A national infrastructure renewal plan has been an elusive goal for bipartisan lawmakers for years, but even as the Biden Administration begins to lay plans for another attempt at the project, one transportation industry group is warning that finding funding for that work remains the primary hurdle.
One of the main potential income sources, a nation-wide vehicle miles traveled (VMT) tax, requires changes to technology and policy to avoid overly expensive administration costs and other wrinkles, according to a study from the American Transportation Research Institute (ATRI).
In a report released today, ATRI modeled the challenges to replacing the federal fuel tax with a VMT tax assessed on all 272 million private vehicles in the U.S. According to the group, that approach would be an inefficient way to raise money because it would incur collection costs of 40%—totaling more than $20 billion annually—due to the complexity of monitoring that huge number of vehicles instead of a limited number of gas vendors, ATRI said in “A Practical Analysis of a National VMT Tax System.”
The report also concluded that hardware costs alone would have an initial price tag of $13.6 billion to install electronic dongles in every vehicle to track and report its mileage, and that another $7.87 billion would be lost annually through evasion and noncompliance.
To address those issues, ATRI’s report called for a “VMT Tax Public Education Plan,” to convince travelers that cheaters will be prosecuted, individuals’ private data will be protected, and administrative costs will be minimal.
The powerful transportation industry group the American Trucking Associations (ATA) backed that conclusion. “With policymakers preparing to lay out a vision for the future of America’s infrastructure, ATRI’s analysis could not come at a more critical time,” ATA President and CEO Chris Spear said in the release. “Most experts agree that some sort of VMT system is a part of that future, and ATRI’s report makes clear that implementing it will take thoughtful leadership, cooperation from stakeholders, and a strong plan to transition away from current funding streams.”
Despite ATRI’s critique, supporters of a national VMT envision a different strategy to apply the policy, saying that the program would not replace the gas tax outright, and that it may be levied solely on commercial vehicles, not on all private cars. In addition, proponents point out that states including Kentucky, New Mexico, New York, and Oregon already use such a tax. Such support has come from a diversity of infrastructure boosters ranging from Biden Administration Transportation Secretary Pete Buttigieg to Republican U.S. Rep. Sam Graves (R-MO) of the House Committee on Transportation and Infrastructure.
To pay for upgrading crumbling roads, bridges, harbors, and rails, any infrastructure bill will probably raise money through a mix of sources, including the gas tax, borrowed funds (also known as “deficit spending”), and encouraging private sector companies to invest in certain infrastructure features.
Current national infrastructure projects are paid for through the Highway Trust Fund, which collects money through a federal gas tax. However, that tax is increasingly ineffective since it has not been adjusted for inflation since 1993, and because a rising number of vehicles will convert from gasoline and diesel fuels to electricity in coming years.