US Finance Commission calls for more tolls now, then direct road use charges

A finance commission set up by the US Congress in the last five year 'TEA' bill to advise on future road funding has suggested greater use of tolling and other pricing mechanisms. They say indirect funding through the gasoline and diesel taxes is unsustainable. It is generating grossly insufficient revenue and is causing wasteful distortions such as congestion.

More direct charges for road use, called by them vehicle-miles traveled (VMT) fees have emerged as the consensus choice for the future, the commission says. Their report headed "Paying our way: a new framework for transportation finance" says greater use of tolling and broad based VMT fees will produce more efficient use of roadways. They could be incorporate variable time-of-day pricing shifting inessential trips out of peakhours to make better use of expensive highway capital.

Officially named in the Washington tradition of ponderous titling "National Surface Transportation Infrastructure Financing Commission" it was chaired by Robert D Atkinson, Washington DC based transportation policy writer, and comprised a mix of experts, officials and stakeholder representatives (see panel nearby). We'll refer to it as the 'financing commission' or the Atkinson Commission.

Unanimity

Unlike a transport policy commission last year which produced a strongly divided report - lobbyists in the majority versus policy people in the minority - the Atkinson commission report is unanimous.

Not just insufficent revenue

Like all such Washington commissions the Atkinson crew find a need to take a shot at guessing aggregate capital needs out to 2035, an exercise akin to forecasting climate change. They produce numbers showing annual capital needs at $194b to maintain and moderately improve the surface transportation network and a high program of $241b/year to do major improvements. These numbers give funding 'gaps' of 60% and 68%.

Underpricing

"The problem, however, is not simply insufficient investment. Our system is underpriced," they say.

Basic economics tells us, they write, that when something valuable like roadspace is p[rovided for less than its cost there will be shortages - manifested on roads as congestion.

"All too often the prices paid by transportation system users are markedly less than the cost of providing the transportation services they use...This underpayment contributes to less efficient use of the system, increased pavement damage, capacity shortages, and congestion."

VMT fees prescribed

In revenue terms the VMT fee would need to be:

- 0.6c/km (0.9c/mile to match the present gasoline/diesel fuel tax

- 0.9c/km (1.4c/mile) to meet the shortterm commission recommendations

- 1.4c/km (2.3c/mile) equivalent to a 48.4c gasoline/diesel tax to fund the commission's maintain-&-improve scenario

The commission says the US must commence the transition to a new, more direct user charge system "as soon as possible" aiming for a comprehensive system to be in place by 2020.

They suggest the need for an "aggressive" R&D program and a variety of demonstration programs of road use fee systems overseen by a new unit within USDOT and an independent advisory committee. The system would be adjusted for inflation and would become the primary mechanism for road funding, while allowing that fuel taxes might be needed for meeting environmental; objectives of suppressing carbon emissions.

The technologies would be designed to accommodate the full range of potential charging systems allowing state, local and private road providers to piggyback on it, and providing for different kinds of pricing. They would ideally incorporate GPS, the commission says.

Tolling any net new capacity

US law and policy should allow tolling of any net new capacity by removing all restriction on the number of projects under the Interstate System Construction Toll Pilot Project, the commission says.

Interstate reconstruction and rehab

The commission wants the number of 'slots' in the Interstate Reconstruction and Rehabilitation program increased from three to five.

Standardization, interoperability

The Commission says it would support standardization by completing rulemaking (this is vague) "regarding necessary rulemaking regarding electronic tolling and interoperability."

TIFIA would be expanded to $1b/year and private activity bonds from $15b to $30b. Projects eligible would be limited to those adding net new capacity.  It also suggests consideration of tax credit bonds.

Interim increases in gasoline, diesel taxes

The commission suggested an interim increase in the feds' gasoline tax of 10c/gallon and 15c/gallon on diesel fuel. That would take the federal gas tax from 18.4c to 28.4c/gallon. The diesel tax would go from 24.4c to 39.4c/gallon. Legislators have not raised the gas and diesel taxes since 1993.

http://FinanceCommission.dot.gov

TOLLROADSnews 2009-02-26/27