluate, and analyze current management practices and problems in the planning and control of construction expenditures in ten state highway depart- ments in the western region of the United States. 2. To develop a system of recommended procedures for financial planning and control of construction expendi- tures that will provide for Optimum utilization of tax- payers’ funds. C ,- -r«--.o.... .P‘ V‘ p: 5" V5 \k‘l‘ _ 1 n......,_ ,. ‘~ ", -\ . .. - “ifi two ~‘g -.. ~ .~ 2'; FT’;"“;,.4 '- .'.""“\U I 'I. . ' ‘ ,“ ‘i‘ho‘- _O '5‘... ..u“ :1. ‘.‘ L‘;.;3“‘ I. ‘ “ ' -.‘;-.' T-b. ‘ k-n: \ a. ._‘ \ O r: w J; ‘ \_ % ¥, ~. “‘t \ "‘.. v--‘. n ' I“~.- -‘ L-\ -. \.,“ ‘L“ I -.:‘ ‘ s | ., ‘~~. ‘s- .' I v.__ ' ... - 'I Q- Q '- U‘. ‘ o g’ - \ ‘1 " . ‘v' 4"-_ §“- -\ ‘: u;“ _. ‘ \ '~ \ 4, , ‘ P ‘ b .- R. \ . ~ .‘s .‘.-. - n In . ‘ s .. .. - 6“ \<.. \ a S... I. 5.. z ‘ ~. .\_ . \. ~ ., - - ~ - ‘ h A. t - Y . \ e ‘~ \.. § - - s o . John L. McKeever The objectives are primarily concerned with construction eXpenditureS for several reasons. First, the bulk of highway funds are expended on construction projects. Second, the plan- ning and control of construction expenditures represent a major and somewhat neglected area of highway finance. The Major Features of the PrOposed System of Financial Planning and Control of Construction Expenditures The study revealed that officials in eight of the ten sur- vey states were allocating a substantialportion of their construc- tion funds on the basis of personal judgment and political expe- diency. If consistently followed, such practices will result in a failure to accomplish long-run and short-run organizational ob- jectives. To eliminate the subjective element in allocating scarce construction funds, the following features of a prOposed system of financial planning and control are discussed in detail as a means to achieving state highway objectives: 1. The elimination of the current practice of distributing construction funds by commissioner, or other, districts. 7. 1‘ I" O-.. \ rs "0. m....._- ‘39'0'u: O ,. v'ww-at . . T" " “\. ’ I \ . . Au ‘4‘... “.. u A... '0 . d\ I L‘ «As a ...“P a... ‘f . ‘ A t u s....~ ‘. v . . "O. ‘..v ‘ n “q ‘ ‘ WA... 5... ‘ a... ._‘ I " S " tux...” . u » bg.‘ ~. .7..- \ "‘. .‘b\: ..’-._. \ \‘.u~‘...\. 7'. .L “L, Atts b- . 'r- a .f I... I- . «I .3: b i; O 5‘. I‘.‘ L~= L' .. .‘ .I.‘. .p. “4..” ‘P o ‘\‘ M. h '"' ~-:: , JA. \ ”k.“. ‘;I‘P 4‘.F d.. c n ‘6: u. h ;.b. ‘r : ..,\ ‘4‘ I ‘5 Mn, $4.: a“: - ._“ V ‘ r “ \ (i. I 'C t‘.‘ '- .A.t ‘ \. ~» 0-,: r -,_ Ag. ‘ v. John L . McKeever This distribution by areas has no relevance to actual construction needs as they exist throughout the state. The installation and use of a priority listing system based on a sufficiency rating procedure whereby road sections are rated, or graded, on the basis of estab- lished standards and designs for the various highway systems (interstate, primary, secondary, etc.). Use of this system for construction fund placement will inject a high degree of objectiveness into the scheduling of construction projects. . The preparation and dissemination of an annual report to the public based on construction activities at the end of the current year in overcoming highway deficiencies and enumerating the construction projects to be under- taken in the coming year. The report is to be based on sufficiency ratings and budgeted and actual construc- tion data to permit public evaluation of highway manage— ment in fulfilling their responsibilities. . The enactment of state legislation to enforce the use of the aforementioned procedures. . The use of various long-range techniques in planning and controlling construction expenditures. . The elimination of certain rigidities now existing in the organizational structures of many of the ten survey states. Although not directly concerned with state highway con- struction fund allocation, the survey revealed a lack of coor- dination and cooperation between state and county officials in planning a rural state highway system. The means to acquire | 0 u'ucnuf [At 0" . Ow' .snviuvri J 5“: s ‘ 1 I‘A\ .‘.:,.. ‘~L\\‘ a“ 4:”..A'.. 1 fi' i l_“‘~o..' ‘ :D . H .. \ -.,..‘ C - "' .. - «.f . H. D ‘ J‘ a 0 ‘A~ \ s u g I \ ‘ ‘~- ‘ . . h n we" ‘2' ‘. , n.‘ '.' \ . i‘Q . I I. ‘ ; 5 . “‘. ’9“ of "Q -\~- F- 5 P.” g h. .'t . . ‘ a ‘x g; C. 5“ .r. IQ I“- 's .‘ . . ‘\t :‘u .A‘.p‘ -. u.‘ .A ‘0 ‘u I ..-h .5, u“ - ‘~ j‘.‘h. H. , 1 I I A. i‘ ‘- N."‘b‘ . \1. " - ‘.. \f‘ .‘ .I.‘ ~ - 3“. \ .- '9. I C. U t. n ' | .Q .- ‘1‘. John L. McKeever an integration of the two systems into a coordinated whole are discussed in detail. Techniques Utilized in Achieving the Objective of the Study In addition to available literature in the field, a survey was conducted in ten states in the western region of the United States. Officials were personally interviewed in the highway de- partments of Arizona, Colorado, Idaho, Kansas, Montana, Nebraska, . New Mexico, South Dakota, Utah, and Wyoming. The survey served several purposes necessary to the de- velopment of the study: (1) It determined the actual procedures being utilized by highway officials in allocating scarce construc- tion funds. (2) It revealed the use, or lack thereof, of the suffi- ciency rating procedure as a basis for scheduling construction projects in the annual budget. (3) It developed other areas of inadequate financial planning and control that were not anticipated in the preliminary stages of the study. Although the survey does not fulfill the requirements of statistical sampling procedure, it does represent an intensified study of the ten state highway departments mentioned previously. I4 .h"... - hut :ka't‘ rrV‘ I "v‘ . 4 ‘ "Q ‘A 0-1 "| u, , _- a, .K ‘3‘“: u£~.’:th \ .‘ no. am'.‘1."‘.v IL_ 'h‘om . i. “it ‘ _‘ ~”.— I. ‘-r . \— . \ w" . II ~t‘ 56‘2ub: II' «I...fl“ .. _ -' n w .Uu...!. £\rl .. ‘; V O “~ __ .“o. 1 ' -:‘: .‘I‘."-u K|“‘ C-“ ' - ‘. if . . . A I ‘-b ‘NLVN. ‘ ~_ . A "u. u ‘.h ’0 u \ .1. '- 1 ".. in; PP. .- ' "'“u 4 .v \- 'fi.-‘. .“‘ a 'e. \N-x l; "" I Q.‘. ‘ .'. ‘ < \: \.“.~ ‘4‘. \.a. H ul‘,_ ‘46:» . ‘ o! F'. 0 .v o. . n. i. w “I “w 3-.. .. ‘~.“ [- .\ \R‘o . _ n.‘ 1‘ .. O \‘. ~ N-‘ 'o i._‘ I‘Qak‘n‘ “.L m, u .,~ «h‘ A. \ ‘,,. ' '1. c.“ N ‘ .. .. ... s - .‘. . b .. ‘ a J. -.. . . ‘ \ ‘~ .. - ‘ Q ‘ S‘. .- . -~ _‘ \. x ll. 0" k ‘. L-, A l John L. McKeever Findings of the Study The survey revealed that little cooperation and coordina- tion existed between county and state highway officials in planning and integrating the rural highways of the states. Large sums of highway user revenue were prorated to county officials with little or no control exercised over its use. In allocating construction funds within the state highway systems, highway commissioners initially prorated the funds among their represented districts by unrealistic formulas or by conces- sion and argument among themselves. Both methods gave very little consideration to construction needs as they existed through- out the states. Highway commissioners, or other highway officials, often scheduled annual construction projects on the basis of personal judgment or submitted to the pressures of vested-interest groups to construct roads in specific localities. Such practices in allo- cating construction funds generally did not provide for the opti- mum use of construction monies and would not result in accom- plishing highway construction objectives—the construction of the most efficient state highway system in the most economical manner. S . a. John L. McKeever Highway officials made little use of construction priority lists based on sufficiency rating procedures even though such lists were made available. The sufficiency rating procedure rep- resents a system of determining construction priorities based on the needs of the highway sections competing for the funds. Suf- ficiency rating methodology as a basis for allocating scarce con- struction monies tends to reduce the subjective element in the decision-making process to a minimum where a choice of construc- tion alternatives exists. Highway officials planned on a short-run basis only. Very seldom were long-range objectives and plans established and fol- lowed. Inadequate reports for public dissemination were being prepared by highway officials. These reports did not provide the necessary information for public evaluation of highway management Performance. Certain weaknesses and rigidities were found to exist in the organization of highway departments that exerted a detrimental effect on sound construction expenditure planning and control. Recommendations To achieve greater cooperation in integrating the planning and control of rural highways, it is recommended that state high- Way OffiCIals be delegated the authority to plan and control the 6 ' . .‘ "MH’, ' r .4 r ‘6" “' new. <& 'i;- ""10. uvofi~‘.‘ a p A I"~. I "'\:;‘3:'4 . A. w “d... p“ ‘ o 5-. .‘kv 0!... . \ m "H‘ I s \ W... 'i ~ . . .'\ . : ace .- JL “ \9A‘ \ 'f a .."¢J: Pur,. J 5".“ “ -‘. “ Q N. ". \ . ‘\ Y‘s “ ‘wn .‘v- “D ‘5 - 2.“. ‘h 'v N ‘ u, z.-.- ' b a -“t .N s' \, “..u. \-‘\ . .‘ 9 '0 k ‘ N V‘.‘ _ sV‘“ ‘ s 3. \ “ \\ ‘- ‘ ‘5‘.” _ - .5“ q ‘4 a \ S ’, o ‘ . ~h. ‘- g a‘ .‘ ‘ ‘ ‘ ‘f‘n. \ ‘h. ““. ‘ ‘~.. ‘ S e V g . I\- t ‘. - .- ‘. ._ “ John L. McKeever use of funds designated for county highway use. This procedure would require legislative action by the state and the counties. In allocating funds for construction of state highway sys- terns, it is necessary that the initial distribution by districts, commissioner or otherwise, be discontinued. This proration of funds has absolutely no relationship to construction needs through— out the state. As a basis for allocating scarce construction funds, it is recommended that priority lists based on the sufficiency rating procedure be used. Only by complete adherence to such a system will optimum use of the taxpayer’s funds be assured and highway construction objectives achieved. The elimination of commissioner districts and the use of the sufficiency rating procedure must be enforced by state legislation to prevent circumvention by highway managers. It is recommended that highway management extend its planning period to cover at least a twenty-year program. Sev- eral long-range planning techniques as they apply to construction Expenditures are recommended. It is also recommended that more complete and timely prog- ress reports on state road construction and finances be made, and CW .4 ip‘.""”"‘ ‘ .. b J; u"*"“'“ l e ‘ I ”-0-. u 2:, mm. a" ,__...uuuuv“~ “‘ l l l l up," A O . 9 Fr .P'" F“' “an-..“ «sand. .. . I t" ,....:r.:e oi the John L. McKeever the type of information to be included in the report is suggested. Recommendations are made pertinent to changes in the highway department organization to provide for greater flexibility in the performance of the highway functions. a. Try Mug \5 T . . . urn \~ $5M .\ . Q A w\. . . Inn «\S .i.‘ I v.. n‘h - s AN INVESTIGATION OF THE ALLOCATION OF STATE HIGHWAY CONSTRUCTION EXPENDITURES IN TEN STATES AND RECOMMENDATIONS OF A SYSTEM OF FINANCIAL PLANNING AND CONTROL FOR SUCH EXPENDITURES BY . ‘9 John L90 McKeever A THESIS Submitted to Michigan State University in partial fulfillment of the requirements for the degree of DOCTOR OF PHILOSOPHY Department of Accounting and Financial Administration 1961 /// 5; 20‘703 S/ZV/ég 5... - .vod‘.”'_ . .., _ I gtebbk‘. t: AA .‘ |.- “." a p . u. .Nu4.~\. :1 J. I I-v. ,. i A I n _ ‘ .h. 9"“ \‘a,.. . .o .u-\‘ ~La.t= ‘ Susi...” A ”m. . . en'“ 7“.» \h .- ; 4“ ‘.U“ u. D \I . I. ' . ,' . ‘ “tafE 1n '- . LE Jt.dg T‘~. l““‘0“ \. \‘- ‘e , \ '4‘: F.,.“r an ‘o t I ' \s.). .c.‘ ‘l u u h. “ P}? . .. V. ‘o-, “‘47. . ! PREFACE Highway departments are big business today, with total annual expenditures in the billions of dollars for the fifty state organizations. Approximately 690,000 miles of the major highways in the United States are under the jurisdictional control of the state highway departments. At present, a substantial portion of this mileage is below standards conducive to safe and efficient travel.1 State highway managers are endeavoring to overcome this construction lag which, incidentally, has been with us since the turn of the century. It is with the construction lag and the manner in which highway officials are planning and controlling the expenditure of construction funds that this paper is concerned. The study eval- uates current practices of highway officials in allocating and Spending scarce construction funds and makes recommendations relevant to the use of better planning and control procedures in the utilization of the taxpayers’ funds. \ For further discussion of the inadequacy of present state hway SYstems, see infra, page 10, footnote 2. ii c. O - ”I 1'. ”my. “‘3“ Q Int. . -Lt't Q t '3 .9 “Us :3 u. I N— .‘vuk‘ far I}. u U... - ' 3i 9". ‘.‘ I. O . “I ~l. “R‘s..- ' '5-‘4..4 r. rim | O O 5o. ‘\ p9,.” " ‘ o ‘ {‘A. re " ‘4 x \‘. -, . I ‘1 U . 'IA“ .‘-' I“J,“ "o s \ Several persons have contributed to the development of the subject matter of this dissertation. To Dr. 0. D. Turner, who made the author aware of the problem of financial planning and control in highway departments, a special debt of gratitude is owed. Appreciation is extended to Mr. Robert Livingston of the Colorado State Highway Department for providing the author with the necessary insight into the specific construction problems which gave direction to the study. To all of the state highway officials who so graciously gave their time during the survey, sincere ap- preciation is offered for their cooperation. The author is deeply indebted to Professors Lemke, Mead, and Simonds for their valuable guidance and suggestions. Prior to his departure for Brazil, Professor Grunewald made many val- uable contributions for which the author is grateful. To Mr. Timon Walther, appreciation is extended fOr the advice so gen- erously offered. iii TABLE OF CONTENTS LIST OF FIGURES ........................... LIST OF APPENDIXES ........................ CHAPTER I. INTRODUCTION ...................... The Objective of the Study ............ Interdisciplinary Aspects of the Dissertation ..................... Importance of the Study ............... Plan of the Dissertation .............. II. THE HISTORY OF AMERICAN HIGHWAYS ........................ Early History of Roads in the United States .................... The Turnpike Era ................... The Period of Neglect ................ The “Good Roads” Movement to the Present ..................... III. HIGHWAY CLASSIFICATION AND ADMINISTRATION ................... Highway Classification ................ iv xxi xxiii 10 13 17 19 21 24 25 35 36 CHAPTER The state system ................. State primary system . . . . . . . State secondary system ........... State park, state forest, and Indian reservation roads ........ County, town, and township secondary road systems .......... Municipal roads and streets .......... Federal roads ................... United States marked routes ......... Federal-aid system ................ Interstate system ............... Federal-aid primary system ........ Federal-aid secondary system ...... Highway Administration ............... Federal government highway administration ................. State highway departments ........... County, town, and township administration ................. Urban administration ............... IV. SOURCES AND EXPENDITURES OF HIGHWAY FUNDS ................ Sources and Expenditures of State Highway Funds ................... State highway revenues ............. Highway user imposts ............ Toll receipts .................. Property taxes ................. Page 37 4O 42 45 45 46 50 5O 51 53 56 58 58 59 63 69 74 76 77 79 83 86 87 ",5..- ."‘LR i I“. o—J h—j “4 (r! (I; k . I CHAPTER Page Appropriations from general funds and other state imposts ......... 87 Other state imposts ............. 88 Funds from the Bureau of Public Roads and other agencies ....... 88 Funds transferred from local sources .................... 89 Borrowed funds ................ 89 Miscellaneous receipts ............ 91 State highway expenditures .......... 91 Expense of collection and adminis- tration of highway user revenues . . 96 Disbursements for state-administered highways ................... 96 Expenditures and fund transfers for local roads ............... 99 Expenditures and fund transfers for nonhighway purposes ........ 100 Sources and Expenditures of Local Government Highway Funds .......... 101 Funds available to local rural units . . . . 101 Local revenue sources ........... 104 Transfers from urban places . . . . . . . 106 Transfers from federal government . . . 107 Borrowing .................... 107 Local rural unit highway expenditures ................... 107 Urban receipts and expenditures ..... . 110 Sources and Expenditures of Federal Government Funds ................. 115 Federal revenues ................. 1 1 6 vi CHAPTER Federal expenditures ............... Federal and state matching of funds ...................... Theories of Highway Taxation .......... The benefit principle and highway finance ...................... Political benefits ............... Economic benefits ............... Other beneficiaries .............. User and nonuser roles in highway finance .............. Allocation of Highway User Tax Responsibility .................... The ton-mile allocation of user tax responsibility ............... Incremental cost allocation of user tax responsibility ........... Other methods of tax allocation among highway users V. SHORT -RUN EXPENDITURE PLANNING ........................ The Nature of Planning and Control ...... Planning ....................... Control ........................ A Technique for financial planning and control of construction expenditures ................... Division of Responsibility for State and County Expenditures Planning and Control ........................ Page 117 125 126 128 128 128 130 130 133 134 135 137 139 141 141 146 147 149 ale-‘- '1! I nod. CHAPTER Page State responsibility for the complete county road system .............. 151 Establishment of a county primary road system ................... 154 Annual Budgetary Procedure ........... 158 Current state highway budget procedure .................... 162 Fund allocation between state highway districts ............. 167 Allocation of funds among highwaysystems.............. 169 A Proposed Program for Annual Budgetary Planning and Control of Construction Expenditures ......... 173 Elimination of fund allocation by state highway districts ........... 174 Allocation of funds within state highway systems ................ 175 VI. A TECHNIQUE FOR SHORT-TERM PLANNING—THE SUFFICIENCY RATING .......................... 180 Segmentation ...................... 184 The Criteria for Rating ............... 186 Structural adequacy ............... 189 Foundation .................... 189 Surface ...................... 190 Drainage ..................... 190 Safety ......................... 192 viii CHAPTER Shoulder width ................. Surface width .................. Stopping sight distance ........... Consistency of alignment .......... Service ........................ Alignment . .................... Passing sight distance ............ Surface width .................. Rideability .................... Other criteria for rating ............ Maintenance economy ............. Remaining road life ............. Rating for lack of proper type of surface .................. Adjustment for traffic volume ......... Special problems in the sufficiency rating procedure ................ The construction log ............... The Field Observation Study ........... The List of Critically Deficient Highways ....................... Priority listing ................... Other Methods of Interpreting Sufficiency Rating Data ............. Maps .......................... Charts and graphs ................ An Evaluation of the Sufficiency Rating Procedure ................. 193 194 195 195 196 197 198 198 200 200 200 201 204 204 109 212 213 220 222 224 227 230 233 CHAPTER Page VII. THE SHORT-RUN CONSTRUCTION BUDGET . .' ....................... 239 The Distribution of the Highway Fund tothePoliticalUnitS.............. 243 Estimating highway user revenues ..... 246 Distribution of highway fund to political units .................. 246 Allocation of the State Portion of the Highway Fund to the State Highway Functions ................ 248 The Construction Budget .............. 255 Programming the construction budget by priorities ............. 259 Construction budgets by systems ...... 266 Forward Planning of Construction Expenditures .................... 279 Preconstruction engineering . . . . . . . . . . 279 VIII. LONG-TERM PLANNING AND CONTROL ........................ 282 Long-Range Highway Revenue and Expenditure Studies ............... 286 The long-range construction needs study ........................ 287 Long-range objectives ............ 288 Historical development of road systems and highway organizations ................ 289 Highway classification ............ 293 Determination of highway condition ................... 295 x CHAPTER Long-range financial needs study . ..... Historical development of highway revenue laws ................ Current tax sources and highway beneficiaries ................ Economic study of the state, county, and community resources .................. Allocating highway revenues among governmental units ....... Matching construction needs to reVenueS ................... Use of the expenditure and revenue studies Traffic Studies ..................... Traffic surveys .................. Techniques used in traffic surveys .................... Motor vehicle use studies ........... In-state vehicular traffic .......... Out-of-state vehicular traffic ....... Road Life Studies ................... Economic Studies ................... Urban Analysis ..................... IX- LEGISLATION, ORGANIZATION, AND PUBLIC REPORTING ................ Legislation ........................ State control over county road fund allocations .................... x1 299 301 302 305 306 307 311 312 313 318 321 321 323 324 325 328 331 333 333 CHAPTER Allocating state highway revenues by districts ................... Allocating construction funds by priority listings ................ Public reporting .................. Organization ....................... Public Reporting .................... A Flow Chart Presentation of the Major Recommendations ............. X. THE SURVEY ....................... Objectives of the Survey .............. Plan of the Survey .................. The survey states ................. Limitations of the study ............. Interview procedure ............... The questionnaire ................. Findings of the Survey ............... Long-range planning ............... Short-term planning ............... Public reporting. . . Politics and the highway organizations .................. Management training ............... Sufficiency rating procedure ......... Short-run budgetary procedure ....... Value of the Survey ................. XI- A CRITIQUE OF HIGHWAY MANAGEMENT ..................... The Practice of Allocating Construction Funds ......................... xii 335 337 340 340 346 351 356 357 357 358 359 363 364 366 367 371 373 374 37 4 375 37 5 378 379 379 CHAPTER General. Highway Management Malpractices ........ XII. SUMMARY, RECOMMENDATIONS, AND CONCLUSIONS ..................... Summary ......................... Lack of coordination in state and county road planning ............ Allocation of the construction fund by districts . . . . Scheduling construction projects in the annual construction budget ..... Long-termplanning................ Public reporting ................. Organization ................... Recommendations.................... Greater state and county rural road coordination .................. Elimination of district boundaries in allocating construction funds ...... Priority listings as the basis for construction fund allocation ....... Long-range planning . . ............ Legislation to enforce the recom- mendedprogram Organization .................... Public reporting ................. xiii 385 388 392 392 393 395 396 399 400 400 401 402 403 404 406 407 408 409 410 413 LIST OF TABLES TABLE Page 1. Rural and municipal mileage in the United States, 1958, classified by administrative control and system ................... 39 2. The state primary rural road system, 1958 . . . . 41 3. Rural state secondary road and county road mileage under state control, 1958 . . . . . . . . . 44 4. County, town, and township secondary road system in the United States, 1958 ........ 47 5. Municipal road mileage under local control, 1958 ............................. 49 6. Summary of state highway user revenues and other receipts applicable to high- ways, by three-year intervals, 1914— 1958 ............................. 80 7- Summary of disbursements from state highway user revenues and other re- ceipts applicable to highways, by three-year intervals, 1949—1958 . ......... 92 8. Receipts of the local rural units for highway use, by source of revenue, 1954—1957 ......................... 102 Disbursements by local rural units for highways, by object of expenditures, 1954—1957 ......................... 108 xiv TABLE Page 10. Receipts of urban places for highways, by source of revenue, 1954—1957 ......... 111 11. Expenditures by urban places for high- ways, classified by object of expendi- tures, 1954—1957 ..................... 113 12. Federal revenue from taxes on motor fuel, lubricating oil, motor-vehicle use tax, and excise taxes on vehicles and auto- mobile products, by three-year intervals, 1932—1958 ......................... 118 13. Expenditures by the federal government on highway systems, by three-year intervals, 1932—1958 ......................... 121 14. Foundation rating ...................... 191 15. Shoulderwidth........................ 193 16. Stoppingsightdistance.................. 196 1'7. Consistency of alignment ................. 197 18. Alignment ............................ 198 19. Passing sight distance .' .................. 199 20. Passing sight distances based on design speeds ....................... 199 21. Rating of maintenance economy for all bituminous pavements . . . . . . . . . .. ........ 202 22. Gilide for determining the remaining road life of highways in sufficiency rating procedure ..................... 204 TABLE 23. 25. 26. 27. 28. 29. 30. 31. 32. A method of listing deficient bridges by the Idaho State Highway Department The construction log for the state highway department of Arizona . . . . . . . . . . . A sufficiency rating list for the state highway department of Arizona . . . . Critical ratings for the three basic elements of sufficiency ratings . . . . Sufficiency rating list for State High- way 34 in the state of Idaho ..... Sufficiency rating study for the state of Wyoming for the year 1958 ..... Sufficiency rating list prepared by the New Mexico State Highway Department .................. State highway department estimated highway revenue from state sources for the fiscal period from July 1, 1959, through July 31, 1960 ...... State highway department distribution of the highway funds to the state, counties, and cities for the fiscal period from July 1, 1959, through June 30, 1960 ................ State highway department estimated revenues available to the department of highways for the fiscal year from July 1, 1959, through June 30, 1960 . . xvi Page 211 214 215 222 223 225 226 247 247 249 TABLE 33. 34. 35. 36. 37. 38. Page State highway department estimated operating costs exclusive of con- struction expenditures for the fiscal year from July 1, 1959, through June 30, 1960 ....................... 250 State highway department distribution of estimated state highway revenues from state sources including state matching funds for construction for the fiscal year from July 1, 1959, through June 30, 1960 ................. 252 State highway department summary of estimated expenditures by the state highway department for the fiscal period from July 1, 1959, through June 30, 1960 ....................... 254 State highway department estimated construction expenditures for all federal-aid systems for the fiscal year from July 1, 1959, through June 30, 1960 ....................... 257 State highway department estimated construction expenditures for the federal-aid systems for the fiscal year from July 1, 1959, through June 30, 1960 ....................... 258 State highway department summary of deficient road mileage for all high- way system road sections having sufficiency ratings of less than seventy points, effective as of July 1, 1959 ........................ 262 xvii TAB LE 39. 40. 41. 42. 43. 44. 45. State highway department estimated construction expenditures required to eliminate road deficiencies ex- isting as of July 1, 1959 ............. Summary of deficient road mileage for the interstate system and the esti- mated construction costs for each sufficiency rating interval, July 1, 1959 . . . ........................ State highway department estimated construction budget for the interstate system for the fiscal period from July 1, 1959, through June 30, 1960 ..... State highway department estimated construction budget for the federal- aid primary system for the fiscal year from July 1, 1959, through June 30, 19560 .................... State highway department estimated construction budget for the federal— aid secondary system for the fiscal year from July 1, 1959, through June 30, 1960 ..................... State highway department estimated construction costs for the federal- aid urban system for the fiscal year from July 1, 1959, through June 30, 1960 ..................... State highway department construction budget for all state highway systems for the fiscal year from July 1, 1959, through June 30, 1960 ............... xviii Page 264 265 268 270 272 274 277 TABLE Page 46. Wyoming State Highway Department primary system needs, including right-of-way and structures ............. 297 47. Wyoming State Highway Department estimated costs for primary needs, except interstate system routes, by types of work ....................... 298 48. Montana State Highway Department total needed expenditures and revenue for twenty years to im- plement thirteen-year catch-up period ............................ 310 49. A comparison of the ten survey states with seven selected states as to land area, population, state-adminis- tered road and street mileage, motor- vehicle registrations, and total high- way disbursements for 1959 ............. 360 50. Preparation of long-range construction and finance studies by the ten survey states, August 31, 1960 ................ 368 51. Use made of the long-range construction and finance studies by the ten survey states, August 31, 1960 ................ 368 52. Length of the construction planning period for the ten survey states, August 31, 1960 ..................... 370 53' Types of condition rating systems being used by the ten survey states, August 31, 1960 .......................... 371 TABLE Page 54. Control over the flow of construction funds exerted by highway commis- sioners in the ten survey states, August 31, 1960 ..................... 372 55. Procedures used in determining sufficiency ratings in eight survey states, August 376 31, 1960 .......................... FIGURE 10. LIST OF FIGURES Map of the interstate system .............. Federal-aid primary and federal-aid secondary systems ................... Field regions of the Bureau of Public Roads ............................ Map showing commissioner and engi- neering districts ..................... Organization chart for the State Highway Department of Idaho .................. Organization chart for the State Highway Department of Utah ................... Organization chart for a district of a state highway department ............... Chart to adjust sufficiency ratings for traffic volume on the interstate system ............................ Chart to adjust sufficiency ratings for traffic volume on the state primary system ............................ Chart to adjust sufficiency ratings for traffic volume on the secondary system ............................ Page 57 62 67 70 71 72 206 207 208 FIGURE 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. A sufficiency rating form used by the New Mexico State Highway Depart- ment ............................. Sufficiency rating map for the state of Kansas for the year 1958 .............. Strip map used by the New Mexico State Highway Department to indi- cate road deficiencies ................. Map used by the Virginia State Highway Department to illustrate road defi- ciencies ........................... An example of a method used by the Washington State Highway Depart- ment to illustrate sufficiency rating data ............................. A bar chart used by the Kansas State Highway Department to illustrate road conditions ...................... The pie chart as a method of illustrating the conditions of highways in the state of Idaho ........................... The bar chart as a method of illustrating the sufficiency rating condition of highways in the state of Colorado . . . . . . . . Location map of continuous count stations in the state of Idaho for 1959 ........... Flow chart of state highway revenues before the proposed recommenations ....... Flow chart of state highway revenues after installation of proposed recommendations . . . . xxii Page 228 229 231 232 234 235 236 320 352 354 ‘fifléxg' ’3 ‘5 S‘g‘w“: VFW fr“... his . APPENDIX A. LIST OF APPENDIXES Questionnaire Used in Survey xxiii Page 427 CHAPTER I INTRODUCTION In the present-day United States there exists the greatest network of highways ever to be constructed on the face of the earth. No other country possesses, or has possessed, a highway system comparable to that now available to the road user—pleas- ure or commercial—in the continental United States; yet a great portion of the highway system at present is obsolete in terms of current and future traffic needs. A vast construction program is now underway to alleviate this condition. New roads are being constructed and old roads are being improved to bring the high- way System up to the standards and design adequate for current de“lands and projected traffic needs of the years 1970—1975. When President Eisenhower affixed his signature to the Federal-Aid Highway Act of 1956, a construction program was undertaken which called for an expenditure of approximately 101 billion dollars over a thirteen-year period. It is this con- Stl‘llction program with its unprecedented expenditures which "*' “A “M‘s .- m. -_ —. -v~._ . A I W; .. A) “ “I A I'. 1 ‘q ‘3" 'fq‘ :‘ Add ‘ LL" vi...“ S; ‘1’ in brings about the need for an evaluation of current practices of financial planning and control now being utilized by state highway departments.1 This increase in highway activity came about over a span of a few years and gave the highway departments little or no time to set up the planning and control procedures necessary to handle the sudden expansion of revenues and expenditures. However, at present there should be no reason for the lack of proper procedures, since sufficient time has elapsed for state highway administrators to become cognizant of the problem. ‘V 491.9; A: I — The Objective of the Study Much has been written, from both biased and unbiased Viewpoints, relevant to the methods of financing the highway con— Stl‘uction and improvement program called for in the Federal-Aid Highway Act of 1956. Most of the discussions of this nature have r evOlved around various principles and theories of taxation—the reVenue side of the picture. These arguments have succeeded in r eleg-aung an equally important problem—that of planning and "V w-mmmh \ te 1For further evaluation of current financial practices in v3 state highway departments, see _ir_ifr_a, Chapters V, VI, and on short-run financial procedures, and Chapter VIII perti- ent to long-range financial practices. A 1w ‘.'-' I controlling expenditures—Ho a position of secondary consideration. The revenue problem represents only one aspect of the total fi- nancial picture. The expenditure phases of the program determine largely the effectiveness of the nation’s highway departments in constructing and maintaining an adequate system of roadways. There seems to be, therefore, cogent reason for inquiring into the practices of state highway departments relative to the alloca— tion and expenditure of revenues. It is a well-recognized principle in the industrial segment of our economic society that wisely, carefully planned spending can result in savings. The process by which spending results in savings is known as financial planning and control, and it comes about by careful consideration of dollar placement where there is a choice among alternatives for the expenditure. It is 1 this choice among alternatives that creates the problems of finan- ‘3181 planning and control. The problem is accentuated in state highway departments because of the extensive road system to be COHStructed, improved, and maintained; the political environment Wlthin which the highway organization must operate; and the higilly specialized nature of the highway organization itself. It is a major objective of this dissertation to study, eval- “ate, and analyze current practices and problems pertinent to the planning and control of construction expenditures in ten state highway departments in the western region of the United States.1 From the knowledge gained of the systems, procedures, and phi- losophies practiced by managers of these highway organizations, it was possible to accomplish the second major objective of the dissertation—the development of a recommended system of planning and controlling construction expenditures in state highway depart- ments. The latter objective is not based solely upon the infor- mation gained from highway officials in the aforementioned ten States, but also relies upon information contained in current read- 1rigs and analysis of planning and control procedures existing in State highway departments in general.2 The two objectives are primarily concerned with construc— tion expenditures for several reasons: (1) The greatest problems of planning and control exist in this area of highway finance. 1The ten states surveyed by the author during August and September, 1960, were Arizona, Colorado, Idaho, Kansas, Montana, Nehraska, New Mexico, South Dakota, Utah, and Wyoming. For fllrther discussion of the survey states, see infra, Chapter X, Pages 358—59. 2Due to the paucity of current literature in several areas of financial planning and control in highway departments, the sec- 0nd objective was accomplished primarily from data accumulated 11 the survey. (2) The bulk of highway funds are expended on the construction or reconstruction of state highways. (3) This phase of highway { activity offers the highway official the greatest opportunity to ac- complish one of the major organizational objectives—constructing highways designed for maximum utility at a minimum cost. The objectives are directed toward financial planning and control of construction expenditures in the state highway depart- ments. However, a situation developed out of the survey perti- nent to the division of authority and responsibility between the State highway departments and their counterparts in the counties. From interviews with state highway officials it seemed that prob- lems of cooperation and coordination existed between the two ad- mlnistrative units. Since there is a need for an integration of the planning function between the two road authorities, the prob- lem and the proposed recommendations are made a part of the ob.iectives of the dissertation. The aforementioned objectives are considered in the light of the aims and goals of the state highway organization. From the study, evaluation, and analysis of current practices of highway In*TI-nagement in planning and controlling construction expenditures, it can be determined whether highway officials are achieving Organizational objectives. From the tools, techniques, and methods ‘m available, an over-all system of financial planning and control of construction expenditures which will result in a more efficient accomplishment of construction objectives can be devised. The proposed method can provide for long- and short-range planning giving consideration to all the limiting factors of funds, person- nel, equipment, and facilities. It is recognized that changes in statutory provisions may be necessary before the recommended methods and procedures for the planning and control of expenditures can be fully implemented in such a manner as to assure the attainment of the desired ob- lGCtives. Such legislation should be so designed as to provide a definite, clear-cut, positive guide to actions of state highway of- f1Cials in the planning, allocation, and control of expenditures for mghway construction. In order to gain the permission of the highway authorities to personally interview highway personnel during the survey of the ten states, the author promised anonymity to both individuals and to state highway departments. Under this condition, the writer Was able to acquire information that would never have been put in writing had a mail questionnaire been used to accumulate data of Sn(:h a personal nature. Therefore, throughout the dissertation the anonymity of the respondents has been respected. Referrals will not be made to a particular state highway department except in those instances where the author received permission to quote the highway personnel involved. Throughout the survey, the writer found that career execu- tives of state highway departments were willing to discuss their opinions of the deficiencies that existed in their respective or- ganizations. In most instances, their dissatisfactions were pri- marily directed toward established policies—or lack thereof—of Planning construction expenditures. Their complaints and criti- cisms were generally directed toward the failure to achieve highway objectives rather than failure to attain personal objec- tives and goals. Interdisciplinary Aspects of the Dissertation Although this study is intended to be a discourse on the Principles of accounting theory and practice as applied to the very narrow area of financial administration in state highway depart- ments, its accounting implications must be interpreted in the broadest meaning of the term. One student of accounting set f°rth the broad aspects of the discipline as follows: The content, objectives, and procedures of accounting may be considered from at least two standpoints. The first Of these is the view that accounting serves to record, classify, and present the financial effects of business trans- actions for an enterprise, to measure income and other finan- cial results for the information of those persons interested in the fortunes and progress of the firm as an institution——es- pecially creditors, investors, and the general public. . . . The other view—with which we are here concerned—is that accounting data and procedures are intimately connected with the processes of operation and management of the busi- ness enterprise; that accounting is a part of management. The accounting system—that integrated set of activities re- lated to the books and records of the institution—deals with a large mass of detail which has considerable relevance to the actual handling and carrying on of operations from day to day, and the way in which things are done (in terms of stand- ard operating procedures) is an inseparable part of both the process of management and the process of accounting. . . . From this angle, the major function of accounting is to serve managerial needs and to facilitate the attainment of managerial objectives. Managerial accounting is concerned with systematic collection of facts about the detailed opera- tions within the enterprise; it involves the procedures related to internal control; the minimization of errors, fraud, and . waste in carrying on the operations; the preparation and ad- ministration of budgets; the interpretation of cost and revenue data in terms of organizational units of responsibility and with respect to different problems of managerial decision; and the orderly handling of details in operation from the standpoint 0f systematic standard procedures.1 More specifically, the study is concerned with the applica- tion Of a system of budgeting to construction expenditures in a State highway department.2 The value of budgeting, which is \ 1William J. Vatter, Managerial Accounting (New York: Prentice-Han, Inc., 1950), pp. fi—os. 2See infra, Chapter VII, page 239. ‘— referred to as “accounting in the future,”1 is predicated on two extremely important factors. The first is procedural, or the man- ner in which the budget is prepared. Basically, the theory and procedure which enter into the construction of the budget provide the foundational utility for its subsequent use—the second factor. Well-designed and carefully prepared budgets would seem to be of little value if proper use is not made of them. The two concepts—procedure and use—cannot be separated according to the disciplines which are concerned with their use. The reason for this is obvious. While many reports are based on historical accounting data, the budget is a forward-looking Process that is concerned with the future. However, it also has Value as a tool for evaluation of past performance which is his- tOrical in nature. In the use of the budget as an instrument in Planning for the future, the forecasting of highway revenues and expenditures in budget preparation is based, at least, upon the Principles of accounting and engineering,2 and, since it is \ lAdolph Matz, Othel J. Curry, and George w. Frank, Cost Ac- °°\‘1nt_i_ng (Chicago: South-Western Publishing Company, 1952), p. 432. b 2The sufficiency rating procedure which serves as the asis for determining priority allocation of construction funds as 111. ecommended in this dissertation is based on established engi- Seering standards and designs for highways. These engineering dards are described in Chapter VI, page 180. 10 concerned with the future, it would also seem to involve the planning and control functions of management encompassing the decision-making process where a choice of alternatives is neces- sary, and a control procedure in evaluating managerial perform- ance. Therefore, it must by necessity combine at least three so-called disciplines—engineering, management, and accounting—— in analyzing the financial planning and control practices in high- way departments. One student states that accounting is a part and parcel of management: . nor is accounting, although a service function, at the elbow of management in the role of servitor. The role is rather that of alter ego. Through the processes and tech- niques of accounting properly applied, management is not merely informed. Its thinking is provided with standards of reference, vehicles of judgment, and forms in which to ex— press these judgments and to effect changes. The accountant is an integral part of the personality of management.1 Importance of the Study The road systems in many states are below standard and are inadequate for present and future traffic requirements.2 Many- \ 1Chester F. Lay, “The Functional Cycles of Accounting C Managemen ,” Readings in Cost Accountipg, Eggetini and ontrol, ed. William E. Thomas, Jr. (Chicago: South-Western Publishing Company, 1955), p. 37. 2The inadequate condition of the highway systems became apparent from interviews with highway officials in the ten survey 11 highways are carrying traffic volumes far beyond their capacity and structural standards; yet states are faced with a shortage of funds necessary to bring their systems up to required standards over a reasonable span of time. Construction needs are great while construction funds are limited. Therefore, it is imperative that a system be utilized that will provide the greatest possible efficiency in allocating construction funds among highways having the greatest need. Inadequate methods of planning and controlling the use of construction funds will result in an expensive and un- necessary prolongation of the achievement of organization objec- tives as they relate to the construction function. It is only through 800d planning and control of construction expenditures that the state highway departments will achieve their desired objectives. The fact that many state road systems are in an inadequate 1 “*u condition has led to the idea—seemingly prevalent in many state ? highway departments—that it does not matter where dollars are Spent on improvements; the resulting improvement is beneficial. AS a result of such thinking, proper attention may not be accorded \ :sates. For a more complete discussion of the tOpic of the in- eQuacy of state highway systems, see A Ten-Year National @ay Program, A Report Prepared by the President’s Ad- U 18017 Committee on a National Highway PrOgram (Washington: . Government Printing Office, 1955), p. 1. 12 to the matter of priority in the expenditure of funds. It is a fundamental thesis of this dissertation that each dollar expended for highway construction should provide optimal benefit and serv- ice to the highway user. Thus, any method of planning and con- trol should incorporate a system for determining—in the light of all existing conditions, variables, and circumstances—a priority of construction based on needs. A major facet of the method of planning and control of highway department construction expendi- tures developed in this dissertation is the determination of pri- orities.l Another factor in support of a system of priority determi- nation in allocating construction funds is the problem of highway safety. Many of the present roads were constructed to traffic Standards existing one to three decades ago and no longer suffice for current or future needs. Motor vehicles are designed for high'Speed travel; therefore, the allocation of construction funds sthd give consideration to the problem of removing safety haz- ards from highways . Huge sums of money are being funneled through highway departments for road construction and other highway functions. \ 1 1The basis for priority determination is sufficiency rat- 1188; see infra, Chapter VI. 13 From the viewpoint of revenue and expenditure, the state highway department is often one of the largest organizations in the state, including private industrial firms and other state, federal, and municipal governmental agencies or units. State highway officials have an important responsibility to the citizenry of their states to provide the best highways possible and to do so with a maxi- mum of efficiency and a minimum of cost. To do otherwise would be an emasculation of the authority and responsibility delegated to w.-w- .- _. them by the people of the state. Plan of the Dissertation An underlying hypothesis of this study is that state high- way departments should strive to make the best possible use of available resources through the institution and utilization of the most effective system of financial planning and control possible. It 18 the objective of the dissertation to examine the tools, tech- niques, and methods of planning and control of construction ex- penditures and, from them, develop a system which will provide an adequate highway plant for the road user. A feature of the plan of the dissertation should be brought to the attention of the reader. It was stated previously that the SSertation had two major objectives: (1) to study, evaluate, and 14 analyze current practices and problems of planning and control of ’ construction expenditures in ten state highway departments, and (2) to make recommendations that would provide a better system of planning and control of construction expenditures. Accomplish- ment of the aforementioned objectives necessitates: (1) a descrip- tion of current financial planning and control procedures existing in the ten survey states, (2) an analysis of the practices, and (3) a series of recommendations to correct inefficiencies in planning and control procedures. In presenting these three latter factors, description and recommendation have been blended together thronghout the dissertation, while the critical analysis of the survey findings has been segregated and treated separately in Chfipter IX. Descriptions and recommendations are based on cause and effect as substantiated by observation and inspection. This is not to intimate that the critical analysis is postulated on emotion and/or bias. In order that the reader may more fully comprehend the br°ad and specific aspects of modern highway administration, Chilliters II and III are devoted to (1) a brief history of the de- velopment of the highway systems, (2) the systems of road clas- A311Pication existing in the United States today, and (3) a brief 8‘fission of the organizational structures of those political units 15 concerned with highways. In Chapter IV, information relevant to past and present sources of funds and highway expenditures for the federal, state, and local governmental units is discussed. Also, a brief inquiry into the theory and problems of highway taxation is made in Chapter IV. In Chapters V, VI, and VII, the short-run aspects of budg- ‘ etary planning and control of construction expenditures are dis- . cussed. Chapter V is concerned with distribution of the highway funds among the counties, cities, and state, and the need for greater planning and control in this allocation. Also in Chapter V. the problems of allocating the state’s portion of the highway fund over the budgeted activities of maintenance, administration, other services, and construction are discussed. Chapter VI is devoted to a discussion of the sufficiency rating procedure as the basis for allocating scarce construction f“lids over the highway systems by priority listings. In Chapter VII, an application of the priority listing process as determined by Sufficiency ratings is made to a realistic budgetary situation for construction funds, the purpose being to bring together the p a“is into a whole system of planning and control. In Chapter VIII, the long-run aspects of planning and c 0"trol of construction expenditures are enumerated and discussed. 16 The tools and techniques which are necessary to expenditure planning and control are set forth in some detail. Chapter IX is devoted to a discussion of three important aspects of highway financial administration: First, the need for state legislation to enforce the use of the recommended procedures of financial plan- ning and control is considered. Second, certain features of the highway organization as they relate to financial administration are discussed. Third, a discussion of the need for proper and ade- quate reporting to the public is undertaken. A necessary part of any financial system is accurate and timely reporting to those Who use and finance the system, or organization. In Chapter X, the objectives, plan, and findings of the survey are discussed. In addition, the statistical limitations of the survey are set forth. Chapter XI is devoted to a critical analS’Sis of highway practices of financial planning and control as determined by the findings of the survey. In Chapter XII, a brief review of the study and recommendations is presented and con- ch’s iOns are made. CHAPTER II THE HISTORY OF AMERICAN HIGHWAYS Throughout history, man has been motivated by complex urges or drives to fulfill certain needs and desires. Frequently, the satisfaction of these needs has taken him over the highways of the world.1 Often he has been in quest of the riches to be acquired by opening channels of trade between cities, countries, or continents. He has sometimes sought to expand his circle of Power and influence by marching armies over the highway to sub- jugate his neighbor or the world. The highway provided him the means of escape from religious, racial, political, and economic . intolerance. He found in the highway an excellent instrument for the fulfillment of his gregariousness, curiosity, knowledge, and a host of other human needs and desires. \ 1The terms “highway” and “road” are used synonymously. .’ elf-my represent a means by which the general public can trav- ' Se the distance between two geographical points. In our pres- snt system of highways, trails of a very primitive nature are 03111 in use and are open to public travel by motor vehicle or 6r forms of locomotion. 17 18 Governments also found use for the highway. It was an important device to provide the cohesiveness necessary to bind the separate political units into a united whole to give it strength, protection, vigor, and flexibility. Whether for good or bad, the highway served the means for the state to expand its borders and to meet various national emergencies. It was instrumental in the development of a nation’s economic, social, and cultural levels. John Brew sums up the effect of the highway on our cul- ture as follows: The diffusion of ideas as well as food and raw' or fabricated articles was a function of the Road. Social and political systems, philosophies and religions, sorcery, alchemy and scientific knowledge all were passed from man to man, from place to place, along the Road. Impulses for change were ever coursing up and down its length. Culture knows no status quo; those conservatives who desire it pursue an illusion which is, in fact, a cultural paradox. The concept exists in almost all cultures, yet the realization is impossible in any. The very nature of human culture precludes its establishment. The Road itself is per- haps its greatest enemy. Hence one of the first acts of its exponents during the intermittent periods when they rise to full power is to close the Road, and we have forbidden cities, iron curtains, and other choices to block the flow of new ideas and revolution. Historical evidence clearly demon- strates that the closing of the Road can do no more than retard the rate of changes. Yet so obvious is the threat of the Road to the status quo that the high priests of the cult are forever trying to choke it off. . . .1 ¥ ‘ 1John O. Brew, “The Highway and the Anthropologist,” Qghways in Our National Life, ed. Jean Labatut and Wheaton J. Lane (Princeton, N.J.: Princeton University Press, 1950), pp. 4—5. 