Saturday, April 27, 2013

Financing Rural Roads

2.9 million miles are owned by local governments. (Kuennen, 2010)
1.5 million miles are unpaved. (LTAP, 2006)
In 2009 Michigan gravelized 35 miles of paved roads (MnDOT, 2010).

In recent years, local governments have faced budgetary shortfalls that have impacted their ability to maintain all roads in their district.  Many roads have fallen into disrepair as agencies are forced to prioritize road projects based on available funding.  Novel funding sources have been developed through various taxes, fees, and special assessments.  When these funding sources are insufficient, some local governments have reverted to gravelization, returning paved roads to gravel, due to the potential cost savings.

A heavy truck tears up a gravel road in
Brown County, S.D.
Rural roads have different issues compared to their urban counterparts.  Changes in the farm industry have put stress on current road infrastructure.   Increased productivity has required larger machinery to harvest and transport crops, which have sent rural roads into disrepair faster than anticipated (Smadi et. al, 1999).   Rural roads have safety issues.  In 2007, 23% of the U.S. population was rural but 57% of all traffic fatalities occurred on rural roads (Kuennen, 2010).   Rural roads have low vehicle traffic, which makes justifications for large capital improvement projects difficult to articulate.

How do local governments continue to provide value when funding falls short? In A Quiet Revolution in Transportation Finance: The Rise of Local Option Transportation Taxes the authors examine local option fuel taxes (not currently permitted in Minnesota) as one method.  The fuel tax is not a sustainable source because it is not indexed to inflation and increasing fuel efficiency has decreased fuel consumption.  Another idea is a wheel tax (Hough et. al.), where a tax is assessed per wheel.  This has been used extensively in South Dakota.  Sales taxes are authorized in thirty-three states (Minnesota included), but many states require earmarks, thereby limiting local governments ability to determine the appropriate allocation (Goldman and Wachs, 2003).  Rural improvement districts, a rural form of special assessment districts, have been used in Montana and North Dakota.  North Dakota’s Cass county can create special assessment districts for projects with costs in excess of $12,000 (Hough et al, 1999). 

Chip seal is a layer of hot asphalt topped with aggregate
Instead of focusing on raising revenue, some local governments have focused on decreasing costs.    Chemical additives like soil stabilizers and chip seal provide cheaper alternatives to reduce maintenance.  Service reductions, such as lowering maintenance frequency (blading a gravel road every other month rather than every month for example), reduce the width of roads, declare roads minimum maintenance or even close roads.  Additionally there are management strategies like streamlining the work force and sharing or contracting engineering services to lower salary and fringe benefits for local agencies (Hough, 1999).

When no more management and maintenance strategies can be implemented, a last ditch effort to maintain roadways is gravelizing.  Gravel roads represent a cost savings for most local governments.   Local agencies reported different cost estimates of roads (MnDOT, 2010).  Hancock County, Indiana estimates the cost for gravels roads to be $22,000 per mile over five years while paved costs will exceed $25,000 in that same period.  Stustman County, North Dakota estimated their “cost per mile per year to rehabilitate a paved road” is $31,293.75 compared to $1,683.70  “per mile per year of converting a paved road to gravel and then maintaining that road” (MnDOT, 2010).  Additional factors that may change costs are availability of gravel and maintenance costs.  Having no local source of gravel requires gravel to be trucked in from neighboring counties and states is expensive and causes additional wear and tear on the roads.  

Gravelizing is not a popular choice. The Highway Superintendent, Jan Weismantal, of Brown County, South Dakota has a current budget of $7 million and 650 paved miles.  She estimates that her budget allows for proper maintenance of 150 miles of paved roads. However, because of negative public reaction, “no large sections are being milled up and immediately returned to gravel” (Landers, 2011).  Other studies have estimated that 0.3 minutes per mile is the increased travel time for gravel roads due to slower posted speeds.

While much of the public decries the devolution of roads to gravel, expanded gravel roads are an inevitable part of our future road network.  Local governments must make extremely difficult decisions in the future.  There are budget issues that will require creativity to bridge the gaps; they will have to be careful to balance the needs and desires of the community with the budget.  They should take care to not focus solely on costs but in increasing efficiency to stretch the current budget. 

Goldman, Todd and Wachs, Martin. (2003). A Quiet Revolution in Transportation Finance: The Rise of Local Option Transportation Taxes. Transportation Quarterly, 57(1), 19-23. Retrieved from

Hough, J., Smadi, A., Bitzan, J. (1999). Innovative Financing Methods for Local Roads in the Midwest and Mountian-Plains States. Transportation Research Board, 1652, 7-12. Retrieved from

Kuennen, Tom. (March, 2010). At A Crossroads: The fate of our secondary roads may be in the balance. Better Roads 80 (3), 12-21. Retrieved from

Landers, Kirk. (May, 2011). Roads to Rubble: De-Paving a Half-Century of Progress.  Hot Mix Asphalt Technology, 16(3), 36-39.  Retrieved from

Minnesota Department of Transportation. (May, 2010). Decision Tree for Unpaving Roads. Retrieved from

Minnesota Local Technical Assistance Program. (October, 2006). To Pave or not to Pave: Making informed decisions on when to upgrade a gravel road.  Retrieved from  

Smade, A., Hough, J., Schulz, L., & Birst, S. (1999). North Dakota Gravel Road Management: Alternative Strategies. Transportation Research Board, 1652. 16-23.  Retrieved form


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  2. Read your post and its really informative and keep updating with newer post on Rural Housing Finance