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Prospectus Blog LaHood, Obama, Congress Face Transportation Challenges

President-elect Barack Obama Friday is to name retiring Illinois Congressman Ray LaHood the next U.S. Department of Transportation Secretary. Though he has served on the House Transportation Committee, moderate Republican LaHood’s upside is his well established role as a bipartisan diplomat with close ties to Obama’s Chief of Staff Rahm Emanuel, as the Chicago Tribune reports. He’ll need to use well the relationships he’s built in seven congressional terms. The surface transportation landscape poses big challenges and real opportunities for establishing a new way of doing business. This article about LaHood’s appointment, from the New York Times, highlights several important menu items.

Mr. LaHood…has overseen major spending projects as a member of the House Appropriations Committee….The next transportation secretary will face several challenges. One is that the gasoline tax, regarded since the Eisenhower administration as a user fee to pay for building highways, is no longer reliable or sufficient. Gas at $4 a gallon stunted sales and tax revenue, and the Congress had to come to the rescue of the Highway Trust Fund with $8 billion.
With a growing number of hybrid cars, use of tax-exempt ethanol and the possibility of plug-in hybrids, gasoline consumption is becoming disconnected from highway use. When the bill to re-authorize the Transportation Department is considered by Congress in 2009, there will be proposals for a variety of replacement financing methods, including tolls that vary by time of day, possibly using transponders like those now provided by E-ZPass and similar systems. Another open question is the status of rail transportation, both passenger and freight. Many freight lines are now operating at capacity. And Amtrak, strongly backed by Vice President-elect Joseph R. Biden Jr. and spoken of favorably by Mr. Obama, needs cash for new equipment.

All along, Cascadia Center has been advocating for time-variable electronic tolling, as well as plug-in electric hybrids and increased inter-city passenger and freight rail capacity, as well as new ways of funding surface transportation. It’s going to be an eventful, exciting time. But even with federal stimulus spending on infrastructure, states that are tens of billions short for roads, bridges, and transit, will have to raise the lion’s share of funds at the regional level. Against a backdrop of region-wide time-variable electronic tolling on highways and major state routes, that means more and more emphasis on complementary funding tools such as transportation benefit districts, local improvement districts, performance-based “alliance contracting” and investment by public employee union and building trades union pension funds. Over the long term, impetus will grow for a mileage-based tax on vehicles, with discounts for off-peak travel.
In ways yet to be fully determined, Congress must help pave the way for this new era. The gas tax – for which prospects of a large hike are politically nil – will have an increasingly ancillary role in transportation funding. Many key players at the federal level either realize that already, or will soon.