Last week, the House Transportation and Infrastructure Committee approved a deeply-flawed $547 billion surface transportation reauthorization bill. As we noted in the lead up to the Committee markup, the “INVEST In America Act'' contains job-crushing regulations and wastes billions of taxpayer dollars on Green New Deal-style projects. NTU strongly opposed this legislation ahead of Wednesday’s vote and plans to continue our opposition as it makes its way to the House floor for a full vote.
Committee Chairman DeFazio (D-OR), along with Del. Norton (D-DC), and Rep. Payne (D-NJ) introduced the INVEST in America Act last week and holds portions of President Biden’s American Jobs Plan. This is the first legislative text that has been published as a part of Biden’s proposal. It is also a surface transportation reauthorization bill which funds many infrastructure and transportation programs for the next five years. Despite infrastructure reauthorizations typically being a bipartisan affair, the INVEST In America Act is strikingly partisan and includes earmarks, new railroad regulations, and expensive Buy America provisions. Weighing in at 1249 pages, there is far too much in this package to cover in one blog post, so today we will highlight one item that we find encouraging: the VMT fee pilot program.
Specifically, Section 5402 directs the Department Of Transportation to establish a pilot program including commercial and passenger vehicles from all fifty states to implement and test the operability of a national VMT user-fee. This program would both test collection mechanisms and help determine the ability of a VMT fee to adequately fund the Highway Trust Fund (HTF) as a replacement for the federal fuel tax. The proposal also includes funding for state governments to run similar pilot programs and updates cybersecurity for the project.
It’s more important than ever that Congress begin the work of transitioning away from the federal fuel tax (the main source of revenue for the HTF). With the rise of electric vehicles and more fuel efficient cars, the current federal excise tax on gasoline is no longer a true user fee model and should be replaced with a VMT fee. A pilot program studying potential pitfalls and benefits of a VMT fee will enable the government to understand this policy in depth before it is enacted on a large scale.
This is a very encouraging item from an otherwise murky package. NTU has supported replacing the federal fuel tax with a VMT fee before, and we continue to support the initiative now. We support the VMT fee because it meets the challenges of the 21st century far more effectively than the fuel tax does.
A VMT fee more accurately reflects who is using public roadways and assesses the cost of repair accordingly. When the federal fuel tax was first introduced, it was an accurate estimation of who was using roads, but with the advent of high fuel-efficient and electric vehicles, that is no longer the case. Folks who purchase less gasoline effectively evade paying their fair share of the cost of repairing the public roads they continue to use. It is worth noting that hybrid and electric vehicles are more commonly owned by high-income earners, and so the gasoline tax falls regressively on low-income taxpayers. This is inaccurate and unfair. A VMT fee would distribute the cost of repairing roads accurately on those who use the roads the most.
In addition to more fairly assessing road use, a VMT fee can keep the HTF solvent, unlike the fuel tax. As of today, over 80% of the HTF’s funding comes from federal fuel taxes -- but those revenues have been steadily decreasing. Congress has not raised the gasoline and diesel taxes from 18.3 cents per gallon and 24.4 cents per gallon respectively since 1993. As the cost of repairing roads rises with inflation and labor costs, and the amount of gasoline Americans purchase decreases with high-efficiency and electric vehicles, the ability of the Highway Fund to fund our highways has diminished. This is a scary fact with real-world consequences that necessitates a solution.
Switching to a VMT fee could very easily be that solution. As long as Americans keep driving on roads, the revenue stream to repair those roads won’t dry up under a VMT system, as it is currently doing under the fuel tax system. It is especially encouraging that the authors of the INVEST in America Act had these concerns about the HTF in mind when authorizing the VMT pilot program. They state that the goal of the VMT fee is “to restore and maintain the long-term solvency of the Highway Trust Fund and achieve and maintain a state of good repair in the surface transportation system”. While the underlying legislation needs significant changes in order to receive the support of NTU, we are nonetheless pleased that both the Republican surface transportation bill, the STARTER Act, and the Democrat version, contain a nationwide pilot program testing a VMT. Ww strongly urge any final reauthorization bill to keep this important policy.
NTU continues to support transitioning from a fuel tax to a VMT fee. It is very important to note that the fuel tax should be replaced by -- not supplemented by -- a VMT fee. This will keep the HTF solvent and our roads and bridges funded, while accurately assessing the costs on the people who use them.