Panel offers gas tax hike, fees to pay for transport infrastructure
Reversing the serious decline of the nation’s surface transportation infrastructure will require drastic ' and expensive ' action, the National Surface Transportation Policy and Review Study Commission said Tuesday.
The commission's nine-member majority, in its nearly two-year review of how to correct the nation's underinvestment in highway and rail infrastructure, proposes to Congress that the nation:
' Significantly increase investment to more than $225 billion per year.
' Shave 10 years off the approval process for large projects.
' Jettison all federal aid programs in favor of 10 new performance-based programs.
' Raise the motor fuel tax 5 cents to 8 cents per year for five years and eventually transition to a distance-based user fee to replace the gas and diesel tax.
' Implement federal freight fee and dedicating a portion of Customs duties to help pay for to pay for freight-related improvements, as well as a passenger ticket-tax for commuter rail infrastructure.
The report is viewed by many in Washington as the first step in framing the debate leading up to the next reauthorization of the multiyear highway-spending bill in 2009.
The commission was not able to reach consensus on its recommendations, with three members splitting over the issues of new taxes and overhauling the bureaucracy. The dissenting members were Mary Peters, chairman of the commission and secretary of transportation; Mary Cino, former Bush administration deputy secretary of transportation; and Rick Geddes, a professor at Cornell University and former senior economist on Bush’s Council of Economic Advisors.
“We are in a death spiral and if we get too far behind we won’t be able to catch up” in terms of fixing deteriorating infrastructure and adding new capacity to meet current and future demand, said Vice Chairman Jack Schenendorf at a press conference to release the report.
The United States has used up the extra capacity built into the Interstate and national highway system after 1955, resulting in large-scale urban congestion and an annual economic drain of more than $62 billion in lost productivity and wasted fuel, exports say. The number of vehicles and miles traveled have skyrocketed in the past 30 years, with very little new highway lanes to match demand.
The situation only gets worse because the existing system will not be able to handle population growth of 120 million to 150 million in the next 50 years and a 70 percent increase in freight volumes by 2020, transportation experts say.
Among the commission’s four key recommendations were that the nation needs to spend in the range of $225 billion to $340 billion per year across all levels of government and the private sector for the next 50 years to modernize the surface transportation system. The United States is only spending about 40 percent of the amount needed, creating a decades-long investment gap.
The panel also said government must rapidly accelerate the time between conception and delivery of major transportation projects to reduce costs. It takes up to 14 years to complete transportation projects in the United States and the commission set a goal of delivering projects within five to six years.
Commissioner Tom Skancke, who heads a public affairs firm in Las Vegas that deals with transportation construction projects, said that enormous cost savings can be achieved through a better planning process. A $500 million project will balloon to $1 billion over the course of 10 years due to construction inflation, which is running at about 49 percent due to huge increases in material costs.
“Those cost savings could be applied to other projects,” he said.
Streamlining the environmental review process is not an effort to short-circuit environmental protections but simply to make the bureaucracy work better, he stressed. Experts typically know the environmental impact of a project within 120 days, but there is no coordination among the multiple agencies that conduct reviews or deadlines for them to meet, Skancke said.
The commission called for the federal government to maintain a full role in transportation funding, in contrast to the Bush administration’s strategy of relying on states and concessions of public assets to the private sector to raise more money.
The report urges Congress not to reauthorize the surface transportation programs in their current form. Instead, it recommends a total overhaul by replacing more than 100 current transportation programs with 10 “performance-oriented, outcome driven, mode-neutral programs” that focus on projects in the national interest.
The new programs include:
' A National Asset Management Program to repair existing infrastructure.
' A Metropolitan Mobility Program to reduce congestion to specific targets.
' A Freight Transportation program to increase freight transportation capacity on major highway corridors and intermodal connections.
' A Highway Safety program designed to decrease fatalities (now more than 40,000 per year) by half.
' An Intercity Passenger Rail program to connect cities in 13-15 major corridors.
' Environmental Stewardship.
' Energy Security.
The vision calls for states and industry stakeholders to take inventory of their infrastructure conditions, develop a set of standards for infrastructure, and develop a plan to bring the infrastructure up to a state of good repair. The panel called for the creation of a new National Surface Transportation Commission modeled on the Postal Regulatory Commission or the Base Closure and Realignment Commission to depoliticize the funding process. The commission would oversee the various programs to make sure they were carried out according to congressional directive, and then figure out how much money it will take to meet the program needs and recommend to Congress a fuel tax or other revenue-mechanism to fund the federal share, subject to an up-or-down vote.
The commission called for the eventual elimination of the fuel tax in favor of a fee based on vehicle-miles traveled, now increasingly possible with available tracking technologies. To meet the nation’s immediate needs during a potential 20-year transition period, it recommended that the motor fuels tax be increased 5 cents to 8 cents per year for five years, for a total increase of 25 cents to 40 cents.
“That’s 41 cents to 66 cents per gallon for the average American motorist. That’s less than the cost of a candy bar,” Schenendorf said. “It’s a small price to pay in terms of decreased congestion and fatalities and improved economic growth.”
Under its plan, the federal government would contribute 40 percent of capital expenditures, and states and local governments would have to provide the rest.
The plan encourages the use of tolling on the Interstate highway system and states to use public-private partnerships where it makes sense. Leases of state assets should come with strict conditions to protect the public interest, it said.
The dissenting members said they did not approve the report because of its call for “substantial state and federal gas tax hikes, what they called a new federal bureaucracy to centralize transportation decision-making, new limitations on states’ abilities to attract private sector investments and a first of it’s kind tax on all public transportation and intercity passenger rail tickets.”
'Raising gas taxes won't improve traffic congestion, it will only perpetuate our ineffective reliance on fossil-based fuels to fund infrastructure and send more of Americans' hard-earned money to Washington to be squandered on earmarks and special interest programs,' Peters said in a statement issued by the Department of Transportation. 'A better way forward is to provide incentives to states willing to pursue more efficient approaches and to invest federal funds more effectively to give commuters real relief from gridlock.'
She said the total cost to motorists in 20 years would be 91 cents per gallon, when indexed for inflation and that states are also expected to raise their fuel taxes.
The full commission report is available at www.transportationfortomorrow.org ' Eric Kulisch.
