A series of reports, led by the report of the National Surface Transportation Infrastructure Financing Commission (the Financing Commission) and earlier work by a special committee of the Transportation Research Board (and including our work at the Bipartisan Policy Center's National Transportation Policy Project (NTPP)), have noted that the federal gasoline tax is no longer providing a sustainable and adequate source of revenue for investment in the nation's transportation system or serving, as an adequate proxy for use.

Currently, the revenues raised from the gasoline tax do not accurately reflect use of the transportation system or the impacts of that use on so-called "externalities," such as safety, congestion, energy security, and environmental resources. Total revenues from federal motor fuel taxes and related charges (in the range of $36 billion to $38 billion annually) are not sufficient even to preserve and restore such critical national transporation assets and facilities, as the Interstate Highway System, let alone to make essential investments, in improving the transportation system. Moreover, at current rates, gasoline and diesel taxes do not act to discourage consumption. Few Americans seem aware of how much of what they pay at the gas pump -- or that any of what they pay -- is used to fund transportation infrastructure investments and use.

A federal gasoline tax, set at an appropriate level, or a highway or transportation fee, related to use, would send important price signals to users. America's transportation system is under priced and over utilized (resulting in congestion in urban areas and at key "choke points" in the system). In the words of the United Kingdom's Eddington Report, it is important that we "get the prices right" in transportation. We are failing to do that in the United States.

Importantly, the relationships between cost, use, and benefits can perhaps be more readily established at the state and local levels. Federal policy should allow -- or, better, incentivize -- state and local governments to implement user-pay mechanisms that will encourage efficient use and investment.

An improved user-pay funding mechanism, accurately related to the full cost of providing transportation services and of maintaining and restoring the transportation infrastructure, is necessary, in order to assist both policy makers and consumers, in understanding the connection between costs and benefits and in making more informed decisions about using and investing in the system. As outlined in NTPP's June 2009 report, "Performance Driven," a system funded by users, who are paying directly for their use, will send timely and accurate signals about the full range of costs and benefits and will advance a range of national purposes, including --

* Enhancing equity across all users;

* Promoting consistency with energy security and environmental goals;

* Reducing congestion and increasing the reliability of travel times;

* Promoting more accurate user-based signals with respect to investment priorities; and

* Reducing capital needs, as users internalize cost impacts and rationalize their use of the system.

Establishing the Highway Trust Fund and dedicating the federal gasoline tax to it in 1956 created the appropriate mechanisms to build the Interstate Highway System. However, the national economic, energy security, and safety goals of a new century require that we consider -- new funding mechanisms that are more directly related to the full costs of use; a refined definition of national interests and of the national transportation system; and revised federal transportation programs, designed to promote innovative responses to national purposes across modes, across agencies, and across jurisdictions.

WMATA’s interim General Manager Richard Sarles is a persuasive writer, but his proposal for “a national multimodal trust fund which is then distributed to States and regions based on their specific modal needs” is not convincing.

How would “specific modal needs” be determined? By the analysts who determined that the USA “needs” high-speed rail to supplement existing road and air services?

And where would the money come from? From a tax on fares? Or might Rich be looking to road users to provide the funding?

Consider a practical example: Rich has the unenviable task of running an organization that is chronically short of funding, possibly because it tends to lose money on every sale, without making it up on volume. To make WMATA financially viable, its management has to choose between the difficult options of raising fares or cutting costs. How much more convenient if WMATA could regularly dip into a “national multimodal trust fund” to provide the funding which its users are not prepared to supply.

It is evident that such a “national multimodal trust fund” could help those who are both nice and sell-connected, and could also help some politicians get elected. But would it really ensure that transportation funding went to the most urgent national tasks? Or might this be, like reports of a second marriage, the triumph of hope over experience?

Changing the way our nation finances transportation is a great idea, but it needs to be fair to all commuters. As it stands, low-income families are spending more than twice as much on transportation as families with higher incomes.

One often hears objections to taxes on food from poverty advocates because buying food is never optional. This same principle applies to a gasoline tax. People who have an hour commute to a job or to a community college in the city from their family farm will end up paying far more on a gas tax than the rest of us. Without reliable public transport to fall back on, a gasoline tax is just inherently unfair.

