Raise Fuel Tax During Transition to VMT to Fund Transportation, Blumenauer Says

This story appears in the March 9 print edition of Transport Topics.

WASHINGTON — Rep. Earl Blumenauer (D-Ore.), a member of the tax-writing House Ways and Means Committee, said the country should move quickly to a vehicle-miles tax but meanwhile should raise fuel taxes significantly, al-though the higher taxes shouldn’t take effect for at least two years.

The tax changes are needed to ensure adequate funding for transportation spending, the long-time transportation advocate said.

“The funding mechanism that we have employed for the last 90 years no longer works on a sustainable basis, resulting in growing deficits and a rather bleak financial future for transportation in the United States, unless we do something about it,” Blumenauer said here March 4.

Blumenauer spoke at a transportation conference hosted by Iona College.

“We absolutely need to increase the gas tax in the short term and by a significant amount, but that’s not going to be sufficient,” he said. “We need a vision for long-term financing that eventually gets rid of the gas tax.”

A long-term vision is necessary because increased efficiency of motor vehicles will erode fuel-tax receipts, Blumenauer said. He also cited declining sales of heavy trucks as a reason for the wobbliness of the Highway Trust Fund, because excise taxes on large trucks are a contributor to the fund.

To replace the fuel tax, Blumenauer suggested using “a share of the carbon revenue because we’re going to have some sort of cap-and-trade tax on carbon pollution. We ought to retain a portion, at least 10%, to be able to fund long-term transportation infrastructure” and a vehicle-miles-traveled tax.

The VMT is “a better, fairer, more effective road-use charge” than the fuel tax, Blumenauer said, citing the experience of his home state of Oregon, which recently concluded a mileage tax study.

Two congressional commissions have advocated vehicle mileage taxes as a long-term solution to transportation finance.

Blumenauer told Transport Topics that the idea of a VMT fee “has not been front and center” on the House Ways and Means Committee’s agenda but that “it’s getting more attention” and is likely to be discussed when Congress begins debating the highway reauthorization later this year.

“We’ve got to lay the foundation for VMT,” he told TT. “We’ve got to be investing in more pilot projects, at least one in every state, so people can see how it works, and we can refine it and deal with concerns that people have about effectiveness and privacy.”

Last month, White House spokesman Robert Gibbs rebuked Transportation Secretary Ray LaHood for floating the idea of a mileage tax, but Blumenauer said he expected the Obama administration to come around.

“I think this is something the administration will work out,” he said. “They’ve got a bunch of smart people around there, and they know we can’t continue to survive on the gas tax. I’m convinced they’ll end up where they need to end up.”

Blumenauer said that he thought an increase in the gas tax, as well as funds generated by a cap-and-trade regime, would be enough to sustain transportation investments until a VMT system can be started, but that should take place “as quickly as possible . . . no later than 12 years from now.”

Blumenauer said he thought the 10-cent increase in the gas tax advocated by one of the transportation financing commissions was on the mark, but he added that he didn’t think it should be used right away.

“I don’t think there should be any gas tax increase for the next two years,” he said.

Blumenauer said the federal government should be paying $100 billion a year for transportation infrastructure and in lieu of a fuel tax for the next two years, as part of a “10-year program . . . to refill the Highway Trust Fund and increase it going forward . . . with the gas tax increase, with a percentage of the carbon pollution fee.”