A report released by the National Surface Transportation Policy and Revenue Study Commission calls for a significant federal gasoline tax increase of up to 40 cents implemented over 5 years, and argues that “a cultural shift will need to take place across America to encourage our citizens to take transit or passenger rail when the option is given.” The commission was created under SAFETEA-LU to study current transportation conditions and future needs, and evaluate revenue sources to meet those needs.

Aside from the call for a steep gas tax hike, the Commission argues for sweeping changes to the federal surface transportation funding structure. It recommends consolidating the current 108 funding programs into just 10:

1. Rebuilding America: A National Asset Management Program

2. Freight Transportation: A Program to Enhance U.S. Global Competitiveness

3. Congestion Relief: A Program to Improve Metropolitan Mobility

4. Saving Lives: A National Safe Mobility Program

5. Connecting America: A National Access Program for Smaller Cities and Rural Areas

6. Intercity Passenger Rail: A Program to Serve High-Growth Corridors by Rail

7. Environmental Stewardship: A Transportation Investment Program to Support a Healthy Environment

8. Energy Security: A Program to Accelerate the Development of Environmentally-Friendly Replacement Fuels

9. Federal Lands: A Program for Providing Public Access

10. Research, Development, and Technology: A Coherent Transportation Research Program for the Nation

Significant funding would be available under these programs for both highway and transit capacity expansion, particularly in the nation’s major metropolitan areas. The Transportation Enhancements and CMAQ programs which currently provide the bulk of pedestrian- and bicycle-related funding are retained, with increased funding, under the new Environmental Stewardship program. Also notable is the proposed Intercity Passenger Rail program which would provide a stable, dedicated source of funding to improve and expand Amtrak service.

The proposal also calls for scrapping the current formulas for divvying up federal funds among the states, at least for the bulk of the 10 programs. Instead, USDOT would work with states and metropolitan areas to develop national plans for accomplishing key goals, and would apportion funds on a cost-to-complete basis. Individual projects would be required to undergo a cost-benefit analysis, and would have to meet specific performance standards.

The Commission’s most controversial proposal calls for raising the federal gasoline tax to fill the expected shortfall in the federal Highway Trust Fund. The latest projections show that the federal Highway Trust Fund will have a negative balance of between $4 and $5 billion by the end of fiscal year 2009, unless corrective actions are taken. By 2012, the deficit could rise to as high as $26 billion.

To address this projected gap in revenue, the Commission recommends that the federal gasoline tax be increased by 5 to 8 cents per gallon each year over the next five years, beginning in 2009. That would equate to a 25 to 40 cent jump in the federal gas tax (now set at 18.4 cents per gallon). After 5 years, the gas tax would be indexed to inflation. The Commission also strongly endorses road pricing and tolling as a mechanism for generating revenue and curbing congestion.

The Commission’s report was accompanied by a minority report voicing the dissent of the Commission’s chair, USDOT Secretary Mary Peters and two other commissioners. The dissenters’ primary objection to the Commission report is the continued reliance on federal fuel taxes to support transportation improvements. Noting the public opposition to increased fuel taxes, the potential for fuel efficiency gains to erode revenue, and the historic failure of fuel taxes to curb traffic congestion, the minority report instead advocates shifting to roadway pricing, tolling and privatization to fund a much more limited set of transportation needs.

There are striking similarities between the failing of the federal highway trust fund and New Jersey’s soon-to-be-bankrupt transportation trust fund. It is interesting to note that even as Governor Corzine is traveling the state to push his monetization plan, this panel of federal transportation experts has settled on a dramatic increase in the gas tax to fill the nation’s transportation coffers.