The American Association of State Highway and Transportation Officials (AASHTO) announced this week a proposal to convert the federal tax on gasoline and diesel fuel from a cents-per-gallon basis to a percentage basis, a mechanism that could raise revenues to pay for greater highway and transit investment if the price of fuel rises in future years. AASHTO proposed an 8.4 percent tax on a gallon of gas instead of the current 18.4-cent gas tax. The tax on a gallon of diesel would be 10.6 percent instead of the current 24.4 cents.
AASHTO estimates that converting the present fuel-tax rates to a percentage could generate $43 billion more during the expected 2011-16 period that would be covered in a new transportation authorization measure. The estimate is based on anticipated increasing gas and diesel prices -- an average increase of slightly more than $7 billion per year. The additional revenue would enable the reauthorization bill to fund $330 billion worth of projects compared to the $287 billion funding level in SAFETEA-LU.
ASSHTO's Executive Director John Horsley said in releasing the proposal, "The most significant barrier to the passage of a long-term transportation authorization bill continues to be the question of how to pay for it. Over the next two months, we hope to start a dialogue on transportation funding options that have a chance of bipartisan support to either grow the level of transportation funding to the level we're shooting for in a new bill, or at least to sustain it at current levels."
AFTEA-LU expired on September 30, 2009, and the highway and transit programs have been operating under short term extensions ever since. The current extension expires on December 31, 2010 so Congress must take action in a lame duck session or program funding will be shut down.
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