19 Early History of Roads in the United States When the early settlers of the New World set foot on the shores of the North American continent, they found only animal trails and Indian footpaths cutting through the vast forest cover- ing the coastal regions of the Atlantic Seaboard. The early settlements were made along the coastal areas or on navigable rivers or bays. Travel from home to home or from settlement to settlement was conducted on foot, horseback, or by boat. As the coastal areas continued to increase in population, old trails were expanded to provide for better travel between trade centers. One of these was the Boston Post Road connect- ing the settlements in New England with New York. “The region traversed by this road was a dense wilderness penetrated by wild animal and Indian trails for more than half a century following the first permanent settlement at New Amsterdam by the Dutch, in 1613, and the landing of the Pilgrim fathers at Plymouth, Massa- 2,1 ehusetts, in 1620. . . . One hundred and ten years after the first permanent settlement, post riders were carrying mail over 1American Association of State Highway Officials, “1673— lt'irst Colonial Post Rider,” Public Roads of the Past (Washing- ton: American Association of State Highway Officials, 1953), p. 24. L 20 the improved Boston Post Road covering a 600-mile route between Boston and Williamsburg, Virginia.1 Many of the colonial roads were long and winding as a result of following Indian or animal trails, or from being laid out in such manner as to permit farms to remain intact. Their con- dition and maintenance is described by Lane as follows: Little grading was done and the traveler often found his horse or vehicle mired fast. Washouts occurred after every heavy rain. Surveyors attempted to make some swamps passable by hauling a few loads of stone or by laying a number of logs crosswise to form a corduroy pavement. Im- plemeéits for repairing roads were mainly those used by hand. Eventually all the land in proximity to the coastal areas was settled and new migrants were forced to move inland. To maintain contact with the more heavily populated areas along the coast, new trails were cut through the wilderness. Two of these 1‘Oads were to become important trade and migratory routes. The first to be developed was the Pennsylvania Road, Which connected Philadelphia and the forks of the Ohio where ¥ 1Us, Public Roads Administration, Federal Works Agency, gmlay Practice in the United States of America (Washington: Us. Government Printing Office, 1949), p. 1. 2Wheaton J. Lane, Highways in Our National Life, ed. Jean Labatut and Wheaton J. Lane (Princeton, N.J.: Princeton Univer- sity Press, 1950), p. 69. 21 Pittsburgh now stands. Over this route passed thousands of mi- grants pouring into the rich Ohio Valley. Later, in 1775, Daniel Boone laid out the famous Wilderness Trail traversing the Cum— berland Gap to the farmlands of Kentucky and Tennessee. Pioneers thronged the trail across the Appalachians. Be- tween 1775 and 1800, probably 300,000 people passed through the Cumberland Gap on their way to the west—15 or 20 wag- ons every day during the open months.1 The Turnpike Era After the War of Independence, the road system in the States and territories was in a chaotic condition. Financially, the states were unable to construct new roads or improve their 01d road systems and yet the young and now free country had a great need for better highways. New settlers were constantly m(Wing west, and in the east there was a need for the products of the vast farmlands of the rapidly developing northwestern States of Ohio, Kentucky, and western Pennsylvania. The situation was alleviated by the construction of turn- Dikes under the ownership of state-chartered corporations. 1U. S., Department of Commerce, Bureau of Public Roads, 13\lghways in the United States (Washington: U. S. Government Tinting Office, 1954), p. 1. 22 Pennsylvania was the first state to charter a corporation, the Lancaster Turnpike Road Company, which led to the construction of the Lancaster Turnpike connecting Philadelphia with the west. The Lancaster Turnpike from Philadelphia to Lancaster was “stoned” in 1792 by throwing on it stones of all sizes. These were afterward removed and stones “passing a 2-inch ring” substituted. This is said to have been the first scien- tifically built surfaced road in America. . . . By 1828 there had been 3,110 miles of chartered turnpike in Pennsylvania costing over $8,000,000. . . . But other states were simi- larly employed. New York and New England by 1811 had chartered 317 turnpikes.1 So great was the competition among the great trade cen- ters along the Eastern Seaboard for the western trade that each Of them encouraged the construction of an extensive series of turnpikes to bring the products of western farms and industry to their merchants. States, counties, and cities often subscribed to laJ'ge blocks of stock in the turnpike companies, most of which Were of dubious value as most of the chartered companies failed to achieve anticipated profits. “The turnpike era was one of SPeculation excesses, and it also introduced into American poli- ties the great problem of controlling corporations.” 1George R. Chatburn, Higgways and Highway Transporta- u\03 (New York: Thomas Y. Crowell Company, 1923), pp. 60—61. 2Lane, p. 73. CW 0‘ 'Wh—A‘W ' «Wash-n 0-0,"! , _ ft'fiua- 6 ’ Meg-4' w ‘1 use.“ Ni \Ai “fix .W‘E ‘1. l l l . r I \ \ ' It I u , I»?! ,F ‘ ‘r uto‘m it h.i..., . 1 ‘thm'f‘.’”f‘n (if “Mr" \Auou Ht ‘Q h \‘u. r ’ " _ .1 x» “U" ‘ 1 H\ \J I .. "- _ V' H... . ‘ \ 'u. ~ .‘ ‘Ifiohd “on ‘ - t v- \ . ‘§i~ ‘4‘ 23 With the turnpike came many new businesses. Stagecoach and freight-hauling companies were organized to provide public transportation needs and to move the products of a growing coun- try to those places where they were needed. Inns, taverns, and comfort stations mushroomed along the turnpikes to accommodate travelers. Many of the taverns and inns were to remain as land- | marks long after the highway ceased to exist. ‘ Although the turnpikes were an important factor in the de- velopment of trade and commerce in our country, they were des- tined to pass out of existence by the middle of the nineteenth Century. The instruments of their doom were the railroads and cfinals. . . in 1829, the first steam locomotive in the United States was given a trial run. Within two years regular service was started on the Baltimore and Ohio Railroad. The railroad proved the best means of transportation over long distances. Canals, too, bid for passenger and freight business, and were successful for some years. The slow horse-drawn vehicles, with their small capacity, could not compete. The Conestoga wagon freight lines and the stage coaches went out of busi- ness. As tolls dropped off, the turnpike companies failed. Highway transportation in rural areas entered into a long period of neglect.1 :. 1U.S., Department of Commerce, Bureau of Public Roads, filggways in the United States, p. 2. ‘ _ he «,3 M ”an, ‘I " ‘ Y‘n . u“ ‘t:¢§1.e: i ‘1‘: ‘u.}‘.“‘ ' 2 ‘\-_ 24 The Period of Neglect The railroad had captured the imagination of the public. The resources of the nation were directed toward its development and growth. The road system entered into a period of neglect that was to last until the beginning of the twentieth century. During this seventy-year period there was a general ex- pansion of road mileage as the population increased and spread farther westward. Surfaced roads conducive to all-weather traffic increased from about 27,000 miles in 1830 to 100,000 miles in 1890 and were found primarily in the vicinity of heavily DODulated areas. The remaining' 1,900,000 miles of rural high- Ways existing in 1890 were nothing more than dirt roads with little or no drainage, grading, or maintenance. Wet weather ttu‘ned them into impassable bogs preventing any type of vehicu- lar travel. Road construction and maintenance were the respon- sibility of cities, towns, or counties. Finances for the road sS’stem came entirely from local sources and were quite inade- quate to provide anything beyond the primitive level. Those con- cerned with road construction and upkeep frequently did not DOssess the necessary qualifications or experience to construct 1‘ Dads having any degree of permanency. ‘ ‘ ‘ °,','U:OO H. 5 <""1-0.|o ' x h" '-e-i tin» ‘ :1.“ ~I“-h ~55“ 25 The “Good Roads” Movement to the Present By 1890, the population of the country had increased tre- mendously. Industrial expansion brought about a substantial growth in the size of cities, and the demand for food products necessitated the settlement and development of farms located con- siderable distances away from railroad centers. The need for better farm-to-market roads became obvious. A “good roads” movement was initiated by farmers. It was during this same Period that the bicycle became popular. So wide was the use Of the bicycle that a National League of American Wheelmen was organized to defend the rights of bicyclists and to urge rural rOad improvement. The farmer and the bicyclist succeeded in stirring up so much controversy about the condition of the country’s road sys- tem that a “good roads” movement was soon introduced into COngress and led to the passage of the first highway legislation. On January 26, 1893, Representative Deborow introduced a resolution in the House of Representatives, “intrusting the committee on agriculture to incorporate in the agricultural appropriation the sum of $15,000 to be expended for the purpose of making investigations for a better system of roads. On the same day Representative Lewis presented a similar resolution, “intrusting the committee on Agricul- ture to incorporate in the bill making the appropriations for the Agricultural Department a clause authorizing the Secre- tary to make an inquiry regarding public roads. . . . As a 26 final result a statute carrying an appropriation of $10,000 was approved March 3, 1893. Under this statute the Office of Public Roads Inquiries was instituted, October 3, 1893.1 The above statute called for an investigation into the road system existing at that time and, in addition, required that data be collected concerning the best methods of highway construction. Up to this time, little consideration had been given to the best methods of building highways, even though European countries had been constructing roads to tested and approved engineering design for years. During this period the states were not idle. Many of them Passed laws requiring that the state and county share in the cost 0f financing new construction and maintenance of their highway sYstems . The good-roads movement swelled tremendously with the I coming of the horseless carriage. It has continued without '1 let-up since. The Duryea Brothers built the first gasoline automobile in 1893. There were 8,000 automobiles in the United States in 1900, only seven years later. By 1925 there were 20 million motor vehicles on our roads and streets.2 1Chatburn, pp. 136—37 . 2U.S., Department of Commerce, Bureau of Public Roads, I\iighways in the United States, p. 2. i ‘ In ..1§t.09.. 1.. a'I’r‘JSEI-r wt‘.(h 27 From the period 1900 to 1925 there were many changes in the types and kinds of roads being built, in machinery for building them, and in governmental organization for the work. It was during the above period that most of the state high- way departments were created for the purpose of construction and maintenance of highways. This was an important step forward, for it provided for central planning, giving consideration to such factors as road classification and continuity, broader powers for highway taxation, and the means to build an organization of per- sonnel possessing the necessary qualifications to construct high- Ways according to the standards and design required by the motor Vehicle. With the coming of the automobile, new types of highway de‘Sign became necessary. Experiments were conducted to test new kinds of road-building materials. “The first Portland cement cOncrete pavement in the United States was built in 1891, on the streets surrounding the Court House in Bellefontaine, Ohio.”2 1U.S., Public Roads Administration, Federal Works Agency, Qighway Practice in the United States of America, p. 5. 2Albert C. Rose, “The Highway from the Railroad to the Automobile," Highways in Our National Life, ed. Jean Labatut and Wheaton J. Lane (Princeton, N.J.: Princeton University Press, 1950), p. 85. _" h ‘, ‘hI-F . 28 By 1924 the mileage of concrete pavement had increased to slightly over 31,000 and its use in construction was increasing at the rate of 6,000 miles per year.1 Bituminous and brick pavements were also popular during this period. Both were used in paving city streets, and where traffic would justify the cost they were used in paving rural roads . The more extensive use of brick and of bituminous pave- ments of the mixed type on concrete base began also at about the same time, and was due to the same cause, the increased use of motor trucks. In 1914 there were approximately 1,500 miles of brick pavement; in 1924 there were 4,319. In 1914 the mileage of rural highways paved with bituminous concrete - or sheet asphalt was still negligible; in 1924 there were more than 9,700 miles of these.2 During this period, new road-building machinery made its appear- ance. Power shovels and horse-drawn dump wagons appeared on grading jobs. The dump wagon was an adaption of the farm. wagon, so constructed that the load could be dumped by pull- ing a lever. Mechanical mixers displaced hand-mixing labor for making cement concrete. The concrete pavement finisher was being developed as the period ended. Portable plants for preparing bituminous mixtures were placed on the market. These were important contributions but utilization of the 1U.S., Public Roads Administration, Federal Works Agency, Eighway Practice in the United States of America, p. 6. 213g. ‘ w. 29 internal-combustion engine as power in road-building equip- ment was to produce more revolutionary changes in construc- tion methods.1 W“ Shortly after World War I, the total road and street mile- age increased to about three million, of which only 387,000 miles .W ‘4 were surfaced. By 1958, total road and street mileage had in- creased to 3,479,000, of which 2,448,000 miles were surfaced.2 -» .- With increasing car and truck registrations, the major objective of highway departments was to hard-surface the farm-to-market roads. Within a decade they were within realization of their ob- jective only to find that the accomplishment of their original plans Was no longer adequate. The important roads were surfaced. But in the meanwhile the number of motor vehicles had increased tremendously. Speeds were much higher. Trucks were bigger and carried heavier loads. The road builders began again, for the older surfaces were wearing out and costing too much to maintain. In rebuilding, they were made wider, stronger, smoother. Steep hills were cut down; sharp curves were rounded; “blind” spots were improved to give better sight distance.2 1mg, p. 7. 2U.S., Department of Commerce, Bureau of Public Roads, flighway Statistics, 1958 (Washington: US. Government Printing Office, 1960), pp. 106—7. 3U.S., Department of Commerce, Bureau of Public Roads, Highways in the United States, p. 3. ”v era—~— '— '—-II-nr— —_ ¥ _ 30 With the opening of the Pennsylvania Turnpike in 1940, an ' old concept in road construction and finance was underway—the turnpike. This time, however, the movement was being directed by state governments rather than by privately owned, state- chartered firms. The return of the turnpike created consider- able controversy over the manner in which they were being financed and constructed. The construction of the costly limited- access highways was financed from receipts of bond issues author- ized by state officials, while the interest service on the bonds, road maintenance costs, and provisions for amortization of the debt were derived from toll charges placed on vehicle owners uSing the road. The cost of financing toll roads was, and is, considered excessive by many interested persons. One of the I‘easons given for this thought is as follows: In most instances the state has not guaranteed that it will redeem the bonds if toll revenue is insufficient. This method of financing has proved to be expensive, in that interest rates on toll revenue bonds range much higher (almost double) than for State guaranteed bonds.1 Another controversy over the use of state-operated turn- Dikes centers around the inability of state highway officials to I_bld., p. 12. 31 provide similar highways in the form of freeways from road user revenue other than toll charges. One antagonist states: The answer, often overlooked by the public and by the victimized motorists themselves, is that the motorists have already paid in advance for toll roads through gasoline taxes. And the appalling fact is that motorists who ride on toll roads usually pay for them not just twice, but three and four times.1 The reasons given for the inability of highway officials to construct freeways from highway revenues instead of having to revert to turnpikes and toll charges are many and varied. Sev- eral of the reasons are stated in the following quotations: Why did the toll road return? Economic necessity brought it back. “The toll road movement,” says economist Wilfred Owen of the Brookings Institution, “has developed out of the failure of public -highway management because of the political interference to apply the tools available to it in a manner productive to effective highway development.” This is a polite way of saying: “Public enterprise has failed, so state governments have returned to the principles of private enterprise—the price system.”2 Mr. Springer attributes the condition to a diversion of h1ghway funds for nonhighway purposes: Thus began the Sinister practice of diversion-—the use of gas-tax money for purposes never originally intended. Since 1924, says the Federal Bureau of Public Roads, states 1John L. Springer, “Tired of Paying Highway Tolls?” Coronet, XXXIV, No. 2 (June, 1953), 43. 2George Koether, “Tax Road or Toll Road,” Look, XVII, No. 12, 79. 32 have used $3 billion of motorists’ taxes to grow oysters, support public cemetaries, operate ski schools, and for other purposes as far from road building as the mind can imagine. In 1951, out of every dollar that poured into state treasuries in highway-use taxes, only 53 cents was used directly on highway work. Another 37 cents went for ad- ministration and tax collection costs, to state highway police and payments to holders of highway bonds. Yet in that year, states diverted $266,771,000 to other purposes. This sum could have built a modern two-lane highway from New York to California—a free road.1 As of 1954, toll roads of all types consisted of approxi- mately 5,268 miles, or 1.5 percent of the 371,000 miles of the major rural roads existing in the United States at that time. By the middle Of the 1950’s, turnpike construction was being sub- jected to a careful evaluation. Some of the turnpikes were not Producing anticipated revenues, and the value of the bonds had declined substantially. In addition, the Federal-Aid Highway Act of 1956 created some doubt as to the placement of the toll roads in the interstate system. The federal government gave no indi— cation that it would pay for the turnpikes, nor does the law Provide for toll roads in the interstate system. There would seem to be some doubt as to the use of toll roads in the future. World War II prevented further construction, as the ma- terials and labor for highway improvement were severely limited 1Springer, Coronet, XXXIV, No. 2, 43. i signed, the Federal-Aid Highway Act of 1956. 33 due to the war effort. Roads scheduled for construction and re- construction were postponed. Existing roads were given only the necessary maintenance to keep them in operation. This three— to four-year period of neglect during the war years left the road system in a condition that was even worse than normal . Following the end of World War II, a peacetime traffic quickly resumed its stride. Within a year it had broken pre— war records, and has continued to grow ever since. The States were ready for a big road-building program. Plans were prepared and large amounts of State and Federal money available. But because of high prices and shortages of ma- terials, men and machinery, the expected program did not get into high gear until about 1948. Meanwhile the mileage of roads no longer adequate for the traffic carried, or danger- ous for present day speeds, or difficult to keep in good con- dition, grew steadily larger.1 In 1956, Congress passed, and President Eisenhower This program Provided for the construction of the greatest network of modern 1‘Oads ever built. The keystone of the act is the so-called inter- sitate system calling for 41,000 miles of superhighways that will crisscross the nation, permitting high-speed, nonstop travel from ‘ One point to another. The act provided for a thirteen- to fifteen- l Year period of construction. ‘ \__ ‘ 1U.S., Department of Commerce, Bureau of Public Roads, g Highways in the United States, p. 4. 34 There are many interested persons, however, who already think that the proposed system will be obsolete by the time it is completed. Our rapid increase in population coupled with the in- crease in motor vehicle registrations seems to be the crux of the dilemma. CHAPTER HI HIGHWAY CLASSIFICATION AND ADMINISTRATION In certain areas of highway practice today there is a con- glomeration of complex and controversial procedures and issues. In other phases of highway activity, a uniform body of principles has been developed and put into practice by highway personnel in the performance of their tasks. A knowledge of highway system c=lassification, the jurisdictional responsibility for each classifica- tion, and the organization structure of highway authorities is im- Perative to the comprehension of subsequent discussions of finan- C=ial planning and control in state highway departments. For these I‘ealsons, these aspects are treated in some detail in this chapter. Traditionally, each state or political subdivision thereof has been charged with responsibility for actual construction and maintenance of highways within state boundaries. Nevertheless, the federal government plays an increasingly important role in fillancing and controlling the development of the nation’s highways 35 - m—r—-,..—. n- -4 ‘ 36 Over the years, the classification of the highways in the United States has developed into a rather intricate and confusing picture. As might be expected, there are widespread variations in the practice of the various states as to administrative control over highways. Some of the systems of the most-used highways have been superimposed on other larger systems and have become an integral part of the latter. As a result, some highways may be a part of three or four systems. A classification of highways according to character of the road and traffic using it may re— sult in a different classification according to administrative con- trol for maintenance and improvement. Both of these aspects are tI'eated in the following paragraphs. Highway Classification Prior to 1890 the road system was, with few exceptions, uIlder the direction and control of local authorities. Cities were I‘6sponsible for roads and streets that fell within their jurisdic- tions, and counties built and maintained roads designed to serve the rural areas. The invention and development of the automobile brought about the need for better highways and highway planning. No longer were local authorities able to supply the know-how and the funds necessary to build and construct the road systems 37 required by faster and heavier motor vehicles. As a result, states were forced to bring road-building under centralized con- trol. The passage of the Federal-Aid Road Acts of 1912 and 1916 made state participation in highway construction and main- tenance a necessity. The federal government offered financial aid upon the stipulations that the state governments control the use of the funds and that each such state set up a state highway organi- zation to cooperate with the federal agency.1 1 Between 1891 and 1920, every state enacted legislation that eventually brought responsibility for the more important road systems under the control of state highway departments. At first a small office was created to control the use of State-aid by local governments. State and local funds were used in building the State-aid roads, but maintenance was often left to the counties. The final step was full State con- trol of construction and maintenance of a State highway sys- tem by a State highway department.2 The state system The federal government has control of all national forest, national park, and national Indian reservation roads. The mileage 1U.S., Public Roads Administration, Federal Works Agency, way Practice in the United States of America, pp. 8—9. 2U.S., Department of Commerce, Bureau of Public Roads, Highways in the United States, p. 3. 38 in this system represents the only roads that are solely the ad- ministrative responsibility of the federal government. All other roads and streets are the direct responsibility of the states and their political subdivisions. Most road systems are organized along jurisdictional lines, such as state, county, township, and urban. The data in Table 1 indicate the classifications of the total rural and municipal mileage of roads and streets in the United States by administrative control and system. The statistical data presented in Table 1 and following tables include roads located in the continental United States and do not take into account the road systems of Alaska, Hawaii, and Puerto Rico. The reason for this omission is that data for the latter are not complete as yet or are of doubtful validity. Of the 3,074,000 miles of rural roads existing in the United States in 1958, 482,000 miles, or approximately 15 percent, were Primitive1 and unimproved, while 509,000 miles, or 16 percent, Were nothing more than graded or drained dirt roads. Approxi- mately 1,233,000 miles, or 40 percent of total rural highways, had surfaces of stabilized soil or of gravel and stone. Only 850,000 1The primitive road is nothing more than a trail. It has not been surfaced or graded and is generally inaccessible during many months of the year. 39 TABLE 1.—Rural and municipal mileage in the United States, 1958, classified by administrative control and system. Administrative Control and System Mileage Roads under state control: Rural road mileage: State primary system ................. 395,000 State secondary system ................ 98,000 County roads under state controla ........ 136,000 State park, state forest, and Indian reservation roads .................. 14,000 Total rural road mileage ............... 643,000 Municipal road mileage: Extension of state primary system ........ 39,000 Extension of state secondary system ....... 8,000 Total municipal road mileage ............ 47,000 Total road'mileage under state control ....... 690,000 RDads under local control: Rural roads: County, town, and township roads ......... 2,330,000 Municipal roads: City streets ........................ 358,000 Total road mileage under local control ....... 2,688,000 Roads under federal control: National park, national forest, and Indian reservation roads ............... 101,000 Total roads and streets in the United States ..... 3,479,000 ‘g Source: U.S., Department of Commerce, Bureau of Public Roads, giggiway Statistics, 1958, p. 107. aCounty roads under state control in Alabama (8 counties), Delaware, Nevada (455 miles), North Carolina, Virginia (all but 2 counties), and West Virginia. 40 miles, or 29 percent, possessed surfaces that the motorist nor- mally thinks of as “paved.” Of the 850,000 miles of paved sur- faces, 498,000 miles had a low-type bituminous surface consisting of tar or asphalt, while the retaining 352,000 miles had a high- type surface of bituminous penetration, bituminous asphalt, Portland cement concrete, or brick or block surfaces.1 State primary system—The state highway departments of the nation have jurisdictional responsibility for 395,000 miles of State primary roads. These roads connect all the principal cities in the United States and provide the main channels of arterial highway traffic. Over these highways pass the bulk of passenger and commercial vehicular traffic. This system represents the ultimate in highway engineering and design, as the roads must nSheet the standards of heavy, fast-moving traffic.2 In Table 2, cL'ata are presented to Show the surface type of this important SYstem. It should be pointed out, however, that surface type is Only one factor among many that provides an indication of the 1U.S., Department of Commerce, Bureau of Public Roads, Highway Statistics, 1958, p. 107. 2The state primary includes the interstate system com- posed of 41,000 miles of high-standard roads. 41 TABLE 2.—The state primary rural road system, 1958 (mileage classified by type of surface. Type of Surface Mileage Surfaced mileage: Low-type surfacea ...................... 28,000 . Intermediate-type surfaceb ................. 135,000 High-type surfacec ...................... 228,000 Total surfaced mileage ................... 391,000 Nonsurfaced mileage: Primitive and unimproved .................. 1,000 Graded and drained ...................... 3,000 Total nonsurfaced mileage ................. 4,000 Total mileage ............................ 395,000 ~ Source: U.S., Department of Commerce, Bureau of Public Roads, Highway Statistics, 1958, p. 107. 9'Consists of slag, stabilized soil, and gravel or stone Surfaces. bConsists of bituminous-treated and mixed bituminous Surfaces. 0Consists of bituminous penetration, bituminous concrete, :heet asphalt, Portland cement concrete, brick, and block sur- aces. 42 condition of a highway. Other factors of importance are surface condition, road foundation, road and shoulder width, and various safety factors. It is apparent from the data in Table 2 that a substantial portion of the primary system has surfaced roads and that 228,000, or 58 percent, have a high-type surface. An extremely small per- centage, less than 1 percent, or 4,000 miles, are nonsurfaced roads. In addition to the rural roads, the state primary system also includes 39,000 miles of city streets. These are the munici- pal extensions of the state primary roads as they enter and pass through cities and towns along their routes. Responsibility for construction and maintenance—at least financially—rests with the state highway departments . State secondary system.——Of the 2,564,000 miles of second- ary highways existing in the United States in 1958, 234,000 miles Were under the administrative control of the states and the re— maining 2,330,000 miles were the responsibility of counties, towns, and townships. Of the total under state control, 136,000 miles represent county secondary roads that had been placed under the administrative jurisdiction of five states: Delaware, North 43 Carolina, Virginia, West Virginia, and, with relatively low mile- age (455), Nevada. In these states, the counties have individually relinquished their responsibility for local-road administration to the state highway departments. The remaining 98,000 miles of state secondary roads rep- resent the more important highways in the secondary system that state highway officials or state legislators have determined should be under state control. The data presented in Table 3 indicate the surface type of this road system. Sixty-nine thousand miles of the rural state secondary, or 73 Percent, have an intermediate- or high-type surface, which Sel'ves to indicate their importance in the state system. Many of the State secondary highways service traffic volumes far in ex- ceSS of many of the state primary roads. In contrast, 83,000 miles, or 61 percent, of the county roads under the centralized contl‘ol of the aforementioned five states have a low-type surface, are graded and drained only, or are in a primitive and unimproved condition. The various states have added to their secondary road reSPOnsibilities by bringing under their jurisdictions 8,000 miles of municipal extensions. These are the major county secondary .__. 4a—__.___—_ .w L e 44 TABLE 3.—Rural state secondary road and county road mileage under state control, 1958 (classified by type of surface). Type of Surface Mileage State secondary roads: Surfaced roads: Low-type surface ..................... 23,000 Intermediate-type surface ................ 43,000 High-type surface ..................... 26,000 Total surfaced roads ................... 92,000 Nonsurfaced roads: Primitive and unimproved ................ 4,000 Graded and drained .................... 2,000 Total nonsurfaced roads ................ 6,000 Total state secondary roads ................ 98,000 County roads under state control: Surfaced roads: Low-type surface ..................... 56,000 Intermediate-type surface ................ 42,000 High-type surface ..................... 11,000 Total surfaced roads ................... 109,000 Nonsurfaced roads: , Primitive and unimproved ................ 16,000 Graded and drained .................... 11,000 Total nonsurfaced roads ................ 27,000 Total county roads under state control ........ 136,000 \ T°ta1 .................................. 234,000 \ R0 Source: U.S., Department of Commerce, Bureau of Public ads, Highway Statistics, 1958, p. 107. 45 roads that enter and/or pass through small municipalities along their routes . State park, state forest, and Indian reservation roads.— The states administer 14,000 miles of park, forest, or reserva- tion roads in addition to the aforementioned systems. These are generally low-grade roads permitting access to state-controlled public recreation areas. Seven thousand miles of the system have primitive and unimproved surfaces, while 4,000 miles have high-grade surfaces.1 County, town, and township secondary road systems Over 68 percent, or 2,330,000 miles, of the total road and Street mileage in the United States is under the control of coun- ties, towns, and townships. These political local units of states are responsible for the construction and maintenance of rural ’ roads that are located within their jurisdiction. The roads in this system are commonly referred to as the “farm-to-market” roads. Over these highways pass the products of farms and ranches on their way to local, regional, and national \ 1U.S., Department of Commerce, Bureau of Public Roads, $83135 Statistics, 1958, p. 107. 46 markets. They also serve as feeder roads and connecting links to the major state highways. Secondary roads are the economic, educational, social, and cultural lifeline of the rural population in the United States. They may service one or two families liv- ing in isolated areas or many families residing in rural towns or. communities. Traffic volume, passenger and commercial, on this system is light compared to that on the state primary roads. Therefore, construction standards and design can be lower than those of major highways. The data in Table 4 indicate the type of surface existing on these roads in 1958. Of the total road mileage shown in this table, only 10 percent, or 355,000 miles, have improved interme- diate- or high-grade surfaces, while 870,000 miles, or 26 percent, are nothing more than unimproved trails or graded and drained dirt roads with no surfacing whatsoever. Over 47 percent, or 1405,000 miles, have a low-grade bituminous surface. Mipal roads and streets Three hundred and fifty-eight thousand miles of city roads and streets are the responsibility of the local city highway de- partalents. “There are about 17,000 cities, boroughs, and villages 47 TABLE 4.—County, town, and township secondary road system in the United States, 1958 (mileage classified by type of surface). Type of Surface Mileage Surfaced roads: Low-type surface ...................... 1,105,000 Intermediate-type surface ................. 274,000 High-type surface ...................... 81,000 Total mileage of surfaced roads ............ 1,460,000 Nonsurfaced roads: Primitive and unimproved ................. 425,000 Graded and drained ..................... 445,000 TOtal mileage of nonsurfaced roads .......... 870,000 X Total ................................. 2,330,000 Source: U.S., Department of Commerce, Bureau of Public RoadS, thway Statistics, 1958, p. 107. 48 that are engaged in construction and maintenance of the streets and highways within their limits.”1 Like highways in the other systems, city roads and streets have varying degrees of importance. Major city streets permit access to the central business districts and industrial centers. Connecting the major city highways is a network of streets serv- icing the suburban and residential areas. The city highway departments have the same basic work to do as the counties and townships, or the State highway departments. They build, repair, and control traffic on the streets. But in the larger cities the work is difficult and complicated. Traffic is very heavy, especially during the morning and evening hours when people are going to and from work. Most of the streets have to be paved with hard sur- faces. They are subject to terrific wear, and are frequently cut into for repair of underground facilities like sewer, water, and gas pipes, and electric and telephone wires. Street car and bus lines, and the loading and unloading of trucks, are complications the rural governments do not have to deal with.2 From Table 5 it can be determined that 67 percent, or 242,000 miles, of municipal roads have an intermediate- or high- grade surface. In many of the large metropolitan industrial areas, the major municipal highway represents one of the best-engineered \ 1U.S., Public Roads Administration, Federal Works Agency, Wy Practice in the United States of America, pp. 6—7. 219151., p. 7. 49 TABLE 5.—Municipal road mileage under local control, 1958 (clas- sified by type of surface). Type of Surface Mileage Surfaced streets: Low-type surface ....................... 76,000 Intermediate-type surface .................. 116,000 High-type surface ....................... 126,000 Total surfaced mileage ................... 318,000 Nonsurfaced streets: Primitive and unimproved .................. 8,000 Graded and drained ...................... 32,000 TOtal nonsurfaced mileage ................. 40,000 \ Total .................................. 358,000 \ Source: U.S., Department of Commerce, Bureau of Public R0ads, Highway Statistics, 1953, p. 107. 50 road systems in modern construction and design. Thousands of vehicles are rapidly channeled in and out of high-traffic-volume areas over modern limited-access freeways. Federal roads The federal government administers approximately 101,000 miles of roads. They are all found in national parks, national forests, and Indian reservations and are the only roads under the direct responsibility of the federal government. The Bureau of Public Roads cooperates with the Fed- eral Department of Agriculture in constructing principal roads in national forests; with the National Park Service in con- struction of parkways and main roads in and leading to na- tional parks; with other agencies in constructing roads through other Federal areas. . . .1 MStates marked routes Throughout the United States certain routes are marked With the familiar shield-shaped signs bearing the initials “US,” such as US 30 or US 66. These routes have no legal or admin- istI'ative significance, and do not in any way represent a federal geVernment system of highways. These routes, by joint action of the individual state highway departments, have been designated in 51 this manner to assist the cross-country motorist as he travels from one state jurisdiction to another. The system was recommended by the American Association of State Highway Officials in 1925 to bring order out of the con— fusion that faced the interstate traveler as each state used its own signs and route numbers in designating its highways. At the request of the association, the Secretary of Agriculture, on March 2, 1925, appointed a Joint Board of State and Federal highway officials, “to undertake imme- diately the selection and designation of a comprehensive system of through interstate routes and to devise a com- prehensive and uniform scheme for designating such routes in such manner as to give them a conspicuous place among the highways of the country as roads of interstate and na- tional significance.1 The numbers assigned to the national routes have a spe- cial significance. Routes traversing the country from north to _ South were given odd numbers, while those running east and west Were assigned even numbers. Efleral -a.id system A discussion of federal aid can be approached from vari- Ous viewpoints, for it possesses many implications in highway 1American Association of State Highway Officials, “1925— Adoption of Uniform Signs,” Public Roads of the Past, pp. 119—20. 52 administration. In this section, only that facet relevant to high- way system classification will be treated. Federal-aid systems do not include any roads or streets that have not already been described in the preceding paragraphs of this chapter. They are made up entirely of the roads and streets that are under the jurisdiction of states, counties, town- ships, and cities. Even though funds are made available by the federal government for the construction and improvement of a por- tion of these roads, legal and administrative control is still exer- CISed by the states or their political subdivisions. Although the federal government had earlier appropriated funds for the construction of specific national roads, federal aid, in the modern meaning of the term, was first promulgated by the Passage of the Federal-Aid Road Act of 1916. In addition to pro- Vfiling funds for the construction of rural post roads to facilitate the delivery of the United States mail, the act required the states, as a prerequisite to federal-aid participation, to establish state h1ghway organizations.‘ The act further required: (1) a limit of $10,000 per mile for construction, exclusive of the cost of bridges; (2) that funds could not be used for the maintenance 53 of roads; and (3) that federal-aid roads were to be free of tolls of any kind.1 In the Federal-Aid Highway Act of 1921, a new system of roads was designated as the federal-aid primary and was made eligible for federal-aid funds. The new system was limited to 7 percent of the total road mileage of each state, and roads in the system were required to be of an interstate nature. The Federal-Aid Highway Act of 1944 provided for an ex- ' Pansion in the systems eligible for federal funds. State primary roads within urban areas and certain secondary rural roads could now qualify for federal-aid participation. The act further authorized establishment of a “National System of Interstate Highways not exceeding forty thousand miles in total extent to be located as to connect by routes, as direct as practicable, the principal metropolitan areas, cities and industrial centers, to serve the national defense and to connect at suitable border points with routes of con- tinental importance in the Dominion of Canada and the Repub— lic of Mexico. ”2 Interstate system .—The keystone of the federal-aid program is the national system of the interstate highways. This is a 1Association of American Railroads, Highways (Washington: Association of American Railroads, 1955), p. 1. 2%., p. 3. 54 network of superhighways having extremely high construction standards and design to facilitate the rapid movement of traffic over the most used roads in the United States. This would be a super-network of the most important 40,000 miles of the Primary System (now increaSed to 41,000 miles). It would connect more than 90 per cent of all cities with a population of 50,000 or more (209 cities in all), 42 of the 48 state capitals and all 48 continental states. Although this system amounts to only 1.2 per cent of the total rural mileage in the nation, it is expected to carry about 20 per cent of the traffic on all streets and highways.1 The Federal-Aid Highway Act of 1944 authorized the Bu- reau of Public Roads in cooperation with the state highway de- partments to designate the interstate system. The Federal-Aid Highway Act of 1956 increased the mileage limit from 40,000 to 41,000 and changed the name of the system to the “national sys— tem of interstate and defense highways.”2 The structure of interstate highways may vary as follows: Depending on traffic demands, a freeway will be 2, 4, 6, or 8 lanes—each lane at least 12 feet in width. Shoulders will be at least 10 feet; center strips in rural areas will be a minimum of 36 feet wide. . . . These super roads will go around most towns . . . to give towns-people relief from dangerous congestion caused by through traffic. The 1Caterpillar Tractor Company, The Road Ahead (Peoria, 111.: Caterpillar Tractor Company, n.d.), p. 5. . 2U.S., Congress, Federal-Aid Highway Act of 1956, Pub- llc Law 627, 84th Cong., 2d Sess., 1956, pp. 5—8. w >— < 3 :I: 2 = Lu {/3 z I—I—l I—I— LLJ : D z < I.“ g.— < I.— U3 :3: LL] 5.— E LI.— 6 2 Ll—l [—— m >— m —I < z E h < z I-I-I = I—— 56 freeways will be of “Planned Access” design. That means there will be no intersections. No railroad crossings. Not even driveways.1 Federal-aid primary system.——As of December 31, 1958, the federal-aid primary system consisted of 195,941 miles of roads and streets, exclusive of the interstate system. Of this total, 181,878 miles were rural roads and 14,063 miles were urban highways.z This system was initially laid out in 1921 by the states and the Federal Bureau of Public Roads. Since that time the system has been altered somewhat to conform to chang- ing traffic patterns. It represents the most important state roads and streets, exclusive of the interstate system, and it connects all the principal cities in the states. Municipal extensions of the state primary system were brought under federal-aid partici- pation by the Federal-Aid Highway Act of 1944. The federal-aid primary system comprises about 50 percent of the state primary mileage. 1Caterpillar Tractor Company, Your Stake in the Road Ahead (Peoria, 111.: Caterpillar Tractor Company, n.d.), p. 4. 2U.S., Department of Commerce, Bureau of Public Roads, Highway Statistics, 1958, p. 112. 57 SSS .350 nausea ssosssoeoo .mé “sewage anemone anaemia acossz a no $33350 Song?» mmEoBmonm 2: an sandman Eamon < .Euumoum HELEN Houaz Howl—son. < "cannon .maflmmm Ede—Boom “HIGHS“ use ESSA thRnopohltd .ME .33 .3. 2.3. .33: 9.3.3qu 31. ”steak See eagauat Eu Steve .535 33.5 I‘ll-19.no‘ I! oilunulvu’lliluluI-li I41 #2 [Ill-61% delusions-Ilsa... gin-ll lllzlicflulaI-fldéflnilig alas-1......imrglfl . .us.\5WI\I-.I1§FNQQ , .msmeef, 1!! nee ) ‘, FA ? . g!" a," ‘5 - . \ \‘ ‘i .3 A I P If] . s. . .: . . . e . h. :. it 1' er a." 58 Federal-aid secondary system—The federal-aid secondary system was created under the Federal-Aid Highway Act of 1944, and its roads were designated by the states and coordinated by the United States Bureau of Public Roads. “The routes in this system are the most important secondary roads, feeding traffic from farms and villages into the main highways and to the market centers.1 As of December 31, 1958, this system consisted of 560,398 miles of roads and streets, of which 549,273 miles were rural roads and 11,125 miles were urban streets.2 Eighway Administration Administrative control of highways and streets in the United States is vested directly in the states and their political subdi- visions. The federal government, however, exerts a certain de— gree of control over those road-building projects eligible for federal aid. 1U.S., Department of Commerce, Bureau of Public Roads, thways in the United States, p. 5. 20.8., Department of Commerce, Bureau of Public Roads, Highway Statistics, 1958, p. 112. 59 There are four governmental units directly or indirectly concerned with the administration of highways in the United States: (1) the federal government; (2) the states; (3) the coun- ties, towns, or townships; and (4) the cities. Federwernment highway administration Among the powers set forth in Section 8 of Article I of the Constitution is the power “to establish post offices and post roa .”1 This delegation of constitutional power specifically con- fers on the federal government the authority to build a system of post roads. The national government maintains a huge organiza- tion and widespread facilities to provide for mail delivery in exercising its constitutional authority under Section 8. Yet, other than building a few national roads in the early develop- ment of the United States, the federal government has always preferred to interpret its power to establish roads in a very limited sense. Practical considerations would seem to make unlikely any conflict between the states and Federal authorities over the right to own, construct, and maintain the public highways, or any considerable portion thereof. The Federal government 1John H. Ferguson and Dean E. McHenry, The American gstem of Government (New York: McGraw-Hill Book Company, Inc., 1950), p. 975. 60 needs an extensive mileage for the postal. service and also for the purposes of national defense. The use, however, is so intermittent, and so small compared to local traffic, that it will never be economical to maintain separate systems. The needs of the national government can be achieved by the program of Federal aid, where the administration of the Federal fund, by the right to give or withhold aid is made conditional upon compliance with suitable standards.1 Authority for administration of the federal-aid highway program has been delegated by the president of the United States to the secretary of the Department of Commerce.2 Within the De- partment of Commerce, the Bureau of Public Roads is specific- ally charged with the responsibility of coordinating the federal highway program with the states. The Bureau of Public Roads is headed by a federal highway administrator, with main offices located in Washington, D.C. The headquarters staff is composed of five major offices—Administration, Engineering, General Coun- sel, Operations, and Research. Each of these offices performs an extremely important function in the over-all pattern of federal and state participation in planning and constructing the nation’s lCharles Ross, “The Highway and the Divided Constitu- tional Powers,” Highways in Our National Life, ed. Jean Labatut and Wheaton J. Lane (Princeton, N.J.: Princeton University Press, 1950), p. 278. 2The Department of Commerce was established by Congress in 1903. 61 major highways. An enumeration of their more specific duties is as follows: 1. The Office of Administration is responsible for all fi- nancial activities undertaken by the Bureau of Public Roads, including those involving coordinated highway projects with the states. Personnel and personnel training also comprise a function performed by this office. . The Office of Engineering establishes policies on stand- ards and design in construction and maintenance. Au- thority is exercised over the Bureau of Public Roads field representatives in regional and state offices who coordinate the federal and state activities in the prep- aration of construction programs. This office also has the responsibility for reporting the progress of the various projects undertaken and for determination of their proper performance. The Office of General Counsel is responsible for all legal matters necessary to the operation of the bureau. It has legal accountability for investigations, patents, lease agreements, and right-of-way acquisitions. . The Office of Operations is concerned with the national- defense aspects of the road system and for the overseas operations involving technical assistance to various for- eign nations. Overseas offices are located in Ethiopia, Iran, Jordan, Lebanon, Liberia, Nepal, Philippines, Su- dan, and Turkey. . The Office of Research performs an extremely valuable service by conducting research in all areas of highway activity. The studies cover a wide variety of topics ranging from the economic impact of road systems on individuals, groups, and communities to highway struc- tural design. The Bureau of Public Roads maintains direct contact with State highway departments through ten regional offices serving .393 .mdaom 23an «o 3on uzBmfindev 2235530 .33 3.52.2... Ema 33m and meson 0:85 «o 33.3mm Bu «0 ~238qu 3M .Nmouooha noon—5m :3 41.9.3 (0. 2.2.385: no...- ...i: Ho 13. 3!. 3 ill a Ilia-«1-09.85.33.- G n 8°..uc 3.x: 2: .35.. 13:5. 1553.! 30.3- h l°_.ul can... 8.. alu>ldaaiut 21.1: .1) .thOI_.-l< 0 nl\lulaorlao t1: .- mamzaxxa 08.3: >3: .- (ION 1. «3053.5 51 ------' l w¢oz cs ~ 45.6.2... 2 vrxa. - . t 5522»: . .C 33.21. x 4. “05:3... On_._.<¢.rw_z. _ .“ z :41 amuzazm >42,on ”.55 . 54559 mom—>1 szs—ascm mmmzavzm Ema-ozu moz¢ow .5410 zo_.—.55 IIIIII I— >m>§m _ _ _ Ea _ e833 _ _ mmmmzazm F2mo_mwm «max—QZU ”JEEP?! hthmE Kmmzazm @z_k<>>Io_: mo Fzmzhxtlference, Federal-Aid for Highways. However, the federal-aid chissifications were similar and no distortions should be evident in these important categories. 122 TAB LE 13—Continued. Defense Forest Years £32112: High- High- 3:3: Total ways ways 1932—34 1,000 — 33 7 1,415 1935—37 — — 21 5 276 1933-40 — — 25 6 566 1941-43 — 320 14 5 774 1944—46 — 30 25 — 555 1947—49 — — 25 —- 1,025 1950—52 — 95 60 10 1,563 1953—55 — — 65 5 1,720 1956—58 — — 76 19 4,071 Totals . 1,000 445 349 57 11,965 Source: National Highway Users Conference, Federal-Aid foiflighways, p. 9. 123 state secondary roads, and $3.2 billion were divided equally be- tween urban extensions of state systems and to the interstate system. During the depression of the 1930’s the federal govern- ment expended $1 billion on public works programs affecting the nation’s highways. These expenditures were a part of the fed- eral government’s program to inject purchasing power into the economy as an antideflationary measure. The federal government expended funds for defense high- ways during the war years, 1941—1946 and 1950—1952, authorized through special appropriations by Congress. To construct and maintain its road systems in forest and public lands the federal government has expended approximately $406 million over the period of twenty-seven years. Federal-aid funds are apportioned among the various states according to formulas established by law. Federal legislation further prescribes that an amount not in excess of 3.75 percent of the apportionment can be utilized for expenses of state high- Way administration and for conducting research in areas pertinent to highway construction and development. Formulas for apportioning funds among the states utilize three factors in their computation: (1) population, 124 (2) larlid areas, and (3) mileage of rural mail routes in each state. The basis for the apportionment differs slightly for the various state highway systems: 1. Primary system funds are prorated one-third in the ratio of which the land areas of each state bears to the total land area of all states, one-third in the ra— tio which the population of each state bears to the total population of all states, and one-third in the ratio which the mileage of rural delivery routes in each state bears to the total rural delivery routes of all states. Each state receives at least 0.5 per- cent of each year’s apportionment. 2. Secondary system apportionments are the same as those of the primary except that rural population is substituted in the formula for total population. 3. Urban system funds are apportioned in the ratio which the papulation of municipalities and other urban areas of 5,000 or more persons in each state bears to the total population in municipalities and other urban areas of 5,000 or more people in all states. 4. Interstate funds are allocated one-half in the ratio of the population of each state to the total population of all states and one-half in the manner as designated for the primary system. Each state receives at least 0.75 percent of the funds apportioned for the interstate sys- tem. . 1National Highway Users Conference, Federal-Aid for W, p. 11. 2For a more detailed description of apportionment, see Gilman G. Udell, Laws Relatigg to Federal Aid in Construction of Roads (Washington: U.S. Government Printing Office, 1958), D. 247. 125 Federal and state matching of funds .——Federal law requires states to Share in the cost of projects designated for federal-aid participation. For the federal-aid primary, secondary, and urban extensions the basis for matching is 50—50, whereby the states contribute $1.00 for each $1.00 of federal-aid funds. On the interstate system the basis for matching funds is 90—10, with the federal government contributing 90 percent to the states’ 10 per- cent.1 An exception to the matching procedure has been provided for states having large areas of unappropriated and unreserved PUblic lands and nontaxable Indian lands.2 Where such land is greater than 5 percent of the total land area the federal government share of the cost is increased accordingly. For example, Wyoming has a substantial portion of IIldian reservation and public lands within its borders. For the adjusted 50—50 basis of matching for its primary system, the fed; el‘al government contributes 64.34 percent and the state of Wyoming 1The federal government matches 90 percent of the inter- state costs to 10 percent for the states because of the extremely high cost of the system and the urgency involved in completing it. If the states shared a greater cost in constructing the interstate SYstem it would tie up a major portion of their construction funds t0 the detriment of other state highway systems. 2National Highway Users Conference, Federal-Aid for Highways, pp. 13—14 . 