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RELEASE: CAP Recommends Switching from a Gas Tax to a Mileage-Based User Fee

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Contact: Katie Peters
Phone: 202.741.6285
Email: kpeters@americanprogress.org

Read the report.

Washington, D.C. — With insolvency of the Highway Trust Fund threatening federal transportation programs, a new report released today by the Center for American Progress sets forth a series of policy recommendations that will provide robust, stable revenue for transportation for the next six decades.

Nationwide, 117,000 active highway and public transportation projects and 700,000 workers rely on funding from the Highway Trust Fund. Yet the U.S. Department of Transportation projects that the fund will run out of money in late July 2014.

For nearly six decades, federal surface transportation programs have been funded through user fees, principally a tax on every gallon of gasoline and diesel fuel sold in the United States. However, dramatic improvements in vehicle fuel efficiency have eroded the long-term viability of the gas tax as a primary source of transportation revenue, and the revenue produced from the gas tax is no longer sufficient to cover program costs. Since 2008, Congress has backfilled the fund with $54 billion in general tax revenues, with another $170 billion needed in order to keep the fund solvent over the next 10 years.

“For too long, Congress avoided addressing our transportation funding problem,” said Kevin DeGood, Director of Infrastructure Policy at the Center for American Progress and co-author of the report. “Americans need a long-term solution. Mileage fees offer an equitable and effective way to provide for our transportation needs.”

The report released today by CAP experts Kevin DeGood and Michael Madowitz details how Congress can set federal transportation programs on a path to long-term stability by taking three important steps:

  1. Increase the gas tax by 15 cents per gallon with an equivalent percentage increase on diesel. Raising the gas tax is essential to stabilize the trust fund and to provide time to transition to a mileage-based user fee model of transportation finance.
  2. Authorize $100 million as part of the surface transportation authorization bill to fund state-based mileage-based user fee, or MBUF, demonstration projects in 10 to 15 states. Pilot projects will allow states to test different vehicle miles traveled, or VMT, technology platforms, administrative approaches, and privacy protocols.
  3. Establish a surface transportation revenue office within the Office of the Secretary of Transportation to facilitate demonstration projects, provide technical assistance, share best practices, and fund independent research on privacy standards for vehicle data.

According to the report’s authors, transitioning to a VMT fee will not only produce a more reliable source of revenue, but it will also provide a technology platform that will allow states and metropolitan regions to actively manage their roadway networks through pricing.

While other revenue sources could potentially fill the funding gap, they lack a direct connection to system use and would not provide a sound policy tool to manage growing congestion. By comparison, congestion pricing provides a means to efficiently allocate the scare resource of highway lane miles. In addition to improving system performance, the revenue generated by congestion pricing could provide a significant boost to public transportation services, providing people with an affordable, safe, and timely alternative to driving.

The report was discussed at an event this morning event featuring Rep. Earl Blumenauer (D-OR). Click here to watch a recording of the event.

Read the report: Switching from a Gas Tax to a Mileage-Based User Fee by Kevin DeGood and Michael Madowitz

To speak with an expert on this topic, contact Katie Peters at kpeters@americanprogress.org.

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