Congressional Commission Urges a Fundamental Shift Away from the Gas Tax - Key member Geoffrey S. Yarema provides commentary

LOS ANGELES (February 26, 2009) – Nossaman partner and Infrastructure Practice Group Chair, Geoffrey S. Yarema, is a member of a bi-partisan Congressionally-created commission that is urging lawmakers to fundamentally and swiftly shift the way the federal government collects revenues to fund transportation infrastructure.

Yarema responded to the transportation infrastructure funding included in the recent stimulus package. "Those funds will cover only a very small share of the shortfall in highway and transit funding and will not address the systemic crisis the nation faces in its surface transportation infrastructure investment," he said.

Culminating nearly two years of study and deliberation, the National Surface Transportation Infrastructure Financing Commission offers its consensus view and roadmap for sweeping reform of the nation's transportation infrastructure funding approach with the release of its final report Paying Our Way: A New Framework for Transportation Finance. The Financing Commission offers specific recommendations for addressing the significant and widening gap between federal investment and the nation's transportation infrastructure needs, which would move the federal government away from motor fuel taxes toward more direct fees charged to transportation infrastructure users.

Charging vehicle drivers a mileage fee more accurately aligns the costs and benefits of the surface transportation system to those who are using it. More transparent charges for using infrastructure may also spur drivers to use it more efficiently, reducing the overall investment need.

In addition to a federal mileage-based charge, the Financing Commission calls for the federal government to facilitate state and local governments' ability to raise their share of needed revenues in ways that also spur efficient use of the system, including through tolling portions of roads and charging premiums for rush-hour travel in heavily used urban corridors, so-called congestion pricing.

"States have a wealth of experience successfully developing transportation infrastructure with innovative financing based on tolling or user charges," said Yarema. "These charges also help states manage demand, by making drivers aware of the costs of their road use. The federal government should recognize the value of these ‘tools' by encouraging states and localities to use private sector financing."

The Financing Commission recommends expanding existing federal credit programs and developing new incentives for states to tap into private sector capital to address transportation funding shortfalls.

"With the expected shift to more fuel efficient vehicles," said Robert Atkinson, the chair of the Financing Commission and president of the Information Technology and Innovation Foundation, "it will be increasingly difficult to rely on the gas tax to raise the funds needed to improve, let alone maintain our nation's surface transportation infrastructure."

In order to support the transition from the gas tax to a mileage-based charge, the Financing Commission recommends a ten cent per gallon increase in the federal gas tax (15 cents for diesel) and indexing the tax to inflation going forward. The gas tax, which is not currently indexed to inflation, has lost 1/3 of its purchasing power since 1993, the last time the tax was increased.

For more information on the Financing Commission, please visit http://financecommission.dot.gov/.

Please click on the following links to view the full final report and the executive summary.

Please click on the following link to view video of the Press Conference.  Mr. Yarema's commentary begins at the 23:05 mark.