A New Way To Pay?
National Journal
Aug. 30, 2010
BPC's Emil Frankel responds to the National Journal's Transportation Expert Blog:
Program Reform and User-Pay Mechanisms
By Emil H. Frankel, Director of Transportation Policy, Bipartisan Policy Center
A series of reports, led by the report of the National Surface Transportation Infrastructure Financing Commission (the Financing Commission) and earlier work by a special committee of the Transportation Research Board (and including our work at the Bipartisan Policy Center's National Transportation Policy Project (NTPP)), have noted that the federal gasoline tax is no longer providing a sustainable and adequate source of revenue for investment in the nation's transportation system or serving, as an adequate proxy for use.
Currently, the revenues raised from the gasoline tax do not accurately reflect use of the transportation system or the impacts of that use on so-called "externalities," such as safety, congestion, energy security, and environmental resources. Total revenues from federal motor fuel taxes and related charges (in the range of $36 billion to $38 billion annually) are not sufficient even to preserve and restore such critical national transportation assets and facilities, as the Interstate Highway System, let alone to make essential investments, in improving the transportation system. Moreover, at current rates, gasoline and diesel taxes do not act to discourage consumption. Few Americans seem aware of how much of what they pay at the gas pump -- or that any of what they pay -- is used to fund transportation infrastructure investments and use.
A federal gasoline tax, set at an appropriate level, or a highway or transportation fee, related to use, would send important price signals to users. America's transportation system is under priced and over utilized (resulting in congestion in urban areas and at key "choke points" in the system). In the words of the United Kingdom's Eddington Report, it is important that we "get the prices right" in transportation. We are failing to do that in the United States.
Importantly, the relationships between cost, use, and benefits can perhaps be more readily established at the state and local levels. Federal policy should allow -- or, better, incentivize -- state and local governments to implement user-pay mechanisms that will encourage efficient use and investment.
An improved user-pay funding mechanism, accurately related to the full cost of providing transportation services and of maintaining and restoring the transportation infrastructure, is necessary, in order to assist both policy makers and consumers, in understanding the connection between costs and benefits and in making more informed decisions about using and investing in the system. As outlined in NTPP's June 2009 report, "Performance Driven," a system funded by users, who are paying directly for their use, will send timely and accurate signals about the full range of costs and benefits and will advance a range of national purposes, including --
- Enhancing equity across all users;
- Promoting consistency with energy security and environmental goals;
- Reducing congestion and increasing the reliability of travel times;
- Promoting more accurate user-based signals with respect to investment priorities; and
- Reducing capital needs, as users internalize cost impacts and rationalize their use of the system.
Establishing the Highway Trust Fund and dedicating the federal gasoline tax to it in 1956 created the appropriate mechanisms to build the Interstate Highway System. However, the national economic, energy security, and safety goals of a new century require that we consider -- new funding mechanisms that are more directly related to the full costs of use; a refined definition of national interests and of the national transportation system; and revised federal transportation programs, designed to promote innovative responses to national purposes across modes, across agencies, and across jurisdictions.
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