Posted on April 21, 2011 4:37 PM
In Search of New Funding Alternatives for Transportation
Our transportation system is largely supported through user fees like the federal and state gas tax, vehicle registration fees, tolls, and transit fares. However, these revenue sources rapidly lose purchasing power when not adjusted to keep pace with construction and operating cost increases. The obvious symptom is that our roads and transit systems fail to achieve a state of good repair. The GO TO 2040 plan emphasizes the importance of bolstering transportation user fees (while also working to constrain costs), in order to keep pace with inflationary pressures. In addition, current user fees do not reflect economic externalities—the so-called “true costs of congestion”— which include efficiency losses due to lost time and fuel, decreased productivity, congested freight movements, and pollution.
The federal and state gas taxes make up the lion’s share of the revenue pie—GO TO 2040 calls for these user fees to be increased and indexed to a measure of inflation. GO TO 2040 stresses that these taxes, which already have an effective system of collection in place, should be raised in the short term. At the same time, as we look out over the next thirty years, we must prepare for technological advances which will lead to vehicles’ becoming more fuel-efficient. Of course, these advances will also further erode the purchasing power of gas taxes. As a result, we need to start planning for alternatives to traditional financing mechanisms now. The Minnesota Department of Transportation (MnDOT) is starting a new pilot project to do just that.
MnDOT is currently experimenting with a "miles tax" to help make up for gas tax revenues lost from fuel-efficient cars, reports the Star Tribune. Minnesota is facing a shortfall of as much as $50 billion for highway work over the next 20 years, and even with increases to the state’s gas tax, available revenues might not keep pace with construction needs. As a user fee, the miles tax would continue the principle of motorists paying for the majority of highway work, but it would take a number of years to implement effectively statewide. Whereas gas taxes are simply collected at the pump, a vehicle miles traveledtax might prove more challenging (and costly) to administer. MnDOT’s study is exploring the use of a dashboard-mounted device, and the lead firm is seeking sample drivers to participate in a pilot study. While this work is expected to end by December 2012, any full-scale deployment is likely years away.
While proactive studies like these are certainly worthy, near-term action must be taken in Illinois to address funding shortfalls. This begins with dealing with the revenue source we already have in place—the gas tax.