Transport plan could create new taxes

© 2003, NCI, Inc.
Destination Freedom
Newsletter of the National Corridors Initiative, Inc
Vol. 4 No. 38, September 29, 2003
Used with permission

A report released September 24 finds a funding gap of almost $5 billion to $8 billion annually over the next five years to make needed connections between air, rail and highway systems to improve the flow of both passengers and goods. The report also recommends several actions to address the shortfall.

The independent, non-profit project, "Reconnecting America's Transportation Networks," (RATN), released the report by transportation finance expert Dr. William D. Ankner, Ph.D, former top executive at the Rhode Island DOT, in order to promote a dialogue on ways to generate the revenue needed to meet the growing demand for projects to eliminate bottlenecks in the national transportation system.

The report comes following a five-month delay in Congress in reauthorizing TEA-21 federal highway and mass transit funding programs - and a week before the TEA-21 law expires tomorrow (September 30).

In a press release, RATN said legislators failed to renew the legislation "due to an inability to come to grips with the demands from states and transportation industries for more funding."

Hank Dittmar, project co-director and RATN president, said, "We are trying to help Congress and the industry deal with the fact that there is no free lunch. Past generations have made the hard choices when it comes to making essential investments. Today's transportation crisis, for passengers as well as freight, is making connections in metropolitan areas, and Dr. Ankner's report proposes a sensible and incremental approach to the challenge."

Ankner's report proposes a phased approach to raising the needed funds beginning with making so-called "intermodal" projects eligible for funding through existing funding sources such as the National Highway System, and dedicating foregone Airport Improvement Program and fuel taxes paid by railroads into general funds to a new "Last Mile" fund for such projects.

If Congress elects to pursue new sources of funding, Ankner's menu of options includes a value-added tax on cargo estimated to generate $10 billion annually as well as a tax on vehicle miles traveled.

Ankner warned against an excessive reliance on debt, noting that state and local long-term debt grew from $90 billion in fiscal year 2001 to $176 billion in fiscal 2003.

Eventually, though, he argued, "The nation needs to recognize that
current financing mechanisms, which generate funds dedicated to each mode of travel, act against the interests of the overall system, and ultimately against the interests of the user, whether it is a firm or a
traveler."

He explained the personal financing of transportation for most travelers
comes out of the same funding source, their paycheck or company
profits."

Ankner stated in his report, "Only government fails to approach
transportation as a travel experience and it fractures transportation into modes. This fosters competition between and among the providers, and often fails to provide the user with the interconnectivity for a continuous trip."

He urged lawmakers to consider, "We need to treat our entire
transportation system as a single investment, with an expected rate of
return. The current system of financing and planning in itself
represents a hidden tax on the economy."

Scott Bernstein, project co-director and president of the Center for
Neighborhood Technology, said, "If we follow some of Dr. Ankner's
prescriptions, we can begin to see our airports as 'travel ports,' where
travelers can choose between air, rail or bus to complete their trip."

RATN describes itself as "a project to redefine national policies for
intercity travel in order to integrate our separately functioning
aviation, passenger rail and highway systems into a more convenient, secure, financially viable and sustainable network."