Spotlight

On January 15th, the National Surface Transportation Policy and Revenue Study Commission issued its report that recommends a radical restructuring of surface transportation programs and incremental increases in the federal gas tax while broader changes are implemented. The report is supported by nine of the twelve commission members. Secretary Mary Peters, former Deputy Secretary Maria Cino, and Professor Rick Geddes filed a dissenting view.

The commission concludes that the United States needs to invest at least $225 billion annually from all sources (federal, state, and local) for the next 50 years to repair the existing transportation system and create a more advanced system. Today, only 40% of the recommended amount is invested each year. This significant increase in funding is needed to sustain strong economic growth and keep the United States competitive.

For the next approximately 15 years, the commission believes the most reliable way to pay for the system needs identified is to significantly raise the federal gas tax. Accordingly, the commission recommends that the federal fuel tax be increased five to eight cents per year over the next five years, after which it should be indexed to inflation. States would be encouraged to enact even larger increases.

Recognizing the size of the funding gap, the commission also recommends new federal ticket taxes to help pay for transit and passenger rail, a federal freight fee to help finance freight-related improvements, and new flexibility regarding tolling and congestion pricing. The commission also encourages public-private partnerships with certain stated conditions.

Over the long term, the commission acknowledges that increased fuel efficiency and alternative fuels will erode the gas tax’s equity and effectiveness. The commission recommends the gas tax should be replaced by a new system such as a vehicle-miles traveled fee by 2025.

Most of the news coverage on the report has dealt with the commission’s recommendation to raise the federal gas tax. However, the report also includes a number of other bold proposals. The commission states the current federal transportation programs should not be reauthorized in its current form and recommends a new program with the following structural features:

• Develop a comprehensive, performance based approach and a national strategic plan to guide investment. Funding would be distributed based on needs not formulas.
• Reform program and project development processes to reduce the time required to move projects from start to finish. This will reduce the overall cost of the project and allow the benefits of the project to be realized sooner.
• Reduce the number of federal surface transportation programs from over 100 to the following 10 programs:
• Rebuilding America: A National Asset Management Program
• Freight Transportation: A Program to Enhance U.S. Global Competitiveness
• Congestion Relief: A Program to Improve Metropolitan Mobility
• Saving Lives: A National Safe Mobility Program
• Connecting America: A National Access Program for Smaller Cities and Rural Areas
• Intercity Passenger Rail: A Program to Serve High-Growth Corridors by Rail
• Environmental Stewardship: A Transportation Investment Program to Support a Healthy Environment
• Energy Security: A Program to Accelerate the Development of Environmentally-Friendly Replacement Fuels
• Federal Lands: A Program for Providing Public Access
• Research, Development, and Technology: A Coherent Transportation Research Program for the nation
• Establish an independent and permanent National Surface Transportation Commission (NASTRAC) – similar to the Base Closure and Realignment Commission and the Postal Regulatory Commission – that would recommend appropriate authorization and revenue levels to the Congress based on the national strategic plan. Congress could only veto the recommendations.

The Dissenting View
In a minority statement included in the report, Secretary Peters and Commissioners Maria Cino and Rick Geddes explain the areas of agreement and disagreement with the commission. They agree on the following: the transportation system and sustained investment is vital to the nation’s economy, opportunities exist for simplification, consolidation and streamlining the federal program, and greater accountability and rationality is needed for investment decisions.

However, they disagree on fundamental issues such as the size of the federal government’s role. The minority calls for a renewed national focus on infrastructure policy, but in their view, this doesn’t necessarily lead to a larger federal role in directly financing and managing projects. They vehemently reject the proposal to raise the federal gas tax.

They also disagree with how the commission determined the $225 billion in annual needs, the practicality of the independent governance commission (NASTRAC), and what they see as additional federal restrictions on tolling, pricing and private investment.

The minority, which not surprisingly echoes the Bush Administration, recommends leaving the federal gas tax at the current rate and refocusing federal efforts on a) maintaining the Interstate; b) alleviating freight bottlenecks; and c) providing states with analysis, incentives and flexibility as they adopt market-based reforms. While the federal program would focus on achieving federal objectives, states would have to find a way to fund all other projects and programs.

Wisconsin
At the core of the commission’s recommendations (and the dissenting view), there is a focus on national priorities and a moving away from discussions of formula distribution – donor vs. donee. However, parochial concerns run deep. How Wisconsin or any state would fare under the commission’s recommendations is unclear, but it would be reasonable to assume that focusing on national priorities may also serve to focus money on large population centers, primarily the coasts.

This report and the work of the National Surface Transportation Infrastructure Financing Commission, the other commission created by SAFETEA-LU, will provide important information as TDA begins reauthorization discussions with the Wisconsin delegation.

TDA thanks Secretary Busalacchi and all the commissioners for their work on these important commissions.

Click here to download the entire report.