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Transportation Solutions

WASHINGTON — Sen. Barbara Boxer, D-Calif., plans to explore the increased use of municipal bonds and private investments to improve the nation’s transportation systems, she said yesterday after raising concerns about a commission proposal to boost the federal gas tax.

“We are exploring all of the funding mechanisms that are out there, including private financing, infrastructure [tax-credit] bonds and municipal bonds,” Boxer, chairman of the Senate Environment and Public Works Committee, told reporters after a hearing on a recently unveiled report by the National Surface Transportation Policy and Revenue Study Commission.

In its report, the commission — created by Congress to report on transportation needs and how to finance them over the next 15 to 50 years — recommended raising the current 18.4-cent-per-gallon gas tax by as much as eight cents a year over five years and indexing the tax for inflation after the fifth year.

Boxer’s position contrasts with House Transportation and Infrastructure Committee chairman Rep. James L. Oberstar, D-Minn. who favors a gas tax hike and is more in line with Bush administration officials who oppose it.

Currently, federal highway and transit construction funds come from the federal gas tax. The revenues are collected into a pool, known as the highway trust fund, and distributed to states annually based on a formula. States sometimes use the revenue to repay tax-exempt bonds issued to finance projects.

However, Boxer said that continuing to rely on the gas tax to fund transportation infrastructure conflicts with efforts to reduce greenhouse gas emissions from cars and trucks. In December, President Bush signed into law legislation that raised auto fuel-economy standards for and mandated increased use of alternative fuels.

“I personally don’t think that is the route to go,” Boxer said of the gas tax, adding that other financing options, which were discussed in the report, deserve further exploration.

Two gas tax alternatives that should be considered, Boxer said, are increased issuance of municipal bonds and pending legislation sponsored by Senate Banking Committee chairman Sen. Christopher J. Dodd, D-Conn., that would establish a national infrastructure bank that could issue up to $60 billion of taxable tax-credit bonds to help finance publicly owned infrastructure projects. Boxer intends to hold more hearings on transportation finance as the committee prepares to draft legislation to replace the current transportation policy and funding law, which expires at the end of fiscal 2009.

Sen. James Inhofe, R-Okla., the panel’s ranking member, also took issue with the 40-cent gas tax increase proposal. He suggested a smaller increase would stand a better chance of passing.

Both Boxer and Inhofe were intrigued with moving toward a funding system based on miles traveled, but both were opposed, because of privacy issues, to using global positioning system technology to monitor the travels of roughly 247 million registered vehicles.

Other funding recommendations in the report included increased private sector investment through public-private partnerships, or P3s, but called on Congress to prohibit so-called non-compete clauses in P3 deals where states or localities lease a road to a private party for a number of years. Non-compete clauses prevent the government from building or improving roads that would compete with the leased road. Congress should also limit increases in tolls to inflation, require that private entities share revenue beyond a certain level with the public entities, and limit the length of concession agreements, the report said.

The report also called for easing restrictions on tolling the Interstate Highway system to fund new capacity and permitting metropolitan areas with more than one million people to use variable price tolling to fight congestion. The report also calls on states and localities to boost their contribution through a gas tax or other mechanism in order to raise transportation funding to at least $225 billion from all sources over the next 50 years.


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