LaHood asks for 18-month extension of four-year-old transportation law

Government

LaHood asks for 18-month extension of four-year-old transportation law

by Elana Schor • June 17, 2009 5:40 pm

Transportation Secretary Ray LaHood is asking Congress to extend the existing federal transportation law for 18 months, averting the coming insolvency of the nation's highway trust fund while putting off broad-based transport reform for as long as the Bush administration did in the days surrounding the 2004 election.

Photo: AP

LaHood's request comes at an awkward time for Jim Oberstar (D-MN), chairman of the House transportation committee. Oberstar had planned to release an outline of his priorities for a new transportation bill tomorrow and vowed to oppose any short-term extensions of the Bush-era legislation—exactly what LaHood is now seeking.

LaHood urged Congress to couple its extension with "critical reforms" to existing federal transportation policy that streamline cost-benefit analyses and help to promote more livable communities. But it's far from clear that such changes could pass Congress by the end of next month, when lawmakers are slated to leave Washington and must come to a decision on shoring up the highway trust fund.

In addition, LaHood's call to effectively postpone debate on long-term transportation policy reform may not sit well with the small but vocal group of lawmakers who would prefer to start a broader discussion this year.

Extending the existing law also puts off a discussion over whether to keep relying on the gas tax to fund transportation improvements or move to a new revenue source—a politically volatile issue for the Obama team, but one that lawmakers from both parties increasingly say is necessary.

Oberstar plans to stick to his schedule for moving forward on a new transportation bill, his spokesman told Streetsblog. During an invitation-only briefing with reporters earlier today, he called extending the existing law "unacceptable."

LaHood's full statement follows the jump.

This morning, I went to Capitol Hill to brief members of Congress on the situation with the Highway Trust Fund. I am proposing an immediate 18-month highway reauthorization that will replenish the Highway Trust Fund. If this step is not taken the trust fund will run out of money as soon as late August and states will be in danger of losing the vital transportation funding they need and expect.
As part of this, I am proposing that we enact critical reforms to help us make better investment decisions with cost-benefit analysis, focus on more investments in metropolitan areas and promote the concept of livability to more closely link home and work. The Administration opposes a gas tax increase during this challenging, recessionary period, which has hit consumers and businesses hard across our country.

I recognize that there will be concerns raised about this approach. However, with the reality of our fiscal environment and the critical demand to address our infrastructure investments in a smarter, more focused approach, we should not rush legislation. We should work together on a full reauthorization that best meets the demands of the country. The first step is making sure that the Highway Trust Fund is solvent. The next step is addressing our transportation priorities over the long term.

Update: In an interview with Bloomberg, LaHood describes his decision as one to "face reality" instead of "stringing Congress along with three-month or six-month extensions."

Cross-posted from Streetsblog.

17 comments — Share	— tags: James Oberstar, Ray LaHood, TEA, USDOT

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Comments

if highways get an 18-month handout, what do we get in return?

by Peter Smith on Jun 17, 2009 5:53 pm

This sounds like a terrible idea.

by SG on Jun 17, 2009 5:56 pm

Improved gas mileage means fewer gallons of gas are purchased per mile driven. Wear and tear on highways is related to miles driven, not gallons purchased. As a result, the Fed Hwy Trust Fund is falling short of generating revenues to meet spending required.

If you had to choose ONE solution or the other to this problem of revenue falling short of needs, which would you choose:

1. Raise the Fed gas tax from $0.184 to $0.25 per gallon, OR

2. Install GPS devices (with peronal privacy protections) to measure miles driven, and at the gas pump, charge a "Vehicle Miles Driven" fee, added to the cost of gas, instead of the traditional Fed gas tax per gallon purchased

Not a trick question. Which do you prefer?

by Trulee Pist on Jun 17, 2009 7:11 pm

Trulee Pist

Charge a flat fee for entering onto a federal highway?

by MPC on Jun 17, 2009 9:35 pm

MPC--people never overeat at the one-price buffet

by ah on Jun 17, 2009 9:38 pm

Only if you undercharge.

If buffet-style pricing was inefficient, you wouldn't have Sizzler or the Old Country Buffet. Seriously, it's more or less the same concept; playing a one-time user fee and not marginal costs, yet they are profitable.

by MPC on Jun 17, 2009 10:27 pm

MPC, I don't understand. Right now you pay $0.184 per gallon. Alternative plan, you pay some amount per mile you have driven since your last fill-up.

