Transportation Financing Faces Challenges

WASHINGTON -- As the nation continues to move toward alternative sources of energy to power its motor vehicle fleet, Congress must consider other highway user fees to augment the federal gasoline tax in order to finance America's growing transportation needs, say top economists studying the transportation construction industry.

According to the U.S. Department of Transportation's Conditions and Performance report, there is currently a $20 billion gap between what is being invested by all levels of government and what is necessary just to maintain current highway and bridge conditions.

"To close the investment gap and begin making meaningful transportation infrastructure improvements is going to take a strong national and political commitment," said Dr. William Buechner, vice president of economics and research for the Washington, D.C.-based American Road & Transportation Builders Association. "It will require a very significant increase in the level of financial support given to transportation programs by all levels of government. And it is going to require federal leadership."

Buechner spoke of the issue on Sept. 14 at the U.S. Chamber of Commerce transportation roundtable on Financing the Future.

Buechner, a Harvard-trained economist who served more than 20 years with the Joint Economic Committee of the Congress before joining ARTBA in 1996, said he believes the federal excise on gasoline and diesel fuels will remain the primary vehicle for financing transportation improvements for the rest of the decade.

There are, however, a host of additional federal user fee options that could generate critical revenues to meet the nation's surface transportation investment challenges, he said. They could include an annual federal motor vehicle registration fee, a federal sales tax on cars and light trucks and/or a cargo tax.

Also potential funding mechanisms at the federal level, he said, include expanded use of tolling and, perhaps, toll-backed federal bonds for large-scale, high-cost regional and multi-state projects. Unlike the other user fee options, however, tolling and bonding do not lend themselves to a "one size fits all" model for financing the federal investment program, Buechner said.

He added that ARTBA proposed in 1999 that Congress examine how alternative motor fuels and/or motor vehicle use should be taxed at the federal level to ensure the revenue stream necessary to improve mobility in America as part of the reauthorization of the Transportation Equity Act for the 21st Century. The association supports provisions in the House and Senate TEA-21 reauthorization bills now before Congress that would establish a national commission to develop financing options for highway and transit investments in the long term.