126 contributes 35.66 percent. For Wyoming’s interstate system the federal government contributes approximately 94 percent of the total cost of construction.1 Theories of Highway Taxation The allocation of the tax burden to acquire funds for the construction and maintenance of our highways is a complex and controversial procedure. Since this dissertation is primarily concerned with the financial planning and control of expenditures, only a cursory examination of the broad, general problems of highway taxation can be made. Taxation for highway purposes has been predicated pri- marily on the benefit theory, even though benefits received from highway facilities are extremely difficult to measure. Another major theory—“ability to pay”—has not been important as a means of determining highway tax responsibilities. The benefit theory is based on the principle that “all the exPenses of government should be apportioned among those re- ceiving them according to the costs incurred in rendering a particular service to each person, or according to the amount 1Ibid. 127 or the value of the benefits obtained from every service by each person.” Prior to the development of the automobile as an instru- ment for long—distance transportation, roads were designed and constructed for local use. Financing the road system was a relatively simple procedure of placing the tax burden on the property owner. With the technological improvement of the automobile and its companion, the truck, tax problems of a more complex nature Were created. The need for greater road mileage, and new con- cents in highway construction and maintenance to service the heavier, faster, and increasing numbers of motor vehicles made necessary changes in thought pertinent to financing and adminis- tering highways. A broader perspective was required to plan for highway construction, and new sources of revenue were needed to f1fiance highways. No longer could the counties and cities pro- Vlde the necessary funds to construct and maintain the road System. Out of this need for an expanded highway system has de- Veloped a theory of taxation commonly referred to as the benefit 1Buehler, p. 318. 128 principle. Today the highway beneficiaries are providing the bulk of the funds used in constructing and maintaining the na- tion’s highways. The benefit principle and hghway finance The application of the benefit principle to highway finance leaves much to be desired. So wide, varied, and changing are the benefits accruing to individuals and organizations that accu- rate measurement makes an equitable distribution of tax burdens almost an impossibility. In some manner or another, the highways affect the existence of every person residing in the United States. Political benefits .—Governments at all levels use the high- Way as a means of acquiring efficiency and cohesiveness in the Conduct of their affairs. In turn, the road system provides the means by which the public receives the benefits of government Sel‘vice. An example of a recent change in highway benefits can be found in the national defense picture and the interstate system that arose as a result of this demand. Economic benefits .——The importance of the highway as a f2tctor in the development of our economic system which encom- Dasses the individual, the business organization, and the state is 129 a topic that exceeds the quantity limitations of this dissertation. A brief list of the more important benefits accruing to the indi- vidual, business firm, and the state from the highway system is as follows: l/ 2. 3. 4. 5. J6. 7. 8. By opening up new or isolated areas to commercial truckers, roads bring lower prices to the consumers and are instrumental in breaking down local and re- gional monopolies. Roads encourage greater specialization of labor by providing one of the means for greater mobility of the worker to search for employment within an expanding radius of his home. Greater mobility broadens business contacts and in- creases individual income. Land values experience a substantial increase in those areas serviced by improved roads. The highway permits an extension of the markets of farm, ranch, and manufacturing units which may result in increased profits, greater employment, lower prices, and many other attendant benefits. Some of the greatest industries in the nation benefit from better highways. Automobile manufacturers, pe- troleum producers and refineries, and a multitude of other producers and suppliers are dependent on public highways and, in turn, contribute to the wealth of the economic society. Commercial carriers benefit directly from improved roads as they schedule their fleets over the nation’s highways . New industries have been created to cater to the needs, desires, and comfort of the highway user. 130 9. National resources of the state and nation are more effectively developed by adequate road systems. Other beneficiaries—The public in general attains a higher cultural, educational, social, political, and recreational level because of improved road systems. In the light of the aforementioned, but not exhaustive list of highway beneficiaries, the problem of equitable and just tax allocation becomes evident. If the data in the revenue tables are correct, it is the road user who is bearing the greater burden of highway taxation. Indirect beneficiaries are contrib- uting very little to the construction and maintenance costs of highways. Basically, the problem is a dual one with each side of the picture rife with complications. First, the problem is one Of determining what portion of the highway cost is to be borne by the user and nonuser beneficiaries of the highway system. Sec- 0nd, the problem of allocating the cost among the users on some equitable basis is encountered. User and nonuser roles in highway finance.~The user rOle occurs when a person or firm actually moves vehicles over the highways. The nonuser benefits from the movement of vehicles 131 by others, or benefits from the highway by its providing egress and ingress to his property. Locklin1 suggests two methods in allocating responsibilities between the user and nonuser beneficiaries. The two techniques are: (1) the predominant-use method, and (2) the relative-use method. Both methods recognize that highways serve three basic functions. First, highways provide a means of access to land. Without access, lands are assumed to be valueless. Second, the roads perform a “community service function.” Highways provide a. means for the movement of local travel as the resident of the community goes about his everyday affairs in economic, social, educational, and cultural activities. Traffic is strictly local in the second function. Third, it is a function of highways to pro- Vide the means for long-distance travel between communities and States. ' Applying the predominant-use method in the light of the above functions, those systems carrying traffic from community to community or from state to state would be financed entirely fI‘om road-user taxes. Converted to highway administrations, the 1D. Philip Locklin, Economics of Transportation (Home- w00d, Iil.: Richard D. Irwin, Inc., 1954), pp. 659—61. 132 predominant-use method would have the state highway systems—— primary, interstate, and state secondary—supported by road-user taxes. County, town, township, and urban road systems, except for urban and municipal extensions under control of the states, would be financed from local revenue. The relative-use method does not provide for such a sharp distinction between the use of the highway systems. Basically, all highways serve the three functions in some manner, and all highways should, therefore, be financed from both general taxes and road-user imposts on some equitable basis. Currently this theory seems to be the most papular among highway authorities. It recognizes that much of the traffic on intercommunity and interstate roads comes from local feeder roads channeling traf- fic onto the major highways. Most travel is of a short-distance nature, even on interstate highways.1 Therefore, much of the travel on all highway systems may be of a local nature. The relative-use theory was adopted by the Federal Coordi- nator of Transportation in his study of public aids to do- mestic transportation. The Board of Investigation and Re- search study, made a few years later, also adopted this theory. The Federal Coordinator considered that, for the years 1933—37, motor-vehicle taxes might properly contribute A more detailed discussion can be found in Association of American Railroads, Highways, p. 22. 133 85 per cent of the cost of state highways, 34 per cent of the cost of county and local roads, and 30 per cent of the cost of city streets. The Board of Investigation and Research study assigned to motor vehicles 85 per cent of the annual costs of the primary highway system, 30 per cent of the cost of secondary and local roads, and 40 per cent of the costs of city streets. Other studies have assigned still dif- ferent proportions of highway costs to the highway user.1 Various studies on highway cost allocation between users and nonusers conducted by highway authorities have modified the two methods to fit the peculiarities of highway travel in their states. The Rocky Mountain states with large land areas and small populations have tax-allocation problems not entirely simi- lar to those of the highly populated and smaller land area states. Allocation of Highway User Tax Responsibility Once an equitable distribution of taxation is determined for user and nonuser beneficiaries of the highways, a new and “Rally difficult problem is encountered——the allocation of the uSer share of highway costs among the different types of vehicles using the roads. This process is not as simple as one would imagine, for it involves conflicts between various groups of highway users: lLocklin, p. 661. 134 commercial carriers versus passenger automobiles, and commer- cial carriers in competition with the railroads. The problem is too involved to enter into an extensive discussion. However, several methods of user cost allocation will be discussed briefly; they are: (I) the ton-mile method, (2) the incremental cost tech- nique, and (3) other methods. The ton-mile allocation of user tax responsibility The ton-mile calculation is used more than any other method for distributing tax responsibility among highway users. Fundamentally, the ton-mile method is based upon the benefit theory. The underlying philosophy is that each user of the highways should pay for the benefits he receives from them. It is asserted that the product of weight times distance is a measure of these benefits; of the value of service ren- dered by the highway facility. Although there is no way of proving that the product is a direct measure of such value, it is obvious that the transportation of weight does provide monetary remuneration to a large segment of the motor- vehicle population—~notably all trucks and buses.1 1Montana State Highway Department, Financing Modern \1glmays for Montana, A Report on Highway Finances Prepared for the Montana Fact Finding Committee on Highways, Streets 2nd Bridges (Helena. Montana State Highway Department, 1956), - 34. 135 A ton-mile is defined as the movement of one ton over one mile. The ton includes both the weight of the vehicle and the weight of the load being transported. The cost per vehicle-mile increases with the weight of the truck, as would be expected. A constant tax is applied to the product of weight times distance. The ton-mile theorists claim the method results in equitable charges based on value received. They contend that it measures the two important factors of highway cost—weight and wear. Conversely, many highway financial experts condemn it as an inequitable method of distributing tax responsibilities. They contend that it results in a maximum tax assignment against larger motor vehicles while automobiles utilized for business and pleas- ure escape the ton-mile tax. Incremental cost allocation of user tax responsibility While the ton-mile concept supposedly allocates tax re- sponsibility on the basis of benefits received, the incremental method would attempt to charge road users according to the costs occasioned by that particular type of vehicle. The incremental method involves an engineering deter- mination of the cost that vehicles of different sizes and weights incur on the highway structure, and on the geo- metrics of highways as gradient and curvature. It is fairly obvious that a heavy truck requires a thicker pavement 136 structure to support its weight than a light truck or passen- ger car, and the additional thickness is measurable to a reasonable degree of accuracy.1 The first step involved in this process would be to deter- mine the cost of constructing a highway to withstand the elements, and to carry the ordinary light passenger car traffic. The cost of this basic highway would then be assigned equally to all ve- hicles on the basis of vehicle-miles operated on the highway. If a type of vehicle requires a change in the standards and design of the road structure due to its weight, width, or speed, then that class of vehicle will be assessed the incremental costs in excess of the basic road cost requirements to construct the more expensive roadway. The incremental method has gained a wide acceptance among students of highway finance as the most equitable method of assigning tax responsibilities. Studies are now underway in various states gathering engineering data necessary to a national cost distribution among the types of vehicles using the highways. In the past, most incremental cost studies have made recommenda- tions assigning a proportionally smaller tax responsibility to 1Ibid., pp. 37—38. 137 heavier vehicles than those proportions recommended by ton—mile studies. Other methods of tax allocation among highway users Several states tax commercial carriers on the basis of the dollar value of the load being transported. This gross- receipts tax is the equivalent of a highway use sales tax. Another method involves the distribution of tax responsi- bility according to the operating cost of the vehicle using the road. Since highways are used for commercial purposes and for private purposes which have economic values, there ap- pears to be a great attraction in the attempt to allocate tax responsibility on the basis of value received by the highway user. It is this reasoning which underlies the operating-cost theory proposing that motor-vehicle operating costs, which rise steadily with size of vehicle, may be taken as a meas- ure of the value of service provided and therefore as a basis for assignment of road user tax responsibility.1 At present no commonly accepted solution to the problem of allocation or road-user tax responsibility has been derived. With so many vested interests involved in the controversy it is 1William A. Bresnahan, Who Should Pay How Much of flhway Costs? (Washington: American Trucking Associations, Inc., 1952), p. 4. 138 questionable whether an answer agreeable to all parties will be found. Until additional factual data on the subject are forthcom- ing, decisions on road-user tax responsibility will be based sub— stantially on human judgment. CHAPTER V SHORT-RUN EXPENDITURE PLANNING Students of business recognize that there are three basic functions of management: planning, organizing, and controlling.1 The manner in which these functions are performed determines, largely, the success or failure of the enterprise—whether it be a private profit-making business or a governmental organization. Although there appears to be a rather general feeling that private businesses and governmental organizations are somehow “different” in their methods of management and objectives, an underlying thesis of this dissertation is that the fundamental Principles and practices of management are equally applicable t0 these two kinds of organizations. Managers in both 1Authors of management literature often add staffing and directing to the list of functions of management. However, plan- ning, organizing, and controlling are considered universal. See I‘I'c‘trold Koontz and Cyril O’Donnell, Principles of Management (New York: McGraw-Hill Book Company, 1959), pp. 35—38; and William H. Newman, Administrative Action (Englewood Cliffs, N.J.: Prentice-Hall, Inc., 1959), p. 4. 139 140 organizations encounter many of the same types of problems, con- ditions, or obstacles. Yet, because of the nature of the organiza- tions, management may be operating in different surroundings. For example, the manager in a state highway department of nec- essity functions in a political environment since the organization is a part of the political structure of the state. He may find, or feel, that the policies or actions of legislators and commis- sions are unduly restrictive or arbitrary and prevent him from doing the best managerial job in accomplishing the objectives of the highway department. The manager in a private business or- ganization does not usually complain of the same problems; how- ever, he may, and often does, complain of such problems as com- Petition, prices, and general policy established by “top brass” in his organization. The point is, managers in both kinds of organi- zations are confronted by problems which must be solved and by decisions which must be made in order to best achieve organiza- t101ml objectives. Emphasis must be upon the formulation and achievement of organizational objectives through adherence to, and practice of, the managerial functions of planning, organizing, a11d controlling. Nowhere in the highway organization is the ad- herence and practice of these principles more important than in 141 the financial planning and control activity.1 It is the objective of this and the two subsequent chapters to consider short-range planning and control as they relate to highway construction funds. The Nature of Planning and Control Flaming and control are not modern concepts nor do they only have relevance to businesses and other formal organizations. Planning and control have been practiced in antiquity. Every ra— tional individual in some manner or another plans and controls his activities. Wig Planning has been defined as “the managerial function of determining in advance what a group should accomplish and how the goals are to be attained.”2 Basically, planning is a decision- making Process. It implies a selection process from developed alternatives of various objectives, policies, and procedures. \v 1'l‘he managerial function of organizing is treated in some detail in Chapter IX; see infra, page 340. 2Michael J. Jucius and William E. Schlender, Elements of erial Action (Homewood, 111.: Richard D. Irwin, Inc., 1960), p. 26 142 Organizational objectives serve to provide the organization with direction and purpose; they are the basic guides to the en- terprise. Without them, the organization (and segments of the organization) lacks the vitality which results from a consciousness of where it is going and why. In recent years students of business theory have empha- sized that the basic objective of an organization should be to provide a service and not, as many managers seem to feel, to make profits exclusively.1 If this concept of the purpose of an Organization is adhered to, there appears to be no apparent rea- son why it should not apply with equal force to governmental or- ganizations—those nonprofit enterprises. Consequently it would seem to follow logically that management in governmental organi- zations should have the same incentives as do managers in indus- tr 131 enterprises who seek to maximize the ratio of output to \\ s For a more detailed discussion of the service objective, ee L- Urwick, The Elements of Administration (New York: Har- per and Brothers, Publishers, 1943), Chapter III; William H. New- man and E Charles E. Summer, Jr., The Process of Management ( “glewood Cliffs, N.J.: Prentice-Hall, Inc., 1961), p. 384; and William R. Spriegel and Ernest C. Davies, Principles of Business (Won and Operation (Englewood Cliffs, N.J.: Prentice-Hall Inc“: 1960), p. 1. 143 input in the operations of the organization.1 The same line of reasoning would seem to lead to the conclusion that administra- tion of governmental organizations should be as diligent in the application of accepted management principles and practices as executives of business organizations. In the highway department, as in other organizations in which the modern theories of business management are being practiced, the over-all objective is service——to create and dis- tribute values to the public with maximum efficiency and economy. To be more specific, one of the major objectives of a highway department is to construct and maintain an adequate highway sys- tem for the people paying for and benefiting from the roads. If the above is true, policy, procedures, systems, and programs as they relate to highway expenditures should seek to provide for maximum utility from each dollar expended on the highway plant. Procedures and systems—designed in the light of objectives and policies—should be utilized to insure that dollar placement in the highway systems will be based on the 1The basic thesis here is that governmental organizations should be as interested in achieving the maximum utility from every dollar expended as profit-making organizations and should seek to develop skill in the application of management principles and concepts to this end. 144 most efficient methods available. These precepts, if followed, minimize the elements of human judgment, political expediency, and community pressures in the decision-making process perti- nent to the expenditure of highway funds. Today a situation exists in which highway finance experts expound on the revenue side of the finance picture while rela- tively little attention is given to the manner in which highway officials plan and control expenditures. In this modern era of high taxes and huge public expenditures, highway managers should carefully evaluate their methods of expenditure planning and con- trol. They should make use of the latest and impersonal methods available in allocating highway funds. Most state highway depart- ments possess the tools, techniques, information, and personnel necessary to provide for efficient operation in planning and con- tPulling highway expenditures. R. C. Davis states that “the performance of the planning fllnction always involves some degree of futurity.”1 Since the planning process must be formulated, developed, and executed in the time dimension, it is imperative that management base its 1R. C. Davis, The Fundamentals of Top Management (New York: Harper and Brothers, Publishers, 1951), p. 43. 145 decisions on available relevant and rational facts about the fu- ture. Organizations tend to divide the time element into two segments for the purpose of decision-making: (l) short-term planning and (2) long-range planning. Short-run planning gener- ally covers a period of a year, depending on the specific business and its production cycle. Long-range planning is usually tem- pered by the long-range commitments of the firm and in the re- covery of costs sunk in plant facilities. Due to the peculiar nature of highway operations, the short-run planning period must by necessity cover several years. In programming a highway for construction, a substantial amount of advance planning is necessary before the project can be let t0 contract with private firms. Problems of right-of-way acqui- sition alone may consume months and even years if litigation is 11lvolved. Short- and long-range planning tend to become diffused in highway operations, and many highway officials believe they are Performing long-run planning when, in fact, they are planning on 3- short-run basis. It is important to grasp the idea that long and short- range planning are two aspects of the same continuous proc- ess. Success in planning depends on the ability of executives to achieve an integration of the two types. Short-range planning can be successful only if carried out in a context of adequate long-range planning, so that shifts in the 146 long-range view may be taken into account in the short- range plans.1 Control The control function can be defined as “the process of determining what’s being accomplished, evaluating it, and if nec- essary applying corrective measures so that performance takes place according to plans.”2 As in other areas of endeavor, con— trol is a necessary requisite to the measurement of managerial Performance. Highway departments, by necessity, have geograph- ically decentralized operations which, by their very nature, re- qmre extensive control procedures. As in most organizations, the highway department makes EXtensive use of the budget as a tool for financial planning and Centrol. Its value as a technique for control depends entirely uDon the importance that highway management places upon it as a basis for planning its Operations. Planning and control are 1Ilseparable: “. . . control implies the existence of goals and 1Dalton E. McFarland, Management Principles and Prac- tices (New York: The Macmillan Company, 1958), p. 72. 2George R. Terry, Principles of Management (Homewood, 111.: Richard D. Irwin, Inc., 1956), p. 473. 147 plans.”1 If control is an important managerial function, then it is imperative that that which is controlled—namely, budgetary plans—be well conceived. If budgetary planning is faulty, budgetary control cannot be effective. Greater emphasis will be placed on the planning function as it relates to construction expenditures than on the control function because it seemed to the author during the survey that the accounting control proce- dures and facilities being used were adequate to provide manage- ment with sufficient information on the progress of operations.2 Mechnique for financial plannigg and SLntrol of construction expenditures Planning and control are functions that are not generally sDontaneous in nature. Usually a great amount of evaluation, analysis, and thought enters into the process of planning and Control. Consideration must be given to the historical aspects Of operations, present resources must be carefully evaluated, the 1Koontz and O’Donnell, p. 578. 2The progress reports on highways using federal-aid funds prepared by the states for the Bureau of Public Roads provide “built-in” control procedures on construction pragress. The DOint being stressed here is that, although control procedures and facilities seemed adequate, they were rendered ineffective, more or less, due to inefficient planning of construction expendi- tures. 148 future predicted, and measurements established to determine devi- ations from planned operations. The basis for past, present, and future analysis is often founded on accounting data accumulated in accordance with accepted principles and practices. In planning and controlling construction expenditures in highway operations, it is an accounting technique——the budget— that assumes a major role in the recommended processes designed to provide for greater efficiency in construction spending. The Value and effectiveness of the budget depends entirely upon the manner in which (1) the annual construction projects are sched— uled, (2) the procedures utilized in recording, classifying, ana- 1Yzing, and reporting actual and budgeted cost data, and (3) the uSe made of the budget as a control and reporting device in measuring and evaluating managerial performance. It is with the first and third items above that this dissertation is concerned. Highway departments are not taking advantage of the full poten- tial of the budget as a tool for financial administration. Possibly it would seem more logical to approach a dis- cussion of expenditure planning from a long-range vieWpoint. However, the short-run techniques as recommended in this dis- sertation require the Support of a long-range planning program to fill in certain gaps not adequately covered by the short-run 149 method. Therefore, the short-run aspects of the problem will be presented first. Long-range planning will be the subject of Chap- ter VIII. Division of Responsibility for State and County Expenditure Planning and Control A situation exists in state and county highway administra- tion which deserves some mention, although it does not directly concern the major thesis of this dissertation—the planning and control of state highway construction expenditures. The problem came to light during interviews with state highway officials in ten state highway departments. With the exception of five states1 in the nation which have aSsumed administrative and financial responsibility for all, or Part, of their county road systems, there are within each state at least three highway authorities concerned with the construc- tion and maintenance of roads under their jurisdiction: (1) states, (2) towns, counties, and townships, and (3) urban places. State l'lighway departments are responsible for the construction and maintenance of the interstate, primary, secondary, and urban 1See supra, Chapter [[1, page 42. 150 extensions of state systems. Counties have administrative con- trol over the rural roads not in the state systems, and urban units administer roads and streets within their jurisdictions. Each one of the political units mentioned above supports an organization to construct and maintain its road system. From discussions with state highway officials, the following conditions were found to exist in the various states: 1. There was a complete division of responsibility between the state, county, and urban places for the planning and control of highways and streets under their jurisdictions. 2. There was some lack of coordination among the three administrative units in integrating the three separate road systems. This was especially true between the counties and the state in planning the rural road sys- tems. 3. There was a duplication of effort in administrative practices, especially between the counties and the states. If the above is true, there would seem to be a need for greater cooperation and coordination among the highway authori- ties. Due to the local nature of roads and streets in urban areas, this lack of coordination is unavoidable except in instances of the cooperative projects between state and urban officials. County roads present an entirely different picture. They are an integral part of the rural road system of a state. It would seem from the author’s interviews with highway officials 151 that county roads are being planned and designed for use within the area of the county rather than as a part of the over-all state system. Apparently what is needed is a planning procedure which will consider both the factors of local service and the integration of the rural county roads into the state system for the servicing of general state traffic. To facilitate planning for an entire state rural system and to eliminate the costly duplication of effort, two alternative courses of action are available: (1) The entire county system could be placed under the administrative and financial control of the state highway department, or (2) state and county officials could estab- lish a major system of county primary roads for which state high- Way officials would establish standards applicable to highway de- sign, location, et cetera, as a requisite to sharing in highway- User revenues . §mte responsibility for the comgete gounty road system For the state to assume complete responsibility of the county road systems, changes or amendments to the present state laws would be required. County residents would have to approve the administrative change by special elections. In spite of the administrative and legislative problems, the advantages to be 152 derived from such a change would by far outweigh the disadvan- tages. From discussions with state highway officials the author established a pattern of poor managerial practices in county road administration: 1. County commissioners are elected officials who often possess very little knowledge of planning and control- ling the functions of a highway department. 2. Decisions pertinent to road location are often based on factors other than community service and road continuity. 3. County administrators do not employ trained engineers to plan and design county road systems and to deter- mine standards for road use and capacity.1 In view of the above poor managerial practices, the fol- lowing advantages could be derived from the proposed recommen- dations: First, road standards and design, and problems of road location would be the responsibility of the highly trained state highway engineers. In planning county roads, consideration would be given to road continuity as it relates to over-all state road system planning. Furthermore, road standards and design would be correlated to future traffic needs. Roads designed for current For example, in Montana only thirteen counties out of fifty-six employed qualified highway engineers. In some instances outside engineering consultants were employed to plan construc- tion projects. 153 use soon become obsolete and deteriorate rapidly as traffic vol- ume increases. Second, an important advantage to be derived is that highway expenditures would be more fairly distributed among the counties. At present, funds are distributed to states, coun- ties, and urban places for highway use according to state law. The wealth of counties often varies according to the type of tax- able property existing within each county. A highly industrialized county often has a broader tax base than the predominately agri- cultural county.1 With the highway department planning and con- trolling the allocation of funds on county roads, a system could be initiated to distribute the funds on the basis of a priority listing system as determined by sufficiency ratings.2 1An example of this situation now exists in the state of Wyoming. State law requires that counties match state fund dis- tributions for county farm-to-market roads not on the secondary system to the extent of 7 percent of the total costs. Even though they have raised their property tax mill levy to the maximum pre- scribed by law, seven of Wyoming’s twenty-three counties are un- able to find sufficient funds to meet the 7 percent matching provi- sion. Consequently, the rural road system in Wyoming is out of balance as far as standards are concerned. 2Sufficiency rating procedure is discussed in detail in Chapter VI; see infra, page 180. 154 Establishment of a county primary road system A second alternative, and one that would be more accept- able to highway officials, involves a less extreme action on the part of the state in assuming responsibility for the county road system. At present all of the fifty states have 98,000 miles of rural county roads and 8,000 miles of municipal extensions under their jurisdictions in the state secondary road systems. There still remain approximately 2.3 million miles of rural roads under the administrative control of county, town, and township authori- ties. Counties are spreading their funds very thinly over a large road mileage. Rather than add more mileage to the state second- ary road system, which requires different standards and design, or to have the state assume complete responsibility for the entire county road system, state authorities in cooperation with county officials could create a special county primary road system com- posed of the more important county roads. The mileage of this special system could be limited in each state to those roads that serve communities or other relatively heavily populated rural areas, and to those roads that provide connecting links in the over-all state system. Authority for the administration of this county system should remain with the county commissioners. 155 However, final approval for road standards and designs, location, and other pertinent factors relevant to traffic, safety, and service in highway construction would remain with the state highway de- partment. The special county road system would be financed entirely, or in part, from state road-user taxes. The remaining county road system should be financed from local revenues. The first distribution from the state highway revenue fund results in an allocation of monies for highway use between states, counties, and urban areas. The formula for this distribution of road-user reve- nue is usually determined by the state legislatures and enacted into law. Funds allocated to rural and urban units are substan- tial in amount, providing approximately 45 percent of total rural receipts and 17 percent of urban revenue. Under these conditions, legislation could be passed which would permit highly trained state highway personnel to direct and control the flow of these revenues into the special county primary road system in a par- ticipative program similar to that which now exists between the state and federal governments. The benefits to be derived from such a program would be many: (1) Planning would be extended to include a major portion of a state’s rural road mileage which would service the bulk of 156 total rural traffic; (2) the special county system would be inte- grated with other state systems, other than for administrative control which would still be retained by county officials, provid- ing for greater road continuity and system design; (3) the most important roads of the county system would be constructed to higher standards; and (4) county officials would receive the serv- ices of experts in highway construction. A similar plan has recently been recommended in a re- port prepared for the State Highway Commission of Wyoming by representatives of the Automotive Safety Foundation. This latter group has made many studies of highway needs for various states, and their recommendations are highly regarded. In Wyoming they recommended that a county primary road system composed of 13,000 miles of the 48,000 miles of county roads be established.1 In discussing the county road problem with officials in various states surveyed by the writer, it was discovered that a situation has been developing that is similar to the above recom- mendation but in a way detrimental to the state highway finance 1Automotive Safety Foundation, A Guide for Planning Wyo- ming Highways, A Report Prepared for the State Highway Com- mission of Wyoming (Cheyenne: Wyoming State Highway Depart- ment, 1960), p. 5. 157 programs. Because of pressures exerted on them by county of- ficials and community groups, state legislators are continually adding to the secondary road system mileage under the control of the state highway department. This situation favors the coun- ties by relieving them of the cost of constructing, and possibly maintaining, the county roads added to the state system and it gives them better roads than they would otherwise construct. On the other hand, state highway departments are faced with a situa- tion in which new mileage is brought under their control without a commensurate increase in funds to care for them. The states are forced to spread already inadequate funds over an ever— expanding road system. In line with the proposed recommendation, state legisla- tures should enact legislation which would freeze the road mile- age of all state highway systems. This would include the mileage designated under the special county primary system even though administrative responsibility is retained by county officials. Failure to stabilize system mileage by state law would defeat the objective of the proposal since pressure groups have a pow- erful influence in state political circles. Undoubtedly the above recommendations have been some- what simplified. The problems involved in the transition of all 158 or a part of the county road systems to state control would en- tail considerable planning and legislative approval. It would necessitate organizational changes in both administrative units. Current methods of taxation and tax allocation procedures would have to be evaluated to provide for a more equitable distribution of tax responsibilities. Standards and design would have to be devised for the low-traffic-volume county roads. It is felt that the advantages of the recommended alternatives would by far outweigh the disadvantages that are presently obvious in county road administration. However, many highway officials interviewed by the writer do not approve of such a program. They firmly believe that the systems, administratively and financially, should remain divided among the states, counties, and urban places. Yet, if one thinks in terms of over—all objectives, there is probably a need for better coordination between the highway authorities con- cerned with the construction and maintenance of the nation’s rural highways . Annual Budgetary Procedure Budget methodology has been fairly well standardized in state highway departments. The Research Division of the Bureau of Public Roads has been quite active in establishing standard 159 procedure which has been widely accepted and put into practice by many state highway departments. Slight variations may exist in certain areas of budget preparation, but these differences are relatively unimportant according to highway officials interviewed. For example, in one state the chief maintenance engineer inthe headquarters office of the highway department prepared the main- tenance budget for the decentralized maintenance districts. In other cases the district maintenance engineers would prepare their own budgets which were subsequently evaluated by the chief maintenance engineer before being submitted to the highway commissioners for final approval. There would seem to be some question whether a chief maintenance engineer should prepare a budget for the district maintenance engineers, who are probably better acquainted with the maintenance needs in their districts. In the ten survey states the author found that the facilities for excellent budgetary control existed. All of the state highway departments utilized the latest I.B.M. equipment, or its equivalent, and many possessed their own electronic computers. Budgetary reports for maintenance, administration, and other services were prepared monthly, quarterly, and annually. Every division and department head knew precisely what percentage of his budget had been expended each month. For maintenance the budget was 160 generally prepared on a project basis, enumerating the estimated cost, for instance, of maintaining a certain section of road within a maintenance district. The maintenance estimates were further broken down into the specific type of maintenance that would be required, such as routine and special roadway surface operations. As maintenance operations were performed in the districts, the maintenance engineers reported regularly the cost for each type of Operation for each maintenance project. This information was punched on cards and periodic reports were prepared from the budgeted and actual data. Equipment control was also facilitated by the use of mech- anized bookkeeping machines. Every piece of equipment was properly accounted for. Information pertinent to equipment was recorded on punched cards indicating their assigned number, make, type, model, serial number, motor number, location, rental cost, and other pertinent factors. Basically, the writer could find little fault with the ac- counting aspects of recording, classifying, and analyzing data for use in the budget. In a few instances there was a lag in actual cost accumulation for report purposes, but these cases were un- avoidable. Due to legislative requirements in which all state highway expenditures are approved and dispensed through a 161 central state finance office rather than by the highway fiscal de- partment, expenditures vouchers were outstanding for as long as a month to a month and a half. Budgeting planning and control of maintenance, administra- tion, and other highway services (other than construction) was provided for in a satisfactory manner. It is in the procedures used in plamiing and controlling the projects for the annual con- struction budget that the question arises as to whether highway officials are accomplishing organizational objectives to the high- est possible degree. It was not the purpose of this study to delve into phases of management malpractices involving fraudulent intent through collusive agreements and venality whereby scarce construction funds were diverted from the construction expenditure stream into the personal accounts of highway officials or private contractors. In describing and analyzing highway management practices perti- nent to the allocation of construction funds based on political pressures and expediency, it is not the intent of the author to intimate that such practices are dishonest in any way. Quite the contrary, it is contended that the inefficient procedures utilized by highway officials are the result of (1) a misunderstanding of their responsibilities to the public, (2) a lack of understanding of 162 management principles and practices, (3) an adherence to custom and tradition in highway management, and (4) a general apathy on the part of the public. Revelations over the past two years pertinent to seemingly fraudulent practices of highway management in certain states can- not be ignored. These dishonest actions have come about even though control procedures existed to prevent their happening. This phase of fraudulent highway management practices is dis- cussed in Chapter XI. Current state highway budget procedure In the preceding sections of this chapter it was pointed out that the first distribution from the highway revenue fund re- sulted in a division of the fund between the state, counties, and urban areas. From the portion now available to the state high- way department, the first budget allocation is between the four major functions—construction, administration, maintenance, and other services. Practice among the ten survey states differed somewhat in this procedure. In one case, construction funds to match federal-aid apportionments were determined first and the resi- due was distributed among the remaining functions. In the other 163 states, maintenance, administration, and other services received prior consideration, and construction was considered last. The method used depended upon the financial condition of the highway fund. However, it is interesting to note that none of the ten states had lost a federal-aid allotment requiring state matching of funds. Federal apportionments for construction were segregated according to the system for which the funds were to be used, such as federal-aid primary, secondary, interstate, and urban. Ten percent of the federal allocation for any fiscal year may be transferred among primary, secondary, and urban systems if such a transfer is requested by the state highway department and is approved by the governor of the state and the Bureau of Public Roads as being in the public interest.1 The apportionments are made six months prior to the start of the fiscal year and remain available for expenditure for a two-year period subsequent to the year of authorization. Therefore, the state has at least three and one-half years in which to plan the use of federal-aid funds. As highways require a considerable amount of advance planning 1National Highway Users Conference, Federal-Aid for Highways, p. 11. 164 for construction, this provides a degree of flexibility in the budget programming. In planning and controlling construction expenditures, state highway officials are confronted with two major problems: First, an immense effort is being put forth on the construction of the 41,000 miles of the interstate system. It is imperative that other state systems are not neglected in any manner. In fact, greater effort and consideration should be given to programming the state primary, secondary, and urban extensions for construction and maintenance. Second, state highway departments have never pos- . sessed sufficient funds to bring roads up to standards within a short period of time. There has never been, nor will there ever be, the ut0pian situation in which a state has sufficient funds, time, personnel, and equipment to attack simultaneously all the projects required to bring its road up to standard. Choices must be made.1 The preceding quotation sets forth the problem very well. It is with the choice of alternatives for the placement of construc- tion funds on road systems, and segments, that this dissertation is primarily concerned. In this phase of planning and programming 1New Mexico State Highway Department, Planning Division, Ratings for Highway Improvement (Santa Fe: New Mexico State Highway Department, 1957), p. 1. 165 the construction budget, highway management can achieve the greatest degree of success in accomplishing the organizational objectives. As was mentioned previously, the first allocation of the highway fund is over four basic highway functions (maintenance, construction, administration, and other services) and represents the initial distribution of the revenues available for state high- way use. Administration and other services generally do not present a problem in budgeting, since the expenses tend to be fixed in nature. Administrative costs for the various depart-— ments—such as accounting, personnel, engineering, research and planning, and public relations—are rather easily determined. The same holds true for budgeting the expenditures for other serv- ices, which include such activities as the highway patrol, traffic division, property facilities, and equipment. The costs are rela- tively stable from year to year and needs can be readily planned. Planning and control of maintenance operations also seem to present very little difficulty, since district maintenance engi- neers can estimate fairly accurately the maintenance needs within their districts. The maintenance engineers intimated rather proudly during the interviews that they knew thoroughly the maintenance needs of every mile of road within their spheres 166 of responsibility. If this is true, budgeted estimates of district maintenance needs as prepared by district maintenance engineers coupled with historical cost data from preceding years serve as a reasonable basis from which to plan maintenance budget require- ments. The budget committee, or those officials concerned with budget evaluation and approval, should provide for an armual increase in maintenance allotments to cover increasing mainte- nance costs caused by the rising price level and the expanding road mileage. In the western states emergencies such as floods, heavy snow conditions, and unusual frost breakups from extremely cold winters often require adjustment to the maintenance budget. An emergency fund is generally established to care for the un- usual maintenance situations that may arise. Maintenance costs seemed to be adequately controlled and reported. Unlike administrative costs, maintenance expenditures may present a variety of alternatives for the use of the mainte- nance dollars. It is in the area of planning and controlling the expendi- tures for highway construction and reconstruction that highway officials should devote more attention. A considerable portion of the primary and secondary roads are below acceptable standards. Because of the poor road conditions, highway officials take the 167 position that it does not matter where the highway dollar is spent —-the highways need the improvement. Highway planning engineers and other officials work on the assumption that funds are well spent if the condition of the over-all system is raised. It is the contention of the author that this type of planning for a high— way system will not result in acquiring the most efficient highway plant over the short-run period and possibly may result in failure to achieve long-range construction objectives. Every dollar ex- pended on the highway systems should be made on the basis of priority. In every one of the state highway systems (interstate, primary, et cetera) there are roads, or road segments, which have a greater need for improvement than other roads in the Same system. Spending money is not a difficult process, but Spending money wisely is a feat not easily accomplished. Fund allocation between state highway districts—After the budget allocation has been made for the construction function and it has been further subdivided to match federal-aid appropriations for the state systems, a second distribution takes place under current practice in eight of the ten survey states. The construc- tion funds are distributed between commissioner or some similar type of districts. This distribution is made on the basis of a 168 predetermined formula or by mutual agreement between the high- way commissioners. Where a formula is used, the district allo— cation may be prorated equally or distributed between the districts on the basis of such factors as road mileage, population, or ter- rain found in the district. In most cases distributions were de- termined by agreement between the members of the boards of highway commissioners who were appointed to represent their specific districts. From pertinent information acquired in interviews with highway officials, the distribution was eventually arrived at only after substantial discussion and concessim among the commission- ers. The object of the compromising agreements apparently in- volved two factors: (1) to have as much money as possible fun- neled into the represented district, and (2) to improve the road systems in the specific districts. Quite often these decisions Were apparently based on rather dubious premises. For exam- ple, the interstate highways traverse certain narrow areas of a state but substantial expenditures will be made in those districts that are affected by this costly system. Therefore, the practice in at least three states apparently was to reduce the allocation of primary and secondary funds to those districts receiving large amounts of interstate funds. It would seem that such planning 169 practices would result in a lack of balance in primary and sec- ondary roads in the state system.1 Allocation of funds among highway systems .——After funds for state primary, secondary, and urban and municipal extensions of state routes have been allocated by districts, it is then nec- essary to make a third distribution. The latter is for the purpose of determining the specific road or road segment which should be constructed or reconstructed within the limitations of the funds available. The decisions involved in making this allocation are extremely complex and difficult because so much of the road mile- age in most state systems is below current and projected stand- ards and design. During the course of the survey it became apparent that the methods utilized to allocate funds to specific projects varied somewhat among the states. In eight of the ten states the final 1A situation existed in another state in which two district commissioners represented the highly populous eastern sections of the state while the other four members of the six-man board were appointed from districts that were strictly rural in nature. A glance at the critical-road-deficiency map of the entire state revealed that approximately 50 to 75 percent of the deficient road sections existed in the two eastern districts. When questioned, state highway officials stated that rural commissioners often stood together as a voting bloc when the highway fund for construction was distributed among the districts. r . 170 decision as to the projects to be programmed for the budget was made by top-level administrators—generally the commissioners} Planning the construction budget generally involved a se- ries of steps. Although the procedure differed slightly in the survey states, the ultimate results were the same: some mis- direction of construction funds from high-priority projects. Usu- ally the district engineer prepared a list of construction projects for his commissioner. The compilation of this priority list was based on the experience of the district engineer with the high- ways in his assigned areas. In at least one state construction planning engineers assisted the district engineers in the prepara— tion of the priority lists. The list was occasionally given to top-level officials for evaluation before being sent to the commissioners for further re- View and final approval. In addition, the commissioners were generally provided with a list of critical road deficiencies 1The importance of this procedure is the fact that com- missioners could, if they so desired, change the annual construc- tion program prepared by the planning department to include projects having lower priorities. In Colorado and Nebraska, state law required that the annual construction program be de- termined by sufficiency ratings, which eliminated the role of the commissioners in making decisions pertinent to construction project scheduling. 171 determined from sufficiency ratings and prepared by the planning department to assist them in making their choice of alternatives from among construction projects. From the two reports (district engineer’s list and the planning department’s critical list) the commissioner determined the annual construction budget for his district. According to highway officials interviewed, it was not unusual for the commissioners to submit to pressures of commu- nity groups in programming the construction budget. Inquiries made by the writer as to the use of priority lists prepared by the planning department revealed a wide variation among, and within, state highway departments. It was determined that highway officials who claimed a high percentage of priority Projects in the annual construction budget were using a priority list that included almost the entire road mileage of each of the state systems. In preparing the list, no attempt had been made to scale down the most serious road deficiencies to match the budgeted funds for the year. Instead, the lists presented to the commissioners contained the equivalent of enough projects to match two to five years of construction budget appropriations. 172 Even if it were assumed that 80 percent1 of the annual construction program contained high-priority projects, such a planning process leaves much to be desired. If one thinks in terms of a lOl-billion-dollar construction program, the expendi- ture of a substantial portion (20 percent) of this huge amount will be made on rather dubious rationalization. Another step in the programming process involved com— missioner hearings. The commissioners met with as many as one hundred different persons, or groups, to hear their argu- ments or pleas as they affected highways in their specific loca- tions. Highway officials admitted that such pressures were often effective in directing the flow of highway construction funds. The hearing procedure is a part of the democratic process as prac- ticed in the United States. However, as a basis for allocating scarce revenues throughout the highway system it leaves much to be desired. On the other hand, there are cases involving high- way relocations in which community groups should be heard, es- pecially if the relocation will direct traffic away from the 1Eighty percent was the most frequently reported figure for construction projects chosen for annual programming from priority lists prepared by the planning departments from suffi- ciency ratings. 