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The Fuel Tax and Alternatives for Transportation Funding: Special Report 285
criterion led the committee to give special attention to methods of charging fees that could be directly related to the cost of providing services—in particular, tolls and mileage charges.
The committee did not estimate how much governments should spend on transportation and did not interpret its task as devising revenue mechanisms to support an increased level of spending. There is no certainty that finance reform in the direction of improving the efficiency of transportation would increase revenues. A reformed finance system would remain subject to many of the external political and economic constraints that limit the revenue potential of the present system. However, reform would help transportation agencies to manage capacity and to target investment to projects with the greatest benefit to the public. Each dollar spent would be more effective and services would improve, and it is conceivable that the public would be willing to pay more for transportation programs that worked better.
The committee’s conclusions concern the two parts of its charge: to assess threats to the viability of the present finance system and to identify directions for reform of transportation finance.
Viability of Revenue Sources
The risk is not great that the challenges evident today will prevent the highwayfinance system from maintaining its historical performance over the next 15 years; that is, it should be able to fund growth in capacity and some service improvements, although not at a rate that will reduce overall congestion.
Threat of Loss of the Tax Base
A reduction of 20 percent in average fuel consumption per vehicle mile is possible by 2025 if fuel economy improvement is driven by regulation or sustained fuel price increases. Offsetting the revenue effect of such a gain would not require unprecedented increases in fuel tax rates. The willingness of legislatures to enact increases may be in question, but the existing revenue sources will retain the capacity to fund transportation programs at historical levels.
Without new regulations, fuel price increases alone probably will stimulate only a small improvement in fuel economy in this period.
Three factors will constrain the rate of progress on fuel economy: first, consumers prefer to maintain or enhance the performance and size of the vehicles they buy; second, new vehicles that offer performance and cost close to those of