An earlier version of this piece appeared in Public Works Financing, for which Mr. Poole writes a regular column, © Robert W. Poole, Jr., 2008.
Published here September 2008.

Editor's Note | Introduction | An Alternative Source of Funding 
A Shift in Investment Thinking | Tax Implications Overlooked
Pension Funds in Australia and Canada | Construction Trade Unions in the US


For most of the past three years, we've been hearing from group after group about the shortfall in infrastructure investment in the United States. The American Society of Civil Engineers does an annual report card on the major types of U.S. infrastructure - and most grades run from C through F. The Federal Highway Administration's biennial "Conditions and Performance" report to Congress consistently finds that the USA is not investing enough in its highways and transit systems. Indeed, it is not even sufficient to maintain the current level of (not very good) performance, let alone the $60 billion per year more that would be needed to improve performance. That is, to replace deficient bridges and reduce urban traffic congestion.

More recently, as we approach the impending 2009 reauthorization of the federal surface transportation program, a whole series of reports on the shortfall in highway and transit investment has appeared. They are from such organizations as the American Association of State Highway & Transit Officials, the American Road & Transportation Builders Association, the U.S. Chamber of Commerce, and others. Their estimates of the transportation investment shortfall are even larger, and they all call for a sizeable increase in the federal fuel tax. And in January 2008, a national commission created by Congress called for tripling the federal fuel tax to fund a major expansion of the federal role and greatly increased transportation investment. A second national commission will report by year-end on how best to finance surface transportation investment.

Unfortunately, all these efforts to lay the groundwork for a major increase in gasoline and diesel taxes were planned before the recent escalation in fuel prices. With gas prices now exceeding $4/gallon for the first time and presidential candidates calling for a summer-long suspension of the federal gas tax, 2009 hardly seems like a good time to call for doubling or tripling the gas tax rate. So where does that leave fixing the infrastructure shortfall?

Editor's Note  Editor's Note

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