Here is a response from Dan Holler, Communications Director for Heritage Action for America:

When it comes to the problem of how to pay for our nation’s transportation needs, the temptation in Washington is to view Washington as the solution. After tens of billions in Highway Trust Fund bailouts and nine short-term extensions, it is clear Washington does not hold the answer. The real answer is outside the beltway.

Former Pennsylvania Governor Ed Rendell recently scoffed at the idea of looking beyond Washington for transportation funding solutions, saying proponents of such a move “haven’t looked at any of the state budgets recently.” But the Governor misses the point. It is not that states are awash in cash (the federal government isn’t either), but rather that states are much more efficient.

Last year, Indiana Governor Mitch Daniels explained his state “can build in 1/2 the time at 2/3 the cost when we use our own money only and are free from the federal rulebook.” Literally just outside the Washington Beltway, a private company is adding four high-occupancy toll lanes for half the cost the government projected, and the lanes are better designed, too.

Instead of looking for an innovative solution, too many in Congress prefer to debate various funding mechanisms for months on end knowing they will settle for a gimmick that ensures insolvency. There is a better way; lawmakers just need to know where to look.

It is troubling that Congress seems to be moving away from the user pays concept - but until Congress steps up to the plate, they must not hamper state and local funding and financing options. While we are supportive of the policy reforms in the Senate transportation bill (MAP-21), we are troubled by several provisions in the bill that could make it more difficult for many states to leverage funding with private sector partners. BAF is particularly concerned about language that would provide a disincentive to states to consider partnering with the private sector for fear of losing a percentage of its federal funding; eliminates the option to use Private Activity Bonds (PABs) to finance leased highway projects; and changes the depreciation timetable for long-term highway leases from 15 years to 45. Taken together or individually, these provisions would have a chilling effect upon future private investment in infrastructure. Because federal funding has become less certain, several states and cities have looked to such things as public-private partnerships (P3s) (over 30 states have some form of P3 authorizing language on the books), state infrastructure banks, and local referendum to raise a sales tax with proceeds going to specific projects. But there is also a void of leadership and innovation at the federal level. For example, a properly structured National Infrastructure Bank (NIB) that offered low interest loans to projects of regional or national significance could be one of the many tools available to help finance infrastructure projects of national and regional significance. Instead of erecting barriers to P3s, the federal government should also explore establishing a P3 "best practices" entity like there is in Canada and Australia to help states and cities better understand the financing options available to them when partnering with the private sector. And at a minimum, the provisions that hamper such partnerships in MAP-21 must be removed when the bill gets conferenced with a House bill.

The key factors in developing any future plan will be flexibility and sustainability. During the past century, as much of the highway infrastructure we know today was put in place, traditional appropriation and procurement processes, bond issuance and the straight fuel tax were more than adequate to maintain and expand our national highway infrastructure. With decreased per capita usage of personal vehicles combined with decreased petroleum dependency, it is beyond conjecture that this model is simply not sustainable--its inadequacy is already a matter of fact. Whether through vehicle miles traveled (VMT), road user charging, congestion charging, parking revenue optimization, infrastructure privatization-concession, or other revenue streams entirely from a combination of public and private resources, it will be essential for governments from the local to the national level to have new and reliable sources of revenue. Moreover, going forward, demographic, economic and political climates in and between states and regions will, with almost equal certainty, dictate a variety of differing options. The flexibility to engage these solutions will be essential. The critical element in all of this will be the ability of current and emerging technology to manage the data follows within these networks, and to fairly apportion charging commensurate to usage, and ensure both the immediate deployment of resources to support transportation operations, as well as facilitate long range planning. Regardless of the ultimate choices, the availability of more data, higher quality data, and the analytics to support prudent and responsive decision-making will not be an option, but will, in turn, provide dividends to governments, investors, entrepreneurs and above all the traveling public.

The on-going saga of passing legislation to authorize federal surface transportation programs -- legislation that is now more than two-and-a-half years overdue -- reminds us that two overriding public policy issues are intertwined: first, the scope of the national interest in surface transportation; and, second, the manner and level of the appropriate sources of revenue to support such a clearly defined federal program.

Although rarely noted, one of the most important points made in the excellent report of the National Surface Transportation Infrastructure Financing Commission (the Financing Commission), issued in early 2009, was that the level of federal gasoline tax increase to be recommended depended upon the scope of the national highway system (and other key national transportation interests) that had to be supported by federally-generated transportation-related revenues.

