Earlier this week, Joseph Kile of the Congressional Budget Office outlined for a Senate committee the dire situation that is the Highway Trust Fund. The fund that pays for U.S. highway and transit projects — largely populated by the weak federal gas tax — will more or less run out of money by the end of fiscal 2014. Insolvency could occur as early as August, and the Department of Transportation may need to begin withholding payments to states this summer.
If the gas tax were a fuel gauge, we'd pretty much be in the red.
The good news is that lawmakers have actually started to formulate new funding plans. President Obama sent Congress a $302 billion transportation package late last month; the Senate has promised a bill sometime next week; a House appropriations committee is busy crunching numbers. The bad news is the sides already feel far apart: Obama's ambitious plan lacks a politically palatable funding mechanism, the Senate more or less preserves the status quo, and the House is leaning toward pretty heavy cuts.
It's too soon to scrutinize the details of the bills, but one element of Obama's plan seems likely to endure. That's an idea to let states place tolls on their free interstate highways. Right now, states can only toll an interstate highway to pay for the construction of new lanes. The new plan would let states create tolls to pay for maintenance of a crumbling highway they have no plans to expand at all. (Three states already have such permission through a federal pilot program — Missouri, North Carolina, and Virginia — but none has acted on it.)
The idea has a little something for everyone. It shifts power to the states, which conservatives tend to like. It makes drivers pay for road use more directly than the gas tax does, which economists like; in fact, the free-market Reason Foundation recently proposed a similar plan. And it lets politicians avoid the unpopular move of raising the gas tax during an election year, which every party likes. For the record, the C.B.O. recommends a 10 to 15 cent per gallon hike.
Critically, the idea as proposed by the White House allows toll revenue to go toward transit projects in the same corridor:
This section also would allow toll revenues to be used for costs necessary for improving public transit service, provided such service is provided within the transportation corridor in which the toll facility is located…
The transit provision is particularly encouraging, because it gives metro regions the ability to use existing road space in a more flexible and efficient way. Cities and metro areas could use toll revenue to create express bus lanes, for instance, thereby expanding highway capacity without widening highway corridors. Tampa is already experimenting with such a system, and the new rule would make it easier for local governments to adapt the concept to their needs. Facilitating transit in a corridor also addresses a major concern about the equity of tolling.
The list of benefits goes on. Giving states the option of tolling existing interstates also supports a fix-it-first strategy that prioritizes the maintenance of existing highways over the construction of new ones — a smart policy for metro areas whose built-out road networks no longer provide new economic or mobility benefits. If tolls are priced based on traffic levels or rush hours, they can control congestion even as they generate transportation revenue. And federal law is pushing all tolls toward a universal cashless system anyway.
At the very least, lawmakers determining the future of federal transportation funding have another option before them. One can envision an outcome to the current trust fund crisis in which some funding is cut a bit, the gas tax is raised a bit, interstate tolling is allowed, and a pilot program is adopted for a mileage-based fee system. Together these efforts would inch the country toward a better transportation funding system, and as anyone who sits in traffic everyday knows, inching forward can eventually get you somewhere.