Gas Tax Increases, Public-Private Partnerships, Tolling, Mileage-Based Fees to Fund Transportation All On the Table in 2013

I’m about to head to Austin for the CSG National Conference, where our Transportation Policy Task Force will convene Saturday to hear transportation experts discuss the state of the nation’s infrastructure, the implementation of the federal surface transportation bill known as MAP-21 and the latest research going on around the country on a possible replacement for the gas tax. Before I hit the road, here are a few recent items on transportation funding issues states are grappling with in advance of their 2013 legislative sessions. Gas tax increases, public-private partnerships, TIFIA loans, tolling and mileage-based fees are all getting a look. I also have follow up items on ballot measures considered this year and how the new chairman of the U.S. House Transportation & Infrastructure Committee might wield the gavel.

  • The Washington Times this week looks at the possibility that Maryland and Virginia both could consider raising their gas taxes next year to fund transportation. Among those David Hill talked to for the story is Gus Bauman, the lawyer who served as chairman of Maryland’s blue ribbon transportation commission and who participated in CSG’s most recent Transportation Policy Academy this summer. “What’s it going to take?” Bauman wonders. “A bridge falling into a river here before they actually take this seriously?” Over in Virginia, Gov. Bob McDonnell is reportedly evaluating a proposal to raise the state’s 17.5 cent a gallon gas tax and/or index it to inflation. “The cost of projects is getting to the point where it is very difficult for the public sector to fund and manage them,” said Virginia Transportation Secretary (and CSG Transportation Policy Task Force Vice Chair) Sean Connaughton. “Public-private partnerships will become the norm for all large projects in Virginia and across the country.”
  • But Virginia’s approach to using public-private partnerships to finance projects, which has long been held up as a model for other states, received some criticism in a report issued this week by the Southern Environmental Law Center. The report finds fault with the state law that allows Virginia to enter into such agreements, the Public-Private Transportation Act of 1995. It says the law lacks adequate safeguards to protect public interests. The report delves extensively into two P3-financed projects, the I-495 Express Lanes in Northern Virginia and the Midtown Tunnel project in the Hampton Roads area. The SELC makes a series of recommendations about how to improve the law including: giving the legislature a role in deciding whether tolling will be used to finance a project, requiring at least two bidders for each project, and requiring a public hearing at least 30 days prior to signing an agreement. State officials however note that the law and indeed the state’s P3 process have been improved considerably by the creation of the Office of Transportation Public-Private Partnerships and other changes implemented under the McDonnell administration. The (Newport News) Daily Press has more on the report and reaction to it.
  • It is a public-private partnership that will build new express lanes that are expected to ease congestion on Interstate 95 in Northern Virginia. U.S. Transportation Secretary Ray LaHood announced last week that the I-95 project would receive a $300 million TIFIA loan to help make the project a reality. TIFIA, the federal credit assistance program first established in 1998 for transportation infrastructure projects of regional and national significance, was beefed up considerably under the recently enacted MAP-21 authorization bill. In making available up to $17 billion in credit assistance for projects, MAP-21 “transforms TIFIA into the largest transportation infrastructure loan program in history,” according to an FHWA press release. The Federal Highway Administration has a list here of all the MAP-21 TIFIA letters of interest for various projects around the country that have been submitted.
  • A new Reason Foundation study from toll industry consultant Daryl Fleming and Reason’s Robert Poole argues that the cost of collecting tolls using all-electronic tolling is now comparable to the cost of collecting gas taxes. “Toll collection costs in the vicinity of 5% of the revenue collected are entirely possible today using proven methods and technology,” the study concludes. The authors also note additional advantages allowed by tolling. “21st-century tolling offers the opportunity to charge for use of a specific highway, when it is used, and by the type of vehicle being operated … When implemented with a value-pricing toll schedule, AET can also be used to manage traffic—offering significant benefits that motor fuel tax programs cannot provide.” For these and other reasons, Fleming and Poole write that “The time to embrace electronic tolls as a primary source of highway funding is now.” Tollroads News has more on the study.
  • Indiana, which in 2005 leased a toll road to a private entity and in the process reaped a fiscal windfall to fund other transportation projects around the state, now faces a $200 million annual shortfall in funds needed to maintain highways and bridges, The (Fort Wayne) Journal Gazette reported this week. Indiana transportation officials told members of the State Budget Committee that the additional funding is needed in order to save $2 billion in more extensive repairs over a 20-year period. Virtually all proceeds from the Indiana Toll Road lease have been spent or obligated and the state’s gas tax collections have dropped due to more fuel efficient vehicles. Among ideas being considered in the Hoosier State: raising the 18-cent-a-gallon gas tax, indexing the tax to inflation, increasing license plate fees, and creating a new system based on how much drivers use the roads.
