Gas Tax, Mileage Tax, Infrastructure Bank Touted as Possible Federal Transportation Funding Options

With the federal Highway Trust Fund and the next surface transportation bill hanging in the balance, a number of national policymakers, stakeholders and analysts are beginning to weigh in with their preferences for what should happen in the months ahead. Here’s a roundup of some recent pronouncements on the subject as well as some other related resources.

Shuster Suggests Mileage Tax, Rejects Gas Tax Increase

House Transportation and Infrastructure Committee Chairman Bill Shuster said this week that he wants the next surface transportation bill (the successor to 2012’s MAP-21, which expires at the end of September) to be a five- or six-year bill and that he favors user fees, including a vehicle miles tax, to pay for it.

During remarks at a Bloomberg Government infrastructure event in Washington, Shuster also rejected the idea of raising the federal gas tax but suggested other funding possibilities might include higher taxes on energy exploration and bringing back corporate profits earned overseas.

“Economically, it is not the time” to raise the gas tax, Shuster said. “I just don’t believe the American people have the will out there, in the public or in Congress; even our president has said we’re not going to do that. We’ve got to figure out a different way at this point in time.”

Tanya Snyder at Streetsblog USA wrote this week that Shuster’s comments could complicate things just as the funding debate is really getting underway.  

Others Favor Gas Tax Increase

But others continue to say an increase in the gas tax would still be the easiest solution. Oregon Democratic Congressman Earl Blumenauer introduced legislation in December to increase the tax by 15 cents a gallon over three years. The U.S. Chamber of Commerce and other groups have endorsed that plan but it hasn’t gained much traction in Congress. Congressman Alcee Hastings, a Florida Democrat, last week called for a “slight increase” in the 18.4 cents a gallon tax but he declined to specify how much.

Former U.S. Transportation Secretary Ray LaHood has also become a strong proponent of a gas tax increase since leaving office and becoming co-chair of Building America’s Future, joining another gas tax proponent, former Pennsylvania Gov. Ed Rendell. LaHood and Rendell were also among the speakers at this week’s Bloomberg event.

“One thing Congress should consider is raising the gas tax by 10 cents a gallon and indexing it to inflation,” LaHood writes in a piece for The Hill this week. “That would provide the kind of breathing room needed to get our roads and rails back on track.”

LaHood’s piece is part of a special transportation report in The Hill that also includes pieces from Shuster, James Corless of Transportation for America, Patrick Natale of the American Society of Civil Engineers, and a group of six former U.S. secretaries of transportation.

Warner Touts New Version of Infrastructure Bank Concept

Also in the mix in The Hill’s special report is Virginia Democratic Sen. Mark Warner, who writes about legislation he has co-sponsored with Missouri Republican Sen. Roy Blunt.

“The BRIDGE Act will establish a new infrastructure financing authority that complements existing programs currently scattered across several agencies,” Warner writes. “The legislation will allow us to consolidate expertise and talent in infrastructure financing and program management. This new authority could help states and localities go toe-to-toe in negotiations with private sector partners, ensuring that taxpayers get a good return while helping to identify and build out a pipeline of viable projects.”

The financing authority would be established with a one-time initial investment of $10 billion, which would be used to provide loans and loan guarantees to infrastructure projects and unlock an additional $300 billion or more in investment over a decade.

Warner says the authority would be paid for through consolidation and disposal of unused federal property and would come at no additional cost to taxpayers. It would be structured to be self-sufficient over time.

The measure, unlike a proposed gas tax increase, has attracted bipartisan support, Warner noted.

EPW to Hear from Transportation Stakeholders

MAP-21 reauthorization gets the spotlight next week when the U.S. Senate Environment and Public Works Committee holds a full committee hearing on Capitol Hill. Among those scheduled to testify: Kentucky Transportation Secretary and current AASHTO President Mike Hancock, U.S. Chamber of Commerce President and CEO Thomas Donohue and American Road and Transportation Builders Association President and CEO Peter Ruane.

Recent Reports & Resources

  • A new report prepared for Associated Equipment Distributors by researchers at the College of William & Mary looks at “The Future of Transportation Infrastructure Investments: Determining Best Practices for States’ Funding and Financing Mechanisms.” Among the funding mechanisms highlighted and assessed: fuel taxes, tolls and VMT fees. Among the financing mechanisms that get a look: state revolving funds and state infrastructure banks, public-private partnerships and bonding.
  • Speaking of VMT fees, the man leading the charge in Oregon’s implementation of a mileage-based fee program was recently interviewed by Leonard Gilroy of the Reason Foundation. James Whitty, Manager of the Office of Innovative Partnerships and Alternative Funding at the Oregon Department of Transportation, talks to Gilroy about the history of the mileage fee concept, the rationale for road usage charges, the 2013 legislation that created the latest iteration of the program, the role the private sector will play in implementing it, the challenges ODOT officials have run into along the way, and what the future may hold for Oregon and other states looking to follow their lead. Whitty was one of the featured speakers at our Transportation Policy Academy in Portland, Oregon last July.
  • Gilroy’s colleague at Reason, Robert Poole, recently wrote about “Ten Reasons Why Per-Mile Tolling is a Better Highway User Fee than Fuel Taxes.”
  • The National Highway Traffic Safety Administration recently announced it wants to require vehicle-to-vehicle communications systems in new cars by some future date. Randal O’Toole of the Cato Institute writes this week that privacy advocates have much more to fear from that technology than they do from vehicle mileage fee systems.

Webinar on States to Watch in 2014: Transportation Funding

Last week’s CSG webinar on states to watch in 2014 on transportation funding is now archived in the Knowledge Center and available for viewing. I’ll also have a full write-up on the webinar and state funding efforts in the February 13 edition of the Capitol Ideas E-Newsletter.