The measuring stick now is how many gallons you put in the tank. That's delivering less and less revenue because people get more miles per gallon.

Alternative plan the measuring stick is how many miles you drove since the last time you bought gas (maybe higher or lower based on the vehicle weight). That always delivers enough revenues to cover wear-and-tear on the highway, because it's miles driven, not gallons of gas purchased, that determines wear-and-tear on the highway.

Just askin'--which do you prefer, paying a certain amount per gallon in Fed gas tax, or paying a certain amount per mile driven?

by Trulee Pist on Jun 17, 2009 10:32 pm

Just askin'--which do you prefer, paying a certain amount per gallon in Fed gas tax, or paying a certain amount per mile driven?

Neither- each time you enter on to a federal highway, or whatever highways fall under the jurisdiction of the trust fund, you simply pay a flat rate, regardless of distance traveled.

by MPC on Jun 17, 2009 11:11 pm

MPC, the transaction costs for charging people every time you go on a federal highway could be very large. I think it's still better to rely on the gas tax to fund the transportation trust fund. I think we should increase the tax at least to keep up with inflation we've had since it was last raised.

Regarding all-you-can-eat pricing, your example of Sizzler or Old Country Buffet ignores the problem of externalities associated with driving too much (ok, obesity has its own externality problems, but let's ignore those for now).

@Trulee Pist: Road damage per mile is roughly proportional to the fourth power of axle loading (vehicles that are twice as heavy cause about 16 times as much damage). Therefore, since larger and heavier vehicles typically burn more fuel per mile, it makes sense to tax gasoline as a proxy for total miles driven weighted somewhat towards heavier vehicles.

by Michael Perkins on Jun 17, 2009 11:36 pm

Trulee Pist:

If you twisted my arm, I'd say the latter. But I pick both. One does not catch drivers who drive excessively in fuel efficient cars, and one, IMHO, is unfair to drivers of ultra efficient vehicles. I think some combination of the two is preferable, but the latter choice would probably encourage better land use policies in the long run vice the proliferation of more efficient vehicles in the short to mid term. The proliferation of these vehicles, btw, sounds like an implicit subsidy to the auto industry.

by JTS on Jun 17, 2009 11:39 pm

MPC, the transaction costs for charging people every time you go on a federal highway could be very large.

Up-front capital costs, such as EZ-Pass readers or whatever would certainly be there, but you conceivably wouldn't have many labor costs.

Besides, there aren't transaction costs with the gas tax? How many bureaucrats over at DOT are getting salaries and benefits? Throw some SESrs into the mix, and, well you see my point.

by MPC on Jun 17, 2009 11:43 pm

"but you conceivably wouldn't have many long run labor costs"

by MPC on Jun 17, 2009 11:44 pm

Regarding all-you-can-eat pricing, your example of Sizzler or Old Country Buffet ignores the problem of externalities associated with driving too much

Raising the price of driving won't make peopl drive less? The law of demand would like to talk with you

by MPC on Jun 17, 2009 11:46 pm

MPC's idea might work for bridges. But long highways with multiple exits don't have maintenance costs that are "flat fee"...

As for TP's query, I'll go #1. Period. I'd even go higher than $0.25/gal. If you can find a way to measure miles driven without resorting to GPS, I'll consider it. GPS, contrary to popular belief, isn't the saving grace (especially once those satellites reach the end of their design life)....not to mention the "big brother" implications.

by Froggie on Jun 18, 2009 6:56 am

MPC: I am sorry I was so thick-headed. Of course you are right, there is a third option on the table now: Easy Pass tolls.

Froggie: Can you give me a list of Members of Congress with the courage to raise the gas tax? Yikes.

I don't know which of the three I am for.

by Trulee Pist on Jun 18, 2009 9:33 am

Oberstar, for starters.

by Froggie on Jun 18, 2009 9:54 am

Personally I'm for indexing the federal gas tax to inflation, as that it does reward people who drive cars with better mileage, even if a little.

The easy pass toll, while I wouldn't like it, would work rather well, I think.

by Art on Jun 18, 2009 10:12 am