LaHood dismisses gas tax increase(3)

US Transportation Secretary Ray LaHood rejected a proposal to raise the gasoline tax as a way to alleviate a projected $400 million shortfall in the federal government’s budget for highway and transportation funding, opting instead for tolling and public-private partnerships as a way to raise money.

LaHood: against gas tax hike

Last week, a federally mandated commission on transportation infrastructure spending recommended that the 76-year old gas tax be raised 10 cents per gallon as an interim measure for closing a projected federal highway and transit gap of $400 billion through 2015, or $2.3 trillion through 2035.

“I saw the recommendations. I actually met with the commission. With the economy the way it is right now, trying to propose a 10 cent a gallon increase in the gasoline tax is not going to fly anywhere in America, including Washington, DC . . . 10 cents a gallon increase is not modest, it's impossible,” LaHood told the Wall Street Journal during an interview.

LaHood had previously expressed approval for the commission’s recommendation that the US switch from the gas tax to a vehicle miles traveled (VMT) tax by 2020, but President Obama opposes this idea.

In lieu of tax-based solutions to the funding shortfall, Secretary LaHood said the government should embrace the tolling of new roads and bridges and tap private-sector capital for infrastructure investment via arrangements such as PPPs.

“That's the kind of out-of-the-box stuff we need to be thinking about”, LaHood said, echoing similar remarks he made at his confirmation hearing in December.

“It's going to be up to Congress to decide these things. I want to get some principles together that we believe in…and give them to the Congress,” he added.

Congress is will soon begin to debate the reauthorisation of the surface transportation bill known as SAFETEA-LU (“Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users”), which is scheduled to expire with the end of the government's current fiscal year on 30 September 2009.

The reauthorisation debate will likely focus on ideas such as tolling, PPPs and other alternative fundraising and financing mechanisms for transportation infrastructure.