173 community as some of the interstate highway projects are cur- rently doing. It should be pointed out that commissioner decisions to allocate funds to highway projects which do not have high critical needs will not necessarily result in wasted effort, since many of the highways do need improvement. However, such planning pro- cedures will not provide the most efficient highways over the short-run period and may result in prolonging long-range objec- tives. It is more conducive to a patchwork and unbalanced system of highways. A Proposed Program for Annual Budgetary Flaming and Control of Construction Expenditures In the following paragraphs a proposed budgetary system will be recommended. First, consideration will be given to the problem of allocating construction funds to commissioner and/or construction districts. Second, the system of priority listing of construction projects by the sufficiency rating procedure will be introduced. In the following chapter the sufficiency rating procedure will be discussed in detail. 174 Elimination of fund allocation by state highway districts It does not matter whether funds are prorated to commis- sioner and/or construction districts on the basis of bargaining strength of the commissioners or by formula; both methods are inefficient as a means of allocating highway funds and are not conducive to the achievement of highway organization objectives. Any process that distributes funds by districts will result in the misdirection of the taxpayer’s dollar no matter how rational the prorating procedures may seem. These methods fail to regard the highway system as a whole and they give very little consid- eration to highway needs. Such methods are based on the as— sumption that needs are the same within all districts when actually they are not. Too many variables affect the make-up of a state road system to permit personal judgment to enter into the process of allocating the highway construction funds. Funds should be apportioned over the entire highway sys- tem on the basis of the specific needs within the system. Dis- trict boundaries as a basis for the distribition of funds should be abolished entirely. Needs can be established on the basis of critical priority listings for each segment of highway as determined 175 by sufficiency ratings as described in the next section of this chapter. Undoubtedly the allocation of funds by priority listings of critical highway deficiencies will result, initially, in an unequal distribution of monies among districts. However, a point will eventually be reached where every district will be receiving an equitable distribution based on critical highway needs in that district. The important factor in such an allocation procedure is that construction planning is on a state-wide basis rather than by segmental units. The system will be brought up to re- quired standards as a whole rather than in parts. In only two states of the ten in the survey were funds allocated on the basis of highway needs rather than by districts. Allocation of funds within state highway systems Within each state system the problem is encountered as to what highway or highway segments should be constructed or re- constructed with the available funds. The problem is one of choice of alternatives, since many of the highway systems (inter- state, primary, secondary, et cetera) are badly in need of con- struction programming. Within each highway system certain highways, or road sections, have a greater need for improvement 176 than do other highways or sections in the same system. What is needed is a procedure that will rate each segment of a highway in a manner that will permit a choice of alternatives in annual budget programming for construction and reconstruction. The best tool available today is the sufficiency rating method. A sufficiency rating study is the determination of rela- tive values for the different parts of a highway system. A section of highway that is perfect is assigned a value or rating of 100. Deficiencies or inadequacies reduce that per- fect rating of 100 by varying amounts, resulting in the as- signment of a numerical value to each section of highway. That is called a sufficiency rating for that section.1 In eight of the ten states visited by the writer, sufficiency ratings were prepared by the planning engineers of the state highway departments.2 The other two states used methods simi- lar to the sufficiency rating method. The procedure was first developed and applied in Arizona. A complete method for arriving at a numerical rating of highway sections as a basis for counteracting deprecia- tion and obsolescence, later termed sufficiency rating, was developed by Karl Moskowitz of the U. S. Public Roads Ad- ministration. In 1946 the system was applied by the Arizona State Highway Department to all Federal-aid and state routes. Popularly known as the “Arizona Method,” this procedure 1Idaho Department of Highways, Sufficiency Rating Study (Boise: Idaho Department of Highways, 1959), p. 1. 2The two states not utilizing the sufficiency rating pro- cedure were Montana and Utah. 177 for rating highways was adopted by other states. In the course of time, experience and differing conditions in some states dictated many modifications of the original system. Thirty-three of the states now employ either the Arizona method or another formula for sufficiency ratings as an administrative tool.1 The preceding quotation lists thirty-three states as em- ploying the sufficiency rating methods. However, if the survey of ten states in the Rocky Mountain Region is indicative of the use of the method, only one-fifth, or seven states of the thirty- three, are utilizing sufficiency ratings to the fullest possible extent in placing funds in the highway systems. In the two sur- vey states that made complete use of the system, the procedure in establishing priority construction lists was required by state 2 law. Most sufficiency rating procedures have at least three points in common: 1. Each road section to be rated must be homogeneous in character. A section ends at a point where a new char- acteristic appears, and a new section is designated. Sec- tions may therefore vary from a fraction of a mile to several miles in length. 2. Sufficiency ratings must be determined by field checks with other data applied to the results of the field investigation. 1New Mexico State Highway Department, Planning Division, Ratings for Highway Improvement, p. 3. 2Colorado and Nebraska. 178 3. A point system is used to assign values to a pre- determined set of factors, and their subelements, each having a given range of points. Any rating lower than 100 points shows the degree of a section’s deficiency.1 Annual construction budgets can be programmed in a se- ries of steps. First, each highway in each system (primary, secondary, et cetera) is sectionalized into segments having homo— geneous characteristics such as pavement types and terrain. Once the segmentation has been performed in the initial stage of in- stalling the sufficiency rating system, it needs only an occasional revision thereafter. Second, a set of factors based on highway geometrics and design is determined. Most systems utilize at least three features—condition, safety, and service——which are further divided into subfactors. Third, point values—generally totaling 100 points———are assigned to the major factors determined in the third step. The point weight assigned each factor is usu- ally based on the importance of the feature to over-all road standards and design. The fourth step involves a field survey in which each highway segment is rated by actual observation by highly trained personnel. The observer grades, or rates, each road section 1New Mexico State Highway Department, Planning Division, Ratings for Highway Improvement, p. 3. 179 according to the predetermined weights for each factor. Fifth, from the numerical ratings a priority list of critically deficient road sections is prepared. Generally a segment of a highway having a rating of 60 to 70 or below would be considered criti- cal and in need for correction. The sixth and final step is the preparation of the annual budget program. After certain adjust- ments for factors not adequately considered in the sufficiency rating procedure, construction cost estimates can be applied to the priority list projects and matched against available annual revenues for the purpose of programming construction expendi- tures.1 From the priority listings various control tools such as road-deficiency maps, tables, and charts can be prepared. Short- range future programs can be determined and advance preconstruc- tion planning can be undertaken. The state highway department knows precisely what must be done to bring the highway system up to standard. 1The factors not adequately considered in construction programming by the sufficiency rating procedure are discussed in detail in a subsequent chapter; see infra, Chapter VII, pages 266—67. CHAPTER VI A TECHNIQUE FOR SHORT-TERM PLANNING—- THE SUFFICIENCY RATING If past history provides a gauge for the future, it appears reasonable to say that no state highway system can be brought to 100 percent of adequacy and kept in that condition. The very na- ture of the economy is such that, by the time a system approaches complete adequacy, technological developments will occur that will make the system less than 100 percent adequate. Thus, highway departments are constantly confronted with problems caused by an ever-changing environment which emphasizesthe need for com- petent planning in order to maintain the highway system at the highest peak of adequacy available. This situation makes imper- ative the formulation of objectives in terms of the needs of high- way users. As previously stated, a fundamental requirement of objectives in the planning and control of expenditures is the de- velopment of a method or system whereby a priority of such ex- penditures is established. It is the purpose of this chapter to expound and discuss one of the more important procedures for 180 181 planning and controlling construction expenditures—the sufficiency rating procedure for determination of construction priorities.1 It should be pointed out to the reader that the sufficiency rating procedure and the subsequent priority listing is the first step in preparing the annual construction expenditure budget. Revenue for the construction budget is assumed to have been determined by the federal-state matching process, and the prob- lem is now one of utilizing these revenues to the best advantage. The value of the construction budget as a planning and control tool is conditioned by the manner in which construction projects are scheduled. Unlike the budget goal in the private, profit- making firm which may be cost reduction,2 proper use of the budget in highway practice should strive for maximum utilization 1As was mentioned in the preceding chapter, each of the ten survey states prepared some sort of a priority list from a rating device to designate the critically deficient highway in need of improvement. The study further revealed that only two of the ten states used their systems exclusively in preparing their an- nual construction programs. In both of these states the use of the sufficiency rating procedure was made mandatory by state law. In the other eight states highway commissioners or other highway officials were instrumental in directing and controlling the annual highway construction program. 2James L. Peirce, “The Budget Comes of Age,” Readings in Cost Accounting, Budgeting, and Control, ed. William W. Thomas, Jr. (Chicago: South-Western Publishing Company, 1955), p. 137. 182 of the construction dollar by spending it on roads which have the greatest need. In the highway department, construction projects are let to the lowest bidder among competing private contractors. This process tends to transfer the responsibility for cost reduc- tion to the private firm. It is imperative, then, that the scheduling of construction projects be based on the utilization of the best methods available which will reduce the personal judgment factor to a minimum. Toward this end, the sufficiency rating procedure is the best tool available at present. Programming by priority is not a new concept in highway finance. In 1916 the federal government began the practice of allocating state-aid funds on the basis of specific highway sys- tems, and it has continued to do so until the present. Currently, high priority is being given to the interstate system. Toll roads are another example of high-priority highways. Toll roads are extremely costly, as access roads must be limited to entrance and departure gates. Expensive overhead or underpass cross- ings are required on these limited-access roads. Construction of these expensive highways could easily result in utilizing a major portion of annual construction funds to the detriment of other highways in the state systems. For this reason, bond 183 authorizations are undertaken to provide funds for the construc- tion of the high-volume toll facilities. In more recent years, ef- forts have been made to develop systems whereby priorities may be established. In the search for a practical approach to a priority system, some states, notably Virginia and Vermont experi- mented about 1940 with systems that evaluated various im- portant elements of a highway section in relation to desir- able values for the particular elements. Included in the consideration were pavement-width and type, curvature, sight restrictions and grades as well as the volume of traffic served. The results of these evaluations was a series of priority or deficiency lists based on each of the elements considered. Such data were found to be helpful in setting up programs, but they could not be reflected readily into a single, simple priority schedule.1 It was not until the years immediately following World War II that the sufficiency rating method for determining construc- tion priorities was devised. During the intervening years there have been new developments and modifications of the earlier sys- tems. The sufficiency rating procedure is not an end in itself—— it is the means to an end. It is but one of a series of steps that can result in a systematic determination of priorities for 1Roy E. Jorgensen, Priorities and the Development of An- nual Highway Programs (Washington: National Highway Users Con- ference, 1952), p. 4. 184 programming construction projects over the short-run period. It will be the objective of this chapter to describe and evaluate the sufficiency rating procedure as a technique for programming the annual construction budget and to indicate certain modifications in the utilization of the tools that are felt necessary to improve planning and control of expenditures.1 There are certain elements common to all sufficiency rat- ing systems utilized by state highway departments today. In the ensuing discussion and analysis these common elements are con- sidered first. Subsequently, various modifications are treated. Segmentation For the purpose of determining the condition of highways through the use of sufficiency ratings, the highway system is segmentized. The segments are variable in size—ranging from a fraction of a mile in some instances to ten miles in others. The major reasons for segmentation are explained below. Possibly the major reason for segmentation is the neces- sity for establishing highway sections which are homogeneous in 1The evaluation is based largely upon the observations and analysis of the sufficiency rating methods and techniques employed in the ten survey states. 185 nature; i.e., sections which are constructed to the same pave- ment and shoulder widths, of similar materials, the same right- of—way widths, and similar foundational characteristics. Only in this manner is it possible to develop criteria against which the condition of various segments can be evaluated and a rating de- termined. It is apparent that criteria are necessary for each type or kind of road in the total system. A second major reason for segmentation is the need to establish small sections in order to insure greater accuracy in the field observations and evaluation of degree of sufficiency. For example, it is much easier to accurately grade a short seg- ment of roadway (perhaps one—half to three miles in length) than it is to rate one twenty to thirty miles in length. In the shorter segment there are fewer variables to consider. Some factors which are most frequently considered in es— tablishing segments initially are as follows: 1. Differences in structural conditions such as surface material type, foundation, shoulder, pavement or right- of-way width, number of lanes, or terrain character— istics. 2. Natural (more or less) beginning and ending points such as are afforded by bridges, tunnels, intersections; city, county, district, or state boundaries; and other such easily identified points. 186 The sufficiency rating system envisages that the total highway system—each foot of roadway—will be a part of some segment and will be evaluated, or rated, against established standards, or criteria, at regular intervals. It is through such ratings that the degree of adequacy of the total road system, and particular segments, is derived and known. The Criteria for Ratirg There are two crucial aspects of the sufficiency rating system: (1) the development of adequate criteria to serve as standards of evaluation, and (2) the actual observation of seg- ments and the rating accorded the segments. While the former may be formulated with a great deal of objectivity, the latter is always susceptible to the subjective judgment of individuals. Geometric standards and design may vary considerably from state to state insofar as roads constructed strictly with state funds are concerned. However, the greater volume of road mileage in state systems is subject to federal-aid participation and must, therefore, comply with federal requirements for road standards and design. Naturally, the objective of the federal requirements pertinent to road standards is to acquire greater uniformity among the states in constructing highways. 187 Major factors which influence design standards are the topOgraphy, climatic conditions, traffic volume, and national de- fense. For example, states in the Rocky Mountain region must build roads over extremely mountainous terrain, as well as over flat and rolling terrain. Roads over mountainous areas must, of necessity, be constructed to modified standards relative to those built over flat or rolling terrain. Climatic conditions create rather complex problems in construction designs and standards. Roads built over high passes must be designed to withstand the effects of frost pene- tration during cold winters, as well as the effects of moisture from melting snow. Unusually wet spring seasons with heavy moisture runoff make it necessary to design foundations to with- stand these conditions. Traffic volume, as well as the nature of the traffic, nec- essitate differences in road design and standards. Heavily trav- eled roads require wider and additional traffic lanes, wider shoulder and right-of-way widths, and fewer horizontal and vertical curvatures to impede traffic flow. Roads carrying the heavy commercial carriers require thicker foundational structures and pavement surfaces. . 188 The interstate system is not only constructed to carry pleasure and commercial vehicles in peacetime, but in case of national emergency it is designed to provide a means of move- ment for military traffic and civil defense. Evacuation of civil- ian and military personnel from stricken areas and the movement of military personnel and supplies to strategic points will be at least partially carried out over the interstate road system. Currently, three common features of standards and design are considered in most sufficiency rating procedures: (1) struc- tural adequacy, (2) service, and (3) safety. It is the practice to subdivide these features into various component factors to ac- quire greater uniformity and objectivity in rating. A total value of 100 points is usually assigned to the three major features. They may be weighted as follows: Structural adequacy: Foundation ............... 10 points Surface ................. 20 points Drainage ................ _§ points Total ................. 3_5 points Safety: Shoulder width ............ 8 points Surface width ............. 7 points Stopping sight distance ...... 10 points Consistency of alignment ..... 5 points Total ................. _3_Q points 189 Service: Alignment ................ 9 points Passing sight distance ....... 9 points Surface width ............. 7 points Rideability ............... 10 points Total ................. 3_5 points Total possible score ......... 100 points Structural adequacy Structural adequacy is concerned with the structural con- dition of the highway as it relates to foundation, surface, and drainage. Office records may have to be utilized in determin- ing the foundation component if thickness is a variable to be considered. Foundation.——The results of foundational defects, or fail- ures, depend on the type of road being rated. Colorado uses the following procedure in rating this feature: A tally is kept for each section of highway rated, in- dicating the number of foundation failures. During the rating procedure, evidence of frost boils or heaves, distorted sur- faces and shoulder puffs indicating plastic flow are found to be indicative of foundation failures under asphaltic surfaces. The failure items used in rating concrete pavements are pumping action and excessive or map-pattern cracking and surface distortion caused by unsound foundation. On gravel, or graded and drained roads, it has been determined that 190 soft spots, severe ruts and evidence of plastic flow are in- dicative of foundation failures. . . To assist the field rating team in acquiring uniformity for grading this feature, a table of foundation ratings has been devised (see Table 14). Surface.—-—The surface feature is generally rated slightly higher than foundation. Since highways are surfaced with various materials such as gravel, temporary bituminous mats, permanent bituminous surface, and concrete, the points assigned each pave- ment type will differ. Surface failures take such forms as crack- ing, displacement, joint failures, chinking, raveling, and oxidation. In rating this factor, the number of defects per section or per mile is the basis for a high or low rating. Drainager—Drainage is generally weighted as the least of the factors of structural adequacy. Rating of this feature is based upon the methods of disposal of surface water by means of graded side ditches, pipes or culverts, bridges, or natural drainage facilities. 1Colorado Department of Highways, Planning and Research Division, Rural Highway Sufficiency Rating Study (Denver: Colo- rado Department of Highways, 1954), pp. 2—3. 191 TABLE 14.—Foundation rating (par 10). Foundlagiroxihli‘eailures Fogdiiion Value None or one ..................... , ...... 10 Two or three .......................... 9 Four or five .......................... 8 Six or seven .......................... 7 Eight or nine .......................... 6 Ten or eleven ......................... 5 Twelve or thirteen ...................... 4 Fourteen or fifteen ...................... 3 Sixteen or seventeen ..................... 2 Eighteen or nineteen ..................... 1 Twenty or more ........................ 0 Source: Colorado Department of Highways, Planning and Research Division, Rural Highway Sufficiency Rating Study, pp. 2—3. 192 saggy. Several factors are considered in safety: (1) shoulder width, (2) surface width, (3) stopping sight distance, and (4) con- sistency of alignment. Highway departments have attempted to write accident data into their sufficiency rating systems, but without much success.1 First, a great number of accidents are not reported by the highway users to permit evaluation of the cause of the accident. Second, there has not been sufficient precision pertinent to the described location of the accident to enable highway personnel to make prOper investigations. Third, there is always some question of determining whether the cause of the accident was due to driver carelessness or highway de- fects. In interviews with state safety engineers the writer was often informed that accident data indicated causes other than highway defects. It seemed that accident rates were high on highways having the least number of safety obstacles, while on dangerous rolling or mountainous roads having many unsafe fea— tures per mile accident rates were often quite low. 1At present many of the ten survey states are conducting extensive surveys and studies into the causes of accidents. It is possible that more objective safety data for sufficiency rating purposes will be developed from these investigations. 193 Shoulder width—Shoulder width is an important element in highway safety. The possibility of accidents is mitigated con- siderably if a stalled vehicle can be moved to a solid shoulder. For purposes of acquiring greater road safety, shoulder design requires an increase in width as traffic volume increases. This factor is also rated according to established standards; for in- stance, if the standard shoulder width for a highway is fifteen feet, rating procedure would provide for the point values as shown in Table 15. . TABLE 15.—Shoulder width (par value: 8 points). Standard Actual Value (feet) (feet) (points) 1 5 1 5 8 1 5 1 4 7 15 12 6 1 5 10 5 1 5 8 4 Source: Wyoming State Highway Department, Planning and Research Division, Wyoming Sufficiency Study (Cheyenne: Wyoming State Highway Department, 1958), p. v. 194 As shoulder width standards would differ for roads in the various state systems, criteria similar to those in Table 15 would be established to reflect the differing conditions. Surface width—Surface width has a dual nature in most sufficiency rating systems, as it is often made a part of two of the three major features: safety and service. It is considered in safety because a wider traveled way affords the motorist greater maneuverability in avoiding collisions. Surface width is a factor in the service feature in that narrow pavements con- tribute to greater driver fatigue. In determining the point rating for this factor, states may use the following formula: Total Standard Width Point _ Value - Factor — minus Rating Actual Width If the standard width for a state primary road is twelve feet, the actual width is eight feet, and the total weight applied to this feature is ten points, the rating is determined as follows: 10 — (12 -— 8) = 6 points Traffic volume is considered in the surface-width rating procedure. Should the traffic volume justify a four-lane highway 195 where a two- or three-lane highway is being used, the point value for surface width would be zero. Average traffic volumes of 3,000 to 4,000 vehicles daily would probably justify a four-lane highway . Stopping sight distance.—-Stopping sight distance repre- sents “the minimum distance required to stop safely when any- thing on the highway requires a stop.”1 It is measured by the number of restrictions per mile to safe stopping sight distance and considers such obstacles as horizontal and vertical curves and intersections. A point value of ten may be assigned to this feature, and Table 16 may be used as a guide for the field ob- servation teams .2 Consistency of alignment.——-Consistency of alignment is concerned with the gradient and alignment of the highway sec- tion. Some curvature is permitted, but only if it is well dis- tributed. Sudden curves, or the so-called “death” curves, would reduce the rating considerably. If a point value of five 1Idaho Department of Highways, Sufficiency Rating Study (Boise: Idaho Department of Highways, 1959), p. 2. 2Table 16 has been devised by the Kansas State Highway Commission for use in assisting its field teams in making ratings. 196 TABLE 16.—Stopping sight distance (par 10). Substandard Features .5211: None .................................... 10 One or less per mile ........................ 9 One to two per mile ......................... 8 Three to four per mile ....................... 6—7 Four to five per mile ........................ 3—5 Six or more per mile ........................ 0—2 Source: State Highway Commission of Kansas, Highway Planning Department, Highway Sufficiency Rating Survey (Topeka: State Highway Commission of Kansas, 1958), p. 5. is assigned to this factor, Table 17 may be used to serve as a guide in determining the rating. Service The third major category is service, and it includes such components as alignment, passing sight distance, surface width, and rideability. These factors are concerned with the comfort of the ride and the ability to maintain a selected speed in high- way travel. Rough and narrow roads are not conducive to 197 TABLE 17.——Consistency of alignment (par 5). Point Consistency of Alignment Value Consistency good ........................... 5 Consistency poor ........................... 4 Occasional surprises ......................... 1—3 Death curves .............................. 0 Source: Wyoming State Highway Department, Planning and Research Division, Wyoming Sufficiency Study, p. vii. driving comfort. In addition, horizontal and vertical curves re- strict constant driving speeds and limit the Opportunities to pass other vehicles. Alignment.———Alignment is concerned with horizontal curves that result in the reduction of safe speeds to those below the design speed for the road section being considered. The rating is determined by the number of substandard curves Occurring within a mile. Table 18 may serve as a guide for field obser- vation teams rating this factor. 198 TABLE 18.—Alignment (par 8 points). _ Point Misalignment Value Rare (one substandard curve in three miles) ........ 6—7 Frequent (one or two substandard curves per mile) . . . 4—5 Untenable (three or more substandard curves per mile) . 0—3 Source: State Highway Commission of Kansas, Highway Planning Department, Highway Sufficiency Rating Survey, p. 5. Passing sight distance—The number of restrictions to passing sight distance encountered per mile Of highway is the basis for this factor. The Wyoming Highway Department weights this component six points and uses the information presented in Tables 19 and 20 as guides for its rating teams. In conjunction with Table 19, the passing sight distances listed in Table 20 are used for the various design speeds. Surface width—As was mentioned previously, the surface width of the service category is concerned with the fatiguing as- pect of pavement width. Driving on narrow roads is extremely tiresome to the motorist. Rating this factor is the same as that 199 TABLE 19.—Passing sight distance (par 6 points). . . . Point Substandard Passmg Sight Distance Value Rare (one restriction in three miles) ............. 6 Occasional (one or two restrictions per mile) ....... 4—5 Substantial (three or four restrictions per mile) ..... 2—3 Completely (five or more restrictions per mile) ...... 0—1 Source: Wyoming State Highway Department, Plaming and Research Division, Wyoming Sufficiency Study, p. vii. TABLE 20.——Passing sight distances based on design speeds. Design Speeds PaS§ing Sight (miles per hour) Distances (feet) 30 500 40 900 50 1,400 60 2,100 70 2,900 80 3,700 Source: Wyoming State Highway Department, Planning and Research Division, Wyoming Sufficiency Study, p. vii. ( 200 for surface width in the safety category. The formula explained in the preceding section is also used in grading this factor.1 Rideability.———Rideability takes into account the roughness of the road surface and any other irregularities on the surface that might contribute to driver fatigue. The quality of driving comfort of the motorist is the determining factor of this feature. Other criteria for rating A few of the highway departments surveyed by the writer included other components of geometric standards and design in their sufficiency rating procedure. The most important of these were: (1) maintenance economy, (2) remaining road life, and (3) rating for lack of proper type of surface. Maintenance economy.———This feature assumes that there is a reasonable balance between the cost of maintaining a rOad and the cost of reconstructing it. It is possible, for instance, that a road segment may have a sufficiency rating above the critical point and yet it may require a high cost of maintenance to keep it in serviceable order. By giving weight to the maintenance 1See supra, page 194. 201 feature in sufficiency rating determination, high-maintenance-cost sections will result in lowering the total rating. Nebraska1 weights this factor fifteen points in its system. A reasonable cost of maintenance is determined by averaging the maintenance expenditures on sections of highway which are de- signed for the traffic which they carry. The average is com- puted over a current five— or six-year period to give consider- ation to the rising costs of maintenance. Reasonable maintenance costs are determined for the various surface types such as gravel, asphalt, concrete, brick, and bituminous surfaces. The highway sections are then rated on the basis of their actual average costs as compared to the state average for that type Of surface. For the rating Of bituminous and pavement sections, Nebraska uses a table (see Table 21) as a guide to rating this feature. Remaining road life.——This factor is based on the road- life studies conducted by most state highway departments. The life of a road depends on many variables, such as the amount of traffic it carries, foundation, pavement thickness, and type of 1Nebraska State Highway Department, Manual of Proce- dure for the Numerical Rating of the Nebraska State Highway System (Lincoln: Nebraska State Highway Department, n.d.), p. 15. (Mimeographed.) 202 TABLE 21.—Rating of maintenance economy for all bituminous pavements (par 15). Percent of . Average Pomt Cost Value Under 50 15 50—64 14 65—79 13 80—94 12 95—109 11 110—119 10 120—129 9 130-139 8 140—149 7 150—159 6 160—169 5 170—184 4 185—199 3 200-224 2 225—249 1 250 and over 0 Source: Nebraska State Highway Department, Manual Of Procedure for the Numerical Rating of the Nebraska State High- way System, p. 15. 203 surface, to name a few. Nebraska1 weights this feature ten points in its rating procedure. The data in Table 22 are used as the guide for rating this feature. Ratng for lack of proper type of surface.——Colorado and Wyoming use this feature in their rating systems. It is based on the principle that roads carrying certain traffic loads should have surfaces capable of handling those volumes. Because of increased traffic and changes in traffic patterns, many highways are subjected to traffic flows that are beyond their ability to properly service. Rapid deterioration sets in and the road be- comes a hazard unless constructed to prescribed standards. Adjustment for traffic volume After the total numerical grade has been derived for the three categories, the rating is adjusted for the traffic volume us- ing the road. For instance, if two road segments have a total rating of sixty points apiece but one carries an average daily traffice of 100 vehicles while the other carries 3,000 per day on the average, the road carrying the heaviest traffic is pro- grammed for construction first. A formula has been devised 111m, p. 13. 204 N HO HO OHOH N NO OO OHOH Aogggdhugafizv m N m :- MM FHMH a a .N .9— QH H Add 33302 585.5 :mEonOm OOBHHOHM 0 am am OM Wm“ H O H 3.3m. «M3302 05 «o 953 O5 .3“ 92630.5 H H a a as O . Ho 3232: “sogaon .3355 33m 5.3324 .OOHHHOm M M WM m M” H H OH NH ONOH H H.H O.OH HH ONOH OH N NH H O.H H.HH OH ONOH O ON O N.N HH N O HH ON ONOH .OOOHOO O .OcoaOOOHOO O.O ON H O.N OH N 0.0 NH ON ONOH Hp Islands . OOOO uonu<.OO OOO anon» wagon Ousxw H.H ON H O.N OH N O NH ON ONOH .ououocoo OHO OO an Oon OOH OHOOO OHOO oap\N O.H ON H O.N ON H 0.0 HH ON OHOH .O can» OOOOOOO OHHOOHOHLO OOOHOO N ON H H ON H O HH ON HHOH .353 a H35 .2535 9333 a wad—HE acoaunanua OO OOH: oHOaO.OOOO nonnauom no OOOOO «can» OOH\m O H.N ON H N.H ON O O HH ON NHOH H O.N ON H O.H ON O 0.0 0.0H HN HHOH H H ON N O.H ON O 0.0 O.OH NN OHOH H H.H ON N H.O ON O O OH HN OHOH N O.H ON N O ON O OH OH ON OHOH O OH N H.O HN H O ON O HH OH OH OHOH 0.0 OH N O.O HN O O.O ON O NH OH OH OHOH H.H OH N O NN O H.O ON O HH OH OH OHOH O.H OH H O.O HN O O ON O OH OH OH OOOH O O.H OH H 0.0 HN O O ON OH OH OH OH HOOH H N OH H H.O ON O OH ON OH OH OH OH NOOH H H.N OH O O.O ON O HH ON OH OH OH HH HOOH O O.NH H O.N OH O H.O OH O NH ON OH OH OH NH OOOH H.O H.HH H O.N OH O O OH O HH ON OH OH OH HH OOOH H.O H.OH H H HH O 0.0 OH O OH ON OH ON OH OH OOOH O O.O O.O N H.H NH O H.O OH OH OH ON OH HN OH O OOOH 0.0 H 0.0 0.0 N O.H NH O OH OH OH OH ON OH NN OH O OOOH O.O H H.H H.O N H.O HH O O.OH OH OH OH ON pH HN OH O OOOH O.O H O.H 0.0 H O.O HH O H.HH OH OH OH ON OH ON OH O OOOH H.H N H.N H.O H H.O OH O NH OH OH OH ON OH ON OH O HOOH O.H N O.N 0.0 O O OH O HH OH OH ON ON OH ON OH O NOOH O.H N H.H H.O O O OH O OH OH OH HN ON OH ON OH H HOOH H.N H H.O H.O O O OH OH OH OH OH NN ON OH ON OH N OOOH O.N O O O O O OH OH OH OH OH HN ON OH ON OH H OOOH H O O O O OH OH OH OH OH OH ON ON OH OH OH O OOOH om 0.... Cam» 350m cm 0... 0...: 352 ofioH OOHH 350m on o» 3: 350m cm 0» 8.: 350m MONO» 8: “Ham 3: .22 {CH 2 Eco» H309 «LOO». H309 new; H33. mama». H309 memo» H309 ow< qun .O .O so On: .OHO HH-O OOHH .OOO .OO O. HH-O OOHH .OOO .p» OHO HH-O OOHH .o>< .OO OH. .O-H OOHH .O>O .a» ONO HO-O OOHH .o>< .pOlOHO use» One ho>o uaoo hog uaoo hog mug ho :N .uum 605: ON ho>o .udm U05 euupocou .0 .m Hoahm \N \m O \H MONA 62H2H§ 6.36303 gas 583%: 5 OOOBOOHO HO OH: 82 95:32 2: OOHOHEOOOO .SO OOHOOIOO 35H. 205 to provide for the traffic adjustment. The formula used by most state highway departments is as follows: Y = x + (2:113:01: (Log T - Log TS) where: Y = adjusted rating X = basic rating T = ADT (average daily traffic) for rating section T = ADT for portion of highway system (federal-aid, primary, etc.). From the formula, curves can be derived and charted for quick reference in the conversion. Figures 8, 9, and 10 are used to adjust sufficiency ratings for traffic volume for the in- terstate, primary, and secondary systems, respectively. The use of the formula is illustrated in Figure 9. Assume that a road is designed for an average daily traffic (TS) of 1,000 and that it is currently servicing 3,000 vehicles per day (T). The basic suf- ficiency rating (X) for a road section is assumed to be 75. On the horizontal axis find the basic sufficiency rating Of 75 (en- circled) and move up the vertical line to the curve representing 3,000. Determine the horizontal line intersecting the 75 point basic rating vertical line at 3,000 ADT. The horizontal line at 206 FEDERAL AID INTERSTATE ROUTE No.80, U.S. 3O 8 305 60 50 4O 30 Basic Sufficiency flaring Ix) Fig. 8.-Chart to adjust sufficiency ratings for traffic vol- ume on the interstate system. Source: Wyoming State Highway Department, WyOming‘ Sufficiency Study (Cheyenne: Wyoming State Highway Department, 1958). Adjusled Sufficiency Rating (y) 207 FEDERAL AID PRIMARY SYSTEM (EXCLUSIVE 0F F.A. ROUTE No.80) 60 Adjusted Sufficiency Rating 0) IOO 90 30 ® 70 so 50 4o 30 20 no 0 Basic Sufficiency Rating (I) Fig. 9.—Cha.rt to adjust sufficiency ratings for traffic vol- ume on the state primary system. Source: Wyoming State Highway Department, WyOming' S_uf£iciency Study (Cheyenne: Wyoming State Highway Department, 1958). 208 FEDERAL AID SECONDARY SYSTEM 60 50 4O 30 Basic Sufficiency Rating I!) Fig. 10.—Chart to adjust sufficiency ratings for traffic volume on the secondary system. Source: Wyoming State High- way Department, WyOming‘ Sufficiency Study (Cheyenne: Wyoming State Highway Department, 1958). Adjusted Sufficiency Rating (I) 209 ‘ point of intersection is the adjusted sufficiency rating; in this case the adjusted rating is 71. Traffic volumes on the various state highway systems are determined by loadometer studies conducted on a continuing basis throughout the state. Mechanical and manual traffic counts are made at strategic locations on the state road systems. In addi- tion to being used for adjusting sufficiency ratings, traffic studies serve as a basis for many other short- and long—term plaming procedures. Further discussion Of traffic studies will be made in Chapter VIII. Special problems in the sufficiency rating procedure At present many state highway departments surveyed by the writer do not determine sufficiency ratings for their municipal and urban extensions of state highway systems. The rating con- ditions differ substantially between urban and rural road sec- tions. However, a few of the survey states are in the process of setting geometric standards and design for urban roads and will incorporate them into their rating systems in the future. In rating urban areas, Idaho used the following method: The rating of urban sections has been treated essen- tially the same as for rural sections with the traffic density and the topography controlling the standards. The space 210 between the normal travelled way and the curb was taken as “Shoulder Width” although, due to the usual presence of parked vehicles, it might have the designation of “Marginal Friction” for this element. “Surface Width” was taken as the normal width of travelled way and rated according to rural standards for this element, although, the term “Medial Friction” might be more expressive in urban sections. Inter- sectional friction is created by cross streets and driveways to service stations, motor courts, food markets, etc. Each such cross street, alley or driveway used by the general public was counted as a stopping sight distance restriction and the road section rated accordingly under stopping sight distance.1 Certain structures do not lend themselves readily to the rating system. Bridges and tumels, for instance, must be eval- uated in a different mamer. For example, in determining the deficiencies of bridges, factors such as carrying capacity and width are evaluated. The data in Table 23 show the method of listing deficient bridges by the Idaho State Highway Department. In establishing geometric standards for the purpose of rating, states must give consideration to the terrain over which the roads must be constructed. The states in the Rocky Mountain area segregate their roads according to flat, rolling, or mountain- ous terrains. For each of these types of topography a different set of geometric standards must be prepared. The cost of 1Idaho Department of Highway, Sufficiency Rating Study, 211 TABLE 23 .—A method of listing deficient bridges by the Idaho State Highway Department. INADEQUATE BRIDGES ON THE IDAHO STATE HIGHWAY SYSTEM Rated Below H-l5 Loading or that Create 0 Hazard due to their Horizontal Clearance Bridgee are termed Ioedeeuefe If the carrying capacity to leee thee H-I6 leedlng or the width between cum le Ieee then- l4' fer trefflc of 200 or Ie II‘ for traffic of 20I to lfim 22' to: traffic of IOOI or more you TABLE 6 The above eldrhe ere minimum end much Ieee then deelgn efenderde for new efruefuree. Sheet No. . Horizontal Pfeeenf Dolly Traffic Hrghwoy County Nome Bridge Number Clearance Loading Volume .954 15 2 Serum Pena Orellle River 0001 20.” 8-15 2,000 13 2 Boom: Priest River 0068 20.00' H-15 1,1100 83 1; mm Carver: Greek 00$ 20.17' "-15 1,1“ as 9 Idaho Cleemter River - Kooekle arm 07% 18.121 n—is 1,050 15 10 Shoehene Coeur d'Aiene Rive:- - Cottage Grove 0655 18.1!)I Ii-15 2,706 18 10 Slasher» Ooeur d'Alene River - B of Wallace 0612 18.509 “-15 2,786 03 10 Shoehene Coeur d'Alene River - c 01' Uellece 061.8 18.791 1145 2,766 18 10 Suzhou Coeur d'Alene River - U of fluiien 06‘” 20.00. 8-15 2,570 15 10 Sheena“ mete- d'Aiene River - I of Milan 0681 10.50' 1145 2,570 15 10 Swehone Coeuc d'Alene River - U of lull-n 0660 18.50' “-15 2,570 18 101 Dormer Peck River 0509 18.wf 8-15 1,21” SI 15 Boiee Wet.“ River - I or! Ibreeehoe Bend 022 18.12' 111-15 1,1110 SI 19 Men Golden Gate 0099 3.8 H-9 1,9m 7 SI 21 Outer Stanley Leh’e Creek 1187 20.001 “-11 50 SI 21 Custer melted Creek 1200 20.00. H-5 50 SI 21 Custer Creek 1219 20.00' H-5 50 Si 21 meter Iren Creek 1220 33.001 :2 65 SI 21 Oueter 0oet 1%? 20.00' 65 SI 21 m fleedov Q-eek 1250 20.25' 1H; 65 all a. Maiden '3' Cenel 0029 18.55' l-l-h 925 at all 111111401: '3- Cari-1 ode 25.051 n-n 925 IS 50 Meta Snake River - Giterio Bridge 0&0 18.17' li-15 6,220 13 E flooding Snake River - Orelq Ridge 1656 16.67' “-15 1,100 Si lee Farce Catholic Cred 0150 16.50‘ “-15 3 Si 15 Oahu Snake River - Helene Ferry Bridge 0105 70' H-ll SI 118 Jeti‘ereen Roberta Sleigh w01 17.001 li-15 850 511 50 “hits run Sun. River - m Bridge 0085 15.00! if-lO 1,1150 9! 2 Gel We River - wrkiwe 0517 18.33' Ill-15 2,600 Si! 60 Elmore Dixie Canal 21014 22.001 s-m aeo SH 68 Cane Creek 559 21.1!” "-10 125 SH 77 Ceeeie lbrch week, 0066 18.50' H-9 510 15 89 Beer late M Power 8 1.1m anal a 18.501 "-15 1,511) 15 89 Beer Lela Bear River 18.50' "-15 13 95 - Si 19 myhee Smite River - liceedele Bridge 251 17.1!” If- 2,255 13 95 Won Boise River 18.751 it- 15 95 - 131': mu Punt. River 0682 show a-15 11,720 13 95 11mm cum Ceml 0662 211.001 11-7 1,110 18 95 Ileehiwtoo Pine Creel: 1167 16.10' H-ID 18 95 Minutes Spring Creek 1169 16.10. II-9 9M 13 95 Idaho Slate Creek 2193 16,50! “.15 715 1B 95 men Iiitebird Q-edt 2513 16.901 li-15 850 13 95 lee Perce halides-hill Overhead 5185 18.50' li-15 1,570 13 95 lee Pearce fielding Overhead ”.m' 8-15 1,570 13 95 let Perce Cleefieter River - Spelding Ridge 5205 18.1!” 8-15 5,050 13 95 - 15 2 m Peck River 5017 20.00' fl-15 1,1150 13 95 - 1B 2 Dundee-y Deep Creek - l. of hplee 5176 16a” ff-15 1,113 0595-132 Band-17 DeepCceeh-l. ore-pie. 5181 18.00' "-15 1412!! 1595-132 Dorm-:1 DeepQ-eeh-S.oflonvie SE5 18.00' "-15 1,113 1395-152 sum Defiant-5.013031?“ $10 18.1!” III-15 1,11% us 95 - 1B 2 Bet-lazy m1 River - Bearer-e retry k. 562 20.00! lI-15 2,300 15 95A Benenh St. lax-lee River 11167 23.001 li-5 550 1B 191 - 1691 Bemocit Overhead lorth W110 0792 10.50' H-15 5,900 Source: Idaho Department of Highways, Sufficiency Rating" Study (Boise: Idaho Department of Highways, 1958). 212 constructing a highway through mountainous terrain to the same standards as a highway carrying an equal traffic volume on flat topography would be burdensome. Many geometric standards such as gradient and alignment must be lowered in the construction of mountain roads. The construction log In establishing road segments for the purpose of rating, it is important that the procedure follow as closely as possible other records of a similar nature. The'tool most commonly used in conjunction with the sufficiency rating survey is the construction log. This record sets forth a section-by-section description of each route in the state system and provides a completely detailed, historical record of the state highway systems. As in the sufficiency rating procedure, the construction log divides the highway into segments. The purpose of such seg- mentation is based on differences in geometric standards among the road segments and on the date of construction of any partic- ular section of highway. The construction log describes each section as to geomet- ric standards such as right-of-way width, pavement type, pave- ment and shoulder width, traffic lanes, and other such descriptive 213 data. It does not, however, set forth the condition of the various component elements; this is one of the functions of the sufficiency rating procedure. From the two techniques a trained observer can derive a complete picture of a highway section. The con- struction log indicates the geometric standards of the road seg- ment, and the sufficiency rating survey reveals its condition. To permit a better evaluation of the two techniques, Tables 24 and 25 are shown. Table 24 is an example of the construction log for the state of Arizona as of January 1, 1960.1 Table 25 is the sufficiency rating list for the same sections of highway as found in the construction log.2 The Field Observation Study In the states surveyed by the writer, sufficiency rating studies were made by highly trained, experienced state highway engineers. It was the practice of some states to have one team (usually two engineers) drive over the entire state system, making 1Arizona State Highway Department, Planning and Survey Division, Log of the Arizona Highway System (Phoenix: Arizona State Highway Department, 1960), p. 8. 2Arizona State Highway Department, Planning and Survey Division, Arizona Highway Sufficiency for 1960 (Phoenix: Arizona State Highway Department, 1960), p. 28. 214 a, m u n... n _ - vaéoda mm 0H brmo mm mm .w 10m...” 1>w .r_m.. x_i vnm 0mm IE2 mmflo ow . ea Head mm ofl nOmo 9n sh 10m wahm rm_Im<3 J<.ZZMPZMU mm vane 00 . . ca Head mm 0H mem GamauJA,flmoo.ZD mZOJdm x neon 00 Va dOHH NN OH mvflm :n ”M & mmm F_m X.X Va“ H A NNO l Ovnn 00 . _ . vH «odd mm ca name 4m in 3 .mn s_m x.2 rm. mm on i came 06 ca ”0"” mm an mom» waAI k< mum u a.mk Em HFVH ow . . . vH ”can o" Ha and mm at ”ma 3003 Wu. In<3 20m)» an enva oo . . vH HOAH on HH and 014 Good W1130w rm Have a! 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AJNDOD AHdVUOOdOl Lain 1% Sat. 3 0.212320%... H .mnmcimCC. 34430...“ .... .. . . 31 .. inn. 3 Hign 3 deJHISinfia 31142.. 3 gflmflwo; Jollmwlczlxfil... .3. J 69:9... SloflHgo.u Ho .2 .E EH23”. oo .2 .E 1. csaaadfiulqm n flatmates 2... 33m 53.. ZoerEmeo 20:0wm 02:41 117808 80 NVBUO NOI133S ONMVU WUZuHJHm V02“ HO—hhbm 83th haknwmm 3de cad—om 055 "wagon hmoanZS H... 2.2.»... saw. so .3. 952 Busofiumlfi Mimi. 8386"”! AVMHQIH —nv. ISO; It! 224 northeasterly direction covering approximately fifty miles. A complete breakdown of the rating segments is shown in the table along with identifying information pertinent to the location of the road, length of section, the numerical rating for each component, the adjusted rating factor, and the road sections’ daily average traffic volumes. Second, for the various systems the road sections are shown in ascending order of the numerical ratings, listing first the lowest critical ratings. Table 28 is taken from the 1958 Wyoming sufficiency rating study. Note that the ratings for each construction district are listed, from the lowest and most critical to the highest section ratings for the state secondary system. Third, listings can also be made according to deficiencies of the individual elements of geometric standards and design. New Mexico uses such a system, as is illustrated in Table 29. When the numerical rating for the individual factor is below the toler- able, or acceptable, point it is indicated in the column to the far right of the table. Other Methods of Interpreting Sufficiency Rating Data It is said that a picture is better than a thousand words, and in the case of visual presentation of sufficiency rating data the adage holds true. For the purpose of planning, controlling, 225 TABLE 28.—Sufficiency rating study for the state of Wyoming for 1. 2. 3. 4. 5. 6. 7. 8. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 31. 9.0.2221 Uinta Uinta Uinta Uinta Uinta Sweetwater Uinta Sweetwater Sweetwater Sweetwater Sweetwater Sweetwater Sweetwater Sweetwater Uinta Sweetwater Sweetwater Sweetwater Uinta Uinta Uinta Sweetwater Sweetwater Uinta Uinta Sweetwater Uinta Uinta Uinta Sweetwater Uinta Sweetwater Uinta Uinta Uinta Sweetwater Uinta Uinta Sweetwater Uinta the year 1958. WYOMING HIGHWAY DEPARTMENT PLANNING AND RESEARCH DIVISION 1958 Project Sufficiency Ratings Construction District NO. Route N2. 80 80 80 80 80 80 80 80 80 80 80 80 80 80 80 80 80 80 80 80 80 80 80 80 80 80 80 80 80 80 80 80 80 80 80 80 80 80 80 80 INTERSTATE SYSTEM Project FAP+E-l7(AFE 2192) NRH-E-ISS PAP-135R FAP-E-75(AFE 2192) NRH-E-135(AFE 2192) 3 SN-FAP-58A(4) Sec. I FAP-E-l7(AFE 2192) PAP-137R(AFE 2375) PAP-49R Unit I SN-FAP-58A(4) Sec. I FI-58(10) SN-FAP-58A(4) Sec. II PAP-137(3) FAGHI-588(2) FI-219(4) Sec. II SN-FAI-58A(6) FI-58(IO) PAP-97(2) r-55(3) AFE-2342 FI-219(4) Sec. II SN-FAP-58A(4) Sec. III FI-219(4) Sec. I FI-219(4) Sec. II r1-219(4) See. I r-ssls) FI-55(2) F-180(5) FI-219(4) Sec. II r1-219(2) FI-219(6) FI-219(2) FI-l73(9) mam-13(1) FUHPI-13(l) SN-FAI-SBA(6) APE-2862 r-1eo(5) FIH190(4)(FI-190(6)) FI-219(4) Non Part Surfaced 1934 1934 1933 1934 1944 1942 1944 1947 1937 1942 1952 1942 1940 1947 1950 1947 1952 1940 1948 1948 1950 1942 1950 1950 1950 1948 1948 1949 1950 1948 1954 1948 1948 1950 1950 1947 1956 1949 1955 1950 Length 2.998 0.227 0.114 1.748 1.390 0.079 0.131 4.530 15.134 2.165 0.644 1.903 10.130 0.568 1.041 0.580 1.343 1.694 3.159 0.706 2.587 1.800 9.356 1.595 1.575 0.453 0.955 0.048 1.225 12.180 3.691 0.878 4.012 3.263 0.535 0.158 0.777 0.033 4.221 0.190 Rating 62 66 67 67 69 70 75 75 76 80 82 83 83 84 85 86 86 86 87 87 87 87 89 90 91 91 92 92 92 92 93 93 94 Source: Wyoming State Highway Department, WoMMOiency Stud (Cheyenne: Wyoming State Highway Department, 1—1‘ 958 . - 5&3 Jnonnnanoa 5.5—BE 33m 02.32 3.2 "oh .3ng 255.555 .muanE he .munuum £55.3qu maknma 83m 02382 302 "counom 226 has... on S on S 33 o 8.3.. a.» 58......» I... a. 13 .895... R 8 a S S 2 main in is «a 8 Jon 8 in 3.8.3 R. n 8 S 2 2 8.... n.~ «.273 .76 3...:- .2 3 HA 53...... a 2 S S d 3 08.. 0.. «8.1538 3 Tn 98...... R S w 2 3 S 8o.n 3: 8%...3 S Ta 88...... K 8 o S 2 S Rim «.2 28.33 .83.! 3 7n 3.... nu nn H S 3 2 81. u.“ 5.8:... 8 .a 3 T. 3...» N. S a o 3 S 2.1” a... 58...; .3: .88 an I. J.» 8 HA 3...» R «a m 2 2 2 81,. ~23 .o .3 fig I. J... S «A £8.93 R Q ~ 1. S 3 3.4 «.3 589.85.... 3 433 9...... a. c on 2 I S 8.1. .1. «9.8 6.6 8.3.- 5.1918 3 HA 5...... 3 o s. 3 on S .53. .6 .8 .éufité 8.3.8... 8 Tn 83.83. 3 on o 0 AS o 8..” .6 5.60.; .3 8 TH 83.36. a. on o o a: o .8; .4 5.8.83 3 T. 3.3 3 3 H S S 3 3.8 ~A €2.63: 3...... 8 a-“ .35.... 3 a... H S E o 8. o... 58...... d?!— 8. 8 «A 3...... 3 p e S 2 S 8~.n 3. .3 S. 9 5.78.3... S “A .38... on o a S 3 2 3... 5.. «Bf-ago... 8 In 90.3.3 R o 2 S 2 S 83. 3 «39.5 .5... .u .i n 8 «A 53...... R o p S .2 S 31. “A 59...»... E 8.9:- 8 Tn 3...... R o 1. S 2 S on... 3. figfléo .n 38.5 8 NA 5.8.8 R o n 3 3 2 8H.“ 3. {o 3 .18 .8» 88.5 8 .«A 58...... an o N 2 d 3 on... e... «8... I. 5.. 8 Wm .96....» an o m o «a S on}. 0;. «8.5.59. 8 .z .3 3 NA 90.59.53 3 o w 2 E o ~23 H.~ A3 .8 8 5.7.8: 3..» 3 «A 583.31. .5... 3a.... 3.3 .9396 .826 83.8.5. 33: .83.... 533 83...: .3. 38m 838m . 133.8 .3. ARE .2395 2.8 .23 3.8 .8 .3. 8:3. did 933.com .361.“qu 330.30 gm BE A55: SHED 02H: Ea H4263 Eu»... 8g 5 .Eonaugon .3533 33m 3:32 302 05 .3 3.3339 an: 933 55355913 mafia. 227 and reporting the condition of a state highway system, maps, graphs, charts, and tables are used. Maps The sufficiency rating map can take two forms: (1) The map can cover the entire state highway system, and by shading or scaling the road according to sufficiency rating intervals such as 90 to 100, 80 to 90, et cetera, the condition of the highway system becomes strikingly evident. (2) Strip or sectional maps can be utilized to portray the condition of a single highway run- ning throughout the state, section, or district. Figure 12 is the sufficiency rating map for the state of Kansas for the year 1958. A quick inspection of the map enables a trained observer to quickly determine those roads or areas possessing critical de- ficiencies. When color is used instead of shading in black and gray, the deficiencies, or roads below tolerable limits, become even more obvious. Figure 13 is an example of the strip map used by the New Mexico Highway Department. This form of presentation is prob- ably the best technique that the writer found in use in the ten survey states. It not only shows the precise location of the highway, but the road sections and the numerical ratings are set 228 PHILLIPS MITCHELL THOMAS GRAHAM wussm ynwcs LINCOLN Fug. I2.——Sufficiency rating map for the state of Kansas fo r the year I958. KANSAS STATE HIGHWAY SYSTEM SUFFHCIENCY RATHNGS 1958 I. T LEGEND — Below 60 ' 60 69 7o 79 so 100 1 N01 Ru ed ( Travelled Way ) \ntuslale Syuzm "(Mun u m- STATE HIGHWAY COMM|SSION OF KANSAS HIGHWAY PLANNING DEPARTMENT m coopmmcm mm «m: U. 5. DEPARTMENT OF COMMERCE BUREAU OF PUBLIC ROADS 229 N ’6‘ g m. gk‘K agé 2.88.418an 9352.38 rm 3 238 3898 33.3 w m M w w flag. 832W: : an. .a a _8. n 88 8 c i u 8 8 o .. a. n c 3 m p, m. M a n M o q a o. 8 r 8 as 2 .2 z 9. 8 n. c 2 c o. o. 8 a , 8 c ._ __ 8 8 n 8&3. o. o. o. a. 9 a. o. a. o. o. o. o. o. o. . a. o. o. o. a o. a. dig «33.8 ings? 8.93.8383 63 5a 388.... . F3 83 .383. E.» 3.88.393 82:: 838 $89 8&3998 on 8 888 8883i: sax as: zsfiaaa 8 § 888 sass. $.33. 8. 9 3 3 3 B. 3 3 S on 5 8 3 n... 5 3 3. 3 9 a... S. 3 8 3 £93 _ _ _ n _ _ _ _ _ . n _ . u _ _ _ _" _ n _ __ _ _ _ u _ . _ _ _ _ _ _ _ _ _ _ _ n _ _ u n _ T __ n u _ _ _ u _ _ _ n _ _ “ u _ _ n L _ _ . n _ u _ _ _ _ _ . _ _ _ _ _ _ _ n _ _ . u n _ _ L _ _ _ _ _ _ _ _ _ z r f f f f f / — _ f _ _ r, _ _ F u _ _ _ F F ._ , . . ._ a . , . . _ I. 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ZO_m_>_O 02.22.14.“ 3 n... 3 3 n... 5&3 FZUEmexawO 51310.... mFocm_o_tsw Sékfitk mobfiofi wk 2 mm Go oczom >oco_o_tam Seton .o m» .6 9.29. .nm a 26: 3:6 mmvd “Eu .3. use mm 5253 no.9. one: 3.2: Nmm So .22 < :2: 32 3.8... 333 .255 Km 2:: hem 25 on 52:2. 3.8 .32.: m8. won :2: mac. 39. 3:5 «mm .308 2:2. of .0 .2283 25:53 B 32.: mm 9.3205 .0: 303:3: 23m 3.5.x So 3:... 00¢.¢ 3.260 32m mmm. on: . 933 no 33» 05 5 933:9: no 2838.80 2: 533E so 353 a 3 tan 2n BBL: SE 236 .3 .n . a3 $433 w o «:oBHquQ 0.3.330 .93:va mllmaa no“ «hogan 5:235 3:53. m 03.830 .mmdzfiwfim no Smfifiamwn agnofiov ”8.35m asp—c- 5 u QEQQ mud—2 51w ._<._.O._. 8102:... a! Q: g: g I a: E .............. . . . . . . . . . ........ an E E {but}. « n! 23 ml:- 3 gm- SEU ..... - at In rah. .u .A’s five: £3: m! :3 i:- 0; gnu—i ..... - Akui \gdwflwagnn Janina... (can. NW. N! 33 '5 2.2 IE ..... - 1 I... .7... 1.7961,! u 5.... .- .19.“. :6 ... .u’. :sz3; é... 3‘3“.th H.H-83 :3: 83..-. ........ - (.... .L. .uu ... 5: ... laud? L.$(,3.R.T3, ...,wiuwlgfn m! 23 2: 8—2 ian ..... 