U.S. Infrastructure:

Funding Trends and Opportunities to Improve Investment Decisions

RCED/AIMD-00-35: Published: Feb 7, 2000. Publicly Released: Feb 7, 2000.

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John H. Anderson, Jr
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GAO provided information on United States infrastructure, focusing on: (1) trends in the government's investment in infrastructure; (2) how federal agencies can improve their decision-making for the acquisition and management of infrastructure; and (3) the challenges to an effective investment in infrastructure at the federal level.

GAO noted that: (1) the United States has historically made an extraordinary investment in its infrastructure; (2) the amount of federal spending devoted to infrastructure shows a continuous downward trend after fiscal year (FY) 1987--ranging from a high of $174 billion in FY 1986 to a low of $118 billion in FY 1998; (3) this trend is driven, in part, by reductions in defense spending for the acquisition and construction of infrastructure and by constraints that deficit reduction agreements between Congress and the President have placed on the government's discretionary spending, which finances most federal spending for infrastructure; (4) in contrast, federal spending for nondefense infrastructure shows a slightly upward trend; (5) spending by state and local governments is continuing an upward trend that began in the 1980s and exceeds federal spending in certain categories; (6) in many cases, spending on infrastructure is intended to have a beneficial effect on the nation's economy, but studies on whether it has increased economic growth have shown mixed results; (7) on the other hand, some federal spending on infrastructure is motivated by noneconomic policy goals, such as improved safety, and should not be expected to always be directed toward improving economic productivity; (8) to maximize the benefits of investments in infrastructure, federal agencies can improve their decision-making for the acquisition and management of infrastructure by following the best practices of leading government and private-sector organizations; (9) enhanced decision-making concerning the acquisition and management of federal infrastructure is needed both to ensure that the purchase of new assets will have the highest and most efficient returns to the taxpayer and the government and to ensure that existing infrastructure will be adequately repaired and maintained; and (10) federal agencies and Congress face several challenges in determining the appropriate levels of and effective approaches to infrastructure investment: (a) a general lack of accurate, consistent information on the existing infrastructure and its future needs; (b) federal agencies have not taken a consistent approach to analyzing the costs and benefits of potential infrastructure projects, which would help in setting priorities and determining noncapital alternatives; (c) agencies have not been required to relate their planned infrastructure spending to their missions and goals; and (d) federal budget structure does not prompt explicit debate about infrastructure spending that is intended to have long-term benefits.