As the Bipartisan Policy Center (BPC), two national commissions, and a multitude of organizations and groups have repeatedly noted over the last few years, the United States is not investing enough in its transportation infrastructure and networks. There is a growing gap between now-available resources and the investment capital necessary to bring aging, deteriorating, and congested facilities to conditions of good repair.

Redefining the national interest in surface transportation and adopting fundamental reforms to federal programs are inextricably linked to, and arguably should precede, determining how much federal money should be invested in the achievement of those goals and in establishing how best to raise the related federal revenues. It should be emphasized that the task of redefining the national interest in surface transportation and of identifying the character and extent of federal revenues to support those purposes is both more difficult and more urgent in the context of the nation's fiscal crisis, persistent annual budget deficits, and the escalating national debt.

The Senate-passed surface transportation authorization bill, MAP-21, has made an important start, in proposing significant reforms to federal programs. However, the shape of a final bill, if any, is still unclear, as no clear consensus has yet emerged in the House of Representatives on the scope of, and resources for, a national surface transportation program.

As BPC has consistently noted, we must first define national goals and federal interests in surface transportation. These goals and purposes are likely to be somewhat different from, and could perhaps be more narrow than, such goals and interests in the 1950s, when the Interstate Highway Program was authorized, and even from 1991, when ISTEA was enacted. It remains BPC's view that the federal revenues dedicated to the achievement of these clearly defined goals should be user-based (but we recognize that some others may have different views on that subject) and that these federal revenues should be adequate to assure a sufficient and appropriate level of federal investment in the pursuit of national purposes, as defined by Congress.

Moreover, as BPC has urged and as Bob Poole has noted in his response to this question, there is bound to be a greater role for states and metropolitan regions, in surface transportation investment. To that end, existing federal barriers to state and metropolitan regional flexibility and innovation, in raising investment capital and in generating revenues, should be reduced, if not totally eliminated.

Unless and until Congress articulates national goals and interests in the surface transportation authorization bill that it is now considering, it seems unlikely that it will be able to determine the sources of federal revenue to support those purposes or the level of appropriate funding. I remain hopeful that Congress will, at least, take these essential first steps toward articulating and reforming national surface transportation policy.

It’s increasingly obvious that the fuel tax system of paying for highways is running out of gas. Charging for road use based on gallons consumed rather than miles driven only worked as long as everybody consumed gallons at more or less the same rate.

The users-pay/users-benefit principle is still a sound one—after all, it’s how we pay for the services of other capital-intensive network utilities: electricity, telecom, natural gas, water, etc. What’s broken is the relationship between use and payment.

That’s why we need to begin the shift from gallons consumed to miles driven as soon as possible—and this shift can be encouraged in the currently pending reauthorization bill. The way to do this is to reduce current federal barriers to tolling and pricing on federal-aid highways, especially the Interstates.

Ever since the ISTEA reauthorization 20 years ago, each reauthorization bill has chipped away at what used to be a pretty thorough prohibition of tolling on federal-aid highways. But nearly all of this has been brought about via pilot programs, limited only to a modest number of states or a limited number of projects. Each of these pilot programs—Value Pricing, Express Lanes, Interstate Reconstruction via Tolling—was debated by a previous Congress, with the inclusion of various safeguards to prevent those user fees from turning into broader taxes (i.e., safeguarding the users-pay/users-benefit principle).

Consequently, the simplest way to expand states’ options for tolling and pricing is for Congress to remove the numerical limits on these pilot programs. Nothing new needs to be invented; all we need is to let all states make use of these tools, rather than limiting them to a relative handful of states or projects.

A bipartisan amendment to do just that made a lot or progress in the Senate last month, jointly sponsored by Senators Carper, Kirk, and Warner. Opposing it was an anti-tolling amendment from Sen. Hutchison. After fierce lobbying over both amendments, both were withdrawn shortly before the voting was scheduled. Tolling and pricing advocates are now making their case to members of the House.

To be sure, expanding the tolling and pricing pilot programs will not solve the “pay-for” problem of the current bills. But it would be an important step toward enabling state DOTs to cope with what, at best, will be the first ever no-increase reauthorization bill since the federal program began in 1956.