66.2300 «0 83m 05 5 mmaBnmE «o 833:8 mug..." mongofism m5 wfiuabmna «o 60:38 a ma “ago .39 3.7L“: .ME 237 the planning and control process as there is in any method that provides for a choice from among alternatives. So many vari- ables must be considered in the decision-making process that confusion may be rampant unless the factual data are presented in a logical manner. The sufficiency rating procedure attempts to provide a logical presentation of information in a manner that reduces judgment values to a minimum. Yet, its value as a tool for planning depends on a number of extenuating factors. First, its contribution to the planning and control of construction expendi- tures is dependent upon the prevailing philosophy of top manage- ment in highway departments. If highway managers are prone to utilize less objective methods simply because custom has given them sanction in the past, then the sufficiency rating procedure is merely an encroachment on the traditional managerial preroga- tives. Second, the elements that are written into the geometric standards and design, and the weights that are assigned the elements, are factors that must be given careful thought and consideration. The standards of measurement should provide for adequate determination of the condition of the highway com- Donents and still be understandable and simple as possible. The 238 weight variables should be distributed in such a manner as to give proper consideration to the importance of each element. Third, unless carefully controlled, the field observation process may reduce the objectivity obtained in the two preceding factors. Observers should be provided an initial period of train- ing in the art of rating and, periodically thereafter, should re— ceive briefing sessions. The training sessions should be designed to acquire uniformity and accuracy in rating the highway segments. ..‘altl‘... I‘. 1r . III lrll.llll . CHAPTER VII THE SHORT-RUN CONSTRUCTION BUDGET The budget is one of the most effective tools available to management for planning and controlling its financial activities. By its very nature the budget is a forward-looking process and is concerned with future events and predicted conditions. As a tool for control, the budget requires a constant evaluation of ac- tual results with budget goals. It exacts explanations and justi- fication for deviations from planned objectives. Properly used, the budget is an important and powerful tool in the fulfillment of managerial responsibilities. However, like other techniques of planning and control it can be misused or relegated to a role far below its potential. It should be understood that budgeting has certain limita- tions, and these restrictions should be known and understood be- fore undertaking a budgeting program. Welsch lists four rather self-explanatory limitations on the use of the budget: 1. The budget is based on estimates and the strength or weakness of the program depends on the accuracy with which the estimates are made. 239 240 2. The budgetary program must be continually adapted to fit changing circumstances. The budget program should be dynamic. 3. Execution of the budget will not occur automatically. It requires the effort and support of executives in achieving its goals. 4. The budget will not take the place of management and administration. The budget should be a servant, not a master.1 Too often the budget is viewed by management as primarily a technique for control in which the administrator must live within the bounds of department or division budget apprOpriations. Fundamentally, the budget has its greatest value as a tool for planning, and secondarily as a control technique. In highway administration the budget can be the epitome of an enlightened and progressive management. A properly pro- grammed budget can serve management in many ways. First, and most important, it is a decision-making tool which can assist management in achieving highway organization objectives. Sec- ond, as a tool for planning it can aid management in better un- derstanding the dynamic changes that are constantly taking place in the highway organization. For instance, the federal govern- ment instituted an extremely large road-building program in 1956 1Glenn A. Welsch, Budgeting, Profit Planning and Control (Englewood Cliffs, N.J.: Prentice-Hall, Inc., 1959), pp. 13—14. lizl III I." \Lptvj I‘I’r 241 which was far beyond anything undertaken by state highway de- partments prior to that time. Huge amounts of federal—aid funds were made available to the states. A well-planned budgeting program would have enabled any state highway department to forecast its personnel, equipment, property, and material needs to take full advantage of the accelerated federal-aid programs. Third, the budget can serve as the basis for highway reports to the public. The budget can serve as a yardstick for measurement of managerial performance. Highway budgetary re- ports, especially as they relate to construction and maintenance, can reveal to the public the accomplishments of highway manage- ment. Fourth, a properly planned highway budget will alleviate the pressures of vested-interest groups and, therefore, serve as the basis for justification for managerial action. The well-pro- grammed highway budget represents a logical presentation of facts that discourage illogical arguments. It will be the purpose of this chapter to integrate the fea- tures of short-run construction programming into a hypothetical, but realistic, budgetary situation. The system will serve as a model to illustrate the recommended procedures of short-term planning and control of expenditures as discussed in Chapters V and VI. The discussion will be more or less restricted to the 242 annual construction budget and only a cursory analysis will be given to the other highway functions such as maintenance, admin- istration, and other services. No attempt will be made to reflect the effects of long-term planning on the annual budget program. Long-term planning as it affects the annual budget will be dis- cussed in the following chapter. It will not be the purpose of the budget model to recom- mend the forms to be used in presenting the budget. Quite the contrary, the forms used in the model are designed to facilitate explanation. In many instances much of the detail of construc- tion programming will be avoided, as it would add little to the discussion. However, when the detail is eliminated, the reader will be made aware of the situation by explanation or reference to previous citations. A rather high degree of uniformity prevails in the methods of accounting and budgeting by state highway departments, which could be the result of action taken by the Research Board of the Bureau of Public Roads in establishing standardized procedures and systems. All of the highway departments visited by the author owned, leased, or had access to the latest mechanical tabulation equipment. With these high-speed machines the budget departments were able to prepare and disseminate budgetary 243 reports to highway management monthly, quarterly, and annually with no delay. The Distribution of the Highway Fund to the Political Units The highway fund is composed almost entirely of highway user revenues. As was illustrated and discussed in Chapter IV, revenues are received from a variety of user sources such as motor-fuel taxes, registration fees, and motor-carrier imposts. The distribution of this highway fund among the counties, cities, and the state is established by the action of the state legislature. There seems to be little uniformity among the states in the allo- cation of the fund between political units. As was recommended in Chapter V, the states should exer- cise control over the use of the highway funds allocated to the counties. The following qualifications should be established by county and state authorities as a requisite to the receipt and use of the funds by county road authorities: 1. A county primary road system1 composed of the more important county roads, exclusive of the state second- ary system, should be established by cooperative 1The county primary road system was explained and dis- cussed in Chapter V; see supra, page 154. 244 agreement between county and state officials. This road system should comprise the more important roads connecting communities and major primary and second- ary highways. 2. The county allotment should be used exclusively for county highways and not for nonhighway general-fund purposes. ' 3. At least 75 to 85 percent of the funds should be devoted to construction1 and reconstruction of county roads. The remaining portion could be used for maintenance and administration costs. An evaluation of county main- tenance costs should be made to determine actual needs. The 75 to 85 percent figures are arbitrarily determined and are used to stress the importance of prorating the greatest portion for construction purposes. 4. The state highway department should establish a set of standards and design for the county primary system. From the standards and designs, a system of establish- ing construction priorities should be prepared and used as the basis for planning and control of expenditures. 5. All county construction projects should be approved by state highway department personnel before funds are released. A special department should be established to administer to county needs. 6. Funds for construction and maintenance of roads not on the county primary system should be derived from local sources rather than from the highway fund. The advantages of this proposal have already been set forth in a preceding chapter.2 There are two disadvantages of 1Construction would include expenditures for right-of-way acquisition and any other preconstruction engineering costs. 2See supra, Chapter V, pages 155—56. 245 the above recommendations that are worthy of mention: (1) The authority of the county commissioners would be restricted to the extent that approval for highway planning and control of construc- tion expenditures would be vested in state highway authorities. (2) State highway organizations would have to be expanded to include a department of highway experts to administer the county highway programs. Considering the benefits to be derived in planning, controlling, and integrating the rural road systems, the above disadvantages would seem to be minor in importance. The problem of planning and control over the cities’ share of the highway fund is less important. Other than for the arterial highways entering and/or passing through the city, the streets are of such a localized nature that they are relatively unimportant to the over-all state system. However, to insure that proper con- sideration will be given to the municipal extensions of state high- ways, some degree of control should be exercised over the high- way fund allocation to the cities. Most state highway departments already have working arrangements with cities pertinent to state highways within city limits. 246 Estimating highway user revenues The first step in preparing the budget should involve the estimation of the highway revenues that will be forthcoming from state sources.1 The data in Table 30 depict the hypothetical es- timated revenue for a hypothetical state highway department for the fiscal period 1959—60. It is stressed that all statistical in- formation appearing in the following tables are not actual data but are strictly hypothetical in nature. However, the proportional relationship of revenues and expenditures of various types have been carefully determined and are representative of actual con- ditions found to exist in the tax and cost structures. Distribution of highway fund to political units Revenue from state sources available for highway use is distributed among the political units concerned with highway fi- nance. In the model it is assumed that state law requires that the receipts be distributed 65 percent to the state, 30 percent to the counties, and 5 percent to the cities. Allocation of the high- way fund under these circumstances is presented in Table 31. 1Estimating highway revenues did not seem to be a diffi- cult process in the survey states. Highway revenues seem to have remained relatively stable from year to year. 247 TABLE 30.—State highway department estimated highway revenue from state sources for the fiscal period from July 1, 1959, through July 31, 1960 (amounts in thousands of dollars). Source Amount Highway user revenue: Motor-fuel tax ......................... 49,234 Motor-vehicle registration . . . . . . . . . . . . . . . . . 9,400 Mileage tax (commercial carriers) ............ 1,806 Total highway user revenue .............. 60,440 Other miscellaneous sourcesa . . . . . . . . . . . . . . . . . 1,100 Total estimated receipts .................... 61,540 aMiscellaneous revenues include motor-vehicle fines, re- ceipts from cooperative agreements with local units, and miscel- laneous collections. TABLE 31.—State highway department distribution of the highway funds to the state, counties, and cities for the fiscal period from July 1, 1959, through June 30, 1960 (amounts in thousands of dol- lars). Description Amount Total estimated revenue ..................... 61,540 Allocation of highway fund: State (65 percent) ....................... 40,000 Counties (30 percent) .................... 18,462 Cities (5 percent) ....................... 3,078 248 Allocation of the State Portion of the Highway Fund to the State Highway Functions With the funds established for state highway use, the next step is to allocate these revenues over the major highway func- tions. It is assumed that departmental, divisional, and district budget needs have been determined and approved by the proper authorities.1 Once the state matches the federal-aid appropriation, a certain amount of flexibility can be introduced into the budget. States have two years after the close of the fiscal period in which to spend federal-aid allotments.2 This permits some de- gree of latitude in programming the highway construction budget. At this point it is necessary to consider federal-aid allot- ments which, when added to the state highway fund, represent the total estimated revenues available for highway use. Table 32 1At this point an assumption is made in the construction of the model. It is assumed that highway revenues are sufficient to meet the financial needs of fixed costs (maintenance, adminis- tration, and other services) and that adequate funds remain to meet federal-aid matching appropriations for road construction. In all but one of the survey states, revenues were available to cover fixed costs first and federal matching funds second. In the one state, they were forced to budget funds to match federal-aid construction appropriations first and to allocate the residue over the fixed costs. Because they were working on a tight budget they held maintenance, administration, and other service costs to a minimum. 2Udell, p. 231. 249 TABLE 32.—State highway department estimated revenues avail- able to the department of highways for the fiscal year from July 1, 1959, through June 30, 1960 (amounts in thousands of dollars). Description Amount State highway user revenue .................. 40,000 Federal-aid allotment ...................... 50,000 Total estimated revenue ..................... 90,000 illustrates the total revenues available to the state highway de- partment. The states are restricted in the use of the federal-aid allotment. Federal funds must be used strictly for construction of roads in the federal-aid systems.1 From the revenues from state sources, funds are appor- tioned to the nonconstruction expenses. The data in Table 33 indicate the budget needs for the nonconstruction functions. These expenditures are segregated into three major classifications: 1The federal highway acts do provide for a small per- centage of funds to be used for administrative and research purposes. 250 TABLE 33.—State highway department estimated operating costs exclusive of construction expenditures for the fiscal year from July 1, 1959, through June 30, 1960 (amounts in thousands of dol- lars). . Estimated Expenditure Classification Expenditure Administration: General administration ................ 900 Administrative engineering ............. 620 District engineer operations ............ 300 Public relations .................... 80 State employees retirement fund ......... 470 General insurance ................... 70 Compensation insurance ............... 60 Total administration ............... 2,500 Maintenance: District 1 ........................ 3,000 District 2 ........................ 1,500 District 3 ........................ 1,500 District '4 ........................ 2,000 District 5 ........................ 2,000 Total maintenance ................. 10,000 Other services: ‘ Traffic .......................... 200 Highway patrol ..................... 700 Property ......................... 600 Equipment ........................ 1,000 Total other services ............... 2,500 Total estimated fixed expenditures ......... 15,000 251 (1) administration, (2) maintenance, and (3) other services. The breakdown under these classifications should be further subdivided by object of expenditures such as salaries, wages and associated accounts, supplies, travel expense, et cetera. Estimated mainte- nance expenditures should have additional subclassifications by project sections and type of maintenance expenditures. Before the remaining funds can be allocated to meet con- struction expenditures, two additional appropriations are generally made: the contingent fund, and debt service or bond retirement needs. The contingent fund may service a variety of needs such as litigation costs resulting from legal action over right-of-way controversies and other similar problems. Many highway depart- ments are authorized to issue bonds, or warrants, to step up their highway construction programs. The debt must be serviced and the bonds retired. The model provides for $100,000 to service its bonded debt and $300,000 for its contingent fund. The data in Table 34 indicate the distribution of revenues available from state sources to nonconstruction functions, the contingent fund, debt service, and the state requirement to match federal-aid construction funds. From Table 34 it can be determined that $21,100,000 of funds from state sources must be provide to match federal-aid 252 TABLE 34.——State highway department distribution of estimated state highway revenues from state sources including state match- ing funds for construction for the fiscal year from July 1, 1959, through June 30, 1960 (amounts in thousands of dollars). Description Amount Estimated state highway revenues .............. 40,000 Estimated fixed expenditures ................. 15,000 Contingent fund ........................... 300 Debt service ............................ 100 Total nonconstruction expenditures . . . . . . . . . . . . . 15,400 Balance of state revenues ................... 24,600 Required matching funds .................... 21,100 Excess state revenue ...................... 3, 500 253 requirements. It is evident from the table that estimated state funds will be sufficient to meet all state highway construction and nonconstruction needs and that an excess of $3.5 million will re- main. The excess funds can be disposed of in a number of ways. First, many states construct and maintain a small road mileage that is not subject to federal-aid participation.1 The excess funds may be used to construct and maintain these roads. Second, the states may prorate the excess monies over the major state sys- tems for construction purposes or they may allocate the funds to one system that may be in greater need of construction. In the budget model, the excess funds will be prorated over all the sys- tems for use in construction in the following manner: 40 percent for interstate road construction 30 percent for primary road construction 20 percent for secondary road construction 10 percent for urban road construction From the preceding information it is now possible to con- struct a summary of total budget expenditures by highway func- tions which includes federal-aid funds. The data in Table 35 indicate the total budgeted expenditures for the fiscal period 1959—60. 1In the ten survey states, nonfederal-aid state roads sel- dom exceeded 200 miles. 254 TABLE 35.—State highway department summary of estimated ex- penditures by the state highway department for the fiscal period from July 1, 1959, through June 30, 1960 (amounts in thousands of dollars). Description Amount Percent Administration ................ 2,500 3 Maintenance .................. 10,000 11 Other services ................ 2,500 3 Debt retirement ............... 100 — Contingency fund ............... 300 — Construction .................. 74,600 83 Totals ...................... 90,000 100 255 The Construction Budget Funds available for construction are established at $74,600,000, of which $24,600,000 (including excess funds) rep- resent the state’s contribution to the program and $50,000,000 is the federal-aid apportionment to the state. In planning its federal-aid highway expenditures, Congress determines the total appropriations for a fiscal year or for a series of fiscal pe- riods. Congress also stipulates the amount of the appropriation to be expended on each of the systems such as the interstate, primary, et cetera. For instance, the Federal-Aid Highway Act of 1956 provided the following appropriations for the interstate system:1 Fiscal Period Amount Appropriated Ending June 30 per Year 1957 $1,000,000,000 1958 1,700,000,000 1959 2,000,000,000 1960—67 2,200,000,000 1968 1,500,000,000 1969 1,025,000,000 For the construction of the primary, secondary, and urban systems, the Federal-Aid Highway Act of 1956 provided lUdell, p. 201. 256 appropriations of $125,000,000 for the fiscal year ending June 30, 1957; $850,000,000 for the 1958 fiscal year; and $875,000,000 for the fiscal year ending June 30, 1959.1 The Federal-Aid High- way Act of 1959 further provided appropriations of $900,000,000 and $925,000,000 for the fiscal years 1960 and 1961, respec- tively.2 Both the 1956 and 1958 acts established the following ra- tios as the basis of distributing the total noninterstate appropria- tions between the three systems: Federal-aid primny . . 45 percent of appropriation Federal-aid secondary . 30 percent of appropriation Federal-aid urban . . . . 25 percent of appropriation In the budget model, the total federal aid for construction projects in all systems is $50,000,000. Of this sum, it is as- sumed that $32,500,000 is designated for the interstate system. The remainining $17,500,000 is divided between the primary, secondary, and urban systems in the ratio prescribed by law, which is 45, 30, and 25 percent, respectively. The data in Table 36 indicate the total estimated construc- tion funds for all the federal-aid systems, while the information Inna, p. 197. 2mm, p. 231. 257 TABLE 36.——State highway department estimated construction ex- penditures for all federal-aid systems for the fiscal year from July 1, 1959, through June 30, 1960 (amounts in thousands of dol- lars). Description Amount Federal-aid allotment ...................... 50,000 State revenues required to match federal aid ...... 21,100 Total federal-aid and state matching funds ........ 71,100 Excess state revenues ...................... 3,500 Total federal aid and state .................. 74,600 in Table 37 indicate a more detailed presentation of the estimated construction funds available for each federal-aid system. In matching federal-aid funds, the states must adhere to federal restrictions. Federal-aid legislation requires the states to match 10 percent of the cost of the interstate system and 50 percent of the primary, secondary, and urban construction costs. As was discussed in Chapter IV, the matching cost for the state is adjusted for the amount of public and Indian lands within the boundaries of a state.1 In the budget model, it will be assumed that no adjustment is to be made. 1See supra, pages 125—26. 258 TABLE 37 .—State highway department estimated construction ex- penditures for the federal-aid systems for the fiscal year from July 1, 1959, through June 30, 1960 (amounts in thousands of dol- lars). System Description Inter- Pri- Second- Total Urban state mary ary Federal-aid allot- ment ......... 32,500 7,875 5,250 4,375 50,000 State matching funds . . . . . . . . . 3,600 7,875 5,250 4,375 21,100 Total federal aid and state match- ing funds ...... 36,100 15,750 10,500 8,750 71,100 Excess state revenuea ...... 1,400 1 ,050 700 3 50 3 , 500 Total federal aid and state funds for construction . 37,500 16,800 11,200 9,100 74,600 aExcess state revenues for construction are distributed in the following ratio: 40 percent to the interstate system, 30 percent to the primary system, 20 percent to the secondary sys- tem, and 10 percent to the urban system. 259 Programming the construction budget by priorities Now that the estimated construction funds have been allo- cated to the various systems, the next step involves programming the highways in those systems for construction or reconstruction. At this point a recommendation made in Chapter V should be stressed.1 Construction funds for the various systems are pro- rated among commissioners and/or construction districts on some arbitrary basis. The distribution may be on the basis of estab- lished formulas or by agreement among the members of the board of commissioners. It is stressed again that good planning and control of construction expenditures should not give considera- tion to district or other types of boundaries. Construction funds should be allocated throughout the state systems on the basis of needs as determined by priorities. This method of allocating scarce resources will place funds in state systems where the need is the greatest. Another important factor in the prorating of construction funds is that federal restrictions become less stringent at this point. Other than for federal limitations pertinent to the letting 1See supra, pages 174-75. 260 of contracts, prevailing wage rates, maintenance, public hearings, toll roads, advertising control in proximity to interstate highways, civil defense, and other minor restrictions, the major require- ments for construction programming are few: (1) The Federal- aid funds must be used for designated federal-aid highways. (2) The construction project must meet federal requirements relevant to standards and design. (3) The construction project must be approved by representatives of the Bureau of Public Roads be- fore the contract is let to private contractors. Actually, the representatives of the Bureau of Public Roads very seldom interfere with the procedures of programming indi- vidual highways or highway segments by state highway officials. Unless there is a flagrant abuse of the programming privilege by state highway officials, the approval of highway construction pro- grams involving federal-aid funds is generally given by the rep- resentatives of the Bureau of Public Roads. In actual practice, the list of sufficiency rating segments is, by necessity, quite extensive. If the state is responsible for 3,000 miles of highways and sufficiency rating road segments averaging five miles in length, the report of deficient and ade- quate sections would include six hundred listings. Therefore, for the purpose of the budget model, and summary of sufficiency 261 ratings will be used. Deficient road mileage will be accumulated by sufficiency rating intervals of ten points, such as 0—9, 10—19, et cetera. A rating of seventy points will serve as the dividing point between tolerable and intolerable conditions. In other words, road sections having a sufficiency rating below seventy points will be either programmed for construction or will enter into the preplanning construction stage even though it may not be programmed for construction for a two- or three-year period. The data in Table 38 comprise a summary of road deficiencies, by system, for the budget model.1 To properly program by construction priorities, it is nec- essary to prepare cost estimates pertinent to each system.2 In the various state systems, highways are constructed to specified standards and design; therefore, on the basis of actual cost rec- ords it is possible to determine the average cost of constructing highways in each system. Theoretically it would be possible to determine construction costs for each type of operation necessary 1It was the practice of many of the survey states to com- pile the lists to include both deficient and adequate road mileage. The data in Table 38 represent a summary of road deficiencies only as taken from the detailed priority list. 2A8 a procedure for program planning, surprisingly few states made any attempt to apply estimated construction costs to road deficiencies. 262 TABLE 38.—State highway department summary of deficient road mileage for all highway system road sections having sufficiency ratings of less than seventy points, effective as of July 1, 1959. Adjusted _ Total S uffi- Inter- Federal- Federal F eder al— Defi- state Aid Aid ciency S s— Pri- Second- Aid cient Rating tzm mar ar Urban Mile- (points) y y age 0—9 0 0 0 0 0 10—19 0 10 50 10 70 20—29 0 100 100 10 210 30—39 40 180 200 20 440 40—49 80 200 300 20 600 50—59 180 350 500 30 1,060 60—69 140 560 700 60 1,460 Total deficient 440 1,400 1,850 150 4,240 mileage 263 to construct the roads to prescribed standards—grading, drain- age, materials, and other types of costs. In addition, costs should be averaged for rural and urban highways. The cost of constructing roads, especially the interstate highways, is more in urban areas because of the extremely high prices paid for right-of—way acquisitions.1 On the basis of the estimated average costs per mile for highways in various systems, it is possible to determine the total costs to bring all of the state systems up to standard. In addi- tion, if estimates of revenues can be accurately predicted, it is possible to determine the number of years required to bring the state systems up to desired standards. The data in Table 39 are useful in planning short-run construction needs.2 1The figures necessary for a detailed breakdown of con- struction costs are not available to the writer; therefore, general average cost estimates will be used in the model. Cost estimates of $400,000 per mile for the interstate, $125,000 per mile for the primary, $42,000 per mile for construction of secondary roads, and $100,000 per mile for urban extensions of state routes will be used. These estimates are more indicative of the costs in- curred in the ten survey states. Costs differ considerably for other areas of the United States. 2The data in Table 39 do not give consideration to high- ways having a sufficiency rating of seventy or slightly above, which will probably become deficient in the next few years; how- ever, sufficiency ratings are determined annually or biennially, and the progress in eliminating deficient road sections can be emphasized by comparative annual reports. 264 TABLE 39.—State highway department estimated construction ex- penditures required to eliminate road deficiencies existing as of July 1, 1959. Estimated No. of Mileage Cost per Total Cost Estimated Years below Annual Avg. System Mile for of Con- to 70 Construction Points Con- struction E e nditurea Com- structions KP plete Inter- state . . 440 $400,000 $176,000,000 $37,000,000 4.7 Pri- mary .. 1,400 125,000 175,000,000 17,000,000 10.2 Second- ary . . . 1,850 42,000 77,700,000 11,000,000 7.7 Ur- ban . . . 150 100,000 15,000,000 9,000,000 1.6 aAnnual average construction expenditures is based upon the current year’s appropriation. The information in Table 39 can be used for planning rev- enue and expenditure needs and for determining priority by system for excess state funds available for construction. In addition, the data can be used to plan long-run requirements and as a basis for justifying demands for increasing highway user revenue by the state legislature, or for issuing bonds to accelerate the highway construction program. 265 From the summary of deficient road mileage in Table 38 and the cost estimates in Table 39 it is possible to derive a to- tal estimate to bring each state highway system up to desired standards. Table 40 is an example of the construction program by sufficiency rating priority lists that are prepared for each of the systems. TABLE 40.—Summary of deficient road mileage for the interstate system and the estimated construction costs for each sufficiency rating interval, July 1, 1959 (amounts in thousands of dollars). Adjusted Estimated Sufficiency Deficient Cost of Rating Mileage Construction (points) to Standard 0—9 0 0 10—19 0 0 20—29 0 0 30—39 40 16,000 40—49 80 32,000 50—59 180 72,000 60—69 140 56,000 Totals 440 176,000 266 The same type of analysis would be prepared for the pri- mary, secondary, and urban systems. Once the priorities and cost estimates have been established, the next step is to pre- pare the budgets for the individual systems. Construction budgets by systems Preparation of the final budget for each of the systems is not entirely a simple matter of programming the construction pri- orities having the lowest sufficiency ratings. Certain factors must be taken into consideration before programming on a prior- ity basis. First, projects may have been programmed and the construction contracts let in the previous year with the inten- tion that funds would have to be allocated in the subsequent year to complete the contract. These projects receive prior claim on the construction funds of the budgeted year under consideration. Second, the sufficiency rating procedure does not provide for programming bridge or tunnel construction. These structures must be programmed separately and funds must be made available for their construction out of the funds to be provided in the budgeted year. Third, there may be essential priorities that should take precedence over highway sections having lower suf- ficiency ratings; for example, if all but one or two small suffiency 267 rating sections in a section of highway fifty to one hundred miles long have been constructed or reconstructed to standards, the few remaining segments should be programmed for construction even though their sufficiency ratings are higher than other sections in the state system. Fourth, the sufficiency rating procedure can determine only the condition of existing highways, and cannot consider the needs for a highway that does not presently exist. If the need for a new highway is determined, it it imperative that it be programmed in such a manner that it does not disrupt the over-all construc- tion program. The cost of building a new highway can be very great, and possibly it could require a substantial portion of one or two years’ budgeted funds to the detriment of other high con- struction priority roads in the same system. Since construction funds are established for each highway system, a construction budget is prepared for each system. The individual system budgets can be integrated into a total construc- tion budget encompassing all of the systems. Tables 41, 42, 43, and 44 are the construction budgets for the interstate, primary, secondary, and urban systems, respectively. In the budgets, consideration has been given to estimated costs of completing construction projects undertaken in prior 268 TABLE 41.———State highway department estimated construction budget for the interstate system for the fiscal period from July 1, 1959, through June 30, 1960 (amounts in thousands of dollars). Description Amount Estimated revenue available for construction of interstate highways ..................... 37,500 Estimated cost to complete work undertaken in prior years: Project number: FAI-80-162 Year initiated: 1958 Section rating: 43 Project cost: 786 Project number: FAI-25-06 Year initiated: 1959 Section rating: 48 Project cost: 530 Total cost ........................... 1 ,316 Budgeted funds available .................... 36, 184 Estimated cost of bridge construction and replacement: Project number: FAI-Br-164 Year constructed: 1925 Project cost: 1,050 Project number: FAI-Br-lOl Year constructed: 1933 Project cost: 250 Total cost ........................... 1 ,300 Budgeted funds available .................... 34, 884 269 TAB LE 41—Continued . Description Amount Budgeted funds available .................... 34,884 Estimated cost of essential priorities: Project number: FAI-80-204 Year constructed: 1938 Section rating: 62 Project cost: 1,800 Project number: FAI-25-604 Year constructed: 1940 Section rating: 78 Project cost: 1,200 Total cost ........................... 3,000 Budgeted funds available .................... 31,884 Estimated cost of construction priorities: Project description: FA Interstate Section ratings: 30—39 pts. Estimated cost: 16,000 Project description: FA Interstate Section ratings: 40—49 pts. Estimated cost: 15,884 31,884 Total cost ........................... 270 TABLE 42.—State highway department estimated construction budget for the federal-aid primary system for the fiscal year from July 1, 1959, through June 30, 1960 (amounts in thousands of dollars). Description Amount Estimated revenue available for construction of federal-aid primary highways .............. 16,800 Estimated cost to complete work undertaken in prior years: Project number: FAP-l66-2 Year initiated: 1958 Section rating: 21 Estimated cost to complete: 540 Project number: FAP-186 Year initiated: 1958 Section rating: 22 Estimated cost to complete: 720 Total cost ........................... 1 ,260 Balance ................................ 15,540 Estimated cost of bridge construction and replacement: Project number: FAP-Br-116 Year constructed: 1924 Estimated cost to complete: 420 Project number: FAP-Br-173 Year constructed: 1936 Estimated cost to complete: 150 Total cost ........................... 570 Balance ................................ 14,970 271 TABLE 42—Continued. Description Amount Balance ................................ 14 ,970 Estimated cost for essential priorities: Project number: FAP-161 Year constructed: 1938 Section rating: 61 Estimated cost: 300 Project number: FAP-178 Year constructed: 1939 Section rating: 65 Estimated cost: 250 Project number: PAP-198 Year constructed: 1937 Section rating: 70 Estimated cost: 380 Total cost ........................... 930 Balance ................................ 14,040 Estimated cost of construction priorities: Project number: FA Primary Section rating: 10—19 points Estimated cost to construct: 1,250 Project number: FA Primary Section rating: 20—29 points Estimated cost to construct: 12,500 Project number: FA Primary Section rating: 30—39 points Estimated cost to construct: 290 Total cost ........................... 14,040 272 TABLE 43—State highway department estimated construction budget for the federal-aid secondary system for the fiscal year from July 1, 1959, through June 30, 1960 (amounts in thousands of dollars). Description Amount Estimated revenue available for construction of federal-aid secondary highways ............ 11,200 Estimated cost of construction work undertaken in prior years: Project number: FAS-98 Year initiated: 1959 Section rating: 17 Estimated cost to complete: 820 Project number: FAS-102—3 Year Initiated: 1958 Section rating: 18 Estimated cost to complete: 400 Total cost ........................... 1 , 220 Estimated cost of essential priorities: Project number: FAS-210 Year constructed: 1931 Section rating: 50 Estimated cost of construction: 500 Project number: PAS-211 Year constructed: 1932 Section rating: 48 Estimated cost of construction: 300 Total cost ........................... 800 273 TAB LE 43—C0ntinued . Description Amount Balance ................................ 9,180 Estimated cost of construction priority program: Project number: FA Secondary Section rating: 10—19 points Estimated cost to complete: 2,100 Project number: FA Secondary Section rating: 20—29 points Estimated cost to complete: 4,200 Project number: FA Secondary Section rating: 30—39 points Estimated cost to complete: 2,880 Totalcost........................... 9,180 274 TABLE 44.-fiState highway department estimated construction costs for the federal-aid urban system for the fiscal year from July 1, 1959, through June 30, 1960 (amounts in thousands of dollars). Description Amount Estimated revenue for construction of federal- . aid urban roads and streets ............... 9,100 Estimated cost of completion of construction work undertaken in prior years: Project number: FAU-32 Year initiated: 1958 Section rating: 17 Estimated cost to complete: 150 Project number: FAU-61 Year initiated: 1959 Section rating: 62 Estimated cost to complete: 310 Total cost ........................... 460 Balance ................................ 8,640 Estimated cost of essential priorities: Project number: FAU-l36 Year constructed: 1938 Section rating: 61 Estimated cost of construction: 420 Project number: FAU-141 Year constructed: 1936 Section rating: 68 Estimated cost of construction: 540 Total cost ........................... 960 Balance ................................ 7 , 680 275 TABLE 414—Continued. Description Amount Balance ................................ 7 ,680 Estimated cost of construction priority program: Project number: FA Urban Section rating: 10—19 points Estimated cost to construct: 5,000 Project number: FA Urban Section rating: 20—29 points Estimated cost to construct: 2,680 Total cost . .......................... 7,680 276 years, the cost of constructing bridges, and essential priorities. The last allocation of construction funds in the budget is for the established priorities as determined by the sufficiency rating study. Those roads having the highest priorities, or lowest sufficiency ratings, have been programmed for construction first. The use of such a system for programming construction by pri- orities can only result in the allocation of scarce resources in a manner to provide the most efficient highway system possible. From the budgets of the individual systems, a master con- struction budget for all systems can be prepared. The master construction budget will set forth the total commitments for con- struction in the fiscal year under consideration. Table 45 is an example of the master construction budget. What the budget model has done to this point is to allocate highway revenues on the basis of priorities. Subjective judgment has been reduced to a minimum. Of course, there is an element of subjectiveness in the determination of the sufficiency ratings for the individual road sections, but even this aspect can be alleviated by using highway engineers who have been well trained in the procedure of highway rating. 277 TABLE 45.—-—State highway department construction budget for all state highway systems for the fiscal year from July 1, 1959, through June 30, 1960 (amounts in thousands of dollars). Description Amount Estimated revenue for construction of the state highway systems ................... 74,600 Cost to complete construction work undertaken in prior years: Interstate system 1,316 Federal-aid primary 1,260 Federal-aid secondary 1,220 Federal-aid urban 460 Total cost ........................... 4,256 Balance ................................ 70,344 Cost of bridge construction and replacement: Interstate system 1,300 Federal-aid primary 570 Total cost ........................... 1,870 Balance ................................ 68,474 Cost of essential priorities: Interstate system 3,000 Federal-aid primary 930 Federal-aid secondary 800 Federal-aid urban 960 Total cost ........................... 5,690 Balance ................................ 62,784 278 TABLE 45—Continued . Description Amount Balance ................................ 62,7 84 Cost of construction priority program: Interstate system 31,884 Federal-aid primary 14,040 Federal-aid secondary 9,180 Federal—aid urban 7,680 Total cost ........................... 62 784 279 Forward Planning of Construction Expenditures The budget model has been based on the assumption that all preconstruction planning, including right-of—way acquisitions, could be completed within a year. Actually, cases may arise in which the preconstruction phase prior to letting the contract could conceivably cover a period of a year and a half or two years. It is not unusual for controversies over right-of-way values to end up in the courts, involving months of litigation. After the initial stages of instituting the sufficiency rating system, the state highway department has the necessary informa- tion to preplan high-priority road projects two to five years in advance so that annual construction programming can readily be prepared on a priority basis. Preconstruction engineering A substantial amount of planning must go into the precon- struction stage of building a highway prior to the letting of the contract to a private road-construction firm. The most common deterrent to highway planning is the acquisition of right-of-ways. This is especially true for interstate highways, as they pass through urban areas. Highway officials in many states have been far-sighted in acquiring land for the construction of roads. 280 In many cases involving the primary, secondary, and urban con- struction, right-of-ways are often sufficient to meet current standards for construction. Before the highway project is ready for final approval, two phases of preconstruction engineering are usually performed: (1) preliminary engineering, and (2) final engineering. A brief summary of the planning processes is presented in the following paragraphs. Preliminary engineering is concerned with determining proposed locations for the construction of the highway, right-of- way appraisals based on the proposed locations, studies of inter- sections, rest area locations, material sources, structures such as bridges and overpassess or underpasses, roadside improve- ments, design and standards, road alignment, soil tests, and ground profile studies. Once completed, the preliminary plans are given to state highway officials and Bureau of Public Roads representatives for tentative approval before further action is taken. Once approved, all the factors mentioned in the preceding paragraph are stabilized for final approval. Public utilities such as telephone, power, gas, and pipeline companies are notified if the construction will affect their operations. Locations are 281 chosen, final design of the roadway, structures, and rest areas are determined, and the final plans are submitted to the same aformentioned officials for approval. If approval is given to proceed with the project, the right-of-ways are acquired and the project is ready for advertising for bids from the road- construction companies. If the construction project requires an important change in the relocation of the highway, hearings are held in those areas for people who will be affected by the location change. Inter- ested parties are permitted to voice their opinions on the relo- cation proposals. CHAPTER VIII LONG-TERM PLANNING AND CONTROL Business literature tends to segregate the managerial func- tion of planning into two time periods: short- and long-term. Undoubtedly the intent is not to consider the two as separate and unrelated areas, but to differentiate them for the purpose of discussion. Fundamentally, long- and short-term planning are both parts of the same continuing process. Long-range planning may establish goals or objectives that are attainable only over the long-run period of the life of the enterprise. In the private profit-making firm, long-run goals may encompass such objectives as (1) increasing the firm’s share of the national market, (2) cre- ating a favorable image of the firm in the eyes of the public, or (3) an expansion program correlated to long-run growth trends. Long-range goals may be more specific, such as a machinery and equipment replacement program, or planning for the retire- ment of a long-term debt. Long-term objectives are generally achieved through a series of short-term plans. In fact, most long-range programs 282 283 can be viewed as a series of short-run plans. In some instances management may give very little consideration to long-term plan- ning and may operate its organizations on a short—run basis en- tirely. Several reasons may be suggested for this emphasis on short-term rather than long-term planning. First, the shorter the planning period the more accurate will be the estimate of the future. It may seem futile to management to plan twenty years in advance if future conditions cannot be predicted with any degree of accuracy. Second, many managers do not have the necessary information to make long-term forecasts. They may not be able to afford the financial cost of buying the serv- ices of certain organizations that have built a reputation on pre- dicting the economic future. Third, management may have ob- served the errors of the so-called experts and their failure to predict even the short-run events. Fourth, even though they may have reliable data from which to make a long-term forecast, many managers may lack the ability or the staff to establish long-range plans for their organizations. If nine of the ten survey states are any indication, long- range planning seems to be a process that is foreign to the 284 administrators of state highway departments.1 There may be certain reasons, not too logical perhaps, for this lack of long- range planning, especially as it relates to finance. For example, all plans involving a change in the tax structure affecting high- way revenues must be approved by state legislatures. These political bodies may not be prone to make tax changes under any conditions. Their decisions may be based on factors other than the actual long-run financial requirements of the highway depart- ment. After a series of refusals by the legislature, highway of- ficials may be reluctant to repeat such an ordeal.2 Another reason why highway officials may fail to give _ proper consideration to long-term planning may be due to the fact that their short-run objectives and construction needs are so great that they represent the major goal in current highway planning. At present, greatest effort and funds are being chan— neled into interstate highway system construction. 1In nine survey states the author invariably was informed that little or no long-term planning was conducted by highway of- ficials. Only Colorado plans its revenue and expenditure needs beyond a five-year period. 2Officials in one state—Montana—revealed an experience in which a long-range study indicated the need for a tax increase to bring highways up to standards. Instead of approving the pro- posed tax increase, the state legislature reduced highway revenues substantially and the long-range plan was discarded. 285 Despite the above major reasons, highway officials should devote time, effort, and funds to long-term planning. Highway operations can definitely be improved by anticipating highway needs for construction and finances in the long-run period. It will be the objective of this chapter to analyze and discuss the various long-range planning techniques available to state highway officials. The planning tools discussed in this chapter directly or indirectly affect the expenditure pattern. One of them, the traffic study, supplements the short-run con— struction budget based on priority listings by filling a gap not adequately provided for by the sufficiency rating procedure. There is a paucity of literature on the subject of long-range planning of financial expenditures in state highway departments. The following discussion is based, primarily, on the author’s knowledge and research in the various state highway departments in the survey. ’ The techniques to be discussed are (1) the long—range revenue and expenditure studies, (2) traffic studies, (3) road life studies, (4) economic impact studies, and (5) urban analyses. In the light of the objectives of this dissertation, these five tech- niques represent the more important tools of construction ex- penditure planning and control. However, they are not the only 286 methods available to highway management in planning their finan— cial needs. Long-Range Highway Revenue and Expenditure Studies It has been emphasized in the preceding chapters that the highways of many states are below current and future standards to properly service vehicular traffic. So great is the effort being put forth on the interstate system that other state systems may be neglected during this “crash” program. Due to inade- quate funds, many states must by necessity plan their highway improvement programs to cover a long-range period of fifteen to twenty-five years or longer. To better understand their con- struction and financial needs, highway officials should conduct a long-range highway construction need study and a supporting study to determine the financial requirements necesSary to under- take such a program. It is through these two studies that high- way officials can make known to the public and the state legisla- ture the construction and financial requirements necessary for an adequate state highway system. Most important, the studies serve to give direction to state highway officials over the long-run pe- riod in the accomplishment of construction objectives. 287 Studies should be conducted in two areas: (1) an engi- neering appraisal of present highway conditions and the con- struction requirements necessary to bring them up to future standards; and (2) an evaluation of long-term financial require- ments necessary to meet the construction needs determined in the engineering appraisal. A thorough investigation of the two areas will provide highway management with a better insight into the expenditure and revenue needs over the long-run pe- riod. The long-range construction needs study Before the financial requirements of the long-range high- way program can be estimated, it is necessary that construction and other highway costs be determined. A study of long-range construction requirements should include: (1) a clear, clean-cut definition of the objectives of the study; (2) a history of the de- velopment of the road systems in the state and of the growth of the highway organization; (3) an evaluation of the classification of the highways in the state, county, and urban systems; and (4) determination of the condition of the highways under the various political authorities and the construction needs to bring them up 288 to standards which will service traffic twenty to twenty-five years in the future. Long-range objectives .—-—Before the long—range construc- tion needs study is undertaken, highway management should care- fully determine the objectives of the project. The report should serve highway administrators in several ways. First, if the re- sults warrant it the study can be used to educate the public and legislative bodies as to the need for action on a progressive long-range highway program. Before state legislative bodies will take action on measures to change highway revenue laws, they must be sold on the exigency of the program. Second, even though additional revenues may not be forth- coming by legislative action, the report should not be discarded as useless.1 The long-range construction needs should be matched against revenues available under the present tax structure, and a long-range program should be established and followed. If funds are not provided to bring highways up to required standards over 1Long-range construction need studies had been prepared for highway officials in several of the survey states. In those cases where the state legislatures did not react favorably to a revenue increase, highway officials discarded the report as a tool for planning long-range construction programs. 289 a relatively short period of time, highway officials are forced to plan their construction programs over an extended period. By utilizing a priority listing procedure as explained and discussed in Chapters V, VI, and VII as the basis for allocating construc- tion funds over the short-run planning period and determining and following a long—range construction and financial program over the long span of time, the highway official can allocate scarce resources in such a manner as to achieve Optimum effi- ciency. In addition, long-range goals are established to serve management as a guide in the accomplishment of objectives. Third, the study should serve highway management as the basis for determining personnel, equipment, and facility require- ments. Organizational resources can be marshaled, classified, and blended over the long-run period to provide for the most efficient operation. Historical development of road systems and highway or- flnizationSr—Valuable information can be derived from an evalu- ation of the development of the road systems of the state, coun- ties, and urban areas. If previous studies have been prepared indicating changes in traffic patterns and volumes, they may serve as important tools in planning future construction programs. 290 From the past, a correlation between road use and the develop- ment of state resources such as labor and materials can be made. The road systems of most states have developed according to the needs of the state economy. Significant factors in the state’s economy, the farm and ranch are equally significant factors in the problems of highways and roads as the growth of the agricultural econ- omy has had a tremendous impact on the development of the state’s road pattern.1 During the development of the economies of many states, the highway departments were unable to keep pace with the grow- ing demands for highways. In addition, highway programs failed to provide a system commensurate to the progress of the auto- motive industry. Consequently, a lag has existed between vehic- ular traffic and the construction designs and standards of high- ways conducive to safe and efficient travel. Probably one of the most important benefits to be derived from a well-planned long—range highway program accrues to the state and its political units. The road system is an important factor in the development of the resources of a state, county, or 1Nebraska Highway Advisory Committee, Nebraska Highway Needs, A Report Prepared for the Governor of the State of Ne- braska (Lincoln: State Department of Roads and Irrigation of Ne- braska, 1948), p. 5. 