Oberstar at Humphrey Institute August 2009

Congressman Oberstar, Chairman of the House Transportation and Infrastructure Committee, spoke at length at the Humphrey Institute on August 5, 2009. A video of Getting America to Work: Opportunities and Challenge in Transportation Policy is here.

After his talk, Congressman Oberstar was interviewed by Lawrence Jacobs, Director of the Humphrey Institute Center for the Study of Politics and Governance. Halfway through that (timemark 53:00), the ensuing few minutes make it clear that the fuel tax will likely be raised and that VMT taxes will be delayed – at least for the next couple of years…

Lawrence Jacobs: Let turn to the revenue issue – that is obviously the big question. There’s a structural deficit now in the … highway trust fund, because you’re getting less of the gas tax paying the needs… it’s partly good news, we have more fuel efficient cars out there, we’ve got alternative fuel sources, you’ve also got obviously less driving during a recession, and you’ve laid out some different options – you’re clearly leaving your own options open as to how things break down, but I’m curious: when you look at the White House, President Obama ran a campaign and they repeated it – he’s repeated just recently – that he’s unwilling to support taxes that land on Americans that earn less than $200,000 a year. Increasing the user fee – the tax on gas – would obviously fall on that part of the population. How’s that going to be resolved?

I found this $200,000 figure startling. VMT tax, if a revenue neutral replacement for fuel tax, is projected at less than $300/year/vehicle or $0 net average tax increase. At perhaps twice this – a net-new $300 – which is what some analysts think is actually needed to balance the books – is about what the average American spends on cigarettes per day. I am hard pressed to see how a driver earning a measly 100,000 per year would be thrown into poverty at a new $1 per day tax burden. Crazy as it seems, I would hazard that the projected savings of “several days” of annual idling in traffic for the average driver should more than offset the $300. What am I missing, here?

James Oberstar: That’s why I brought together all the interest groups, the user groups who have a stake in the outcome to get their input. The US Chamber of Congress testified at the Ways and Means Committee hearings in support of an increase in the user fee. The American Trucking Association has expressed their support for increase in the user fee, including indexing it to the construction cost index. The Association of General Contractors has done the same. Well, if the biggest business groups in America who support increasing user fee – gas tax – that takes away a great deal of the sting or the fear that the Administration has and will continue to have about the program. I’ve told the groups that they have to lead, because the White House isn’t. And they have to develop a consensus around an approach. And we have to take into account political realities but if the Chamber and the manufacturers and the Truckers Association and the Association of General Contractors, and all the building trades unions and the American Public Transit Association all come around in favor of a financing scheme then the White House problem is solved, the Senate problem is solved, we’ll move ahead and do this Bill.

LJ: Thank you. One of the options you mention briefly, and that’s gotten some attention in a variety of different communities is the idea of creating a tax on miles traveled. How do you view that issue? …I realize that’s something under consideration, there a lot of political forces on it… there are some that are really concerned that while this may deserve attention that it may also raise privacy issues because your gonna have the government tracking your travel … the miles. Do you see a way outta that or do you just kinda prefer to put that to a side and let it kinda simmer for a bit?

JO: That issue took on a life of its own. I simply mentioned it at a committee hearing, as one of a range of options being considered and one that had already been tested in Oregon, and it somehow took on a life of its own, that I was advocating it. I just laid it out … that this is one of a range of options that we ought to consider.

LJ: … and do you favor that option….

JO: … and I went on to say, which never was reported, that Oregon tried out the idea – 280 drivers – they found a number of concerns … the technology needed to be perfected. The Center of Transportation Studies here at the University of Minnesota, has tested a technology of their own using [making?], something the equivalent of a cell phone. Oregon said we need to protect privacy – that can be done by a certain computer technology. But it needs a wide scale, nationwide, test run. Well, that might take 3 or 4 years.

The significance of VMT is that it really does measure your use, each person’s use, of the roadway and impact on the roadway.

Now rural folks say, well, we travel longer distances so we might pay more. No. It would be calibrated to the existing gas tax raising similar revenue … as I said a little while ago … 50% of the vehicle miles traveled occur in urban centers, in metropolitan areas of the country. They’re the ones putting the most miles on. In rural areas – 70% of the national highway system is in rural areas – and much of that is used by trucks. Those are the kinds of issues that need to be weighed, evaluated, thought-through. And its too new a concept, too untested a concept, to advocate. We laid it out as one option. I don’t think at this time we should be terribly experimental with the funding. I think we need to stick with what we know has worked.

LJ: Well, here’s something we know that has worked, and that is general revenues. The Obama Administration has talked about pumping in perhaps 68 billion or 70 billion and relying on general revenues for some of the transportation…

JO: I think that would be a terrible mistake. We have had a long, sustained connection between the use of the roadway, revenues to sustain its construction and maintenance, and a trust fund that is protected against diversion to other governmental purposes. Once we slip over that divide and go into …

All in all, I can see Oberstar’s arguments, but I am sorely disappointed that he is distancing himself from VMT charging. Perhaps he needs to do that to force the gas tax increase that he clearly argues well for. Perhaps he recognizes that there are sufficient technology and trust issues that he risks embarrassment pushing a program now that still needs 4 or 5 years to develop. But I am certain that off camera, he knows well that funding through fuel taxes is even less unsustainable than funding through the general fund as fuel efficiency and alternate fuel sources continue to erode the current funding foundation. No amount of politics and no length of recession can stop the eventual collapse of the gas tax.

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