Fuel tax fix floated to fund infrastructure

Fuel tax fix floated to fund infrastructure       The United States should phase out collection of fuel taxes and switch to a direct mileage-based user-fee system to address the growing gap between available revenue and a backlog of projects to upgrade deteriorating highways and bridges, a special commission chartered by Congress recommended on Thursday.
      The National Surface Transportation Infrastructure Financing Commission also called for:
      ' Hiking the 24.4-cent-per-gallon diesel tax by 15 cents, 2 cents of which would be diverted to a new trust fund to raise about $800 million for freight-related projects.
      ' Raising the gasoline tax 10 cents to 28.4 cents per gallon as a short-term solution until a vehicle-miles traveled fee system can be instituted.
      ' Doubling the Heavy Vehicle Use Tax (for trucks with a gross weight of more than 55,000 pounds).
      ' Maintaining the existing truck and trailer sales tax and truck tire tax.
      ' Indexing the motor fuel, heavy vehicle use and truck tire taxes to inflation.
      Taken together the measures are expected to raise $20 billion per year for the Highway Trust Fund, which Congress bailed out with $8 billion from the general fund last September in order to keep federal aid commitments to states. The solvency of the Highway Trust Fund is under growing threat as high fuel prices and a weak economy cause people to drive less, and increasingly turn to fuel-efficient vehicles. In fiscal year 2008, Highway Trust Fund receipts totaled
$36 billion, down about 10 percent from $39 billion the previous year.
      The continual erosion of funding has forced states to place many projects on hold due to the uncertainty of receiving federal money.
   Congress set up the commission to inform it about funding options as it prepares to debate a massive new surface transportation blueprint that will set policy and spending priorities for the next six years. The existing $286 billion package, which passed in 2005 after multiple delays, expires on Sept. 30, and without new authorization programs will be funded at current levels.
      The 15-member commission acknowledged that fuel-tax increases and a vehicle-miles traveled (VMT) fee are not politically popular at the moment, but said sticking with the fuel tax as the primary funding source for federal highway aid is not sustainable given technological and behavioral trends, and is at odds with new policy goals for reducing dependence on foreign sources of oil and emissions from burning fossil fuels.
      In recent weeks the Obama administration has signaled opposition to raising fuel taxes and a VMT fee, although Transportation Secretary Ray LaHood originally offered that a VMT was a valid funding tool. Raising the fuel tax, which has lost one-third of its buying power since last adjusted in 1993, is not popular on Capitol Hill, especially since many Democrats who otherwise may favor certain tax increases believe a fuel tax is regressive and disproportionately impacts low-income earners. Many members of Congress and interest groups have also raised cost, privacy, and fairness concerns about a VMT system that monitors vehicle movement.
      Rob Atkinson, chairman of the commission and president of the Information Technology and Innovation Foundation, said that it's premature for Congress or the White House to make a decision on VMT now. The commission is only asking Congress to start research and development of standards and technology, and establish several pilot projects for automobiles and commercial vehicles to study the issue so that by the next reauthorization bill in 2015 Congress can decide whether to pursue the concept, he stressed at a press conference in Washington where the report was released.
      'There's no need to ask politicians to go way out front of where the people are,' he said.
   Atkinson also noted that Obama and LaHood's statements about gas taxes referred to no increases during the recession and that by the time any reauthorization bill is passed, and new taxes kick in, the nation may be out of the recession. Fed Chairman Ben Bernanke and other government economists have recently stated they see the potential for the economy to hit bottom by the end of this year or early 2010 and begin growing again.
      The report says the government should commit to deploying a VMT system, including new cars and trucks built with electronic onboard recorders and satellite-based Global Positioning System devices, by 2020. The timetable is much more aggressive than one in a report by a sister policy commission last year that called for a 15 to 20-year transition phase to VMT, but extra fuel taxes in the range of 25 cents to 40 cents per gallon over a five-year period.
      The Finance Commission recommended that the federal fee should be
2 cents per mile to address the investment gap at the federal level, which it estimated could average about $68 billion per year during the next 30 years. Congress could set the rate at 0.9 cents per mile if its goal is to simply match the current performance of the Highway Trust Fund.
      Commissioners also said that an extensive public education campaign is needed to familiarize people with a VMT and gain their support.
      The report also recommended a menu of financing options to allow states to leverage federal revenues and meet their own needs. These
include:
      ' Lift restrictions on interstate tolling for all new capacity and for existing capacity under certain circumstances.
      ' Create an incentive program for states to do more tolling.
      ' Enhance federal low-interest credit programs for transportation.
      ' Expand the cap on private activity bonds to $30 billion from its current level of $15 billion.
      ' Invest $500 million per year over six years to re-capitalize State Infrastructure Banks.
      The commission also endorsed further use of long-term asset leases to private investors as long as public protections are clearly articulated.
      The full report is
available here. ' Eric Kulisch