A federally mandated commission will recommend raising the gas tax by as much as eight cents, but the plan will not be endorsed by the panel’s chairman, Transportation Secretary Mary Peters, who instead supports increased use of tolling and public-private partnerships to fund the nation’s surface transportation infrastructure, knowledgeable sources said this week.

The report, which is not expected to be released until Tuesday, appears to be a setback for Peters and other advocates of public-private partnerships, or P3s, sources said. The panel missed “an opportunity to do something extraordinary,” one P3 supporter said.

The sources, who include federal transportation funding experts, spoke on condition of anonymity.

Peters is chairman of the 12-member National Surface Transportation Policy and Revenue Study Commission, created by Congress to write a report assessing the future needs of the surface transportation system and how to finance them over the next 15 to 50 years.

The report includes a proposal to raise the current gas tax of 18.4 cents per gallon between five and eight cents per year for five years and to index the tax for inflation after that, sources said.

But it will also include a statement of dissent from Peters and two other commission members — Maria Cino, a former DOT official who is currently leading organizational efforts for the 2008 Republican National Convention, and Rick Geddes, director of undergraduate studies at Cornell University’s Department of Policy Analysis and Management. President Bush, who has long opposed raising the gas tax, appointed both Peters and Cino to the commission. Congress appointed Geddes.

Peters believes greater use of tolling and private sector investment through P3 deals are the most effective way to mitigate traffic congestion. She has argued that P3s are better for improving the nation’s roads, in part because Congress is increasingly earmarking federal gas tax receipts for transportation programs in their districts instead of dedicating them to projects that would provide the best results to reduce congestion.

Others on the panel disagree with her, including vice chairman Jack Schenendorf, a transportation lawyer with Covington & Burling LLP. They contend in the report that the federal government should continue to fund the system through the gas tax, and that tolling and public-private partnerships should be more on the periphery. The gas tax was last raised in 1993.

The report will also recommend that federal gas tax dollars be spent to meet congestion relief goals, but will give states a range of options for meeting those goals — a departure from the current transportation program.

“To meet the performance goals, [states would] get a menu of options to choose from,” including building more highways, mass transit, passenger rail, and freight rail projects, one source said.

Currently, federal gas tax receipts flow into the highway trust fund, and are distributed back to states under a formula to fund highway and some transit projects specified in state and local transportation plans. Other modes of transportation cannot be funded with federal gas tax dollars.

The report “is pretty innovative,” according to the source, who added that some portion of the proposals could end up in the legislation that replaces the Safe, Accountable, Flexible, Efficient Transportation Equity Act: a Legacy for Users. Typically known as SAFETEA-LU, the authorizing law expires at the end of fiscal 2009.

However, the proposal to fund various transportation modes with gas tax dollars could prove too politically contentious. For example, it would be difficult to decide how much funding each state should receive and how much to provide for each type of transportation mode.

The report is expected to help shape the debate as Congress gears up to draft legislation to replace SAFETEA-LU. The House Transportation and Infrastructure Committee is expected to hold a hearing on the report Thursday and the Senate Environment and Public Works Committee is expected to follow suit the week of Jan. 23.


Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.