SPECIAL REPORT: Group studies best way to pay for road work

| 11/12/2003

Federal and state transportation officials are looking at a study by a group called Reconnecting America that examines whether fuel taxes are the best way to continue to pay for the nation's highways.

Stating that "the federal motor-fuel tax is not keeping up with surface transportation needs," the report suggests a variety of new approaches for transportation financing.

The report, “Financing Intermodal Transportation,” was written by transportation consultant William J. Ankner, a former director of the Rhode Island Department of Transportation. Ankner examines five different approaches to transportation finance, including:

  • A value-added tax on cargo;
  • A national vehicle-miles-traveled fee;
  • A national vehicle registration fee;
  • Tax-credit bonds; or
  • A shift away from modal funding to the income tax.

“Fuel efficiency and energy prices will continue to erode the financial capabilities of the motor fuel tax,” the report said. “In fact, the yield of the federal motor fuel tax is decreasing. The current yield is $0.92 billion per penny, as opposed to $1.4 to $1.6 billion per penny in the mid ‘90s. The federal motor fuel tax need to be supplemented and/or we need a totally new concept.”

For incremental funding adjustments for intermodal connections, the report investigates gas-tax increases, expanded use of tolls and dedication of railroad fuel taxes to intermodal transportation.

The report makes a number of recommendations, beginning with retaining the premise that user fees equal user benefits.

"Today, the beneficiaries of our transportation investments are the vitality of our national economy, the quality of our lives, transportation and resource efficiency, and our collective mobility that is unprecedented in the world. If all benefit, then all should pay," the report states.

It adds that reauthorization of aviation and surface-transportation programs provide an opportunity to redefine eligibility of existing funding sources in TEA-21 and AIR-21, to let them encompass intermodal projects.

Too many cooks

The report notes that on the federal level, five administrators are responsible for highways, transit, aviation rail and freight -- each responsible for their own mode, constituents and political structure.

In addition, Congress is fragmented, the report said. For example, three different and powerful Senate committees are responsible for transportation: Environment and Public Works for highways; Banking for transit; and Commerce for aviation, Amtrak, trucking, rail, and freight and ports.

In addition, there are two main federal transportation trust funds, one for highways and some transit, and the other for aviation.

Moreover, policy and investment decisions for transportation systems at the state and local levels are often fragmented in two different ways: either into state and local jurisdictions and/or quasi-public agencies, which are often accountable only to themselves.

“So ingrained is this philosophy that government often finances a mode to enhance its competitiveness over the other modes, irrespective of whether this modal solution makes the most sense for the public,” the report said. “Ironically, this stove-piped and competitive approach is not how we as consumers approach transportation … Most urban and suburban travelers and freight customers view transportation as a single trip from point A to point B that happens to use several modes … all desire a seamless and continuous trip.”

The report also recommends expansion of public-private partnership opportunities to undertake large regional transportation projects.

Copies of the report are available at http://www.reconnectingamerica.org. Look to www.landlinemag.com for more specifics on the pros and cons of new funding approaches.