Federal funding for surface transportation projects should migrate from a petroleum-fuel-based tax to a mileage-based user fee by 2020, says a 15-member commission appointed by Congress in 2007. The bipartisan group released its final report on Feb. 25 with suggestions for overhauling the Highway Trust Fund, due for its six-year reauthorization later this year.

LaHood says no fuel tax hike.
Photo: The DOT
LaHood says no fuel tax hike.

The National Surface Transportation Infrastructure Financing Commission includes financial experts, lawyers, politicians and industry leaders. Geoffrey Yarema, a member and a partner with Nossaman LLP, Los Angeles, a law firm specializing in infrastructure, says the group’s conclusions were "unanimous."

The commission, estimating annual capital needs for maintaining surface infrastructure at $172 billion a year, recommends that the reauthorization include "substantial efforts" to begin a transition to a mileage-based user fee. One example is a program that would expand on a $1.25-million experiment conducted by Oregon State University. Researchers designed an in-vehicle system that relies on a "smart" odometer with wireless technology to calculate how many miles a vehicle travels before refueling. When filling up the tank, the fee was added to the cost of gas, in lieu of a tax.

The report also recommends federal incentives to states that pursue tolling on expansion projects, relax restrictions on tolling existing Interstate sections in congested metro areas and expand the private activity bonds program from a $15-billion cap to $30 billion. "We think as the credit markets recover, demand will come back in spades" for bonds to fund projects, Yarema says.

As a Band-Aid measure, the commission recommends the federal tax on gasoline be raised by 10¢ and the diesel tax be increased by 15¢. Last year a majority of the National Surface Transportation Policy and Revenue Study Commission also recommended increasing federal motor-fuels taxes. But at the AASHTO Washington briefing on Feb. 24, Transportation Secretary Ray LaHood said, "The last thing...any politician [is] going to talk about is raising taxes."

LaHood has stated that a mileage-based fee should be considered, but White House Press Secretary Robert Gibbs said in a Feb. 20 briefing: "It is not and will not be the policy of the Obama administration."

"We’ve got a short-term ... and long-term funding problem."

Industry groups agree something must be done to revamp the trust fund. Robert G. Burleson, president of the Florida Transportation Builders Association, says, "We’ve got a short-term funding problem...and then we’ve got a long-term funding problem. On a long-term level, in spite of what our new president said about vehicle miles traveled, I really think that that’s the direction we’ll head in."