It wasn’t that long ago that the rising price of gasoline was the No. 1 issue facing the American public. At this point in time, however, the stage is being set by highway lobbyists for what is sure to be high-profile fight over future funding sources to meet the nation’s transportation infrastructure needs. The occasion is this year’s expiration of the SAFETEA-LU legislation that authorized federal surface transportation programs for highways, highway safety and transit for a five-year period beginning in 2005.

Finding future funding sources has become a serious problem. In brief, the state of the American economy has led to fewer cars being purchased and significantly fewer miles being traveled, meaning a lot less being paid at the pump. Virtually everybody engaged in the debate points to the near certainty that current funding deficits will become even more overwhelming. And, negative comparisons with Europe and China’s infrastructure policy have become increasingly common.

Rep. Earl Blumenauer (D-Ore.) summed up the situation like this: “The surface transportation law, as it’s currently written, doesn’t even have a policy statement...There is a growing consensus regarding both the magnitude of the challenge and the desire for something that is bolder.”

But even with broad agreement that a new national approach is needed, there is also broad disagreement about how to best improve our surface transportation system and the fairest approach in terms of how to pay for these improvements. Monitoring vehicle miles is one alternative currently under the microscope, but it is not a slam dunk. In fact, the biggest opponent currently resides in the White House.

Problems with the Gas Tax

The federal role in transportation policy was considerably expanded in 1956 with the creation of the Interstate Highway System. The goals back then were pretty simple: Drivers would pay at the pump and the federal government would provide grants to states that would in turn knit together a network of multi-lane roads that would connect the country from coast to coast. A lot has happened since then.

For example, the 18.4-cent-per-gallon federal tax on gasoline has not been increased since 1993. This has led to a deficit in the Highway Trust Fund. Considering the rise in fuel-efficient vehicles and the fact that people are generally driving less, the idea that we won’t be able to count on fuel taxes as the only long-term financing solution to our rising transportation needs is fast becoming a reality. The struggling economy is not the only reason. The increasing popularity of hybrid cars and other ways to become more fuel efficient are also a direct result of pressures to address global climate change.

Another problem related to a volume-based gas tax is that it gives states an incentive to promote more driving to obtain more revenue when what is needed is a more balanced transportation system that gives people more choices.

New Tax on Vehicle Miles?

The idea of a “Vehicle Miles of Travel” tax has been hailed as an innovative way to generate transportation revenue in states seeing fewer gasoline tax dollars coming into the coffers for the reasons cited above — people driving less and cars becoming more fuel efficient.

Many states are in fact already exploring the idea of taxing drivers directly on mileage. Oregon started the process with a pilot project in Portland with a global positioning service (GPS) device on vehicles, the drivers of which were charged 1.2 cents per mile in lieu of the state’s 24-cent gas tax.

A dashboard display, a GPS receiver and antenna, a mileage counter unit and a short-range-radio-frequency antenna are the equipment being considered. Under the pilot program in Portland, gas stations were equipped with mileage-reading devices, radio wave transmitters that would send information to a computer in the gas station office. The driver’s receipt from the pump showed the gas tax was removed and the mileage tax added. The driver paid the amount due.

“Big Brother” and Other Considerations

While taxing miles traveled might indeed provide a new source of road rehabilitation financing, it will most likely spark controversy. In addition to many Americans not liking the idea of the government tracking information about where and when they travel, those who drive to and from rural areas will most likely feel unfairly penalized under a system that charges them for the longer distances they have to drive. On top of that, taxing based only on distance traveled would not meet the goal of congestion pricing — the idea of charging more for driving on the busiest roads during the most crowded times. There are even proposals being considered that would tax drivers based not only on where and when they travel, but also on what they drive.

Feasibility is another problem. Imposing the tax through gas stations might be possible, but the cost of retrofitting all vehicles with the necessary equipment would likely be too high. The gear could be put in new vehicles by manufacturers, but that means implementation of the concept could be years down the road. Another obstacle is how to gather the information and collect the mileage fee at a minimal cost without causing motorists too much inconvenience. The need to ensure that the transponder built into every vehicle is tamper-proof must be added to the growing list of concerns.

Undeniably, there will be many policy issues with which lawmakers will have to contend as they attempt to reauthorize the transportation program currently set to expire this fall. In addition to ongoing economic and environmental issues, privacy, fairness, labor and other considerations will find their place on the discussion table. NUCA’s role in the search for a new national approach will be to work with its colleagues in the highway lobby to ensure a robust reauthorization measure that effectively expands the highway construction market, which typically includes significant work for the underground utility construction industry in terms of relocating utility systems included in surface transportation projects.

Eben Wyman is NUCA Vice President of Government Relations.