Taking steps to finance infrastructure

The fact that our transportation infrastructure financing system is broken is not breaking news, but the sad fact that we are falling farther and farther behind other economies around the world should elevate it back to the top of issues that need to be addressed.

I have attended several conferences and meetings in recent weeks that have heralded the advances others are making in their transportation systems and the growing levels of investment being made in transportation infrastructure globally. Our position in the global economy is beginning to erode - economic growth depends on transportation systems. Meanwhile, we still don’t have a budget for the USDOT, and all indications are that once we do it will be considerably smaller. State DOTs’ budgets are shrinking. Texas Transportation Institute recently released its latest Urban Mobility Report and it was no surprise that congestion has risen and spread. Congestion costs, both in terms of time, but also fuel consumption and contributions to poor air quality.

As the economy recovers, demand for transportation services is on the rise again. Demand continues to grow, while capacity has been stagnant. The Highway Trust Fund is no longer adequate. The federal tax on motor fuels has not been increased since 1993, despite inflation and continual growth in demand for highway travel. Most state motor fuel taxes have also lagged well behind inflation and demand. Even aside from political issues, the future does not look encouraging, with new car fuel economy standards mandated to increase to 35.5 miles per gallon by 2016 (the so-called CAFE standards). Growth in electric and hybrid vehicles are expected to blossom in response to worries about higher oil prices and concerns over greenhouse gas emissions.

The Obama Administration has also discussed a 62 mile-per-gallon standard for new cars by 2025.

Growing financial shortfalls limit funds to address congestion and basic infrastructure. True progress in solving these problems requires a solution that can be applied on a nationwide scale and is accepted by all stakeholders in the transportation community. VMT fees are a popular topic among those interested in finding a new source of funds for surface transportation. In particular, focus has been placed on new systems that can be quickly and equitably implemented both to generate increased revenues in the near term and to create a sustainable alternative to fuel taxes to generate adequate revenue for the future. VMT-based fees offer a flexible source of funds for transportation.

Implementing a VMT fee system for motor carriers would be significant first step to implementing a system for all vehicles. Many of the barriers, especially privacy concerns, are not as big an issue for motor carriers. Implementing a relatively simple straightforward system for motor carriers will alleviate many of the obstacles and result in a VMT fee system that is administratively affordable, sustainable and implementable nationwide. A technology based solution would have the added benefit of providing the very data needed to identify where the funds need to be spent to improve the movement of freight

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