The U.S. should change its infrastructure funding structure from indirect motor fuel taxes to direct mileage-based fees, and increase the federal gasoline tax and the federal diesel tax to aid the transportation system in the short-term, the National Surface Transportation Infrastructure Financing Commission said at a press conference earlier today to announce the release of its Paying Our Way: A New Framework for Transportation Finance report.
“With the expected shift to more fuel efficient vehicles, it will be increasingly difficult to rely on the gas tax to raise the funds needed to improve, let alone maintain, our nation’s surface transportation infrastructure,” said Robert Atkinson, chair of the Financing Commission and president of the Information Technology and Innovation Foundation.
According to the Commission, the total number of miles traveled by automobiles increased 97% from 1980 to 2006 while the miles traveled by trucks increased 106%, but the total number of highway lane miles has grown only 4.4% and real highway spending per-mile travelled has decreased nearly 50% since the late 1950s.
The U.S. should change its infrastructure funding structure from indirect motor fuel taxes to direct mileage-based fees, and increase the federal gasoline tax and the federal diesel tax to aid the transportation system in the short-term, the National Surface Transportation Infrastructure Financing Commission said at a press conference earlier today to announce the release of its Paying Our Way: A New Framework for Transportation Finance report.
“With the expected shift to more fuel efficient vehicles, it will be increasingly difficult to rely on the gas tax to raise the funds needed to improve, let alone maintain, our nation’s surface transportation infrastructure,” said Robert Atkinson, chair of the Financing Commission and president of the Information Technology and Innovation Foundation.
According to the Commission, the total number of miles traveled by automobiles increased 97% from 1980 to 2006 while the miles traveled by trucks increased 106%, but the total number of highway lane miles has grown only 4.4% and real highway spending per-mile travelled has decreased nearly 50% since the late 1950s.
Because of the excess travel with less financial support for maintenance and expansion, more than half the miles Americans travel on the highway system are on roads that are in less than good condition and more than one-quarter of U.S. bridges are structurally deficient or functionally obsolete, the report stated.
“If we fail to address the immediate funding crisis and longer-term investment challenge facing our surface transportation system, we will suffer grim consequences in the future: unimaginable levels of congestion, reduced safety, costlier goods and services, an eroded quality of life, and diminished economic competitiveness as a nation,” the commission said. “Our alternative future—with increased federal revenue, new funding approaches, and new technology as a foundation—is an integrated national transportation system that is less congested and safer and that promotes increased productivity, stronger national competitiveness and improved environmental outcomes.”
The report said that any transportation plan must support enhancing mobility for all transportation system users; generate enough resources to meet and sustain national investment needs; cause direct beneficiaries to bear the full cost of use; encourage efficient investment in the system, and support energy independence and environmental protection. It also noted that the economic stimulus package, while helpful in the short-term, will not solve the longer-term problems of the funding system.
To address the immediate federal funding crisis, the commission suggests the enactment of a 10-cent increase in the federal gasoline tax and 15-cent increase in the federal diesel tax, indexed to inflation. In addition, it suggest, doubling the Heavy Vehicle Use Tax (HVUT), which has not increased since 1983, while maintaining the current sales tax on tractors and trailers and adjusting the fees the entire trucking industry pays into the Highway Trust Fund.
The long-term recommendations, which the commission hopes can be completely implemented by 2020, would eliminate the current fuel and vehicle-related charges as the primary funding source for the surface transportation system, which it said is not sustainable. The commission said its “twenty-first century”-focused plan not only implements a user-based system but also will facilitate the installation of technological advances that will deliver real-time information to drivers geared to help reduce congestion, improve safety and reduce emissions, while giving data to system managers for improved monitoring and management of the allocation of transportation infrastructure resources.
In addition, the report advocates facilitating non-federal investment through expanding the ability of states and localities to impose tolls on the Interstate System; supporting standardization of tolling and information systems, and encouraging private-sector financial participation.
The report also spoke on the need to address the increasing insolvency of the Highway Trust Fund, noting that its revenues are estimated to be only $32 billion annually compared to required investments totaling nearly $100 billion. According to the commission, the problem will only worsen until Congress addresses the fact that current revenues simply are inadequate to support current federal program spending levels.
The American Trucking Assns. (ATA) commended the commission for the report, which it described as a necessary wake-up call to Congress, although it disagreed with the conclusions. The trucking lobby agreed that an increase in the federal fuel tax is necessary, but disputed the five-cent differential in the gasoline and diesel tax increases, which would mean that the trucking industry would pay a higher share than other highway users. ATA also expressed concern with the doubling of the Heavy Vehicle Use Tax, which it said would exacerbate the current problem of fee evasion.
While ATA recognized that vehicle technologies will reduce fuel use and thereby reduce intake of fuel taxes, it said it would likely occur over a much longer timeframe than the 10-year time period suggested by the Commission, and a vehicle miles traveled (VMT) tax is an “extreme” solution that would do more harm than good.
“The federal fuel tax has worked well for more than 50 years with the lowest collection and evasion costs,” says ATA president Bill Graves. “There is no reason to transition to a new funding source within the ten-year timeframe suggested by the Commission, and certainly not to an alternative with as many problems as a VMT tax.”
The Owner-Operator Independent Drivers Association (OOIDA) also agreed that additional funds are necessary, but said that truckers are already paying more than their fair share and the proposals would force them to pay an even higher percentage while ignoring the issue of unnecessary spending.
“This commission’s report is a waste of public and private resources, let alone the time and energy of transportation policymakers,” said Todd Spencer, OOIDA executive vp. “They neglected to address the most fundamental problem associated with financing our nation’s infrastructure – reining in and redirecting ineffective and wasteful spending on programs and initiatives that aren’t aligned with actual construction and maintenance for our highway system.”
The bi-partisan National Surface Transportation Infrastructure Financing Commission was created by Congress to provide policy and action recommendations, consisting of 15 individuals from diverse backgrounds including economics, finance, government, industry, law, and public policy. The Commission said its report, the result of two years of research, was unanimously agreed to as a road map for the transition to a new funding and finance framework.
