The nation should not continue to rely on gas tax revenues to finance transportation infrastructure needs because soaring gas prices will likely force consumers to drive less, resulting in less revenue coming in, Virginia Gov. Timothy Kaine and U.S. Transportation Secretary Mary Peters said yesterday at a meeting here.
Instead, state and local governments need to find "innovative" alternatives, such as congestion pricing, private financing, and toll roads to finance those needs, Kaine and Peters said.
"We're not going to see gas prices go down in any significant way," Kaine said at the National Governors Association's State Summit on Innovative Transportation Funding and Financing.
Kaine said relying on the gas tax is banking on a "revenue source that is sort of running away" from governments. After the sixth straight month in a row that there has been a national decline in vehicle miles traveled, Peters said states cannot rely on paying for the increasing transportation demands that they face with a funding source that is "simply not keeping up." She added that the prospect of raising federal or state gas taxes to increase revenues "in an environment that is increasingly hostile to raising taxes" is not the way to fly, either.
Currently, most states rely on their own gallon gas taxes to help fund transportation maintenance and construction projects. Federal highway and transit construction funds come from federal gas tax revenues, which are put into the highway trust fund and distributed to states annually. Officials expect the trust fund will be about $3.7 billion short at the start of fiscal 2009, which begins Sept. 30.
As a result of the loss of tax revenues, Kaine said governments will need to have about 30% of their transportation funding needs financed in part by public-private partnerships, tolls, and congestion-pricing options such as a vehicle-miles-traveled tax, He added, though, that traditional financing must still be used.
Peters said that, rather than increasing federal funding, the nation should better allocate current transportation dollars and also tap into private financing through P3s, adding that about $400 billion in private funds are available.
Lawmakers are charged with rewriting the current transportation funding bill, the Safe, Accountable, Flexible, Efficient Transportation Equity Act: a Legacy for Users, or SAFETEA-LU, which expires on Sept. 30, 2009.
While some lawmakers and the National Surface Transportation Policy and Revenue Study Commission report released in January floated increasing the 18.4-cent federal gas tax as a remedy to the trust fund shortfall, most lawmakers have since appeared to move away from that as an option because consumers are already squeezed by unprecedented gas prices.
Meanwhile, Kaine used his presence at the summit yesterday to highlight his own state's transportation infrastructure funding needs even though a bill that he introduced last week has made no progress in a special session of the Virginia General Assembly that began Monday.
Kaine's plan would raise about $1 billion per year over the next six years through tax increases and also grant a northern Virginia transportation agency the ability to issue bonds for transportation projects in the highly congested part of the state. Its passage seems unlikely because members of the Republican-controlled House of Delegates have come out vehemently against any statewide tax increases and Senate Democrats have introduced a 6-cent increase to the state's 17.5 cent-a-gallon gas tax, which would be phased in over six years.