Time to Modernize How We Pay for Infrastructure

Time to Modernize How We Pay for Infrastructure

There is bipartisan agreement that America’s surface transportation infrastructure is increasingly strained and outmoded. In a welcome step forward, the Trump administration has proposed an infrastructure plan that would help spur necessary investment. But, as with any major investment reform, the next question is obvious: How should we pay for it?

In short, infrastructure improvements need a revenue stream, and the only sustainable way to pay for them going forward will be through tolls and other user fees. In particular, more of the funding responsibility will need to come from the states, since they will be the ones most likely to enable or operate priced facilities.

States may not accept this suggestion with open arms (or pocket books). But history has shown that federal incentives can play an important role in catalyzing state action. And the Trump administration’s plan would give states stronger incentives to take on more responsibility for funding, including through tolls and pricing.

Our nation’s laboratories of democracy, states will be incentivized to experiment with new approaches to surface transportation infrastructure financing, particularly ones that ensure that users pay their full costs. In the case of roads, many of these costs are incurred disproportionately by the large “18-wheeler” trucks that haul cargo over our country’s roads and highways.

Independent studies clearly and consistently show that heavy trucks cause significant damage to our roads. While trucks do pay more in federal taxes than passenger cars, in part to account for this damage, these taxes do not cover the full costs, especially costs related to pavement damage — a key challenge in maintaining America’s infrastructure.

Congress should focus on leveraging technology to help confront this challenge. Technology exists that could easily and relatively cheaply charge trucks by the mile traveled, varying the charge by the truck’s axle weight or the type of road the truck is traveling on. This vehicle-miles-traveled (VMT) is simple. The truck receives a one-way GPS signal to allow it to identify its location and an onboard computer loaded with price-per-mile data for all the roads across America. Additionally, trucks would be equipped with wireless axle-weight sensors, allowing the onboard computer to calculate an additional surcharge based on pavement damage (a formula that factors the type of road and the truck axle weight). The computer would then remit taxes monthly to the federal Highway Trust Fund and to every state the truck traveled through.

This sort of VMT system would have huge advantages over the current taxing system. First, taxes would be more carefully associated with true costs imposed on infrastructure. Trucks that do more damage to roadways would pay more. In turn, it would encourage trucks to drive more on roads that are properly engineered for heavy trucks, to drive fewer trips, and to use their hauling capacity more efficiently.

The Trump administration’s infrastructure plan provides some incentives for states to invest not only on concrete and steel, but also on building out the next generation of hybrid systems — integrating sensors, connectivity, and data analytics to increase transportation efficiency, improve safety, and serve as a platform for further innovation. A VMT system fits into this strategy. By taking advantage of next-generation information technologies, we can upgrade not just our roads and bridges, but the way we pay for them, too. 

The administration’s proposal is a guide; ultimately, Congress will decide the shape of any infrastructure plan. The conversation is starting now on Capitol Hill. The Senate Environment and Public Works Committee is holding a hearing today on the administration’s proposed framework for rebuilding America’s infrastructure. Senators on the committee should focus on moving the nation’s system to a VMT tax system by mandating that all trucks that are involved in interstate shipping pay federal taxes and fees through a VMT system. Such a transition would pave the way for an infrastructure strategy not just for this year, but for the next generation.

Robert D. Atkinson (@RobAtkinsonITIF) is president of the Information Technology and Innovation Foundation, the world’s leading tech-policy think tank. He was formerly chair of the National Surface Transportation Infrastructure Financing Commission.

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