291 urban area. For instance, in agricultural areas, highway facili- ties should provide for the rapid and efficient movement of ranch or farm products to markets. Should the economy of a state enter into a period of transition from agriculture to industry, vehicular traffic types, volumes, and patterns will change dras- tically and rapidly. Roads which had previously serviced the traffic efficiently soon become obsolete, dangerous, and inade- quate. State highway officials should provide for a constant evaluation of the development, or the potential thereof, of the resources of the state or its political units. In this respect highway officials would do well to carefully evaluate the re- search studies of other organizations such as the state resource board, state universities, game and fish departments, county and urban organizations, and other agencies. In fact, there may be some merit in the creation of a state department whose major responsibility would be to coordinate and integrate the long-range plans and needs of the various state agencies, counties, cities, and other local political units. The state highway administrator who fails to give adequate consideration to the long-run develop- ment of the state economy may frequently be faced with a “crash” type of program that might have been avoided if long-range plan- ning had been considered. 292 As to the changing technology in the automotive and allied industries, highway officials should carefully analyze new develop- ments in motor-vehicle engineering. Possibly greater cooperation is necessary between the two industries—highway departments and automotive firms. Not only should road standards and design give considera- tion to future developments in the state economy and technological advances in automotive design, but the highway organization itself should be dynamic and flexible enough to provide for long-run changes. In the past, state highway organizations have not been able to dispatch with any degree of efficiency their long-run challenges because of certain rigidities prevalent in their or- ganization structures. Custom and tradition have been difficult to overcome, especially at top managerial levels in the highway departments. Fortunately, some of these obstacles are being recognized and eliminated as highway administrators are becom- ing more management-oriented. Participation and interest of highway officials in management development programs would seem to indicate that the need for better administration is recognized in many state highway departments.1 1From an interview with Dr. O. D. Turner, Head of the Department of Business Administration, The University of 293 Highway classification.—In the report on long-range con- struction needs, it is imperative that the highways under consid- eration be properly classified. Highway and street classification is the orderly group- ing of roads and streets into systems in keeping with the amount and kind of service to be provided the public. It is the framework around which improvement programs, based on a sound and equitable finance plan, can be developed and or- ganization and management responsibilities for each system defined.1 As the above quotation implies, the problems of classification are concerned with (1) the classification of roads into systems accord- ing to the volumes and kinds of traffic using them, and (2) the road authorities responsible for each of the systems. The need for an orderly grouping of highways is presented below: 1. To establish logical, integrated systems which bring to- gether all roads and streets which should be under the same jurisdiction because of their service. 2. To group those roads and streets which require the same degree of technical competence and ability in their design, construction, maintenance and Operation. 3. To assign responsibility for each class of roads and streets to the level of government having the greatest basic interest. Wyoming. Dr. Turner has participated as a conference leader in more than twenty-five management conferences designed ex- clusively for state highway personnel. 1Automotive Safety Foundation, A Guide for Planning Wyo- ming Highways, p. 19. 294 4. To provide a basis for efficient management and intergov- ernmental coordination to avoid or minimize conflicts among the governmental units. 5. To establish a basis for long-range programming, improve- ment priorities and fiscal planning.1 Not only for the above reasons is highway classification important, but also because the legislatures of many states are continually adding road mileage to the classified state systems. County roads are absorbed into state highway systems without a commensurate increase in state funds to care for them. There is a definite need to “freeze” the road mileage of state highway systems. New additions to road mileage should be considered only if short- or long-range plans determine the justification for them. State legislation should provide for clear, clean-cut defi- nitions of authority and responsibility for the road systems. As a requisite to participating in state road-user revenues, greater cooperation and coordination should be required among the vari- ous political units. 1Automotive Safety Foundation, Moving Ahead on Montana’s Highways, An Engineering Study Prepared for the Montana Fact Finding Committee on Highways, Streets and Bridges (Helena: Montana State Highway Commission, 1956), p. 2. 295 Determination of highway condition .——With roads properly classified according to systems and segregated by authority, the next step in determining construction needs involves an evalua- tion of highways as to their present condition and an estimate of the cost of construction to bring them up to prescribed future standards. In making the evaluation of the condition of the high- ways, a set of standards and designs reflecting the highway needs twenty to twenty-five years in the future should be estab- lished. These standards and designs can be the same as those used in the sufficiency rating procedure for state highway sys- tems.1 However, since the needs study should cover the county and urban road systems, standards and designs should be prepared to evaluate these systems. The engineering appraisal involves a team of experts driv- ing each mile in the various road systems—or a substantial por- tion thereof—and rating the roads according to the predetermined standards and design. Road sections and structures below toler- able conditions are classified as deficient and should be treated as a backlog of construction work to be given priority in the long-range program. Roads that will become deficient during the 1See supra, Chapter VI, page 180. 296 long-range program should also be determined and scheduled for construction. Cost estimates should be applied to the engineering ap- praisal of road deficiencies. These estimates should be broken down into the individual types of construction work necessary to bring the roads up to standards, such as grading, drainage, road base, surface, and other construction operations. The basis for matching road deficiencies to cost of construction is average cost per mile for each of the highway classifications—interstate, pri- mary, secondary, county, and urban road and street systems. The average-cost determination should give consideration to the changing price level. The Wyoming study revealed that immediate and future construction needs for the state primary system from 1961 to 1980 would entail an outlay of $176,427,000.1 The data in Table 46 indicate the mileage and cost for rural and urban im- provements. The data in Table 47 are indicative of the cost estimates for the rural primary road system in Wyoming segregated by the type of work necessary to bring the highways up to standards by the year 1980. 1Automotive Safety Foundation, A Guide for Planning Wyo- EingHighways, p. 54. 297 TABLE 46.—Wyoming State Highway Department primary system needs, including right-of-way and structures. Primary System Needs Miles Pct. Cost Pct. Rural: Needed now ....... 978 38 $ 76,093,000 46 Future needs to 1980. 1,575 g 87,939,000 __§_4_ Totals ......... 2,553 122 $164,032,000 E9: Urban: Needed now ....... 29 31 $ 3,237,000 26 Future needs to 1980. 64 £9 9,158,000 __'_7_4 Totals ......... 93 _1_Q_0_ $ 12,395,000 3.9.9. Rural and urban: Needed now ....... 1,007 38 $ 79,330,000 45 Future needs to 1980. 1,639 62 97,097,000 55 Totals ......... 2,646 gag $176,427,000 _1_09_ 298 TABLE 47 .——-Wyoming State Highway Department estimated costs for primary needs, except interstate system routes, by types of work. Type of Work Costs Pct. Widening and resurfacing ............ $ 22,129,000 14 Base and surface ................. 5,992,000 4 Reconstruction ................... 47,948,000 29 New construction ................. 45,816,000 28 Structures ...................... 26,940,000 16 Stopgap allowances ................ 4,599,000 3 Future surface replacements . . . . . . . . . 10,608,000 6 Totals ......................... $164,032,000 100 The above analysis should be prepared for each of the state systems, county and urban roads. By this process the spe- cific construction cost estimates for all highway needs in the state can be determined. To complete the study, an estimate of the costs of main- tenance, administration, and other services over the long-run period should be made. When they are added to the projected 299 construction costs, the sum represents the total estimated high- way expenditures required over the long-range period for the various authorities. Long-range financial needs study The determination of long-range expenditures for construc- tion and other highway functions presents only one aspect of the financial picture. To enable highway officials to make the neces- sary long-run decisions pertinent to construction programming, the revenue aspect of the financial function must be carefully evalu- ated. For instance, with long-range construction needs estab- lished, a decision must be made relevant to what “catch-up” pe- riod should be undertaken.1 The “catch-up” period may depend upon several factors. First, the construction and financial need studies may be used by the state legislative body in making a de- cision pertinent to accelerating the road construction program by raising or modifying the tax rates applying to road users. If the road systems of a state are in critical condition, the studies re- veal the construction and financial needs with a startling clarity. Second, if an increase in highway revenues is not approved by 1The “catch-up” period is the number of years required to overcome the existing backlog of present road deficiencies. 300 legislative action, the report is not rendered useless. The con- struction program can be matched against current and projected receipts under the present tax laws and a long-range program can be established. Third, if borrowing is permitted, a road construction proposal could possibly be accelerated by the care— ful planning and integration of a long-term borrowing program. Although the payback period might be extended over a longer period than the proposed twenty or twenty-five year plan, imme- diate needs could be met and the future requirements planned. The revenue study should cover several areas: (1) a his- torical development of the tax structure pertinent to highway im- posts, (2) a study of current tax sources and rates and an eval- uation of the benefits derived by highway users and nonusers to determine the fairness of the present tax structure, (3) a study of the past and future growth trends of the state and their effects on highway revenues, (4) a consideration of current objectives and methods of allocating highway user revenues among the vari- ous governmental authorities concerned with highway construction and maintenance, and (5) an analysis of the construction program needs and finances required to underwrite them. 301 Historical development of highway revenue laws .——Much can be derived from an analysis of the historical development of high- way revenue laws of the state, counties, and urban places. Such an evaluation may reveal that considerable highway revenue legis- lation was enacted to alleviate an immediate crisis rather than as the result of long-run planning of highway needs. Many of the financial laws were enacted to correct highway deficiencies that had become intolerable due to inadequate short- and long-range planning. The following quotation serves to support this conten- tion: Costs of construction and maintenance of county roads are, at present, partially financed through five different state-aid programs. Over the years the trend has been to increase support of county roads from state-aid funds, with a corresponding decrease from the counties. This policy has reached a point where in 1958 approximately 80 percent of county road construction and maintenance costs were financed from the five state-aid programs. These five programs, other than providing financial assistance to counties, have little in common either as to purpose, formulas for fund allocation or administrative re- sponsibility. In the aggregate they represent a hodgepodge of law unnecessarily burdensome in administration and com- plex in objectives.1 Another example of poor financial planning by a state in establish- ing revenue legislation is exemplified in the following quotation: 1Automotive Safety Foundation, A Guide for Planning Wyo- ming Highways, p. 22. 302 Existing highway law consists of numerous measures enacted over a long period of years. Much of the law is outmoded in the light of modern highway transportation re- quirements. There are many cases of seeming conflicts, ambiguities and ommissions. In some cases, outmoded law seriously handicaps efficient highway management, in other cases it is merely confusing and unnecessary. A historical review of past financial legislation may re- veal that original objectives which led to the enactment of the laws may now be outmoded and of dubious value in the light of current highway needs. There is undoubtedly a need for a re- evaluation of highway laws in terms of current highway objectives. Current tax sources and highway beneficiaries .—-—The fi- nance study should embody a complete analysis of the current sources of highway revenues for the three governmental units: the state, counties, and urban places. A review should be made of each of the sources of highway taxation, giving consideration to its historical development, the importance of its contribution to total highway revenues, and a comparison of each of the sources with those of other states having similar highway con- struction problems. 1Automotive Safety Foundation, Moving Ahead on Montana’s Highways, p. 35. 303 An analysis of revenues needed to support a long—range highway expenditure program should include an inquiry into the past, present, and future objectives, trends, and methods of allo- cating the cost of constructing and maintaining the rural and ur- ban highways of a state among those who benefit from an adequate road system.1 A review of the relationship between those who benefit from adequate roads and those who pay for them should be a continuing process in a state highway department. So fre- quent are the changes in highway benefits accruing to the highway users and nonusers that constant evaluation is necessary. Of course, this assumes that fairness and equity are objectives in establishing a highway tax structure. The importance of review and revision of current highway tax structures is emphasized in the following quotation: Thus far the present types of taxation for highway pur- poses, their rates, and revenue possibilities have been dis- cussed without any reference to the theoretical grounds upon which these taxes have been based. These taxes have been developed over the past half century, taxpayers have become accustomed to them, and it may be assumed that they have been reasonably adjusted to the existing economy. But when it comes to raising some $54,000,000 to $58,000,000 of addi- tional highway revenue annually for the next twenty years, it 1A brief, but adequate, discussion of the problems involved in highway taxation theory is presented in a previous chapter of this dissertation; see supra, Chapter IV, pages 126—38. 304 will be worth while to subject the general philosophy of this field of taxation to some scrutiny and, if possible, to some clarification.1 As was discussed in Chapter IV, the problem of allocating the costs of constructing and maintaining highways is a dual one.2 First, it must be determined what share of the tax burden will be borne by user and nonuser beneficiaries. Second, decisions must be made as to what share of the road-user taxes will be paid by those who use the highways for pleasure and those who use them for commercial purposes. Although the aforementioned problems of tax allocation are difficult to resolve, they are not insurmountable. A determining factor in this facet of highway finance is that tax objectives should be fairly determined and constantly reviewed.3 1Herbert D. Simpson, Highway Finance, A Study Prepared for the Ohio Program Commission (Columbus, Ohio: F. J. Heer Printing Company, 1951), p. 74. 2See supra, Chapter IV, page 130. 3For further discussion of the problem of highway taxation, see Richard M. Zettel and Richard R. Carll, Financing Modern Highways for Michigan, A Fiscal Report to the Michigan Legisla- tive Highway Study Committee (Lansing, Mich.: Speaker-Hines and Thomas, Inc., State Printers, 1955), Chapter III, p. 36; Daniel J. Shea, Historical Analysis of Taxation for Highway Purposes in Montana, A Report Prepared for the Montana Fact Finding Com- mittee on Highways, Streets and Bridges (Helena: Montana State Highway Commission, 1956), Chapter V1, p. 159; and Association of American Railroads, Highway Benefits and Cost Responsibility (Washington: Association of American Railroads, 1957). 305 Economic study of the state, county, and community re- sources .——Because highway revenues and costs are tied directly to the resources of the state and its political subdivisions, it is imperative that past, , present, and future trends of the develop- ment of state resources be carefully determined in estimating highway needs. A more penetrating study should be undertaken than the usual statistical projections of pOpulation growth, in- come, car registrations, and tourist travel. The economic study should give careful consideration to the presently developed and undeveloped resources of the state and local areas. Many states have untapped natural resources which, if developed, may create highway construction problems. If no attempt is made to antici— pate economic development of a state as it relates to highway needs over the long-run period, highway management may be faced with a short-run problem of trying to write unexpected expenditures into the annual budget. A long-range economic study could alleviate many of the problems encountered by high- way management in planning annual construction budgets. 1Although the problem may not exist in many states, Wyo- ming is a prime example of the situation. Wyoming possesses huge deposits of coal, iron, and oil shale which cannot be developed at present because of the high cost of production. New technological developments, however, may make their extraction profitable. 306 Allocating highway revenues among governmental units .—In many states it would seem that objectives and methods of allocat- ing revenues among the political units are in need of review and revision. As stated in a previous section of this chapter, Wyoming has five unrelated and uncoordinated programs involving state aid1 to the counties.2 The objectives and methods of distributing, or allocating, highway revenues among state, county, and city governments should give consideration to the necessity for the over-all plan- ning of the road systems of a state and the need for the political units to acquire coordination and cooperation in their road pro- grams. Although the author of the following quotation has recog- nized the problem, the major implication of the issue has been overlooked—a lack of coordinated planning among the political units in constructing and maintaining the highways of a state. The distribution of highway revenues among state and local governments has proved almost as difficult a problem 1There seems to be some doubt whether the distribution of highway revenues to counties or urban areas represents a state- aid program. Some students of highway finance regard the situ- ation as one in which the state acts in a fiduciary capacity by collecting the imposts and distributing them to the various juris- dictions for highway use. 2See supra, page 301, footnote 1. 307 as that of raising the revenue in the first place. Most of the present formulae are the result of historical accident, legislative pressures, and other haphazard factors. Ordi- narily the distribution of public funds through such channels would lead to extravagance and waste. In the highway field the saving factor has been the fact that thus far motor reve- nues have not been adequate for the highway needs of all governments, and there has been no liberal margin available for wasteful expenditure. If the State should ever embark upon a policy of providing ample funds and still distribute them through haphazard formulae that have little relation to local government needs and responsibilities, the results will be disastrous.1 Fundamentally, the objective of the allocation should pro- vide for an integration of highway planning among the three high- way authorities. In addition, the method of allocation of funds to the political units should be on the basis of need as determined by a priority system. Matching construction needs to revenues.——This section of the revenue study sets forth the alternatives available in estab- lishing a long-range highway program. The choice of alterna- tives relates to the time period which the long-range expenditure program should cover and the manner in which it should be fi- nanced. With revenue possibilities determined, it becomes a matter of deciding whether the road construction program will 1Simpson, p. 114. 308 be accelerated. This decision may involve two alternatives: (1) to raise additional taxes by increasing or modifying the present highway impost structure, or (2) to borrow funds to construct highways to the required standards and extend the service and pay-back period of the bonds to cover a longer period of time. Another alternative would be to stay on a “pay-as-you-go” basis which will result in extending the “catch-up” period. The prob- lem is accentuated by the fact that present road deficiencies are so great that current and projected revenue is not sufficient to cover the cost of construction to bring the highways up to stand- ards over the short-run period. By extending the construction program to pay for highway needs out of available revenue, roads that are now adequate to service traffic will eventually become obsolete and will increase the magnitude of the problem, depend- ing, naturally, on the rate of obsolescence and the progress made in overcoming deficiencies. By way of an example, a Montana study revealed the fol- lowing construction and revenue needs: 1Source: Montana State Highway Department, Financing Modern Highways for Montana. 309 Catch-u Total Program Estimated Total Periodp Cost for 20 Funds Revenue Years1 Available Shortage 10 years $1,580,444,000 $1,528,659,000 $51,785,000 13 years 1,580,389,000 1,528,659,000 51,730,000 20 years 1,580,274,000 1,528,659,000 51,615,000 The thirteen-year “catch-up” program was segregated by state, county, and urban needs, as shown in Table 48. An evaluation of the table indicates that $1,264,822,000 is needed to bring the state, county, and urban roads up to required standards over the thirteen-year period. Funds available over the same period amount to $1,021,36l,000, leaving a shortage of $243,461,000. During the next seven years, however, the expenditure program for the three highway authorities requires only $315,567,000, while available revenue amounts to $507,298,000. The differ- ence of $191,731,000 represents the excess of revenue over ex- penditures during the seven years, which reduces the previous thirteen-year deficit to $51,730,000 over the entire twenty-year program . The alternatives are rather obvious. Some of them are as follows: 1Includes construction, maintenance, and administration. In all cases the interstate system is included at thirteen years, the expressed intent of Congress. 310 TABLE 48.—Montana State Highway Department total needed ex- penditures and revenue for twenty years to implement thirteen- year catch-up period (amounts in thousands of dollars). First Next Total Unit Thirteen Seven Twenty Years Years Years State:a Program costs ........ 755,079 127,015 882,094 Available revenue ...... 670,682 289,218 959,900 Revenue needed ..... 84,397 162,203b 77,806b County:a Program costs ........ 434,226 155,155 589,381 Available revenue ...... 295,714 179,910 475,624 Revenue needed 138,512 24,755b 113,757 City: Program costs ........ 75,517 33,397 108,914 Available revenue ...... 54,965 38,170 93,135 Revenue needed ..... 20,552 4,773b 15,779 Total: Program costs ........ 1,264,822 315,567 1,580,389 Available revenue ...... 1,021,361 507,298 1,528,659 Revenue needed ..... 243,461 191,731b 51,730 Source: Modern Highways for Montana. Montana State Highway Department, Financing aFederal-aid secondary funds and matching revenue in- cluded under counties. revenues. state . bSurplus. Forest highway funds are under state State highways through cities are included under 311 1. Highway user taxes could be increased for the first thirteen years to cover the deficit and reduced for the last seven years when less revenue will be re- quired . 2. The state could borrow funds to complete the thirteen- year “catch-up” program and extend the bond pay- back period over a remaining number of years nec- essary to cover the expenditure program plus the cost of bond retirement and service charges. 3. The “catch-up” period could be extended to cover a period of twenty to twenty-five years. Over this pe- riod, revenues would undoubtedly be sufficient to en- able the state to complete the long-range program on a pay-as-you-go basis without having to revert to tax increases or borrowing. The same type of analysis should be prepared covering “catch-up” periods of ten, fifteen, and twenty years. All pos- sible alternatives should be supported by long-run projections of revenues and expenditures. Use of the expenditure and revenue studies The above reports should be used by highway officials to inform the public and state legislators of the immediate and long- run highway needs. On the basis of the findings, the state legis- lators may take legislative action to give consideration to the dilemma. Should the state legislature fail to increase revenues or to permit borrowing, the value of the findings is nonetheless important. Highway officials should use the data as the basis for 312 planning their long-range highway program. Highway managers have been prone to regard the study as useless if additional funds are not forthcoming. Traffic Studies In order that state highway departments may better plan their long-run highway programs, it is important that they thor- oughly understand the characteristics of the traffic using the highways. Traffic studies can provide for a continuing histori- cal record of trends that tend to develop in motor-vehicle trans- portation. Such information is essential for both short- and long—range determination of highway needs and costs. Traffic volumes, patterns, and composition are not static elements. Quite the contrary——they are in a constant state of change. From traffic studies valuable information can be derived for future planning. First, estimated future traffic volumes are necessary for the establishment of road standards and designs to service traffic in a safe and economical manner. Second, the lo- cation of new highways is contingent upon the understanding of past, present, and projected traffic volumes and movements. Third, the composition of traffic flow pertinent to vehicular weight and speed is necessary for planning road standards and 313 designs and for determining changing benefits to road users for tax purposes. Traffic surveys The traffic survey is concerned with traffic volumes and the movement of vehicles over the road system. The survey provides information necessary to road location and design of new highways, the more economical use of present roads, deter- mining speed limits on highways, classification, and other impor- tant data. It was discussed in Chapter VI that sufficiency rating systems could measure the adequacy of those roads in existence at the time the study is undertaken.1 The sufficiency rating system cannot determine the need for a road that presently does not exist. Other means must be used to establish the need for new highways. One of the tools that can support the exigency for a new highway is the traffic survey. The situation can be illustrated by the following example: 1See supra, Chapter VI, page 267. 314 A, B, and C represent three highly populated, industrial- ized urban centers, while D and E are smaller towns that serve as shOpping and recreational centers for an agricultural popula- tion. The highway connecting C, B, and E is a nationally used interstate highway generating a high volume of through state traf- fic. A large portion of the traffic using the highways A-D-C and A-D-B is strictly local in nature. Traffic counters have found the average daily traffic (ADT) on the highways to be those indicated on the diagram. Additional facts may show that: (1) the entire stretch of road A-D-C was constructed to standards and design to service an average daily traffic of 4,000 vehicles; (2) the accident rate on the highway between A and D is ex- tremely high and the surface structure is in a rapid state of deterioration; (3) the highway between B and D was constructed 315 to standards and design for servicing an average daily traffic of 1,000 vehicles, and, because it passes over a high mountain range, a substantial portion of the road mileage has many safety obstacles in the form of horizontal and vertical curvature; and (4) a substandard secondary highway between A and B now exists but its condition is so poor that average daily traffic over the road is limited to 100 vehicles per day. The alternatives confronting the state highway department may be as follows: 1. To improve highway A-D to higher standards to service the very high average daily traffic. This could be a costly project, depending upon the present condition of the highway and the need to acquire additional right-of- way property. 2. If the alternative listed above is chosen, it will be necessary to reconstruct highway B-D to higher stand- ards to properly service the traffic volume which is, at present, three times as heavy as it should be. Con- structing a mountain highway to higher standards would be a very costly process. Curves must be straightened and the degree of climb lowered. 3. A third alternative might be to construct and recon- struct a new highway between A and B. No doubt a large portion of the substandard secondary highway could be improved and reconstructed to standards to service projected traffic volumes. In evaluating the above alternatives, highway officials would have to consider other factors in making a decision. First, an origin-destination study should be undertaken whereby a statistical 316 sample would be made of motorists using routes A-D, D-B, A-E, and A-B. At selected road block stations motorists should be stopped and queried as to the origin and destination of their trips. If necessary, a questionnaire could be sent to a sample of motorists in the five towns to determine the annual number of trips made to other cities in the area, routes taken, time of year the trips are made, and other pertinent information. From such a study estimates could be derived as to the traffic use for the new route A-B. Also from the traffic estimates the required standards and designs for the proposed route could be deter- mined. The survey might reveal that the estimated traffic vol- ume over the A-B route will necessitate its being reclassified as a state primary road. Second, the savings to the highway user must be made a part of the study.1 Under present conditions, motorists are ob- viously driving over three hundred miles between A and B to reach their destinations. Some of this travel is over highly dangerous substandard mountain roads. A new highway, A-B, would certainly save the motorists considerable travel cost and travel time. Third, if a substantial portion of the traffic 1See infra, page 326, footnote 1. 317 traveling between A and B by route A-D-B could be diverted to route A-B, the road standards and design of route A-D-B might be adequate to meet the reduced traffic volume on A-D and B-D so that further expenditure other than for routine maintenance will not be required. Fourth, if the situation is serious, an eco- nomic study should be undertaken to determine the effects upon landowners, merchants, and other groups or individuals along the routes that may suffer a loss from the reduced traffic volumes.1 Whenever traffic is diverted from one route to another, a study should be conducted to determine the economic impact on those directly affected by the diversion. State highway departments should hold a series of hearings in the affected areas so that interested parties can make their pleas known. In conjunction with the preceding investigations, a cost analysis pertinent to the various alternatives should be conducted. The estimated costs of the new highway should be carefully com- pared with the cost estimates of other alternatives. Estimates should also be prepared showing the savings to motorists by us- ing the shorter, more direct route. With all the facts at hand, 1The economic study is explained in greater detail in a subsequent section of this chapter. 318 decisions can be made and the project can be written into the short-run budget. Techniques used in traffic surveys.—One of the tech- niques used in measuring traffic volumes and their movements is the traffic count. A traffic count is simply the number of vehicles passing a given point during a selected period of time, recorded by either manual tally or mechanical counting apparatus. The period may vary from a few hours to continuous operation, depending upon the purpose of the count. A single count has little meaning per se. It becomes significant only when a relationship is developed with counts at other locations. An interrelated system of different types of counts at diverse locations for varying time-periods is therefore necessary in order to obtain traffic records adequate to serve the needs of road design, economic analysis, and other functions of the State Highway Department.1 Traffic-recording devices differ according to permanency and automaticity. Automatic counters are permanently installed at strategic highway points and provide continuous traffic data. Others are portable and are moved to highway points as the need for data arises. For instance, they may be temporarily installed at road points that are open to travel only a portion of the year. 1New Mexico State Highway Department, Planning Division, E“! Mexico Traffic Survey (Santa Fe: New Mexico State Highway Department, 1959), p. 9. 319 The equipment may be automatic roadtube counters Oper- ated by permanent electric installations if current is available, or they may be adapted to battery use. Other types may be manual in nature. Where manual counters are used, the oper- ator is usually gathering complementary data pertinent to the composition of the traffic flow. The data in Figure 19 indicate the location of the con- tinuous count stations for the state of Idaho. Two types of tabulating procedures were used in that state in 1959: (1) con- tinuous automatic counters, and (2) manual counters. In conjunction with the traffic count at key stations, load— ometer studies should be conducted. The loadometer studies furnish valuable information on commercial vehicles. The data acquired should include gross vehicle weight, the manufac- turer’s rated capacity of the vehicle, the width, height, and length of commercial vehicles, axle loads, commodity car- ried, origin and destination of the vehicle, and other relevant factors. The information derived from loadometer studies should be used: (1) to assist in road design for surfaces and foundation, 320 “gig-.4 - “. _°_ d. STATE OF IDAHO ; 3' 4:5 w - “"- '-'- CONTINUOUS COUNT STATIONS ' ’ FOR 1959 TRAFFIC COUNTS W H—L—L—J" -- LEG EN 0 — Dulqnotodmot built. . . . . lic-c Unlmnrovoo........— Ground and Drain“ ..... =— Soil Surfaced ......... — Grout. Ground on Droinod . — Oil Ponotrotion ......... .— attumlnou Iso- Ty” ..... .— Pond ............... - Continuous Automatic counters. . .© 24 Hour Monuol Count Stotlont . . . . Q Administrotivc Districts . . . . . ...— Fig. 19.—Location map of continuous count stations in the state of Idaho for 1959. O. 321 (2) to establish regulatory measures,1 and (3) to serve as a basis for evaluation of highway benefits accruing to road users. Motor vehicle use studies Traffic surveys are generally concerned with the volume, movement, and weight Of vehicles over the highways. In addition to this information it is also important to know the composition and characteristics of the traffic volumes. Motor vehicle use studies should be analyzed by in-state and out-Of-state vehicular traffic. The characteristics of both can reveal interesting statistics necessary to long-range planning. In-state vehicular traffic.———It would seem that the bulk of the vehicle-miles?" driven on the highways of a state are by autos and trucks registered in that state.3 If this is true, valuable 1Many states regulate the weight of trucks and penalize commercial firms by fines when overweight vehicles are found using the state highways. 2A vehicle-mile is the unit in which travel is expressed. Fifteen vehicle-miles could represent the travel of one vehicle for fifteen miles, fifteen vehicles for one mile, three vehicles for five miles, et cetera. 3For the year 1954, in New Mexico, 83 percent of the vehicle-miles driven in the state were incurred by New Mexico vehicles, while the remaining 17 percent were attributed to for- eign vehicles. See New Mexico State Highway Department, Plan- ning Division, Motor-Vehicle Use Study, 1954, Project Report (Santa Fe: New Mexico State Highway Department, 1954), I, 24. 322 planning information can be derived from travel characteristics and patterns, and from the habits Of the Operators of the vehicles. In preparing such a study, the state should be segregated into population groups such as unincorporated open country and suburban areas, and incorporated areas by size Of town. From registration data the number of passenger cars and trucks Oper- ating from each of the population groups should be determined. From manual traffic counts it can be established what road sys— tems (interstate, primary, secondary, et cetera) were used by each of the types Of vehicles. Second, through the use of sampling techniques, question- naires can be mailed to a cross section of the population groups requesting information on such factors as average annual mileage driven, average trip length, and purpose Of trips. In addition to the preceding information, it can be established what road sys— tems are being used by what occupational groups (professionals, farmers, business proprietors, salesmen, et cetera) and for what purposes (earning a living, social and recreational, family busi- ness, educational, civic, religious, et cetera). From these data, information essential tO highway planning is derived. A thorough knowledge of the patterns of motor-vehicle use must serve as a basis for any long-range prOgramming of construction and reconstruction on the various road 323 systems within the state, particularly with reference to the financial and economic aspects of such programs.1 Out-Of-state vehicular traffic.——Material similar to that gathered for in-state vehicles should be accumulated from the operators of out-of-state vehicles. Interviewing stations can be established at ports of entry or departure of a state. By sampling techniques and the use of a questionnaire, vehicle operators of foreign automobiles can be interviewed as to their origin and destination, purpose for visiting the state, routes taken or to be taken in travel through the state, places of interest that the traveling unit will visit, and the number of days to be spent in the state. From the preceding traffic studies, the complete travel characteristics of road users can be determined. The traffic volumes, movement, weight, composition, patterns, and other char- acteristics of vehicles and owners can be established. The in- formation is invaluable for determining road classification, struc- tural needs, allocation of tax burdens, and other long-range plan- ning requirements. Ibid., p. 1. 324 Road Life Studies Although highways can be subjected to the same analysis as a piece of machinery pertinent to depreciation and Obsoles- cence, the factors affecting the life of a highway are more varied and difficult to forecast. In addition to the usual wear and tear from use and obsolescence arising out of inadequate standards resulting from increased traffic volumes, unusual weather condi- tions, soil composition, changes in the weight and speed of motor vehicles, and other factors must be considered in determining the life of a road. Studies should be conducted constantly that can assist in reducing the unpredictability of. the variables to a mini- mum. It is possible to determine the average service life of the various types Of road surface materials and the other ele- ments Of a highway such as the foundation, shoulders, drainage systems, bridges, and other structures. If the average life of the highway can be predicted with a fair degree of accuracy, the cost of maintenance over its useful life and its eventual replace- ment date can be determined and made a part of the long-range budgetary forecast. 325 Economic Studies Unless they exercise extreme care, state highway and fed- eral authorities can create considerable hardships for members Of a community. A decision to relocate a road, for instance, along a different path to comply with road standards can cause economic disaster to businesses located along the Old route. The problem can be quite serious in certain circumstances. For ex- ample, Route 30 traverses the nation from coast to coast. In Wyoming, the route enters Laramie from the east and turns north and west in a large semicircle. North and west of Laramie the national route passes through three small towns: Bosler, Rock River, and Medicine Bow. In these communities and along the route many businesses have been established to cater to the needs of travelers on the road. In planning the new interstate system through Wyoming along the old Route 30, a decision was made to bypass the three small towns entirely and eliminate approximately eighteen miles of travel over the Old route. The following diagram is a reason- ably exact facsimile of the geographical situation: 326 MEDICINE BOW ROUTE 30 WALCOTT (old) JUNCTION . ' OCK RIVER BOSLER LARAMIE An economic analysis was made to determine the economic impact on the three towns. The study covered several aspects: (1) the initial loss Of sales to individual enterprises located along the original route if the cutoff were constructed; (2) the second- ary effect on the economies of the three towns and the counties in which they are located as the incomes Of the employees and entrepreneurs are reduced or eliminated and the pOpulations of the communities contract; and (3) the savings in time, fuel, re- pairs, depreciation, et cetera, that should accrue to the motor- ists by having to travel eighteen miles less.1 It is obvious that 1The cost of operating an average passenger vehicle is estimated to be one cent per mile more on an intermediate-type pavement and two cents per mile more on a low-type pavement 327 it will be the individual businesses servicing the highway traf— fic, the communities (business and others) that do not depend on the highway traffic, and the counties that will be affected by the relocation. It is doubtful that the state as a whole will be much affected by the bypass, as the income will be distrib- uted to other businesses, communities, and counties along the new route.1 Another aspect of economic impact studies should have to do with the effect on the values of lands that are serviced by the highways. Land values are substantially affected by the means of ingress and egress to the property. At present, land- owners are paying little or nothing toward the construction and maintenance of the major state highways. than Operating on a high-type pavement. The savings in time is estimated, for pleasure vehicles, at 1-1/4 and 1-1/ 2 cents per vehicle-minute. For further discussion Of operating costs, see Eugene L. Grant, Principles of Engineering Economy (New York: The Ronald Press Company, 1950), pp. 495—501. 1Although the study revealed a severe economic loss to the three communities, state highway Officials made a decision to construct the new bypass. For a more detailed analysis of the problem of the three Wyoming towns, see Wyoming State Highway Department, Study Of Interstate System Location (Cheyenne: Wyo- ming State Highway Department, 1958). A further analysis of economic studies may be derived from W. Zickefoose, Economic Survey of Santa Rosa, New Mexico, 1950—1958 (Santa Fe: New Mexico State Highway Department, 1959). 328 Urban Analysis One Of the major problems confronting state highway and urban officials is the planning of an adequate system to service traffic in the large metropolitan centers. State highway Officials are concerned because of their responsibility for urban exten- sions of the various state highway systems and because urban areas are participating in revenues generated by highway users. The problem has arisen out of the phenomenal growth of cities, the migration of city residents to suburban areas, and poor plan- ning on the part of city highway Officials. Each work day, traffic problems are created by the movement of commuters to and from their places of employment. The cost of building modern multiple-lane freeways to serv- ice the metropolitan traffic is extremely high, especially as to right-Of-way acquisitions. At present, much consideration is being given to urban planning. There is a need for long-range planning for construction and for financing the costly program. Future growth patterns of the urban areas should be carefully forecasted, a road system should be designed to service the an- ticipated traffic, and the means for financing it should be pro- vided. Such a long-range program will require close cooperation 329 and coordination between state and urban officials. Failure to consider urban planning for construction and finance will result in an unbalanced road system and undoubtedly will culminate in unusual demands on highway revenues in the future. Planning the construction and financial needs Of urban, state, and county road systems should be blended into one over-all program.1 With a few exceptions, the urban problem has not been very serious in the ten survey states. However, the rate Of growth of certain cities in a few of the states would indicate that they are rapidly approaching the urban problem. Careful consideration should be given to the manner in which other urban areas are solving their problems. Urban needs should be made a part of long-range plans, and provisions should be made for the acquisition of right-Of-way property—4he costly aspect of urban road construction. Growth patterns of the urban areas should be carefully analyzed, interstate routes should be planned 1For a further analysis of the urban road problem, see Wilbur Smith and Associates, A Major Street and Highway Plan-— Phoenix Urban Area, A Report Prepared for the Arizona State Highway Commission (Phoenix: Arizona State Highway Depart- ment, 1960); and National Academy of Sciences, Highway Re- search Board, Highway Planning and Urban Development (National Research Council Bulletin 64, Publication 249; Washington: Na- tional Academy of Sciences, 1952). 330 that will bypass the city, and traffic patterns should be evaluated for planning a street system which will avoid heavy traffic con- gestions during rush hours. Urban road planning is one Of the most important problems facing highway authorities at the present time. Those state and urban area Officials not encountering the problem at the present time should carefully evaluate and analyze the growth trends in their communities and plan to avoid the situation now faced by highway authorities in other urban areas. CHAPTER IX LEGISLATION, ORGANIZATION, AND PUBLIC REPORTING Organizations, like individuals, tend to acquire personality characteristics that may resemble inherited or learned traits. When the organization is initiated it is often the representation of the philosophies Of its founders. In other words, it acquires at birth seemingly inherent characteristics that represent the concerted or compromised traits of its initiators. As the organization grows, chronologically or physically, it undergoes certain changes as it is subjected to environmental influences and pressures. For example, the organizational phi- losophy of firms toward their employees have modulated consid- erably depending on certain internal and external pressures. It is certainly true that these philosophical shifts have been the personification of the individual leaders who guide and direct the organization. The firm, nevertheless, seems to take on a personality of its own. Even the law has given a degree of indi- viduality to the organization which exceeds that of its members. 331 Ants-kn» 332 The state highway organization is the counterpart of its prototype, the state government. In addition, it is the product of its political environment. It is required to operate in an atmosphere of custom and tradition based on political maneuver- ing and expediency. To bring about changes in managerial prac- tices and other features necessary to an informed and enlightened highway management operating in an efficient manner, legislation is required to overcome the precedence of conventional practices that have become prevalent in the highway department. It will be the objective of this chapter to discuss those factors of a highway plan that are necessary to give meaning, substance, and support to the recommendations for financial plan- ning and control as suggested in this dissertation. To state that certain action should be taken by highway authorities in order to acquire greater efficiency in the accomplishment of organizational Objectives is one thing, but to put them into practice is another. Three features essential to the installation and use of the recommended procedures of financial planning and control are legislation, organization, and public reporting. These factors represent the minimum requirements necessary to the successful attainment of financial Objectives. 333 Legislation In the light of recommended financial planning and control procedures, legislation should be enacted in three areas: (1) State and county legislation should be enacted to provide for a greater degree of control over the use of highway funds for county road construction by state highway departments. (2) State law should be passed, or present law amended, to abolish com- missioner districts or similar established boundaries within a state. (3) A law should be enacted that would require construc- tion expenditures to be allocated on the basis of priority listings as determined by sufficiency ratings. (4) Legislation should re- quire adequate public reporting. State control over county road fund allocations To integrate the county and state rural road systems into a coordinated unit for the purpose of over-all planning and con- trol, the approval of the residents of the counties by popular vote would be required. In turn, the state legislature would have to pass legislation to the same effect. It was discussed in Chapter V that two possible alterna- tives were available: (1) The state could assume responsibility 334 for the entire county road system as to financial and construction planning and control. (2) The most important county highways could be designated as a special system of primary county roads which would be integrated into the state rural road system.1 Of the two proposals, the latter seems to be more acceptable. State highway Officials seemed to be quite reluctant to assume responsi- bility for the entire county systems. However, many did indicate that considerable value could be derived from financial and con- struction planning and control over a limited primary road system by state highway departments. Since the establishment Of a county road system seems to be the most feasible of the two alternatives, the following discussion will be directed toward that end. The reader should be reminded that the first distribution from highway user revenues is made to the state, counties, and urban areas. The formulas for this allocation of highway user receipts among the political units are established by state legis— latures. Legislation should be passed to provide for financial and construction planning and control of the county road systems by state highway departments; administrative control should re- main with county commissioners. 1See supra, Chapter V, pages 154—58. 335 More specifically, the legislation should provide for the following features: 1. County and state highway officials should cooperate in determining which county highways should be made part Of the county primary road system subject to the ap- proval Of the state legislature. The mileage of this road system should be “frozen” and subsequent addi- tions should be made only with the approval of state highway departments. . State highway departments should establish a depart- ment in their organizations to administer the county primary road needs. . Road standards and designs should be created for the county primary roads setting forth the requirements for structural, service, and safety features of the county system. . A sufficiency rating system should be designed and ap- plied tO the county primary road system for the purpose of allocating construction funds on the basis of need. The rating of the county highways should be performed by trained state highway personnel. . All decisions pertinent to county primary road location, construction, or reconstruction should be vested in state highway authorities subject to their approval prior to the allocation Of highway funds for road projects. State highway officials should make their decisions on the basis of an integration Of the county primary road system into the rural state systems. Allocating state highway revenues by districts The second allocation of highway funds for state road systems is made by highway commissioners among the districts 336 which they represent.1 This distribution among commissioner dis- tricts is highly impracticable and unrealistic, and there is little logic to support it as a procedure for allocating highway funds. The allocation has no relevance whatsoever to needs based on road priorities competing for scarce construction funds. If the allocation among the districts is not established by formulas based on population, road mileage, or terrain, the highway commission- ers distribute the construction fund among their districts on the basis of argument and concession among themselves. It makes little difference whether construction funds are allocated among commissioner (or other) districts by legislative formulas or by commissioner agreement; both methods give little consideration to construction needs in the state. Legislation should be established that will abolish distri- bution of construction funds among districts—rommissioner or otherwise. The need for the allocation can be established by the recommendation in the following section pertinent to the use of sufficiency ratings. 1See supra, Chapter V, page 167. 337 Allocating construction funds by priority listings Traditionally, highway commissioners have been determin- ing and approving the placement of funds on specific construc- tion projects within their districts. Even though annual con- struction needs in their districts may have been established by priority lists based on sufficiency ratings, commissioners possess the authority to change, add to, or modify the construction proj- ects as they desire. Often, in scheduling construction projects in their districts, their decisions may not be based on actual needs but may be predicated on alternatives arising out of political pressures. It has been an underlying thesis Of this dissertation that decisions based on commissioner judgment will not result in the most efficient utilization of construction funds. Construction funds should be allocated on a more systematic basis, and the best technique available is the priority listing system based on a sufficiency rating procedure whereby construction projects are determined and scheduled in the construction budget according to need. To say that the function of specific fund allocation should not be the responsibility of highway commissioners is not enough. Custom and tradition pertinent to construction fund allocation have 338 been so thoroughly ingrained in the commissioner function that legislation has been passed in certain states to eliminate it as a basis for decision-making. The manner in which the inefficient practices of commission action can be avoided and a more ra- tional approach assured is to pass state legislation which will make mandatory fund allocation utilizing the most efficient pro- cedures available. To do otherwise would render the system useless and subject to circumvention. The legislation should encompass the recommendation of- fered in the preceding section of this chapter—the dissolution of district boundaries as a basis for distributing construction funds. The following are examples of similar types of legislation that have been passed in one state—Nebraska—and recommended in another—Wyoming. The construction, maintenance, protection, and control of the state highway system shall be under the authority and responsibility of the department except as otherwise provided in Section 39 of this act. The relative urgency of proposed improvements in the state highway system shall be determined by a sufficiency rating established by the department in-so-far as the use of such a rating is deemed practicable. The suf- ficiency rating shall include, but not be limited to, the follow- ing factors: (1) Surface condition, (2) Economic factors, (3) ‘ Safety, and (4) Service.1 1Hugo F. Srb, Laws of Nebraska, 1955, 67th Sess. (Lin- coln, Neb.: Journal-Star Printing Company, 1955), pp. 433—34. 