February 27, 2009

Report: U.S. should employ mileage-based usage fee

The National Surface Transportation Infrastructure Financing Commission (NSTIFC), a bi-partisan Congressionally-created group, urged lawmakers on Thursday to fundamentally shift the way the federal government collects revenues to fund transportation infrastructure.

Culminating nearly two years of study and deliberation, the Commission offered its consensus view and roadmap for sweeping reform of the nation’s transportation infrastructure funding approach with the release of its final report, Paying Our Way: A New Framework for Transportation Finance.

One of the specific recommendations offered for addressing the significant and widening gap between federal investment and the nation's transportation infrastructure needs included moving away from a motor fuel tax toward more direct fees charged to transportation infrastructure users.

Charging vehicle drivers a mileage fee embodies the “user pays” principle and more accurately aligns the costs and benefits of the surface transportation system to those who are using it. More transparent charges for using infrastructure may also spur drivers to use the system more efficiently, reducing the overall investment need.

“With the expected shift to more fuel efficient vehicles,” said Robert Atkinson, the chair of the Financing Commission and president of the Information Technology and Innovation Foundation, “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.”

In addition to a federal mileage-based charge, the Commission called for the federal government to facilitate state and local governments’ ability to raise their share of needed revenues in ways that also spur efficient use of the system and stepped-up investment, including through tolling portions of roads and charging premiums for rush-hour travel in heavily used urban corridors, so-called congestion pricing.

The Financing Commission provided detailed recommendations for lawmakers to facilitate the effective use of private investment and to provide government credit support to assist in the financing of transportation infrastructure projects to stretch the federal government’s limited resources. In order to support the transition from the gas tax to a mileage-based charge, the Financing Commission recommended a ten-cent-per-gallon increase in the federal gas tax (15 cents for diesel) and indexing the tax to inflation going forward.

The gas tax, which is not currently indexed to inflation, has lost one third of its purchasing power since 1993, the last time the tax was increased. The Financing Commission urged the federal government to act swiftly.

While the nearly $40 billion in transportation infrastructure spending included in the stimulus package will be helpful, it will cover only a very small share of the shortfall in highway and transit funding and will not address the systemic crisis the nation faces in its surface transportation infrastructure investment, says the Commission.

“We must start transitioning to a new paradigm now,” said Commissioner Mike Krusee. “If we don’t start, we will never get there.”

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