  •  The Oregon Department of Transportation reported last week that its latest road usage charge pilot project is underway. About 40 volunteers around the state are involved in the pilot, which allows them to choose one of three methods for reporting the mileage for which they will be charged instead of paying the state gas tax. Options are available which make use of smartphone applications and GPS to track mileage and differentiate between miles driven inside and outside the state.
  • Wisconsin Gov. Scott Walker is promising to unveil his plan for transportation spending as part of his state budget next February. But this week he reiterated his opposition to a gas tax increase and downplayed the possible use of increased tolling to pay for transportation projects in the state, the Associated Press reported. Scott’s transportation project priorities include building $6.2 billion in freeways in the southeastern part of the state, including a $1.7 billion interchange outside Milwaukee. “He’s sending signals to his transportation financing task force to find alternatives—other than rethinking the expansions altogether—like diverting auto sales or general purpose income taxes to subsidize road building, or setting up a new, per miles driven fee or an increase in vehicle registration or licensing fees,” reported Wisconsin blog The Political Environment.
  • Former Massachusetts Transportation Secretary James Aloisi penned a three-part series of recent articles for Commonwealth Magazine on the challenges of funding Boston’s public transit system. Part one lays out “The case for funding public transportation.” In part two, Aloisi explains why he thinks “Reform before revenue was the wrong answer.”  And part three offers “Five transportation funding solutions.” Among the solutions he proposes: increasing the gas tax, a vehicle miles traveled system, and a carbon impact parking assessment. Aloisi argues the state needs to relieve the Massachusetts Bay Transportation Authority of the debt it’s saddled with from construction of The Big Dig.
  • The impact of this month’s election on transportation is coming into focus in a number of states. Stateline reports on how a 10-year half-cent statewide sales tax increase approved in Arkansas will allow the state to soon begin widening its highways and looks at why that ballot measure succeeded while a similar one mostly failed in Georgia earlier this year. Meanwhile, the rejection this month of a local sales tax to fund transit in Pierce County, Washington will mean residents of Tacoma and the surrounding area will see substantial cuts to bus and disability services over the next two years, The (Tacoma) News Tribune reported.
  • It was confirmed this week that Congressman Bill Shuster will take over for John Mica as chairman of the U.S. House Transportation & Infrastructure Committee in the next Congress and we’re learning more about his priorities for transportation. The Pennsylvania Republican, whose father Bud once chaired the panel, said this week that a vehicle miles traveled tax, a gas tax increase, expanded tolling and public-private partnerships should all be among the options Congress considers to close the gap between the amount needed to fund highways and transit and the money available, Bloomberg Businessweek reported. In addition, Politico reported that Shuster believes the idea of tying increased energy production to infrastructure funding should also be on the table. But Shuster says he opposes a national infrastructure bank and would not favor devolving the federal role in transportation to the states. The (Central Pennsylvania) Patriot-News also has more on Shuster’s ascension to the post.
  • In his latest Innovation NewsBrief, veteran public policy consultant Kenneth Orski lays out why there is unlikely to be an increase in the federal gas tax approved in the next Congress. “Rather than hoping for an increase in the gas tax,” he writes, “the transportation community should look forward to three new trends as the most likely response to the perceived inadequacy of current transportation revenue: greater financial participation by state and local taxpayers, a shift from federal funding to private and public financing, and an expanded use of tolling.”
  • As I noted above, our Transportation Policy Task Force session in Austin will highlight a variety of important transportation topics. I’ll have a full report on the meeting when I return but for those unable to join us in Austin (or those who simply want to read up on what we’ll be talking about) there are a variety of resources available here in the CSG Knowledge Center. I previewed the task force session in an article for the Capitol Ideas E-Newsletter a few weeks ago. I’ve also posted my extended conversations with two of our Austin speakers: James Bass of the Texas Department of Transportation (who will discuss MAP-21 implementation and Texas’ forays into innovative finance including tolling and P3s) and Richard Baker of the Texas A&M Transportation Institute (who will talk about all those mileage-based user fee pilot projects around the country). Finally, our third speaker—Brian Pallasch of the American Society of Civil Engineers (who will talk about the ASCE’s recent reports on the state of the nation’s infrastructure and the economic cost of not investing in it)—has figured prominently in past CSG events. You can read highlights of his past remarks here, here and here.