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Transportation Transformation Group Revenue White Paper

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The Transportation Transformation Group (T2) suggests that identifying a funding source to replace general fund transfers to the Highway Trust Fund (HTF) should be a priority in Congressional efforts to reduce the deficit.

The 2010 Simpson Bowles Commission recommended an immediate 15 cents-per-gallon increase in the motor fuels tax. Should Congress seek an increase in the motor fuels tax, T2 would urge that it be no more than a transitional revenue source leading to a Vehicle-Miles-Traveled (VMT) fee system successor to the federal motor fuels tax, coupled with granting state and local agencies decision-making authority on tolling, and the removal of current federal tolling restrictions. T2 would support continuation of the present restrictions on the use of toll revenue.

A VMT system would charge motorists a fee for each mile they drive. The VMT fee would be a more reliable way to fund highway repair and construction than motor fuel taxes, which are declining as motor vehicles become more fuel-efficient and more drivers use vehicles powered by untaxed alternative fuels such as electricity or natural gas. As motor fuel revenues continue to decline, the cost of repairing and maintaining the nation's transportation infrastructure is growing dramatically.

According to the 2009 report by the National Surface Transportation Infrastructure Financing Commission, "without changes to current policy (predicated mainly on fuel taxes), it is estimated that revenues raised by all levels of government for capital investment will total only about one-third of the roughly $200 billion necessary each year to maintain and improve the nation's highway and transit systems."

T2 supports robust pilots of VMT fee systems over the next few years to prove the best concept that would be implemented in a subsequent surface transportation authorization.

Even with a VMT funding source for the bulk of federal highway modernization and maintenance, state and local agencies might need additional access to revenue and financing. In this case, state and local officials should have the option to increase the use of tolling on a local option basis. Tolls are often the price for a service, and are generally well accepted by the local electorate when established to provide clearly defined new facilities or improved services on existing facilities. When properly implemented, tolls provide value to those willing to pay and remove congestion from untolled facilities.

The federal government should get out of the way of state and local decision-making and lift current restrictions on the application of tolls. It would be reasonable to restrict the use of toll revenues to transportation and not allow funds to be diverted to non-transportation purposes.

2015 Surface Transportation Primer »

MAP-21 »

  • Resource Center
  • Moving Past MAP-21

Explainers »

  • What is the Highway Trust Fund and How Is It Funded?
  • Is the Highway Trust Fund Going Broke?
  • How should we finance transportation?
  • What is a VMT?
  • What transportation policies create value for consumers?
  • How do Private Activity Bonds (PABs) and TIFIA Work?
  • What is a Public-Private Partnership?
  • How TIFIA Helps to Solve the Problem
  • Six-year vs. Two-year Transportation Legislation

Position Summary »