March 4, 2015 12:50 PM, EST

CBO Tracks Decline in Infrastructure Investment

Public spending on transportation and water infrastructure has gradually declined from a high of 3% of Gross Domestic Product in 1959 to 2.4% of GDP in 2014, according to a new report from the Congressional Budget Office.

“Of all public spending on water and transportation infrastructure, spending on highways consistently accounted for the largest share of GDP throughout the 1956-2014 period,” said the report issued March 2.

However, spending on highways fell from its peak of almost 2% in 1959 — during the construction of the Interstate Highway System — to just under 1% in 2014, the report said.

Public spending by federal, state and local governments on transportation and water infrastructure totaled $416 billion in 2014, CBO said, but most of that came from state and local governments.

“They provided $320 billion, and the federal government accounted for $96 billion,” the CBO report on water and transportation infrastructure spending said.

Also that year, spending for capital, be it new dams or new highways, accounted for 43% of total public spending on transportation and water infrastructure, and 57% of the spending was for operation and maintenance, CBO said.

The budget office also found that, in terms of overall infrastructure spending, including such things as transit and airports, the largest shares of infrastructure spending by state and local governments in 2014 were on highways and water utilities.

State and local governments allocated 37% of their infrastructure spending to highways and 33% to water utilities, although states spent largely on highways while local governments support water utilities, CBO said.

Inflation has eaten away at the buying power of all governments when it comes to materials, CBO said.

In 2003, the average price of materials such as asphalt and cement to build, operate and maintain transportation began rising rapidly, the CBO report said.

Although nominal capital spending on highways rose by nearly 40% between 2002 and 2014, that increase was “outstripped” by the price increases, the report said.