339 In an unpublished report prepared for the State Highway Commission of Wyoming, a recommendation was made by a study group as follows: Section 1. The state highway superintendent, under the supervision of the state highway commission, shall es- tablish a system for rating all roads and highways constitut- ing the federal aid primary and secondary systems including urban extensions on a sufficiency rating basis which shall take into consideration traffic volume, composition of traffic, structural adequacy, safety and such other factors as the superintendent may determine, and shall rate all such roads and lliighways according to such sufficiency rating system. Such legislation will place the responsibility for conduct- ing the field observation study to rate the highways, and the subsequent preparation of the annual construction priority list, in the hands of experts in the state highway departments. Final approval for the annual construction budget should still remain with the board of commissioners. However, the legislation should forbid any changes in the construction budget by the commission- ers that cannot be justified by the priority listing system. 1Wyoming State Highway Department, “Financing of Modern Highway for Wyoming,” An Unpublished Report on a Fiscal Analy- sis Of Wyoming’s Highway Needs Prepared at the Request of the State Highway Commission of Wyoming (Cheyenne, Wyo., 1960), p. 194. 340 Public reporting State legislation should be provided to require the state highway department to prepare complete and timely reports on its activities each year and the projected action for the coming year. Probably nothing is more conducive to efficient operation on the part of highway management than the knowledge that their opera- tions will be subjected to close scrutiny by the interested public. Public reporting is discussed in greater detail in a subsequent section Of this chapter. Organization Before a system of financial planning and control can be made effective it is important that the organization provide the environment for the most efficient Operation.1 Although there is room for improvement in many areas Of highway management and 1The author has participated as a conference leader in several management conferences conducted for state highway en- gineers. These experiences have provided an insight into the problems encountered in state highway management. Many Of their problems are the result of a lack of understanding of man- agement principles, such as authority and responsibility relation- ships, line and staff concepts, a misunderstanding Of the functions of a manager, and failure to establish and utilize prOper objec- tives, policies, procedures, and systems. 341 organization, this dissertation is primarily concerned with those that have relevance to financial planning and control. The most common form Of highway organization at top managerial levels provides for a board Of highway commissioners, or directors, whose authority and responsibility generally encom- pass the complete functions of construction, maintenance, and reg- ulation of state highways. In most cases this managerial body performs in a line capacity whereby its authority is absolute to all other highway managerial and operative positions. The board of commissioners serves in another important capacity in the highway organization other than the planning, di- recting, and controlling of the functional activities and assuming responsibility for their performance. The commissioner body provides a buffer between higher political authorities and the career managers Of the state highway department in the perform- ance Of their activities. This Organizational setup tends to alleviate a substantial portion—but not all—of the political pres- sure exerted by nonhighway personnel. However, even though the idea has merit, the board of commissioners tends to emasculate the principle by submitting to pressures from other external sources . 342 Fundamentally, the board of commissioners can be com- pared to the board of directors Of the modern corporation. The function Of such a body should be to establish Objectives, deter- mine general policies, and to plan and control the over-all ac- tivities Of the organization. At no We should the board members —-—acting in such a capacity—be concerned with performing actual lower-level managerial functions that can be better delegated to, and performed by, specialists who are well trained and experi- enced in the Operation Of those functions. Yet this is precisely what highway commissioners do. They are instrumental in de- termining the actual construction projects for their districts. This function can be performed much more efficiently and ex— pertly by highway planning engineers using the sufficiency rating procedure to determine annual construction priorities based on short- and long-run planning and control concepts. It has already been recommended that the situation should be corrected by state legislation which will make mandatory the use of priority listings. There is at least one other alternative that should be mentioned. The board of commissioners can be placed in a staff capacity whereby their authority and responsi- bility are eliminated.1 In this respect, the board acts in an 1The state of Nebraska utilizes this form of organization structure relevant to the board Of commissioners. 343 advisory capacity to the chief line Officer, who now assumes the authority and responsibility for the operation of the highway functions. The line of authority runs directly from the governor to the line officer in charge Of highway operations, which may make him subject to dismissal with changes in the political ad- ministration.1 The following are examples of both types of organization: 1. The board of commissioners as line Officers. [ Governor 7 Board of Commissioners l l Chief HighwayJ Officer Construction Maintenance Administration 1This situation may be alleviated if the state has a civil service program for its employees. 344 2. The board of commissioners as staff officers. Governor J I Board of Commissioners Chief Highway Officer I Construction Maintenance Administration If legislation cannot be passed eliminating commissioner districts and curtailing commissioner control over scheduling an- nual construction projects, and if the law does not delegate com- plete authority to the commissioner body, the second organizational structure should be used. The disadvantages of the direct line of command from the governor to the chief highway Officer are more than Offset by the advantages in eliminating commissioners from exerting their influence on matters pertaining to financial planning and control. 345 In the organization, the planning division acquires added importance in performing the function of determining the annual construction schedule. Many planning divisions are already act- ing in this capacity and are preparing priority listings based on some sort Of rating device, but insufficient consideration is being given to their efforts. If the recommended procedures are ac- cepted, the planning division should be enlarged to provide the staff necessary to rate county roads in addition to the state systems. Qualified highway engineers should be found and trained in the highway rating procedure in an attempt to reduce the subjective elements of the system to a minimum. If one is not already in existence, a department should be created to coordinate the county primary road program. Close cooperation will be required between state and county Officials in establishing the county primary system, and approving road location, construction, and reconstruction projects for financial approval. County road standards and design can be determined by the same highway department that establishes the construction requirements for the state highway systems. Some state highway departments have established a policy, written or implied, that only engineers can be promoted to top- level management positions. Little or no attention is given to 346 managerial ability or training. Highway engineers are probably the best-trained highway technologists in the world, but this may have little bearing on good highway administration. Good engi- neers do not necessarily make good managers. Highway policy should be modified to include a knowledge and understanding of management principles and practices. The requirement should also apply to commissioner ap- pointments. Often commissioners are lacking in an understanding of both management practices and highway engineering knowledge. Consequently, they tend to perpetuate inefficient management prac- tices rooted in highway custom and tradition. Public Reporting In many organizations reporting Of financial information based on carefully established records and procedures has be- come an integral part of the requirements for management tO account for its past performances. In the privately owned cor- poration, with its absentee ownership, it is necessary that the professional manager account for the authority and responsibility vested in him by the owners and other interested parties of the firm. In the private profit-making concern with its audited rec- ords, managerial responsibility as it relates to financial 347 performance can be fairly well determined. The important fact is that managers do account, in some manner or another, for their responsibilities to those who associate with the firm, internally and externally. In state highway departments, with but few exceptions, little or no attempt is made to justify managerial action, financial or otherwise. In many states only irrelevant and immaterial infor- mation is disseminated to the public that pays for and uses the highways. Occasional news releases are made indicating con- tracts let to private firms, road conditions, and other similar types of information. Very seldom, if at all, is information re- leased that would indicate the manner in which highway manage- ment is fulfilling its responsibilities. Even though the financial records Of state highway departments and other state agencies may be Open to the public, they often do not reveal many aspects of the failure of highway management to achieve organizational Objectives. State highway department officials are often subjected to criticism, abuse, and pressures from outside sources. News- papers, radio, and other media Often attack highway department Officials on some policy or road program undertaken. The basis for such attacks may Often be more emotional than logical, and 348 in many cases the counterarguments of highway Officials may be equally lacking in logic. Individuals, groups, or organizations may apply pressure on highway commissioners to build roads that will further their own interests. State law often requires that commissioners listen to these pleas at public hearings. It was readily admitted by highway officials in certain of the survey states that external pressures were successful in swaying the opinions of the com- missioners. Abuse and pressures on highway officials can be eliminated —Or nearly so——-by two of the procedures recommended in this dissertation. First, in allocating all construction expenditures by a priority listing procedure based on sufficiency ratings, con- struction outlays will be made on the basis of need. Sufficiency ratings permit a comparison of the condition of one highway seg- ment with another and can furnish cogent arguments as to why one highway section should receive consideration in preference to another. Pressures can be eliminated by sheer logic rather than by irrational arguments. The priority list can be used to explain precisely why a highway section was scheduled for con- struction. If advance planning reports can avoid public specu- lation in right-of—way acquisition, the construction schedules 349 can be prepared for several years in the future for public dis- tribution. Second, legislation should be enacted to assure that the public will be informed as to the manner in which highway man- agement is fulfilling its responsibility. An annual report should be prepared for public dissemination setting forth: (1) a brief but thorough explanation Of the sufficiency rating system in terms understandable to the layman; (2) a detailed breakdown of all highway receipts and expenditures for the past year; (3) a com- plete description of the projects undertaken and completed during the past year, indicating the sufficiency rating, cost, and other pertinent information; (4) a summary of the condition of the state highway by classification of the road systems (interstate, pri- mary, secondary, et cetera); and (5) a list Of construction proj- ects to be scheduled for the following year and an explanation of why they were programmed for construction. The report should be well interspersed with sufficiency rating maps, graphs, charts, and other pictorial representations that will make it more read- able to the interested person. As it would be too costly to print and distribute such a report to all residents of a state, the newspapers, radio, and other media should be utilized in disseminating the information 350 throughout the state. By using the mass media Of communication to publicize construction project decisions based on the priority listing procedure, groups having vested interests in highways may become hesitant to apply pressure for their own interests.1 Copies of the report should be sent to the governor, mem- bers of the legislature, and any other interested groups and or- ganizations that might be concerned with good highways. If high— way managers are fulfilling the Objectives of their organizations, the public should know about it. It is only through the use Of good financial planning and control procedures and proper and timely reporting of highway activities that the general public, state administrators, and highway personnel will throw their complete support behind the highway organization. As the situa- tion now exists in many state highway departments, failure to keep the public informed on objectives, policies, and procedures of the highway department and to give adequate, if any, indication of the performance level of highway management will result in further 1A similar but less complete reporting procedure has been legislated into existence in the state of Colorado. In an inter- view with Mr. Robert Livingston, Planning Engineer for the Colo- rado State Highway Department, the author was informed that criticism of construction planning had been reduced to a minimum and that pressure groups were no longer instrumental in directing the flow Of scarce construction funds. 351 abuse and pressure from external sources. With the extensive highway program now in effect involving the expenditures of bil- lions Of dollars, highway management has assumed an awesome responsibility to the public. Failure to inform the public as to how well they are fulfilling this responsibility will render them derelict to duty. A Flow Chart Presentation of the Major Recommendations With the completion Of this chapter, the areas of current highway management planning and control of construction expendi- tures have been discussed and recommendations have been made to improve management practices. To enable the reader to better visualize the complete process, two flow charts are presented. In Figure 20, the flow of highway revenue designated for con- struction is depicted as it is received from the tax sources, dis- tributed to the major highway political units, allocated tO the four major highway functions (construction, maintenance, administra- tion, and other services), prorated to commissioner or other districts by formula or commissioner agreement, and eventually expended in the districts on construction projects as determined and approved by the commissioners of the districts. Figure 20 352 LSources Of State Highway User Revenue /[\ Distribution is established by state law with little or no control exercised over the use of the funds by urban and county authorities. , I , ‘ Counties or State Highway urban Areas [Similar Units Department Distribution is established by functional needs and re— quirements to meet federal- / aid funds for construction. _ _ l A }. Construction Maintenance Adminis- 0th?” tration Servmes ‘ Federal-Aid Funds This distribution is controlled Budget and actu cost allocations by federal-aid matching funds. are well planned and controlled. Federal-Aid Secondary Federal-Aid Primary System Urban Extensions Interstate System System This distribution of construction funds is based on formula or commissioner agreement. All districts may not receive interstate funds. District District District District DiSrict 1 2 3 4 5 J I ' ’ t Con- Con- an- an- Con- struction struction struction struction struction Projects Projects Projects Projects Projects Fund allocation to construction projects is determined by dist- rict commissioners with the assistance of district engineers. Projects chosen for construction will include highway sections not having a highway priority but scheduled on the basis of personal judgment and political expediency. Fig. 20 .—Flow of state highway revenues before the pro- posed recommendations. 353 reflects the conditions as they generally now exist and prior to the utilization of the proposed recommendations. Figure 21 shows the flow of highway revenue designated for construction after the proposed recommendations have been installed. First, note that revenue allocations tO counties are controlled by the state highway department. All county road expenditures from the highway user fund must be approved by state highway Officials as described in preceding chapters. Sec- ond, commissioner or other districts have been eliminated (by legislation), and construction funds are now allocated directly to construction projects based on need as determined by priority lists prepared from sufficiency ratings. This allocation also gives consideration to long-range planning techniques. Legisla- tion is required to enforce the use of sufficiency ratings as a basis for allocating scarce construction funds. Third, from the long-range planning techniques, suffi- ciency ratings, and the construction budgets, maps, charts, and graphs can be prepared indicating the progress in overcoming road deficiencies. These maps, charts, and graphs serve not only as control techniques but are also excellent tools for future construction planning. Information is available for preparing an 354 Sources of State Highway User Revenue J The state highway depart- State . Counties Highway finial“; iti‘ésa‘éisfmifé’é or Similar Department g“ Units for county road construction.a This distribution is established by functional needs and requirements to meet federal-aid funds for construction. Construction Mainnante nance Adminis Other tration Services This dis ribution is controlled by the re- quirements of federal-aid matching funds. ‘ Federal-Aid Funds Federal-Aid Primary System Federal-Aid Secondary System Interstate System \ / / Commissioner, or 0 her, districts have been eliminated as a basis for distributing construction funds. Con- struction projects are now scheduled on the basis of priority lists as determined by sufficiency ratings and long-range planning techniques Funds are distributed according to need throughout the state. Urban Extensions Construction Projects Maps, charts, and graphs to Annual report to the public and determine progress in over- state administrators justifying coming highway deficiencies. the expenditure of tax funds on Based on sufficiency ratings construction projects. Basis and used to plan and control for determining the fulfillment construction activities. of managerial responsibility.a Fig. 21.—Flow of state highway revenues after installation of proposed recommendations. aLegislation will be required to give meaning to the sys- tem of financial planning and control and to prevent circumven- tion of its requirements. 355 annual report for the public justifying decisions made in budget- ing scarce construction funds. CHAPTER X THE S URVEY In the developmental stages of this dissertation, a survey of the current literature revealed a paucity of information on the subject of financial planning and control in state highway depart- ments. Practically all information available was directed toward the mechanical aspects Of sufficiency rating procedure, and ap- parently no research had ever been conducted to determine what use was being made of the system. A series of preliminary inter- views with planning and research engineers in a nearby state re- vealed that current practices of financial planning and control of construction funds in state highway departments might leave some- thing to be desired. With nothing more than supposition and a few facts, it was decided to conduct a survey of several highway departments to determine at first hand the methods used by high- way Officials in scheduling construction projects in the annual ' budget. 356 357 Objectives of the Survey Due to the lack of information pertinent to highway manage- ment financial planning and control, the survey by necessity served several objectives: 1. To determine the methods or procedures used by state highway officials to plan and control construction ex- penditures. 2. To elicit information relevant to the use being made of the sufficiency rating procedure by highway Officials in scheduling construction programs. 3. To determine practices, or lack thereof, in other areas Of financial planning and control Of construction expen- ditures. Plan of the Survey Once a decision was made to conduct a survey, two prob- lems were encountered. First, what means would be utilized in gathering the information? Second, what weight should be given to statistical accuracy in the survey? The two problems were considered together in making the final decision. If a mail questionnaire were used, statistical ac- curacy would be assured. If a personal interview were conducted, it would have to be limited to the financial resources of the re- searcher, and statistical accuracy would be sacrificed. A 358 decision was finally made to follow a course of action whereby statistical sampling accuracy would be ignored in favor of a se- ries Of personal interviews to be conducted in a rather limited area. The reasons for this choice of alternatives are enumerated below: 1. Due to the confidential nature of the information being gathered, a mail questionnaire would not be the proper technique to utilize because Of (a) the natural reluctance of the respondents tO commit themselves in writing, and (b) the inability of the individual to express himself in written form.1 2. The responses would have been limited to the specific questions asked on the questionnaire, and other areas of financial planning and control procedures would not have been revealed. By using the personal interview method, two additional areas that were not anticipated in the preliminary stages Of the study were developed and made a part of the recommendations. The survey states With the decision to make an intensified study in a limited area, the problem of which states to include in the survey was 1The choice of personal interviews turned out to be a wise one. At the end of an interview, questions were directed to a sample of respondents pertinent to their response if the author had sent them a mail questionnaire covering the material discussed during the interview. Invariably, the answers indi- cated that the respondents would have refused to give answers to confidential questions because they could not as readily deny written answers as they could verbal responses. 359 encountered. Rather than limit the research to the Rocky Moun- tain states,1 it was decided to include three Of the so-called plains states——South Dakota, Nebraska, and Kansas. The Rocky Mountain states included in the research study were Arizona, Colorado, Idaho, Montana, New Mexico, Utah, and Wyoming. Actually, it cannot be said that the ten survey states possess, in general, any degree of homogeneity other than for their western location and the possibility that they, as a group, have large land areas and small populations when compared with states in other parts Of the country. The data in Table 49 show a comparison of the ten survey states with seven nonsurvey states as to land area, population, state-administered road and street mileage, motor-vehicle regis- trations, and disbursements for highway purposes for the year 1959. The data are not conducive to an analytical comparison but are included for informational use only. Limitations of the study Since the survey states were not chosen by a random sampling technique, statements cannot be made to the effect that 1The Rocky Mountain states were deemed to include Ari- zona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah, and Wyoming. 360 TABLE 49.-——-A comparison of the ten survey states with seven se- lected states as to land area, population, state-administered road and street mileage, motor-vehicle registrations, and total highway disbursements for 1959. Land Areab Populationc Statea Square Miles Pct. Number Pct. *Arizona ............ 113,909 8 1,302,161 2 California ........... 158,639 12 15,717,204 20 *Colorado ........... 104,247 7 1,753,947 2 Connecticut .......... 5,009 — 2,535,234 3 *Idaho .............. 83,557 6 667,191 1 Illinois ............. 56,400 4 10,081,158 13 *Kansas ............. 82,276 6 2,178,611 3 Michigan ............ 58,216 4 7,823,194 10 *Montana ............ 147,138 11 674,767 1 *Nebraska ........... 77,273 5 1,411,380 2 *New Mexico . . . . . . . 121,666 10 951,023 New York ........... 49,576 3 16,782,304 21 Pennsylvania ......... 45,333 3 11,319,366 14 *South Dakota ........ 77,047 5 680,514 1 Tennessee .......... 42,246 3 3,567,089 5 *Utah .............. 84,916 6 890,627 1 *Wyoming ............ 97 ,9 14 7 330 ,066 — Totals .............. 1,405,416 100 78,665,836 100 aStates marked with an asterisk (*) were included in the survey. bSource: Webster’s New Twentieth Century Dictionary, ed. Jean L. McKechnie (Cleveland: The World Publishing Company, 1960) . c Source: of the United States: 1960. Population. U.S., Bureau of the Census, Eighteenth Census 361 TABLE 49—Continued. State- . Motor- Total Adm1nis- Vehicle Highway tered Road . and Street Registiéa- Disburse-d State Mile d tions ments, 1959 age Mile- Vehi- Amount age Pct. cles Pct. ($000) Pct. *Arizona ...... 4,438 2 578,434 2 50,431 2 California ..... 15,148 9 7,418,137 24 466,950 19 *Colorado ..... 8,232 4 884,697 3 72,771 3 Connecticut . . . . 3,585 2 1,061,069 3 95,098 4 *Idaho ........ 4,777 2 364,047 1 39,018 2 Illinois . . . . . . . 12,931 7 3,678,322 11 279,717 11 *Kansas ....... 10,439 5 1,135,657 4 96,509 4 Michigan ...... 9,354 5 3,201,406 10 151,010 6 *Montana ...... 11,086 6 375,592 1 50,594 2 *Nebraska ..... 9,291 5 706,224 2 52,245 2 *New Mexico . . . 11,806 6 446,495 1 64,532 3 New York ..... 14,455 7 5,011,467 17 463,177 18 Pennsylvania . . . 46,390 25 4,176,661 14 362,265 14 *South Dakota 7,316 4 348,543 1 44,874 2 Tennessee 8,840 5 1,264,255 4 111,937 4 *Utah ........ 5,603 3 401,555 1 51,625 2 *Wyoming ...... 5,164 3 197,621 1 41,888 2 Totals ........ 188,855 100 31,250,182 100 2,494,641 100 dSource: U.S., Department of Commerce, Bureau of Pub- lic Roads, Highway Statistics, 1959 (Washington: U.S. Govern- ment Printing Office, 1961). 362 conditions found in the survey states apply to all states in gen- eral. In other words, the findings of the survey cannot be used to make generalizations relevant to practices of financial planning and control in other states. The survey findings may not represent conditions existing in other state highway departments for several reasons. First, the survey states will differ from most other states in that they possess large land areas and small populations. From a finan- cial vieWpoint, this factor assumes great importance in road standards and design, highway revenues, and other pertinent problems. Second, urban road problems differ substantially in that the survey states do not have the large urban areas found in other states. Land acquisition for highway use in metropoli- tan areas is an extremely costly process, and in some urban areas such as San Francisco it is almost impossible to purchase land for highway purposes. In a few of the survey states this is becoming a problem; Denver and Phoenix are rapidly approach- ing such a situation. Third, the Rocky Mountain states encounter road-building conditions over extremely rough terrain; also, the climate at the higher altitudes presents construction problems not encountered in many other states. 363 Interview procedure To accumulate the required information, it was necessary to interview personnel holding various key positions in the high- way departments. Whenever possible, interviews were conducted with state highway engineers (the chief executive Officer) or their assistants, planning and research engineers, chief maintenance engineers, construction engineers, public relations officers, ad- ministrative officers, district engineers, traffic engineers, safety engineers, and chief accounting officers. As summer (the inter- view period) is the busy season for highway activity, it was sometimes impossible to contact certain of the above-listed per- sonnel. Approximately three weeks prior to the actual interview- ing, a letter was sent to the chief executive Officer of the high- way department requesting permission to interview key personnel. The letter also set a specific date and assured anonymity if so desired. On the assigned date, contact was made with the chief executive and the interviewing procedure was undertaken. In several cases the researcher was limited as to the amount Of time that could be spent with highway officials, and in most in- stances the anonymity of both individuals and the state highway department was requested. 364 A practice was followed in interviewing the planning and research engineer first. There were several reasons for this procedure: (1) The planning and research engineer generally prepares the sufficiency ratings and the priority lists for the highway department. (2) Due to the nature Of the position and length of service, the planning and research engineer was prob- ably the best informed individual in the highway department as to over-all highway Operations. Other than for the planning and re- search engineer, subsequent interviews were conducted in no particular order . The questionnaire To assure that the desired areas would be covered in the interview, a questionnaire was used to guide the researcher. The questionnaire was designed in such a manner that questions covering specific areas could be directed to personnel specializ- ing in those functions. Part I of the questionnaire was devoted to top-level short-range and long-range planning and control pro- cedures and was used in interviewing chief executive officers and planning and research engineers. Part II was concerned with practices used in reporting to the public and was directed toward planning and research engineers and public relations Of- ficers. In Part III, the questions were designed to determine the effect of political pressures on highway department personnel, use 365 of management training programs, and the adequacy Of communi- cations in the organization. The questions in Part IV established the use of sufficiency ratings in determining priorities for the construction budget. Part V was concerned with short—run budg- eting procedures, and the questions were asked of chief account- ants exclusively. As the survey proceeded, it became Obvious that certain of the questions were superfluous. Conversely, certain other areas were developed more thoroughly by questions which were not a part of the original questionnaire. In fact, if a respondent indicated a propensity to pursue an area of interest, he was en- couraged to do so. Consequently, a substantial amount of infor- mation was gathered that delved much deeper than the answers to specific questions in the questionnaire would have revealed. A copy Of the questionnaire is exhibited in Appendix A. As several peOple were interviewed in each state highway department and were Often asked the same questions, it was not unusual to receive conflicting answers to certain inquiries. This was especially true if the question involved an opinionated answer. For example, the respondents were queried as to the use made Of sufficiency ratings in preparing the construction budget. The answers, in a few instances, varied widely. In such cases the 366 answers Of individuals who were closest to the actual construc- tion planning process were considered the most valid. As to the validity of answers to the questions asked of the respondents, the researcher depended upon the veracity Of the interviewees. However, a pattern of interviewing was de- vised tO eliminate bias as much as possible. As previously mentioned, planning and research engineers were interviewed initially because their function in the highway organization had a direct correlation to the subject being researched. In many cases subsequent interviews with other highway personnel served more as a basis to substantiate the answers given in the initial interview with the planning and research engineer than as an ad- ditional source of information. Findings of the Survey Due to the unnecessary nature of many Of the specific queries in the questionnaire and the fact that definite answers could not be given to many Of the questions, no attempt will be made to present a complete tabulation Of all the questions listed in the questionnaire. Instead, only those questions which directly developed the major hypotheses of the dissertation will be pre- sented in tabular form. 367 Long-range planning The first series of questions were prepared to develop information pertinent to long-range planning. The questions were designed to determine: (1) whether highway officials had estab- lished and were adhering to long-range construction and finance programs, (2) the manner in which the long-range prOgrams had been established, (3) if the long-range constructions programs were on schedule, (4) whether revenues had been made available for financing the long-range construction plans, and (5) the pro- visions made to review and revise the long-range programs peri- odically. Responses to the questions relevant to the establishment and use of long-range construction and finance programs are set forth in Tables 50 and 51. From Table 50 it can be determined that six of the ten state highway departments had prepared long- range plans for finance and construction of state-administered highways. The data in Table 51 indicate the use made of the long-range studies by the six states giving consideration to their long-run needs. The reasons given by the respondents in the nine state highway departments for not conducting long-range studies or for discarding the long-range finance and construction programs 368 TABLE 50.—-Preparation of long-range construction and finance studies by the ten survey states, August 31, 1960.a Preparation Number Had never prepared a long-range construction Or finance study ......................... 4 Had prepared a long-range construction or finance study ........................... 6 Total ................................... 10 aThe survey states were Arizona, Colorado, Idaho, Kan- sas, Montana, Nebraska, New Mexico, South Dakota, Utah, and Wyoming. It should be pointed out that all of the ten survey states had prepared long-range construction reports for the Bureau of Public Roads as required by the various federal-aid highway acts, but little use was made of them for state highway planning as the information included in the reports did not con- tain all the necessary information for establishing long-range construction and finance programs. TABLE 51.—-Use made Of the long-range construction and finance studies by the ten survey states, August 31, 1960. Use Number Report was used in planning construction expenditures ............................ 1 Report was discarded and not used in planning construction needs ................. 5 Total ................................... 6 369 were: (1) The legislature or the governor failed to approve of the proposed tax increase called for in the study. (2) The state legislature was continually adding county road mileage, under pressure from county commissioners or other vested-interest groups, to the state highway systems without commensurate in- creases in highway revenues to care for them. (3) Road stand- ards were continually changing, which made it difficult to esti- mate construction costs in the future. Only Colorado received the full amount of the proposed revenue increase asked for in its long-range construction pro- gram. The Kansas legislature provided three-fourths Of the proposed long-run construction finances, while the state legis- lative body in Montana not only rejected the long-run construc- tion and finance prOposal but it reduced the gasoline tax by one cent per gallon for a two-year period. Three of the four states that had never made long-range construction and finance studies were in the process of prepar- ing them for periods covering fifteen to twenty years. At least one of the three states will use the report as a basis for ac- quiring additional highway revenues by legislative action. Planning and control of construction expenditures is strictly on a short-run basis in most state highway departments 370 _ included in the survey. The data in Table 52 indicate the con- struction planning periods utilized by highway managers. Colorado periodically reviews and revises its long-range construction and finance program. The purpose of this review and revision is to determine the progress made in overcoming highway deficiencies. TABLE 52.——Length Of the construction planning period for the ten survey states, August 31, 1960. Length Of the Construction Planning Period Number Two years ............................... 3 ' Two years, with a five-year tentative plan ........ 4 Three years .............................. 2 Five years or longera ....................... 1 Total ................................... 10 aColorado. 371 Short-term planning Of the ten survey states, eight prepared sufficiency ratings either annually or biennially. The data in Table 53 indicate the types of condition rating systems being used in the ten survey states . TABLE 53.—-—Types of condition rating systems being used by the ten survey states, August 31, 1960. Description Number Sufficiency rating system ..................... 8 Deficiency rating systema .................... 1 Adequacy reportb .......................... 1 Total ................................... 10 aThe deficiency rating system as used in Montana is based on an extremely complex formula designed to show the deficiency of a highway in percent as well as the construction priority of any particular road section. bUtah utilizes an adequacy study in determining its con- struction needs. It is very similar to the sufficiency rating procedure except that the total possible points are based on 130 instead of 100. 372 Of the ten states preparing condition rating lists of some sort, in only two states—Colorado and Nebraska—was the use of the procedure made mandatory by state law as a basis for allo- cating construction funds. In the remaining eight states the pri- ority list based on condition ratings was relegated to a position subordinate to personal judgment or political expediency. The data in Table 54 indicate the degree of control exercised over the flow of construction funds by highway commissioners or di- rectors. TABLE 54 .—Control over the flow of construction funds exerted by highway commissioners in the ten survey states, August 31, 1960. Description Number Commissioners have complete or nearly complete con- trol over the direction of construction funds ..... 8 Commissioner control over the direction of construc- tion funds is restricted by state law ........... 2 Total ................................... 10 373 In all but two states—Colorado and Nebraska—construc- tion funds were distributed initially among commissioner or other districts. The basis for this distribution was by formula or by commissioner agreement. Public reporting Highway officials in all ten of the survey states indicated that they had some sort of method for reporting progress to the public. However, the methods used in reporting ranged from oc- casional press releases to monthly, annual, and biennial reports pertinent to highway organization functions, personnel, the broad aspects of revenues and expenditures for the previous fiscal pe- riod, construction projects undertaken and completed, and other miscellaneous data. Press releases generally were concerned with road conditions, projects currently contracted for construc- tion, and similar informational data. Not one of the ten survey states attempted to justify con- struction expenditures by priority listings based on sufficiency ratings in reports to the public. Nebraska’s annual report to the public probably came the closest to justifying managerial action relevant to construction planning. The report contained a map showing the road sections completed and under construction which 374 could be compared with another map in the report indicating the sufficiency ratings of the state-administered roads. Politics and the highway organizations In all ten survey states it was revealed that groups ap- plied pressures on state highway officials to expend construction funds in certain districts or localities. In only two states——Colo- rado and Nebraska—were such pressures generally unsuccessful, while in the remaining eight states the practice was successful in varying degrees. Another type of pressure common to most of the ten sur- vey states was that in which groups—generally individual county organizations or a number of counties working together—attempted to have county-administered roads transferred to one of the state systems. When successful, it provided the counties with better roads, constructed to higher standards, and it relieved the coun- ties of the cost of construction. Management training The survey revealed that only one state-—Idaho—had a formal management training program in operation on a continuing basis. The program was designed to offer instruction at all levels of highway management. ~ hi 375 All of the ten survey states had sent, at one time or an- other, their key personnel to management conferences conducted by organizations concerned with improving highway management performance. Several Of the states had hired outside consultants to conduct conferences exclusively for their own highway person- nel . Sufficiency rating procedure Of the eight states preparing sufficiency ratings, the pro- cedure in determining the actual rating differed somewhat. The data in Table 55 show the procedural differences in establishing a condition rating for road sections. Short-run budgetary procedure Information acquired on budgetary procedure revealed that considerable uniformity existed in the methods used in preparing the annual highway budget. In nine of the ten states, state high- way user revenues were sufficient to cover nonconstruction out- lays first, and to match federal-aid funds for construction second. In only one of the states did the chief maintenance officer in the central Office prepare the annual maintenance budget without per- mitting the district maintenance engineers to participate in the process. The reason given for the procedure was the difficulty 376 TABLE 55.—Procedures used in determining sufficiency ratings in eight survey states, August 31, 1960.3 Description Number Frequency with which sufficiency ratings were determined: Annually ........................... 6 Biennially .......................... 2 Total ........................... 8 Number of teams participating in the rating study: One team in the field .................. 5 Two teams in the field ................. 3 Total ........................... 8 Number Of states in which the district engineer participated in the field rating study: District engineer did participate . .......... 2 DiStrict engineer did not participate ........ 6 Total ........................... 8 aArizona, Colorado, Idaho, Kansas, Nebraska, New Mexico, South Dakota, and Wyoming. 377 in meeting federal-aid matching funds from current highway reve- nues. In the ten survey states, budgetary procedure for mainte- nance, administration, and other services was adequate. Planning and control of the aforementioned functions was emphasized and encouraged by the utilization Of high-speed accounting equipment which made possible the accumulation and dissemination of timely budgeted and actual cost data. In eight of the ten survey states, budgetary planning and control of construction expenditures was quite faulty. The sched- uling Of projects in the annual construction budget was not based on the best methods available to overcome road deficiencies. In many cases budgeted construction funds were not used to construct highways having the greatest priority. Personal judgment entered into the process of matching construction projects against budgeted funds. Reports pertinent to progress in overcoming road deficien- cies were lacking or were the reflection of faulty planning. In eight of the survey states, the public had no basis for measuring the performance of highway management, and the public reports Of the remaining two states were not complete in the light of report- ing procedures as recommended in this dissertation. 378 Value of the Survey Although the major Objectives of the survey were to de- termine the practices utilized in scheduling the annual construc- tion budget and to establish the use being made of the sufficiency rating system, its value was far greater. First, it revealed other areas of poor managerial practices pertinent to financial planning and control. For instance, the lack of coordination and coopera- tion between county and state officials in planning and construct- ing a rural road system came to light during the survey. In ad- dition, the dubious procedure Of allocating the construction fund by commissioner or other districts was revealed. Second, it was a learning process for the writer, whose prior knowledge Of financial planning and control in highway departments was limited to the reading of the meager amount of literature on the subject. Third, it disclosed that highway managers are not achieving organizational objectives as they relate to the con- struction function. Highway managers were still utilizing out- moded methods in the decision-making process Of scheduling con- struction projects. A substantial portion Of scarce construction funds were being expended on the basis of personal judgment. CHAPTER XI A CRITIQUE OF HIGHWAY MANAGEMENT In undertaking a study such as this, the researcher must exercise extreme care in sifting, analyzing, and utilizing the in- formation accumulated during the course of the investigation. Emotion must be separated from fact, and fact from exaggeration. To this point in the dissertation an attempt has been made to be as objective as possible in reporting the facts and in Offering recommendations. It will be the purpose Of this chapter to pre- sent a critical analysis of the practices of highway administrators as determined in the survey. The Practice of Allocating Construction Funds Two very impressive factors have come out of this study. First, huge sums Of money are being channeled through state high- way departments. Highway officials are responsible for directing the flow Of billions Of dollars Of taxpayers’ funds annually. Sec- ond, the procedures used in planning the expenditure of a 379 380 substantial portion of the highway funds are not based on the most efficient methods available. Highway officials are not achieving maximum effectiveness in spending the taxpayer’s dol- lar. The implications of the two aforementioned factors are very serious. NO longer are the traditional methods Of allocat- ing scarce highway resources satisfactory. The procedures of financial planning and control used in the past are no longer adequate for the present and future. If an efficient and economi- cal highway system is to be established, highway officials must change their philosophies of financial management, states must furnish the machinery necessary to insure efficient performance from highway Officials, and the public must be provided with the necessary information to measure the success of highway manag- ers in achieving organizational Objectives. At present, management practices are based on custom and tradition that have existed in highway departments for years. State legislatures have provided the environment within which highway management has operated. They (state legislators) were instrumental in delegating authority to highway Officials without providing the necessary means to exact responsible action from them. Legislators did not enact laws that would insure the use 381 of the best methods of planning and control of highway finances. By creating the commissioner body, establishing districts which they would represent, and requiring that commissioners hear the pleas of vested-interest groups from their districts, the state legislators encouraged the misuse of highway funds. Perhaps the procedures were adequate in the initial stages of the creation of state highway departments, but for modern financial planning and control it is no longer conducive to efficient Operation. It is not suggested that the commissioner body in highway organization be abolished. Instead, it is recommended that legis- lation be enacted that will exact responsible performance from the commissioners and other highway executives. Commissioners have not utilized the best methods available in spending scarce construction funds. They have been prone to follow established custom by allocating funds on the basis of per- sonal judgment and political expediency. The practice utilized in allocating scarce construction funds among commissioner districts is a prime example Of poor plaming and control of highway fi- nances. Whether the distribution is based on established formu- las or by commissioner agreement, both methods fail to give proper consideration to highway construction needs. When commissioners divide the construction fund among their districts, very little 382 analysis enters into the process. Instances were found in the survey where voting blocks were established to prorate funds into rural areas to the detriment Of urban areas. Such a prac- tice created a lack of balance in the highway systems of the state concerned. One interview revealed that a great amount of ani- mosity was created among the commissioners during and after the fund allocation process. Instead of cooperating in distributing funds according to needs throughout the state, the process is reduced to argument and compromise—a dubious means of allo- cating scarce construction funds. A second practice Open to criticism is the manner in which funds are allocated to specific construction projects. In most cases commissioners have the authority to determine the place- ment of construction funds on highways in their districts. Even though priority lists may have been prepared for their use show- ing the highways having the greatest need for construction funds, commissioners, and in some instances other highway Officials, program their own “pet” projects before consideration is given to those highways having a high priority need. Personal judg- ment is a determining factor in the process, and this is Often tempered by the effects of political pressure. Such a practice cannot result in the most efficient use of the taxpayers’ funds. 383 According to respondents interviewed, this practice re- sulted in an allocation of from 10 to 50 percent of the funds on other than a priority basis. The situation may have been worse, for it was determined that in many states the primary, secondary, and urban extension systems were in such poor condition that most of the roads had received a priority listing. Under these conditions many of the roads would have been listed as critical; however, their comparative deficiencies were given little consid- eration. Sufficient consideration was not given to highways for construction on the basis of their lower sufficiency ratings (high priority). This type of planning will only result in an unbalanced road system. Most important, faced with limited funds and great construction needs, there is no doubt that short- and long-run objectives will never be achieved. Highway departments will remain on an ever—continuing “catch-up” basis in road construc- tion. If such practices Of fund allocation have always been in existence, the lag between highway usage and road conditions is understandable . If an evaluation was made of highway commissioners (po- litical appointees) and highway Officials (career executives) it would be difficult to justify the philosophies and actions Of either 384 group. It has been mentioned previously that the commissioner body performs in a political atmosphere based on custom and tradition. It is highly questionable, however, that this fact can serve as an excuse for failing to fulfill public responsibility. Certainly the commissioners are aware of the fallacies of their {practices and recognize the advantages to be derived from the use of a more systematic method of distributing scarce construc- tion funds. If an executive cannot see the faults of his own procedures and make an attempt to use better practices—espe- cially when better methods are available—then it is time to either question the abilities of such executives or to have an examination of the organization within which they operate. With exceptions, career executives in the highway depart- ment seemed to take a rather lackadaisical attitude toward the inefficient planning and control of construction finances. Al- though their sympathies were not necessarily with the commis- sioners in the construction programming process, nevertheless, they assumed that it was useless to “buck” the system. In some cases highway Officials were quite vociferous in their condemna- tion Of commissioner practices. However, these latter officials were skeptical of any changes coming about in the system of planning and control of scarce finances. In the two cases where 385 action had been taken to bring about changes in construction prO- gramming practices whereby the impact of commissioner decisions had been eliminated or reduced to a minimum, it was the result of the initiative of highway career executives. They made their dissatisfactions heard and succeeded in attracting enough atten- tion to bring about the institution of legislation to eliminate inef- ficient practices pertinent to financial planning and control. In general, highway managers have the ability to assume responsibility for the fulfillment of highway organization Objectives but with some qualifications. If legislation is enacted to limit or restrict the authority and thus the responsibility Of the members of the board of commissioners, the functions Of the board can be adequately performed by the type of personnel now being appointed to the positions. If the recommended legislation is not passed, then present methods of fund allocation will continue and highway Objectives will not be achieved. General State legislators and highway officials do not think in terms of a coordinated county-state rural road system within a state. At present, very little cooperation exists between the two road authorities. Even though a substantial amount of funds are 386 being distributed to counties, little control is exercised over the disposition of these monies. County commissioners possess complete authority in plan- ning the county road systems for construction and maintenance. For instance, in the state of Wyoming there are twenty-three counties, each having its own road authority, facilities, equip- ment, and personnel. Much duplication of effort exists under the present setup, and county Officials do not employ trained personnel to properly plan a highway system. It was readily admitted that county commissioners were Often irrational in their decisions involving the use of highway construction funds. Fur- thermore, county road planning is done independently of that in bordering counties. Many of the state highway Officials interviewed expressed a complete lack of interest in integrating the two road systems. It would seem that many advantages could be derived from cen- tralized planning and control utilizing the services of highly trained state highway engineers. Most state highway officials are technically trained engi- neers with excellent backgrounds in road construction and main- tenance Operations. However, few Of them have been trained in management principles and practices. Many state highway 387 departments are sending their key personnel to management de- velopment conferences which have provided the participants with a better insight into management procedures. A one-week con- ference, however, is not sufficient. What is needed is a contin- uing program where every facet Of management practice and pro- cedure is made a part of the schedule. Organizational Objectives, policies, and systems should be discussed, criticized, and under- stood by all highway personnel. Pride Of achievement in any organization can be accomplished only when the Objectives are known and understood by all personnel. The reports distributed by many highway departments do not reveal the actual practices used in planning and controlling construction outlays. The interested person has no way of know- ing the manner in which funds are distributed among the districts or the procedures used in scheduling construction projects. Even though reports may indicate an annual improvement (increase) in the average sufficiency rating for each of the highway systems, this in itself may be misleading. It does not matter where con- struction funds are expended—the result will generally be to raise the sufficiency rating of the improved road and, hence, the average for that road system. This type of practice and report- ing does not indicate to the layman whether the funds were used V "Z ' :u“?