Improving Freight Planning and Finance

Earlier this month DC chapters of the Women’s Transportation Seminar, Young Professionals in Transportation and the Transportation Research Forum met to discuss creating and funding a national freight policy. The event featured Dr. Sandra Rosenbloom, Chair of the Transportation Research Board Executive Committee, Jack Basso, Director of Program Finance and Management at AASHTO and was moderated by Dr. Jack Wells, Chief Economist at USDOT.

Each of the three speakers discussed different aspects of freight. Dr. Rosenbloom discussed the recent RAND Research Monograph: A Federal Role in Freight Planning and Finance which she co-authored with Dr. Martin Wachs. Mr. Basso discussed the recent National Cooperative Freight Research Program Report 15: Dedicated Revenue Mechanisms for Freight Transportation Investment. Dr. Wells discussed political challenges of any new freight policy.

Dr. Rosenbloom detailed that a Federal Freight Transportation Policy should have four elements. The first element is developing a new federal freight capital investment program. This would be a federal grant or loan program using benefit-cost analyses. Federal funding would comprise substantially less than 50% of the total funding. Other public and private entities would pay significant shares. The second part is investigating and informing regulations particularly those that affect prices and inhibit the involvement of the private sector. These reforms would solve three of the biggest objectives of U.S. freight policy: reforming regulations, allowing the private sector to finance freight projects and creating better data on the effectiveness of regulations.

The third element is encouraging and increasing user-based payments. Freight congestion could decrease significantly is variable pricing was used. Adopting direct fees such as MBUF and requiring projects receiving federal assistance to use such fees will increase such pricing. This approach also requires studies to see how various freight segments respond to price increases and to determine where to build new capacity. The fourth part is improving freight data, information and agency capacity. Activities that would help gather data include: improving existing programs to develop better data; disseminating practice-based findings; and developing more effective ways to help planners use appropriate economic methods.

The biggest issue with any transportation program is how to pay for it. Jack Basso suggested several different funding possibilities. Options include mileage based user fees, freight waybill taxes, a surcharge on customs duty, a fuel excise taxes, a truck tire excise tax and the addition of tolling. Diesel fuel taxes with tax refunds in addition to vehicle registration fees yield the most money in the short-term since they build on existing collection systems. Mileage-based user fees show the greatest long-term potential with e increasing efficiency as the fee rises. A national system for passenger vehicles would increase the efficiency of an MBUF funding mechanism. Collection and enforcement, truck conversion from diesel to gasoline, and road to rail shifts will all affect the amount collected. Mileage-based user fees, diesel and gas taxes, and registration fees all raise similar amounts in the long-term. All methods should be indexed for inflation.

Rosenbloom and Basso also discussed whether a user fee covered all of the expenses. Trucks transport durable goods to consumers. Many of these goods are transported 1,000 miles or more. Are consumers paying an appropriate amount for transport?

Dr. Jack Wells added some political perspective. He reminded attendants that from a revenue perspective, any of the proposals could work. However, the greater challenge is political. Researchers should consider which proposals could pass Congress; such proposals would need to overcome pressure from powerful lobbying influences. While Wells views mileage based user fees and tolling as excellent long-term solutions, truck industry opposition to tolls and Congressional opposition to studying mileage-based fees make implementation of those technologies more challenging.