January 14, 2008 7:55 AM, EST

Panel to Back Fuel Tax Hike

Sources Say Commission Split on Funding Issues
By Sean McNally, Senior Reporter
This story appears in the Jan. 14 print edition of Transport Topics.

The commission charged with examining the future of the national transportation system is set to recommend a significant increase in federal fuel taxes to Congress, according to wire service reports and other sources.
However, the report to Congress, scheduled to be released Jan. 15, will have neither the unanimous backing of the full commission, nor, apparently, the Department of Transportation.
The commission will recommend increasing federal fuel taxes between 25 cents and 40 cents a gallon over five years to meet the country’s transportation needs, sources with knowledge of the report confirmed. These sources declined to be identified since the report won’t be released publicly until later this week.
Currently, the federal diesel tax is 24.4 cents a gallon and the federal gasoline tax is 18.4 cents a gallon.
The commission, these sources said, also will leave the door open to other forms of finance, such as tolls and road privatization, and would encourage states to maintain adequate funding levels.
“The commission wrestled with how you combine a range of financing methods that will pay the bill if you eliminated any of them,” one source told Transport Topics.
Meanwhile, Jack Schenendorf, vice chairman of the commission, declined to discuss the report’s details, but he said it was more than just a tax-increase recommendation.
“We have a comprehensive set of recommendations,” Schenendorf said, “and that compre-
hensive set of recommendations provides the context for each individual recommendation.”
One official who has seen the report said, “Eliminating any financing method would leave an enormous hole to fill.”
The report “reflects a recognition that, for the foreseeable future, it’s very difficult to see an alternative to the fuel tax as the dominant funding method,” the source said. The Bush administration has said fuel-tax revenues will drop in importance as vehicles become more efficient.
The report also recommends establishing a standing commission very loosely modeled after the Department of Defense’s Base Closure and Realignment Commission, the sources said. It would guide federal transportation investments and the creation of a new tax to be added to the cost of every transit ride.
The commission was apparently deeply divided on several issues, especially the role of the federal government and financing, leading to a split report. Of the 12-person panel, nine members will endorse the recommendations, but three — including the chairwoman, Transportation Secretary Mary Peters — will not, sources told TT.
Schenendorf said the commission makes “very significant” recommendations in a number of areas, including the roles of federal, state and local governments; defining what the nation’s transportation needs are; and how to finance them.
“The minority views are centered on the role of the federal government,” one source said. “Over the course of its deliberations, there was a clear divide among the commissioners about whether the federal government should have an expanded or diminished role.”
Brian Turmail, a spokesman for DOT, did not comment on the split, but said Peters’ position on fuel taxes had not changed, putting her at odds with what the commission was expected to recommend.
“The secretary feels that raising federal gas taxes won’t improve traffic congestion, perpetuates our reliance on fossil-based fuels and sends more of American’s hard-earned money to Washington to be squandered on earmarks and special interest projects,” Turmail said.
Trina Leonard, a spokeswoman for the commission, declined to comment on the substance of the report, but did say there were disagreements among the commissioners.
“There is very broad agreement on many things in the report, but there are a few specific issues where a few commissioners differ and you will know that when you read the report,” she said.
Bloomberg News reported that the other two dissenting commissioners were former DOT Deputy Secretary Maria Cino and Rick Geddes, a professor at Cornell University.
Peters, Geddes and Cino were named to the commission by President Bush; members of Congress from both parties named the other nine commissioners. Cino chaired the commission briefly as acting secretary of transportation after Norman Mineta resigned in 2006.
Patrick Quinn, co-chairman of U.S. Xpress Enterprises and former American Trucking Associations chairman, also sits on the commission, but through a spokesman referred questions to Leonard.
ATA officials declined to comment on the report until it is made public.
Observers said the expected recommendation of a fuel tax increase would add to the ongoing debate over how to fund transportation infrastructure ahead of the 2009 highway program reauthorization.
“It’s intriguing, to say the least, especially in light of the administration’s very intense and consistent effort to push the commission toward privatization, public-private partnerships and tolling as the primary solution for our highway funding problems,” said Rod Nofziger, director of government affairs for the Owner-Operator Independent Drivers Association.