_' 1'», 388 to the best advantage. When roads having less than highest pri- ority are given a place in the annual construction budget because they are “pet” projects Of a commissioner, it will still result in raising the average rating of highways, but it certainly does not represent good financial planning and control Of construction funds. Yet, this primacy of raising the average rating of state highway systems—mo matter where construction funds are ex- pended—seems to prevail in highway management thought. This objective has merit, but only when construction funds are expended on high-priority roads and scheduling by personal judgment and political pressures are eliminated. At present many highway officials cannot afford to have published reports reveal the manner in which construction proj- ects are scheduled in the annual budget. There is absolutely no justification for their decisions involving the expenditure of a substantial amount of the construction funds. Highway Officials are neither meeting nor fulfilling their responsibilities to the public . Highway Management Malpractices When huge sums of money are involved with little or no control exercised over their use, undoubtedly fraudulent practices 389 will come to light. Although it was not one of the Objectives of this dissertation to uncover evidences Of fraud, certain federal investigations have revealed malpractices in highway finance. Through what seems to be collusion with highway Officials, pri- vate contractors are defrauding the public of millions of dollars. These practices do not seem to be general at present, but are centered in a few states. Currently, one of the survey states ——-New Mexico—is under investigation.1 The malpractices have taken several forms. First, there are those cases where the evidence would indicate outright fraud- ulent practices. For example, on a thirteen-mile, eight-million- dollar bypass at Tulsa, Oklahoma, a grand jury and Congressional investigation have recently found evidence that one contractor, with the knowledge and assistance Of state highway Officials and inspectors, used substandard materials, falsified delivery weights, padded bills, and utilized other questionable practices which re- 2 sulted in overpayments estimated at $524,000. In addition, the road was cracking up after two years of use. 1“House to Push Probe of New Mexico Roads,” Denver Post, June 16, 1961, p. 19. 2Karl Detzer, “Our Great Big Highway Bungle,” Reader’s Digest, LXXVII, No. 459 (June, 1960), 50. 390 Another case involved a member of the State Road Board in Florida who admittedly was an unnamed member of a group that bought a tract Of land in St. Petersburg for $165,000 and later resold it to the state highway department for $240,000; the board member’s fee was $24,000.1 Second, there are cases where management decisions would seem to border on the edge of fraud but are more indicative Of a complete disregard for any responsibility to the public. The fol- lowing is an example of this type of managerial malpractice: Federal policy requires that land must be appraised before it can be purchased by the state. But many parcels of land have been bought first and appraised later. In Ne- vada alone, the Comptroller General’s Office found what it chose to call “deficiencies” in the purchase of 29 out of 40 pieces of land. Typical was “Parcel No. 3, Project IN-001-I (14). This property was bought on April 26, 1957 for $42,000. On that same day appraisers employed by the state listed the value of the parcel at only $22,000.2 Mr. Meisler answers the question as to how corrupt the interstate program is: A veteran newsman has said that if an editor sent six report- ers around the country digging up information, he would put half the country’s state highway Officials in jail. The state- ment is no doubt somewhat exaggerated. But Blatnik’s 1Stanley Meisler, “Super-Graft on Superhighways,” N3- tion, CXCII, NO. 13 (April 1, 1961), 278. 2Detzer, Reader’s Digest, LXXVII, NO. 459, 49. 391 subcommittee, in one Of the fairest and most painstaking in- vestigations in recent years, has quietly uncovered a depress- ing panorama of bumbling federal bureaucrats, bribe-taking highway engineers, chisellng contractors, fat-cat state com- missioners and cracking roads in the federal superhighway system.1 It is the unethical practices of a few unscrupulous highway officials that create a stigma that conscientious highway managers will have to labor under for years. These current malpractices should make highway officials more conscientious in fulfilling their responsibilities to the public. 1Meisler, Nation, CXCII, NO. 13, 276. CHAPTER XII SUMMARY, RECOMMENDATIONS , AND CONCLUSIONS Summary This has been a study of financial planning and control in state highway departments. More specifically, it has been con- cerned with the financial features as they pertain to construc- tion expenditures. The revenue problems in highway finance were given a cursory analysis to provide the reader with a background to permit an evaluation of the over-all picture. A survey was conducted to determine: (1) the practices and procedures utilized by highway officials in allocating scarce construction funds over the various highway systems, (2) the use being made of the sufficiency rating procedure in scheduling con- struction budgets, and (3) the methods used in other areas of financial planning and control of construction expenditures. It was shown that the survey does not in any way represent condi- tions existing in state highway departments that were not included 392 393 in the survey. In other words, the survey does not possess the necessary statistical accuracy to permit the use of generaliza- tions concerning practices in other nonsurvey states. However, the findings of the survey are representative of the practices and procedures employed by highway officials in the ten states included in the study. Although it was originally intended to determine the practices of financial planning and control as they pertain to construction programming, the study revealed other facets of managerial inefficiency in highway administration. Lack of coordination in state and county road planning It was shown that at least three highway authorities exist within states: counties, urban areas, and state highway depart- ments. In some states the counties may be divided into several units, each with its own highway department. In any event the urban areas, each of the counties, and the state maintained their own highway departments. There seemed to be a lack of cooper- ation and coordination between the three highway authorities, and much duplication Of effort was evident. It was explained that lit- tle could be done about integrating urban roads and streets—due to their local nature—into the state systems with the exception of those urban roads and streets already part of the state 394 systems. However, the possibility that the rural highways of the counties and the state could be combined to the advantage Of both political units was discussed. Each year huge sums of highway user revenue are distrib- uted to counties for highway purposes, and little or no control is exercised over their use. The types and amounts of funds allocated to counties and other political units are generally de- termined by state legislatures. It was shown that county road authorities frequently did not possess the personal qualifications—nor did they hire trained persomel—-to properly plan county road systems. Decisions per- tinent to road location and construction standards and design Often were based on considerations other than good road engi- neering practices. In many cases county road systems were in very poor condition and definitely out of balance due to poor road planning procedures, or an inequitable basis for distributing highway revenues. The important factor in the county—state re- lationship is the lack of coordination between the two highway authorities. County Officials construct their roads for local use and little consideration is given to the place of county roads in the over-all state rural road system. 395 Allocation of the construction fund by districts It was shown that the first distribution of the construction fund was among districts, commissioner or otherwise. Once the highway fund had been segregated by highway functions (mainte- nance, administration, other services, and construction), the amounts designated for construction were divided by the com- missioners for use in their represented districts. This alloca- tion was performed in two ways: (1) by formula, such as an equal distribution or according to population, road mileage, ter- rain, or some other factor within the district; or (2) the distri- bution of the construction fund was made by commissioner agree- ment whereby the commissioners by argument and compromise determined what amounts each district would receive. It was pointed out that a distribution of the construction fund by any type of district boundary could not result in the most efficient use of highway user revenue. Such methods of allocating funds have positively no relationship to construction needs within a state. It infers that the needs within the various districts are equal or prOportional, when in fact they are not. This practice is indicative Of the custom and tradition that exists 396 in state highway departments. Of the ten survey states, only two did not follow this procedure. It was shown that this practice can result in a lack of balance in highway systems. In most Of the states the commis— sioners gave very little consideration to actual construction needs throughout the state when dividing the fund among districts. Such rather dubious processes as voting blocs, concessions and com- promise, and other irrational procedures were used as the basis for distributing the construction fund. It was pointed out that such decisions were anything but efficient and had little relevance to actual construction needs. Scheduling construction projects in the annual construction budget The dissertation was primarily concerned with the marmer in which construction projects, and hence expenditures, were scheduled in the annual budget. Considering state and federal matching monies, the greatest amount of highway revenues is expended on construction. Currently, high priority is being given to the completion of the interstate system. Although the major cost (90 percent or more) of this expensive system is be- ing underwritten by the federal government from highway user revenue, the states still expend a substantial amount of their 397 own funds on these highways. With such great effort being di- rected toward the completion of the interstate system, the possi- bility exists that other state highway systems may receive less consideration pertinent to funds and effort. In the light Of cur- rent and future highway standards and designs, much of the road mileage of the primary, secondary, and urban extension systems is in need Of construction and reconstruction. With limited funds and great needs, extreme care must be exercised in directing the flow Of monies into the state systems. It was shown that a philosophy prevailed in highway prac- tice today which would seem to serve as a rationalization for inefficiency in annual construction programming. This concept asserts that it does not matter where a dollar is spent on con- struction because the road systems are in such poor condition that the expenditure can only result in an improvement in high- way conditions and an increase in the average sufficiency rating for the state system concerned. In other words, it does not matter which highway is scheduled for construction or recon- struction as long as the general condition of the road system is irriproved. Pursuing this philosophy, it would make very little difference which road sections were scheduled for construction as long as they were in need Of improvement. It was shown that 398 methods and procedures utilized by highway officials in scheduling the annual construction budget adhered to this philosophy. Pos- sessing the necessary authority, highway commissioners or other highway Officials who received this delegation scheduled a sub— stantial portion of the construction budget on the basis Of per- sonal judgment, which was often influenced by the pressures of political or nonpolitical groups. Even though many of these re- sponsible Officials had received priority lists indicating the roads having greatest need for improvement, these lists were relegated to a subordinate position in the construction programming process. It was pointed out that such practices were not conducive to the‘maximum utilization of the taxpayers’ funds. Short-run Objectives were not being accomplished because the best highway system could not be provided when such procedures were utilized in preparing the construction budget. Long-term objectives would either be prolonged or not accomplished at all. The mere fact that a lag has always existed between road standards and use would seem to indicate that such procedures never were success- ful in planning a highway system. 399 Long-term planning It was shown that state highway Officials do very little long-range planning of highway needs. Plans very seldom exceed five years, and two to three years seemed to be the average for planning highway construction needs. Lack of long-term planning often was attributed to the inability to predict changes in road standards and design, road usage, and similar types Of problems. It is questionable whether such pretexts have any degree Of valid- ity. ‘ The private profit-making concern faces problems Of a simi- lar nature, and such firms seem to derive some value in project- ing plans into the long-range future. Planning on a short-term basis would seem to indicate that state highway departments were devoid of long-range Objectives. At present, with a substantial portion of road mileage below ac- ceptable standards and funds limited to current revenue rates and sources, state highway Officials who do not plan long-range high- way construction and financial needs will never accomplish their Objectives for they are not cognizant of what these Objectives are. Planning on a short-run basis exclusively will result in a pro— longation of the standards-use lag which has prevailed in the past and is accentuated in the present. 400 Public reporting In the discussion Of highway practices it was shown that highway departments were very lax in their reports on progress made to overcome highway deficiencies. In those cases where reports were rendered they were cursory in nature and often did not reveal the manner and procedures utilized in scheduling construction projects. More frequently they were devoted to an analysis of revenues and expenditures, occasional press releases pertinent to the letting of contracts, and similar types of infor- mation. In those cases where the reports used sufficiency rat- ings as a basis for expounding on the condition Of the state high- way systems, information was not revealed as to the process used in scheduling the past year’s construction budget. In other words, the reports in no way provided an indication of the manner in which highway management was fulfilling its responsibility to the public . Organization It was shown that highway officials generally do not pos- ess a necessary understanding Of management principles and practices. They often do not make a full utilization of the most efficient methods available in planning and controlling construction 401 expenditures. Top-level officials often assumed the duties of highly qualified, specialized personnel in scheduling construction projects. Insufficient consideration was being given to the ef- forts Of the staff departments that prepare the priority lists based on sufficiency ratings. Although serious deficiencies existed in many aspects of the highway organization, only those features that relate to finan- cial planning and control were stressed. However, other organi- zational problems were related during the discussion. Recommendations One of the major Objectives of this dissertation was to make recommendations relevant to financial planning and control of construction expenditures. In this respect, the suggested rec- ommendations will result in an improvement in current practices now being utilized by highway management. The suggestions are Offered to provide highway Officials with the means of fulfilling their responsibilities to the public which many of them are not achieving at the present. 402 Greater state and county rural road coordination Recommendations were made involving two possible alterna— tives as a solution to the lack of coordination between state and county road authorities. It should be brought to the attention Of the reader again that very substantial amounts of highway funds are prorated to county road officials with very little or no con- trol exerted over their use. The first alternative recommended that the entire county road systems be placed under the control of the state highway department. Two advantages could be derived from this action. First, control would be acquired over the funds being allocated for the construction of the county roads. The funds would be prorated according to highway needs as determined by sufficiency ratings. Second, the county roads would be integrated into the state rural road systems. Highly trained highway experts would be able to incorporate both systems into a coordinated whole for the purpose of planning and control. The second alternative involved the creation of a county primary road system composed of the most important county roads. The specific road mileage would be determined by state and county Officials and the mileage would be frozen by the state 403 legislature. All or a substantial part Of the county allocation of highway user revenues would be devoted to the construction of this system. Construction and maintenance costs Of county roads not a part of the primary system would be the financial responsi- bility of the counties. If one does not presently exist, state highway Officials should create a special department for county road planning and control. Standards and designs should- be prepared for the county primary system for the purpose of determining sufficiency ratings and priority lists for construction scheduling. All con- struction expenditures should be made on the basis of priority lists determined by experienced state highway personnel. In certain respects, the relationship between county and state au— thorities would be similar to that now existing between states and the federal government. Elimination of district boundaries in allocating construction funds State law has created a situation that should be corrected by legislative amendment. It established districts (commissioner, construction, financial, et cetera) among which construction funds were to be prorated. Generally, commissioners are appointed to represent these districts, and naturally they are concerned with 404 having as large an amount of funds funneled into their repre- sented districts as possible. As mentioned before, distribution of the construction fund by districts would seem to bear little relationship to state—wide allocation based on construction needs. It was recommended that district boundaries be abolished as a basis for allocation of scarce construction funds. This would eliminate the current practice Of distributing construction funds by commissioner argument, concession, and compromise. Construction funds would be distributed throughout the state by a more systematic process as explained in the following section of this chapter. Priority listig as the basis for construction fund allocation Not only are construction funds being distributed in a rather haphazard manner by districts, but the subsequent alloca- tion to specific construction projects within the districts is based on practices that are anything but Objective. To reduce the ele- ment Of personal judgment predicated on political influence, it was recommended that a complete utilization Of the sufficiency rating procedure be made to insure the accomplishment of short- run and long-run Objectives. 405 The sufficiency rating procedure will result in an alloca- tion of construction funds on the basis of needs and will reduce the judgment factor to a minimum. Briefly, the system is based on the application of point values to carefully established road standards and designs pertinent to various highway features such as structural adequacy, safety, service, and traffic volume. These standards are then compared to actual highway conditions by a field study. Generally, the rating for a highway perfect in every respect would be one hundred points, and highways not measuring up to acceptable standards would be assigned weights of less than one hundred points, depending upon the seriousness Of their de- ficiencies. This procedure permits a comparison of road deficien- cies Of highways or highway segments throughout a specific sys- tem for the purpose of preparing construction priority lists. From the priority lists the annual construction budget can be prepared by scheduling, with a few exceptions, those roads having the low- est sufficienty ratings (highest priorities) for immediate construc- tion or reconstruction. Through the proper use of the sufficiency rating procedure, various reports, maps, charts, and tables can be prepared and used for planning and control. Progress in overcoming deficien- cies in the various highway systems becomes evident. The system 406 can also be used to establish a long-range planning program by matching deficiencies against the estimated costs of bringing the various systems up to required standards. From sufficiency rat- ings, short- and long-range construction and financial objectives can be more easily determined. Long-range planning It was shown that state highway Officials do very little construction and financial planning beyond a two- or three-year period. It was recommended that long-range plans be established to indicate highway construction and financial needs. By matching long-range construction costs against anticipated or proposed revenues, highway officials could put into motion plans that could result in achieving construction objectives. It was recommended that studies involving traffic surveys, and motor-vehicle use stud- ies be undertaken on a continuing basis to support other short- run and long-run planning and control techniques. The use of road life studies, economic studies, and urban analyses were also recommended as excellent tools in establishing long-range plans. Short-term planning is not sufficient in a situation in which construction needs are great and revenues are limited. 407 Planning on a two- or three-year basis when construction needs indicate a fifteen- to twenty-year program will only result in a prolongation Of the road standard lag that has plagued state high- way Officials for years. Legislation to enforce the recommended program It was shown that custom and tradition are so firmly en- trenched in state highway departments at top management levels that it would require state legislation to enforce the use of the methods recommended in this dissertation. It was suggested that legislation be enacted to acquire greater coordination between state and county Officials. The legislation should provide for a greater degree Of planning and control over the highway user funds distributed to county highway officials. It was further recommended that state legislation be passed to abolish commissioner districts or other districts that currently serve as the basis for the initial distribution Of construction funds. It was pointed out that this allocation is an unnecessary and harm- ful procedure. Due to the inefficient manner ’m which annual construction projects are being scheduled in the construction budget, it was recommended that the use of sufficiency rating procedure be made 408 mandatory by the passage Of state legislation. It was suggested that only by legislating the use of the sufficiency rating method would the short-run and long-range objectives of the state high- way departments be achieved. It was further recommended that legislation should require proper reporting to the public. Using the sufficiency rating pro- cedure, progress in overcoming road deficiencies becomes evi- dent. Proper reports would also serve the public in measuring the performance of highway management. Sufficiency rating re- ports would also serve as the basis for justifying the decisions of Officials pertinent to construction projects. Scheduling con- struction projects by high priorities presents an objective basis upon which to justify decisions to pressure groups. The detri- mental effects Of political expediency and criticism will be elimi— nated through the use of the priority listing system. Organization Recommendations were also made suggesting changes in the organizational structure. An alternative was suggested whereby the commissioner body would be relieved of its author— ity and responsibility for highway Operations by having them act in a staff capacity. It should be pointed out that this organization 409 change would also require legislation because it was through legislation that they were delegated their present authority in the first place. Their function would be to advise line Officers in the performance of their duties. The planning department of the highway organization would be delegated the authority to schedule annual construction projects using the sufficiency rat- ing procedure. Public reporting It was shown that many highway departments prepare in- adequate reports to justify their actions. In many instances the only reports disseminated for public use generally contain irrele- vant information and in no way indicate the manner in which highway management has dispatched its responsibilities. It was recommended that highway officials should be re- quired—by legislation, if necessary——to prepare an annual report for public dissemination that will completely set forth all the re- quired information to evaluate their efficiency. The report should include: (1) an explanation of the sufficiency rating procedure; (2) a breakdown of revenue and expenditures for the year; (3) a complete description of projects undertaken during the year, in- cluding the sufficiency rating of the highway section, its cost, 410 location, and other pertinent information; (4) a summary of the condition Of the state highway systems based on sufficiency rat- ings; and (5) a schedule of projects to be undertaken in the fol- lowing year. Copies of the report should be made available to the gov- ernor, other state and county officials, newspapers, radio sta- tions, and other media of mass communications, and any other groups, individuals, or organizations that might have an interest in highways. Needless tO say, the way to have highway managers recognize their responsibilities is to have their performance eval- uated by the public. Efficient performance will be encouraged in financial planning and control of scarce construction funds. Conclusions Today, state highway departments are striving to overcome deficiencies existing in their highway systems. The effort is made more difficult by the emphasis being given to the comple- tion of the interstate system, a substantial amount of deficient road mileage already existing in other highway systems, and a limited amount of revenues. Whether the current lag in high- way standards relevant tO use is the result of rapid technologi- cal advancements in automotive transportation, increased car 411 registrations, inability to construct or reconstruct highways dur- ing the war years, or the failure of highway officials to establish objectives and to plan for their accomplishment is not too impor- tant. It is the present and future condition Of the highway sys— tems and the manner in which they are planned, constructed, and maintained that is of significance. What is management currently doing to meet its responsibilities in providing an adequate high- way system for the public? Is highway management furthering and encouraging progress by utilizing the most modern methods and procedures available in planning and controlling the expendi- tures of highway construction funds? Are highway objectives being achieved? On the basis of this study, pessimistic answers must be formulated for the foregoing questions. Management practices in many state highway departments will not result in the most effi- cient use of the taxpayer’s dollar. Unless there is a change in the philosophies of state legislators and highway administrators, short- and long-run objectives will never be achieved. Highway officials—and they are not unique—must recog- nize their responsibilities to the public. The objectives of mi- nority groups and the personal objectives of highway officials must be subordinated to those of the highway organization. 412 Perhaps the dissertation should not be concluded on such a pessimistic note. It is possible that there is a ray Of hOpe. Within the last ten to twelve years two of the ten survey states have installed, in part, the procedures as recommended in this study. The procedures have been successful in both of the states. But, as was mentioned before, custom and tradition are powerful adversaries to overcome. BIB LIOGRAP HY 413 BIBLIOGRAPHY Books Bitterman, Henry J. State and Federal Grants-in-Aid. New York: Mentzer, Bush and Company, 1938. 550 pp. Buehler, Alfred G. Public Finance. New York: McGraw-Hill Book Company, Inc., 1948. 740 pp. Chatburn, George R. Highways and Highway Transportation. New York: Thomas Y. Crowell Company, 1923. 472 pp. Davis, R. C. The Fundamentals of Top Management. New York: Harper and Brothers, Publishers, 1951. 825 pp. Ferguson, John H., and Dean E. McHenry. The American System of Government. New York: McGraw-Hill Book Company, Inc., 1950. 1042 pp. Grant, Eugene L. Principles of Engineering Economy. New York: The Ronald Press Company, 1950. 623 pp. Jucius, Michael J ., and William E. Schlender. Elements Of Man- agerial Action. Homewood, Ill.: Richard D. Irwin, Inc., 1960. 439 pp. Koontz, Harold, and Cyril O’Donnell. Principles of Management. New York: McGraw-Hill Book Company, 1959. 718 pp. Locklin, Philip D. Economics Of Transportation. Homewood, 111.: Richard D. Irwin, Inc., 1954. 916 pp. Matz, Adolph, Othel J. Curry, and George W. Frank. Cost Ac- countir_ig. Chicago: South-Western Publishing Company, 1952. 805 pp. 414 415 McFarland, Dalton E. Management Principles and Practices. New York: The Macmillan Company, 1958. 612 pp. McKechnie, Jean L. (ed.). Webster’s New Twentieth Century Dic- tionary. Cleveland: The World Publishing Company, 1960. 2289 pp. Newman, William H. Administrative Action. Englewood Cliffs, N.J.: Prentice-Hall, Inc., 1959. 483 pp. , Newman, William H., and Charles E. Summer, Jr. The Process of Management. Englewood Cliffs, N.J.: Prentice-Hall, Inc., 1961. 675 pp. anau ‘5‘ J . . Spriegel, William R., and Ernest C. Davies. Principles of Busi- ness Organization and Operation. Englewood Cliffs, N.J.: Prentice-Hall, Inc., 1960. 592 pp. Terry, George R. Principles of Management. Homewood, Ill.: Richard D. Irwin, Inc., 1956. 778 pp. Urwick, L. The Elements of Administration. New York: Harper and Brothers, Publishers, 1943. 132 pp. Vatter, William J. Managerial Accountigg. New York: Prentice- Hall, Inc., 1950. 510 pp. Welsch, Glenn A. Budgeting, Profit Planning and Control. Engle- wood Cliffs, N.J.: Prentice-Hall, Inc., 1959. 487 pp. Parts of Books Brew, John O. “The Highway and the Anthropologist,” in H_ig_- ways in Our National Life. Edited by Jean Labatut and Wheaton J. Lane. Princeton, N.J.: Princeton University Press, 1950. Pp. 3—9. Lane, Wheaton J. “The Early Highway in America, to the Coming Of the Railroad,” in Highways in Our National Life. Ed- ited by Jean Labatut and Wheaton J. Lane. Princeton, N.J.: Princeton University Press, 1950. Pp. 66—76. 416 Lay, Chester F. “The Functional Cycles of Accounting and Man- agemen ,” in Readings in Cost Accounting, Budgetingand Control. Edited by William E. Thomas, Jr. Chicago: South-Western Publishing Company, 1955. Pp. 30—37. Peirce, James L. “The Budget Comes Of Age,” in Readings in Cost Accounting, Budgeting and Control. Edited by Wil- liam E. Thomas, Jr. Chicago: South-Western Publishing Company, 1955. Pp. 129—44. Rose, Albert C. “The Highway from the Railroad to the Auto- mobile,” in Highways in Our National Life. Edited by Jean Labatut and Wheaton J. Lane. Princeton, N.J.: Princeton University Press, 1950. Pp. 77—87. Ross, Charles. “The Highway and the Divided Constitutional Powers,” in Highways in Our National Life. Edited by Jean Labatut and Wheaton J. Lane. Princeton, N.J.: Princeton University Press, 1950. Pp. 277—80. Publications of Federal and State Governments, Learned Societies, and Other Organizations American Association of State Highway Officials. “1673—First Colonial Post Rider,” in Public Roads Of the Past. Wash- ington: American Association Of State Highway Officials, 1953. Pp. 24—25. “1925—Adoption of Uniform Signs,” in Public Roads of the Past. Washington: American Association of State Highway Officials, 1953. Pp. 119—20. Arizona State Highway Department. Arizona Highway Sufficiency for 1960. Prepared by the Planning and Survey Division. Phoenix: Arizona State Highway Department, 1960. 125 pp. . Factual Review. Prepared by the Planning and Survey Division. Phoenix: Arizona State Highway Department, 1960. 113 pp. 417 Arizona State Highway Department. Log of the Arizona State Highway System. Prepared by the Planning and Survey Division. Phoenix: Arizona State Highway Department, 1960. 142 pp. Association of American Railroads. Highways. Washington: As- sociation of American Railroads, 1955. 158 pp. Highway Benefits and Cost Responsibility. Washington: Association of American Railroads, 1957. 19 pp. Automotive Safety Foundation. Moving Ahead on Montana’s High- ways. An Engineering Study Prepared for the Montana Fact Finding Committee on Highways, Streets and Bridges. Helena, Mont.: Automotive Safety Foundation, 1956. 86 pp. . A Guide for Planning Wyoming Highways. A Report Prepared for the State Highway Commission of Wyoming. Cheyenne, Wyo.: Automotive Safety Foundation, 1960. 88 PP- Bresnahan, William A. Who Should Pay How Much of Highway Costs? Washington: American Trucking Association, Inc., 1952. 6 pp. Caterpillar Tractor Company. The Road Ahead. Peoria, 111.: Caterpillar Tractor Company, n.d. 19 pp. Your Stake in the Road Ahead. Peoria, 111.: Caterpillar Tractor Company, n.d. 20 pp. Colorado Department of Highways. Rural Highway Sufficiency Rat- irg Study. Denver: Colorado Department of Highways, 1954. 68 pp. Idaho Department of Highways. Sufficiency Rating Study. Boise: Idaho Department of Highways, 1958. 74 pp. Sufficiency Rating Study. Boise: Idaho Department of Highways, 1959. 49 pp. 418 Jorgensen, Roy E. Priorities and the Development of Annual thway Programs. Washington: National Highway Users Conference, 1952. 31 pp. Montana State Highway Department. Financing Modern Highways for Montana. A Report on Highway Finances Prepared for the Montana Fact Finding Committee on Highways, Streets and Bridges. Helena: Montana State Highway Department, 1956. 135 pp. National Academy Of Sciences. Highway Plannirg and Urban De- velopment. Highway Research Board, National Research Council, Bulletin 64, Publication 249. Washington: Na- tional Academy of Sciences, 1952. 12 pp. National Highway Users Conference. Federal-Aid for Highways. Washington: National Highway Users Conference, 1956. 24 PP« Nebraska Highway Advisory Committee. Nebraska Highway Needs. A Report Prepared for the Governor of the State of Ne- braska. Lincoln: State Department of Roads and Irriga- tion of Nebraska, 1948. 83 pp. New Mexico State Highway Department. Motor-Vehicle Use Study, 1954. Project Report, Vol. 1. Santa Fe: New Mexico State Highway Department, 1954. 140 pp. . Ratings for Highway Improvement. Prepared by the Planning Division. Santa Fe: New Mexico State Highway Department, 1957. 50 pp. . New Mexico Traffic Survey. Prepared by the Planning Division. Santa Fe: New Mexico State Highway Depart- ment, 1959. 139 pp. Shea, Daniel J. Historical Analysis of Taxation for Highway Purposes in Montana. A Report Prepared for the Mon- tana Fact Finding Committee on Highways, Streets and Bridges. Helena: Montana State Highway Commission, 1956. 242 pp. 419 Simpson, Herbert D. Highway Finance. A Study Prepared for the Ohio Program Commission. Columbus, Ohio: F. J. Heer Printing Company, 1951. 169 pp. Smith, Wilbur, and Associates. A Major Street and Highway Plan -—Phoenix Urban Area. A Report Prepared for the Ari- zona State Highway Commission. Phoenix: Arizona State Highway Department, 1960. 162 pp. Srb, Hugo F. Laws of Nebraska, 1955. 67th Session. Lincoln, Neb.: Journal-Star Printing Company, 1955. 1111 pp. State Highway Commission of Kansas. Highway Sufficiency Rat- ing Survey. A Report Prepared by the Planning Depart- ment. Topeka: State Highway Commission of Kansas, 1958. 73 pp. Udell, Gilman G. Laws Relating to Federal Aid in Construction of Roads. Washington: U.S. Government Printing Office, 1958. 285 pp. U.S. Bureau of the Census. Eighteenth Census of the United States: 1960. Population. Number of Inhabitants, Arizona. Eighteenth Census of the United States: 1960. Popula- tion. Number Of Inhabitants, California. . Eighteenth Census Of the United States: 1960. Popula- tion. Number of Inhabitants, Colorado. Eighteenth Census of the United States: 1960. Popula- tion. Number of Inhabitants, Connecticut. Eighteenth Census of the United States: 1960. Popula- tion. Number of Inhabitants, Idaho. Eghteenth Census of the United States: 1960. Popula- tion. Number Of Inhabitants, Illinois. Eghteenth Census Of the United States: 1960. Popula- tion. Number of Inhabitants, Kansas. 7J4 :1 420 U.S. Bureau of the Census. Eighteenth Census of the United States: 1960. Population. Number of Inhabitants, Michigan. Eighteenth Census of the United States: 1960. Popula- tion. Number Of Inhabitants, Montana. . Eighteenth Census of the United States: 1960. Popula- tion. Number of Inhabitants, Nebraska. Eighteenth CenSus of the United States: 1960. Popula- tion. Number of Inhabitants, New Mexico. Eighteenth Census of the United States: 1960. Popula- tion. Number of Inhabitants, New York. Eighteenth Census of the United States: 1960. Popula- tion. Number of Inhabitants, Pennsylvania. Eighteenth Census of the United States: 1960. Popula- tion. Number of Inhabitants, South Dakota. Eighteenth Census of the United States: 1960. Pgula- tion. Number of Inhabitants, Tennessee. . Eighteenth Census of the United States: 1960. Popula- tion. Number of Inhabitants, Utah. Eighteenth Census of the United States: 1960. Popula- tion. Number of Inhabitants, Wyoming. U.S. Congress. Federal-Aid Highway Act Of 1956. Public Law 627, Chapter 462, HR. 10660. 84th Cong., 2d Sess., 1956. Washington: U.S. Government Printing Office, 1956. 29 pp. U.S. Department of Commerce, Bureau of Public Roads. Highways in the United States. Washington: U.S. Government Print- ing Office, 1954. 22 pp. . “Estimate Of User Taxes :Paid by Vehicles in Different Type and Weight Groups,” in Public Roads. Washington: U.S. Government Printing Office, June, 1954. O 1 * -AI. '- — 421 U.S. Department of Commerce, Bureau of Public Roads. The Fi- nancing of Highways by Counties and Local Rural Govern- ments, 1942—51. Washington: U.S. Government Printing Office, 1955. 110 pp. Highway Statistics, 1954. Washington: U.S. Government Printing Office, 1956. 135 pp. - Highway Statistics, 1955. Washington: U.S. Government Printing Office, 1957. 174 pp. Highway Statistics, 1956. Washington: U.S. Government Printing Office, 1958. 140 pp. Highway Statistics, 1957. Washington: U.S. Government Printing Office, 1959. 200 pp. Highway Statistics, 1958. Washington: U.S. Government Printing Office, 1960. 150 pp. Highway Statistics, Summary to 1955. Washington: U.S. Government Printing Office, 1960. 151 pp. Highway Statistics, 1959. Washington: U.S. Government Printing Office, 1961. 153 pp. U.S. President’s Advisory Committee. A Ten-Year National High- way Program. A Report Prepared for the President of the United States on a National Highway Program. Wash- ington: U.S. Government Printing Office, 1955. 57 pp. U.S. Public Roads Administration, Federal Works Agency. Hg’ h- way Practice in the United States Of America. Washing- ton: U.S. Government Printing Office, 1949. 230 pp. Wyoming State Highway Department. Study of Interstate System Location. Cheyenne: Wyoming State Highway Department, 1958. 59 pp. ’ Wyoming Sufficiency Study. Prepared by the Planning and Research Division. Cheyenne: Wyoming State Highway Department, 1958. 114 pp. 422 Zettel, Richard M., and Richard R. Carll. Financing Modern Highways for Michigan. A Fiscal Report to the Michigan Legislative Highway Study Committee. Lansing, Mich.: Speaker-Hines and Thomas, Inc., State Printers, 1955. 127 pp. Zickefoose, W. Economic Survey of Santa Rosa, New Mexico, 1950—1958. Prepared for the New Mexico State Highway Department. Santa Fe: New Mexico State Highway De- partment, 1959. 20 pp. Periodicals Detzer, Karl. “Our Great Highway Bungle,” The Reader’s Di- gest, LXXVII, NO. 459 (July, 1960), 45—51. Koether, George. “Tax Road or Toll Road,” Look, XVII, NO. 12 (June 16, 1953), 76—80. Meisler, Stanley. “Super-Graft on Superhighways,” Nation, CXCII, No. 13 (April 1, 1961), 275—79. Springer, John L. “Tired of Paying Highway Tolls?” Coronet, XXXIV, NO. 2 (June, 1953), 42—46. Unpublished Reports Nebraska State Highway Department. “Manual of Procedure for the Numerical Rating of the Nebraska State Highway Sys- tem.” Lincoln, Nebraska, n.d. 32 pp. (Mimeographed.) Wyoming State Highway Department. “Financing of Modern High- ways for Wyoming.” An Unpublished Report on a Fiscal Analysis of Wyoming’s Highway Needs Prepared at the Re- quest of the State Highway Commission of Wyoming. Chey- enne, Wyoming, 1960. 200 pp. 423 Newspapers Denver Post, June 16, 1961. Laramie (Wyoming) Daily Boomeragg, March 7, 1961. Personal Interviews Bastron, Alvin. Planning and Research Engineer of the Wyoming State Highway Department. Cheyenne, Wyoming, October, 1960. Bennett, S. A. Maintenance Engineer for the New Mexico State Highway Department. Santa Fe, New Mexico, August, 1960. Browning, C. B. Assistant State Engineer for the Arizona High- way Department. Phoenix, Arizona, August, 1960. Buck, W. V. State Highway Engineer of the South Dakota De- partment of Highways. Pierre, South Dakota, August, 1960. Burningham, Dale. Research Engineer for the State Road Com- mission Of Utah. Salt Lake City, Utah, August, 1960. Buswell, Howard T. Planning Survey Manager for the Montana State Highway Commission. Helena, Montana, August, 1960. DeVore, Don B. Technical Engineer for the Montana State Highway Commission. Helena, Montana, August, 1960. Dixon, Orville. Chief Auditor of the South Dakota Department of Highways. Pierre, South Dakota, August, 1960. Equals, E. W. Planning Survey Manager for the Idaho Depart- ment of Highways. Boise, Idaho, August, 1960. Gillam, Bruce. Planning Engineer for the Nebraska Department of Roads. Lincoln, Nebraska, August, 1960 ’I 424 Grubb, Max G. Assistant Administrative Director of the Kansas State Highway Commission. Topeka, Kansas, August, 1960. Hartley, Thomas. Chief Fiscal Officer of the Wyoming State Highway Department. Cheyenne, Wyoming, October, 1960. Herland, H. Planning Engineer for the State Road Commission of Utah. Salt Lake City, Utah, August, 1960. Hooper, Charles W. Comptroller for the Arizona Highway De- partment. Phoenix, Arizona, August, 1960. Jorgenson, C. P. Manager of Research and Planning of the South Dakota Department of Highways. Pierre, South Dakota, August, 1960. Jump, R. W. Survey and Plans Engineer for the Idaho Depart- ment Of Highways. Boise, Idaho, August, 1960. Leonard, E. Chief Maintenance Engineer Of the State Road Com- mission Of Utah. Salt Lake City, Utah, August, 1960. Livingston, R. E. Planning and Research Engineer for the C010- rado Department of Highways. Denver, Colorado, March and April, 1960. Lobdell, A. T. Chief of Personnel for the Nebraska Department of Roads. Lincoln, Nebraska, August, 1960. Lynch, R. Public Relations Officer for the Arizona Highway Department. Phoenix, Arizona, August, 1960. McKellips, E. F. Director of State Highway Department of South Dakota. Pierre, South Dakota, August, 1960. McMeekin, John. Maintenance Engineer for the Nebraska Depart- ment Of Roads. Lincoln, Nebraska, August, 1960. Murphy, C. L. Chief Auditor for the Kansas State Highway Com- mission. Topeka, Kansas, August, 1960. Payne, G. Administrative Director for the New Mexico State High- way Commission. Santa Fe, New Mexico, August, 1960. 425 Reid, James. Administrative Officer of the Idaho Department of Highways. Boise, Idaho, August, 1960. Roberts, Ralph. Budget Accountant for the Idaho Department of Highways. Boise, Idaho, August, 1960. Ross, Lou J. Planning Engineer for the Idaho Department Of Highways. Boise, Idaho, August, 1960. Sime, George T. Public Information Coordinator for the Montana State Highway Commission. Helena, Montana, August, 1960. Smith, F. C. District Engineer of District No. 1 for the Ne- braska Department of Roads. Lincoln, Nebraska, August, 1960. Smith, C. 1., Jr. Manager of the Planning Survey Division of the Arizona Highway Department. Phoenix, Arizona, August, 1960. Stapp, R. G. Deputy State Highway Engineer of the Wyoming State Highway Department. Cheyenne, Wyoming, October, 1960. Steed, Dean. Chief Accountant for the State Road Commission of Utah. Salt Lake City, Utah, August, 1960. Steensland, A. O. Comptroller and Personnel Director of the South Dakota Department of Highways. Pierre, South Dakota, August, 1960. Steffler, S. Advanced Planning Engineer for the Arizona High- way Department. Phoenix, Arizona, August, 1960. Sutton, W. E. State Maintenance Engineer of the Wyoming State Highway Department. Cheyenne, Wyoming, October, 1960. Thompson, C. J. Preconstruction Engineer for the Montana State Highway Commission. Helena, Montana, August, 1960. Tode, Charles. Assistant Accountant for the Montana State High- way Commission. Helena, Montana, August, 1960. 51 m _ .¢-.. miiiiffi-h ..,. r” 426 Turner, 0. D. Head of the Department of Business Administra- tion, The University of Wyoming. Laramie, Wyoming, May, 1961. Vollmer, Edward J. Assistant Maintenance Engineer for the Mon- tana State Highway Commission. Helena, Montana, August, 1960. Welty, George J. Chief of Records and Audits for the Nebraska Department Of Roads. Lincoln, Nebraska, August, 1960. Wiley, Hope S. Planning Director for the New Mexico State Highway Commission. Santa Fe, New Mexico, August, 1960. Willis, Robert. Engineer of Highway Planning for the Kansas State Highway Commission. Topeka, Kansas, August, 1960. Wright, John. Assistant State Highway Engineer Of the South Dakota Department of Highways. Pierre, South Dakota, August, 1960. APPENDIX A QUESTIONNAIRE USED IN SURVEY 427 428 Q UE STIONNAIRE State Date Person Interviewed Position in Organization Duties in Organization Part I. Top-Level Planning and Control 1. Does the state highway department have a long-range program for construction and reconstruction of the state highway sys- tems? 1.1. Yes 1.2. No 1.3. Other 1 .4. Comments: 2. How was the long-range program of construction and recon- struction determined? 2.1. 429 3. What period does the long-range plan cover? 3.1. 4. Is the long-range plan currently on schedule for the various highway systems? 4. 1 . Interstate: Yes NO Other 4.11. If answer is no, why not? 4.2. Federal-aid primary: Yes NO Other 4.21. If answer is no, why not? 4.3. Federal-aid secondary: Yes No Other 4.31. If answer is no, why not? 4.4. Urban and Rural: Yes NO Other 4.41. If answer is no, why not? 430 4. 5. Comments: Has the state highway department made provision for revenues necessary to finance the long-range construction, reconstruction, and maintenance of the highway systems? 5.1. Yes No Other If the answer to the above question was “yes,” how was the long-range program for financing determined? Is the long-range program for financing construction, recon- struction, and maintenance currently on schedule for the various highway systems? 7. 1 . Interstate: Yes No Other If answer is no, why not? 7.2. Federal-aid primary: Yes NO 431 Other If answer is no, why not? 7.3. Federal-aid secondary: Yes No Other If answer is no, why not? 7.4. Urban and rural: Yes NO Other If answer is no, why not? 7.5. Comments: . Were the recommendations of the finance study accepted by the commissioners, especially with respect to the total revenue needs? 8.1. Yes 8.2. No 8.3. Other 10. 11. 12. 432 If the answer to the above question was “no” what were the major areas of nonacceptance by the commissioners? Were the recommendations of the finance proposal accepted by the state legislature, especially with respect to the total revenue needs? 10.1. Yes 10.2. NO 10.3. Other If answer to above question was “no,” what were the major areas of nonacceptance? Were the recommendations of the finance study accepted by the Governor, especially with respect to the total revenue needs? 12.1. Yes 12.2. NO 12.3. Other 13. 14. 15. 16. 17. 433 9’ If answer to above question was “no, what were the major areas of nonacceptance? How does the highway department measure the adequacy of the existing sections of the systems? How is the information on miles and cost to overcome defi- ciencies summarized? Have you some system to measure the obsolescence of the sec- tions of your highway system? If yes, how does the system work? 16.1. Yes 16.2. ND 16.3. If yes, how does it work? 16.4. Comments: What provisions do you have in your organization to forecast your needs 10 to 20 years in the future? 18. 19. 20. 21. 434 If answer to preceding question indicates that they have made provisions for forecasting future needs, then ask: What pro- vision is made for periodic review and revision of the plan? How is the cost for modernizing the state highway systems re- lated to the revenue from existing sources? How is the plan used to guide annual construction and recon- struction scheduling? How far in advance is the annual construction schedule prepared for highway department guidance in organizing, surveys, designs, right-Of-way acquisition, etc.? 21.1. Surveys: 21.2. Designs: 21.3. Right-of-way acquisition: 21.4. Other: 21.5. Comments: 435 22. What is done in the highway department to report progress to: 22.1. The Governor and the legislature? 22.2. The Board of Commissioners? 22.3. The Director? 22. 4. Comments: 23. Does the state highway department establish performance stand- ards for maintenance on the state highway systems? If so, how are they established? 23.1. Yes 23.2. NO 23.3. How are they established? 23.4. Who establishes them? 23.5. Comments: 24. How, and to what extent, are maintenance projects let to contract? 25. 26. 27. 28. 29. 436 How are funds for maintenance Of the state highway department determined in the annual budget? 25.1. How are the funds determined? 25.2. Who determines the maintenance funds? 25.3. Comments: Are the commissioners appointed by the Governor, or are they elected? DO they devote their full time to the highway department? 27.1. Yes 27.2. NO 27.3. Comments: What, precisely, are the duties and responsibilities? Does the board Of commissioners determine what construction and reconstruction needs are most important in the highway systems? 29.1. Yes 29.2. No 30. 31. 32. 33. 437 29.3. Comments: In the final analysis, who makes the final decisions as to what roads, or road sections, will be constructed or reconstructed in the state highway systems? What are the bases for the decisions made in the question above? To what extent does your top-management personnel (chief engineer, maintenance engineer, planning and research engineer) have a part in the final determination of what road or road sections shall be improved or constructed? In other words, what authority do they have in making the final decision as to highway expenditures in the state systems? In making final decisions on determining what roads, or highway sections, shall be constructed or reconstructed, what reports do you receive, or give, that assist you, or others, in making these final decisions? 33.1. 33.2. 33.3. 34. 35. 36. 438 33.4. 33.5. 33.6. Comments: Do you feel that a better system of reporting needs could be 7 devised to assist you, or others, in making the decisions as to , the allocation of funds to the road sections? t 34.1. Yes “'5 34.2. No 34.3. Comments: What are the weaknesses in your present system of needs re- porting? How could it be improved? Part 11. Reporting Does the highway department have a procedure for reporting its progress to the public? 36.1. Yes 36.2. No 36.3. Other 36.4. Comments: 37. 38. 39. 40. 439 2 If answer to above question is “yes,’ what is the procedure for reporting to the public? If the state highway does report to the public, do you think it is a worthwhile procedure? Why or why not? 38.1. Yes 38.2. No 38.3. Why or why not? Part 111. Political Pressure and Management Organization Do you know of instances, in your state, where pressure has been applied by state legislators, or others, to expend funds in certain districts of the state? 39.1. Yes 39.2. NO 39.3. What groups or persons apply such pressure? 39.4. Comments: If answer to above question is “yes,” is such pressure generally successful? 440 41. How is this pressure generally applied? 42. If pressure is exerted which affects the flow Of highway ex- 43. 44. penditures, what percentage, on the average, of the annual budget appropriation is affected? DO you have civil service in the highway department? To what extent? 43.1. Yes 43.2. NO 43.3. To what extent? DO changes in the state political administration bring about changes in top-level management in the state highway depart- ment? 44.1. In the board of commissioners? 44.2. In the Director’s position? 44.3. In the State Highway Engineer’s position? 44.4. Other top-level positions in management? 44.5. District Engineers? 44.6. District Maintenance Engineers? 44.7. Other positions? 441 44.8. Comments: 45. Do you have a management replacement training program in operation? 45.1. Yes 45.2. No 45.3. Comments: 46. Within the state highway department alone, do you have a planning committee composed of top-level management? If so, what departments are included? 46.1. Yes 46.2. NO 46.3. Departments involved: 47. Do you feel that adequate lines of communication have been established from top to the bottom in the organization? If not, why not? 47.1. Yes 47.2. No 47.3. If not, why not? 48. Do you feel that adequate lines of communication exist hori- zontally between departments in the organization? If not, why not? 49. 50. 51. 52. 442 48.1. Yes 48.2. NO 48.3. If not, why not? In what areas do you think that your lines of communication could stand improvement? Do you think that the organization as a whole is designed to give the greatest efficiency and ease of operation? 50.1. Yes 50.2. No 50.3. Comments: If answer to above question was “no,” what do you think could be done to improve the organizational structure to give it greater efficiency? Part IV. Planning and Control Techniques Do you maintain an inventory of condition of your entire high- way system? 52.1. Federal-aid primary: Yes NO Other 53. 54. 55. 56. 443 52.2. Federal—aid secondary: Yes No Other 52.3. County roads: Yes No Other 52.4. Urban: Yes NO Other 52.5. Other: Yes No Other 52.6. Comments: What use is made of the inventory? How is the inventory taken? Personnel and procedure? 54.1. Personnel: 54.2. Procedure: Is the highway inventory used in any way to plan state highway expenditures ? Do you prepare sufficiency ratings on your highway systems? 56.1. Interstate: Yes No Other 56.2. Federal-aid primary: Yes No Other 56.3. Federal-aid secondary: Yes No Other 56.4. County roads: Yes NO Other 57. 58. 59. 60. 61. 62. 444 56. 5. Urban: Yes No Other 56.6. Comments: How are the sufficiency ratings determined? Personnel and procedure? 57.1 . Personnel: 57.2. Procedure: For what purpose are sufficiency ratings prepared? Are sufficiency ratings used in any way to plan annual highway expenditures ? How frequently are sufficiency ratings prepared, or revised? Do you have a system, method, or procedure to determine the priority of fund allocation for construction, or reconstruction, within one highway system, such as the federal-aid primary? And how does it work? 61.1. Yes 61.2. No 61.3. How does it work? If answer to above question is “no,” how would you determine whether to construct or reconstruct a ten-mile segment of one state primary road in preference to a ten-mile segment of another state primary road? 63. 64. 65. 66. 67. 445 If a priority system of some sort is used in allocating funds, what factors may cause you to deviate from your system of planning construction expenditures? 63.1. 63.2. 63.3. 63.4. Part V. Short-Run Budgetary Procedure What is the procedure for preparing the annual budget? In your review of the proposed budgets of the various functions, how do you determine, or verify, the needs of the district main- tenance engineers for funds to maintain the state systems? In requesting funds for the maintenance of state highways do the maintenance engineers send you a list of maintenance projects and the cost breakdown for the maintenance work? 66.1. Yes 66.2. NO 66.3. Other Do they send in information justifying the maintenance of vari- ous projects? And if so, in what form? 68. 69. 70. 71. 72. 446 67.1. Yes 67.2. NO 67.3. In what form? Does the state legislature ever appropriate funds to the state highway department? Under what conditions would they do so? 68.1. Yes 68.2. No 68.3. Under what conditions: Are deviations from the annual budget common? 69.1. Yes 69.2. NO 69.3. Other If budget deviations are common, are they reported immediately? 70.1. Yes 70.2. No 70.3. Other What are the most frequent causes of budget deviations? 71.1. 71.2. What budget reports are prepared and when? 72.1. 72.2. 73. 74. 447 72.3. Do you feel that maximum utilization of the budget as a tool for planning and control is being made, and if not, why not? 73.1. Yes 73.2. No 73.3. Why not? 73.4. Comments: How are funds for construction and reconstruction written into the budget? .9