A highway funding model that relies on fuel tax revenues becomes increasingly untenable as the United States moves towards increased energy independence, greater fuel economy in automobiles, development of alternative fuels, and reduced emissions. Trends show that hybrid vehicles are becoming increasingly popular based on concerns about oil supply, fuel prices and emissions125 and that consumers are driving fewer miles.126 On December 19, 2007, President Bush signed legislation requiring new auto fleets to average 35 miles a gallon by 2020, a 40 percent increase from today's 25-mile average.127 These trends presage reductions in the amount of fuel tax revenue available for investment in transportation, which will make it more difficult to respond to the demand for investment. As the United States strives to reduce its dependence on foreign oil and to encourage greater use of alternative energy sources, a transportation funding system that relies primarily on fuel taxes undoubtedly contradicts the Nation's overall policy objectives.
PPPs address concerns that fuel taxes are not a viable revenue source by substituting private capital and direct user fees for fuel tax revenue. Over the next few years, infusions of private capital can supplement efforts to shore up the uncertain balances of the Federal Highway Trust Fund so that transportation projects can be funded. Perhaps more importantly, private capital and direct user fees are not subject to the same political and market forces that are expected to deteriorate the value of fuel taxes over the next several years.
Political and public sentiment increasingly supports the use of tolls and other direct user fees rather than fuel taxes. A May 2007 report from the Reason Foundation reported that polls conducted around the United States clearly demonstrate that a majority find it preferable and more fair to fund transportation with tolls rather than with increases in fuel taxes.128 For example, a recent survey conducted by the American Automobile Association found that more than half of the respondents favor tolls while only 21 percent favor fuel taxes.
As questions about the short- and long-term viability of fuel taxes intensify, private capital and direct user fees are proving to be advantageous alternatives.
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125 Annual Energy Outlook 2007, Energy Information Administration, February 2007
126 Highway Statistics 2005, Federal Highway Administration, Table VM-1: Annual Vehicle Distance Traveled in Miles and Related Data.
127 Energy Independence and Security Act of 2007, Public Law No: 110-140.
128 The Role of Tolls in Financing 21 st Century Highways, Reason Foundation, May 2007, pp. 14-15.