Panel Urges Fuel Tax Hikes

By Eric Miller, Staff Reporter

This story appears in the Jan. 12 print edition of Transport Topics.

WASHINGTON — A national commission studying transportation infrastructure funding is set to recommend that Congress raise fuel taxes now but eventually replace them with levies based on miles traveled.

“We concluded that there’s really no other feasible or sensible long-run sustainable way to fund transportation,” said Adrian Moore, a member of the commission and vice president of the Reason Foundation of Los Angeles.

The National Surface Transportation Infrastructure Financing Commission, one of two similarly titled groups Congress established in 2005, is preparing to formally recommend raising the federal diesel tax by 15 cents a gallon and the gasoline tax by 10 cents — a more than 50% increase.

The fuel-tax boost is needed to fund near-term highway and bridge construction and maintenance, but 2 cents of the diesel tax increase would go to a special freight infrastructure fund, under the group’s plan.

However, commission members said fuel taxes would be unable to sustain the nearly bankrupt Highway Trust Fund, and commission member Craig Lentzsch told Transport Topics the group is recommending that the federal government drop the fuel tax by 2020 in favor of a system based on vehicle miles travelled.

Commission members, meeting Jan. 8 in order to finish their report for Congress later this month, said they wanted to be sure that political decision-makers get a clear message that the nation must move quickly to a VMT system to relieve the Highway Trust Fund.

An increase in the fuel tax would be just a “band-aid” until a VMT system replaces it, Moore said.

“Nobody wants to pay more gas taxes. I sure as heck don’t want to pay more gas taxes,” Moore said. “But either you find some way to dramatically cut the cost of the roads, or you’ve got to pay for it.”

Under the commission’s recommendations, heavy-duty trucks eventually would be taxed based on the number of miles they travel, and at a higher rate than autos, Moore said.

The commission has been studying future highway and transit needs and Highway Trust Fund revenue since early 2007.

The recommendations generally follow those reached in January 2008 by a separate congressional transportation policy commission, led by U.S. Transportation Secretary Mary Peters, although they call for a more modest fuel tax increase and an earlier move to VMT.

The commission recommended raising fuel taxes by 25 to 40 cents a gallon, although Peters dissented from its final report (click here for previous Premium Content story).

Lentzsch, director of Coach America, a Dallas-based charter bus and airport shuttle operator, said the 15-cent diesel tax increase would be broken into two parts: 13 cents for general transportation funding, and 2 cents dedicated to a special “freight transportation issue resolution fund” to provide commercial freight infrastructure funds for highways, ports and border crossings.

“Freight issues tend to fall low” on most metropolitan planning lists, Lentzsch said. “So in order to have a big pot of money so people pay attention to freight issues, we proposed funding it out of the extra 2-cent diesel tax.”

Some on the commission said trucking should convert to a VMT system before automobiles, but Lentzsch said a compromise resulted in a recommendation that Congress authorize a VMT truck pilot project.

“The reason the early adoption for trucks doesn’t make sense is because the various trucking related inputs to the Highway Trust Fund are the growing part of the trust fund,” Lentzsch said. “It’s the automobile part that’s declining.”

Although the commission recommended a similar VMT system for local governments, Moore said “it’s going to be up to state and local governments to figure out what to do about that.”

Lentzsch said $66 billion a year is needed to maintain and expand the current transportation needs. He added that even if the recommendations of the commission were followed, federal fuel tax revenues would fall short of paying for future needs because motorists are driving less and buying less gasoline.