Every six years Congress must pass a reauthorization bill to set national transportation policy, identifying spending priorities for Department of Transportation programs like the Federal Highway Administration, the Federal Transit Administration and, in the last go round, nearly 7,000 specific projects through individual earmarks.

Surface transportation policy, while perhaps not as scintillating a blog topic as Iranian oil production or the latest in diesel-excreting algae, is nonetheless vital to the future of American oil dependence. The way that we fund, choose, and build highway, transit and rail infrastructure over the next ten years will significantly impact oil consumption. Congestion, inefficient freight transport, and a failure to provide energy-saving alternative transportation options to travelers can undermine our efforts in other spheres, such as fuel economy standards. On the other hand, an efficient transportation system that employs intelligent technology, congestion pricing, and mode-neutral decision-making can help keep America economically competitive while reducing the volume of oil used in transportation – currently about 70 percent of total oil consumption.

That last bill, SAFETEA-LU (I won’t pain you with spelling out the acronym), expired in September 2009 and has undergone a series of extensions as Congress avoids dealing with the tricky problem of funding. The traditional source of transportation funds is the fuel tax, but in recent years tax revenues have declined amidst an aging transportation system increasingly in need of expensive repairs. Over the last two years, over $60 billion in general fund moneys have plugged the Highway Trust Fund gap. The solution has been to provide one-off transfers from the general fund, which while politically palatable increases the deficit and kicks the can down the road to our children.

Last week, these issues were once again put on hold when the House passed the Jobs Bill (H.R. 2847), extending the federal transportation program through December 31, 2010. The bill keeps the Highway Trust Fund solvent with a $19.5 billion transfer from the general fund.

It is highly unclear what will happen with the multi-year bill, with no one in the Administration or Congress willing to suggest a sustainable way to pay for long-term transportation investment. Over the next five years, the expected disparity between program needs and expected fuel tax revenue is around $215 billion (or $265 billion if Transportation and Infrastructure Committee Chairman James Oberstar’s (D-MN) high speed rail initiative goes through).

The transportation program is unique among federal expenditures in that it has historically operated on a user-pays principle. That is, the source of funding is linked to system use. Moreover, the price that users pay – the fuel tax – theoretically promotes energy security by incentivizing drivers to use less oil. Unfortunately, gasoline demand is so inelastic that any tax short of $1.50 or so will fail to seriously impact consumption. However, this fact does nothing to diminish the importance of retaining a user-pays principle, and of using that mechanism to more effectively influence people to make more rational decisions about when and how they travel.

So it is very unfortunate that no one is willing to step up to the plate and insist that the users of transportation infrastructure pay for a larger share of the costs of that infrastructure, not only in terms of capital but in terms of congestion delay, emissions, and the national security costs of oil consumption. The Administration has been very clear that it will not support a higher fuel tax: At a meeting with the heads of State transportation officials, Secretary of Transportation Ray LaHood said, “It’s easy for people who are not elected to talk about raising the gas tax. They don’t have to face the voters.” A fuel tax, however, is not the only way that users can pay for the system. Congestion pricing and tolling, which is used extensively in other countries rich and poor, can provide significant revenue. It is also more transparent to consumers (and therefore more acceptable) if the revenue is used to improve the facility on which the motorist is driving.

The politics of upcoming elections and recession economics mean that a multi-year federal transportation bill is likely not in the cards this year. However, when it does come time to reauthorize the bill, it will be vital to pursue an energy efficient, user-pays transportation system.

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