House Dems want states to test gas tax alternatives

House Dems want states to test gas tax alternatives
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A pair of House Democrats is pushing the Obama administration to allow states to search for alternatives to the 18.4 cents per gallon gas tax that is currently used to finance federal transportation projects. 

Rep. Peter DeFazio (D-Ore.) and Del. Eleanor Holmes Norton (D-D.C.) said in a letter to Transportation Secretary Anthony Foxx that states should begin experimenting with new infrastructure funding mechanisms now, despite the fact that Congress just passed a five-year, $305 billion highway bill last year. 

The lawmakers said the recently completed highway bill does not address a shortfall in transportation funding that forced lawmakers to turn to a package of about $70 billion worth of offsets from the federal budget to pay for five years worth of construction projects. 

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"The FAST Act is a great achievement, but it does not resolve the long-term solvency challenges of the Highway Trust Fund," the lawmakers wrote. 

"To ensure that we are not in the same position four years from now, we must immediately begin to identify real, workable funding solutions to carry our surface transportation programs through the 21st century," they continued. “A safe, efficient surface transportation network is fundamentally necessary to our quality of life and our economy. But we cannot fund this network relying on current Highway Trust Fund revenues.”

The 2015 highway bill calls for spending approximately $205 billion on highways and $48 billion on transit projects over the next five years. The measure includes a grant program known as the Surface Transportation System Funding Alternatives that provides $95 million to help states study alternatives to using dwindling gas tax revenue to pay for transportation projects. 

Prior to passing the highway bill, Congress had not passed a transportation funding package that lasted longer than two years since 2005, much to the chagrin of infrastructure advocates in Washington.  

The new bill formally reauthorized the collection of the 18.4 cents per gallon gas tax, which is typically used to pay for transportation projects. It also includes $70 billion in “pay-fors” to close a $16 billion deficit in annual transportation funding that has developed as U.S. cars have become more fuel-efficient. 

The gas tax has been the traditional source for transportation funding since its inception in the 1930s, but lawmakers have resisted increasing the amount that drivers pay. The federal government typically spends about $50 billion per year on transportation projects; the gas tax only brings in $34 billion annually. 

Congress has been struggling for years to come up with a way to pay for a long-term transportation funding extension without raising the gas tax. The offsets in the highway bill that was passed in December include changes to custom fees and passport rules for applicants who have delinquent taxes. 

Additional mechanisms include contracting out some tax collection services to private companies — over the objection of unions that represent federal IRS workers — and tapping dividends from the Federal Reserve.

DeFazio and Holmes Norton said Thursday that states should get to work now on finding a replacement for the beleaguered gas tax. 

"We believe states are the laboratories of democracy, and the FAST Act provides the necessary funding to incentivize States to explore novel user fee structures that provide sustainable transportation funding."