We need to think about how to increase the fairness of the system for low-income people, as well as how to increase revenue so that we can build a transformative, accountable transportation system that will get everyone where they need to go.

The existing system has worked well for generations and should be modified, not scrapped. We need to continue with a fedreal system of collecting revenues and allocating resources, otherwise we will have 50 disjointed and conflicting road systems with substandard facilies in sparsely populated states.. The gas tax for obvious reasons must be replaced with a distance based tax system as soon as practicable. States should be able, in conjunction with metropolitan bodies to identify priorities and select projects and manage their design, construction , operation and maintenance.A system of metrics should be established by USDOT in partnership with the states to identify goals and objectives and measure results. The Trust Fund with fire walls and multi year contract authority should be maintained for highways and transit. A separate source of continuing revenue should be established for intercity passenger rail.

A single tax solution, such as just placing a larger tax on petroleum, will not work as a long term solution to meet the future funding needs of the Highway Trust Fund, or some similar replacement fund. The need to conserve energy in terms of petroleum consumption is self-evident when you consider that importing so much oil places this country in a dependent position within the international community. The implications of changing our national energy policy means rethinking a transportation tax structure currently dependent on oil consumption.

Future funding should achieve four goals:

o A well functioning transportation system creates wealth and enhances our economic competitiveness in the world market Any new funding package must reflect both the value added that mobility brings and the essential need for mobility, whether for people or goods. Smart transportation investment equals added value for everyone; it allows and facilitates growth in the economy. Why not capture a portion of this added value whether because of time saved or ability to connect efficiently between locations not before possible?

o The new funding package needs to generate an amount of money that escalates sufficiently to address future needs. For decades, as long as we consumed more oil each year, the tax on oil worked in generating sufficient funds. We need a balanced approach to raising funds that reflect the national economic, environmental, energy and quality of life goals. Just as the gas tax is a proxy for use of the highway system, we need a new proxy(ies) that would not just measure how much gas we burn, but how much we use and benefit from the multimodal network.

o A new balance between prerequisites for funding, oversight and flexibility is needed. We must end the dilemma of knowing that the truly innovative funding approaches we must employ at times in the future must navigate the swirling rapids of an uncertain process, endless reviews and well-intentioned but not well aimed oversight.. We need regulation that is less prescriptive and more that provides incentives for doing things correctly.

o The monies collected need to be placed in a national multimodal trust fund which is then distributed to States and regions based on their specific modal needs. The need for a “systems” approach to resolving passenger and freight transportation needs has been known for years and it is time to align the funding sources and availability to fit this model. A 20th century funding mechanism primarily used for creation of the interstate highway system is not appropriate for a multimodal transportation.system.

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Looking at today’s world, we see older European and developing countries around the world investing hundreds of billions in new highways, rail lines and public transit systems. They are planning to outspend us, and they are investing on a multimodal basis. It is time we renew our leadership and invest correctly in a multimodal surface transportation system for this country.

The discussion should indeed be about "finding a more flexible and comprehensive way of paying for transportation", and I suggest that the best way to do this is to avoid reauthorizing the federal Highway Trust Fund -- and the federal taxes that feed it --and restore highway financing to the states.

Federal highway financing was introduced to fund the Interstate Highway System. Now that the IHS is complete, more effective financing systems are needed. Why not allow the states to find them?

The fifty states (and DC) would be able to replace the federal revenues by appropriate increases in their own charges for road use. As they are not flush with money, they are likely to favour the traditional American "user pays" principle: Let users pay for what they consume, and receive what they are prepared to pay for. Modern technology enables road users to pay for road-use as easily as they pay for cell-phone use.

Ken Orski reported in a recent Innovation NewsBrief:

"All speakers [at a high-level conference] noted with a certain sense of frustration that no one seems to acknowledge the seriousness of the infrastructure crisis nor a willingness to do something about it -- not the Congress, not the White House, not the general public."

If left to themselves, some states will adopt successful policies, and others will replicate them. Is this not how progress is made in federal systems? Why should transportation users be held hostage to federal budget problems?