Closely tied to perspectives on the federal role are assessments of required investments. As summarized in Chapter 2, the levels of investment needed to maintain and improve the conditions and performance of the nation's highways and transit systems are immense- far larger than current spending levels. Even if policies and programs were significantly reformed to greatly improve the allocation of resources, the Commission has concluded that more revenue is still needed. In light of this fundamental underinvestment problem, any scheme to reduce current federal fuel taxes in exchange for increases in state-level taxes would be problematic. Using the Commission's Baseline Revenue Forecast and Base Case Investment Scenario, the average annual investment shortfall relative to spending needed to maintain and improve the nation's highway and transit systems is $138 billion. Closing that annual gap with fuel taxes alone would require an increase of about 76¢ per gallon (that would be on top of the existing federal and state gas taxes that combined average about 40¢ per gallon today). Thus, according to the most recent assessment, the nation (at all levels of government) is spending only about 35 percent of what is needed to maintain and improve the surface transportation system. Quantifying the funding gap in this manner shows that any opt out program involving federal fuel tax reductions that roughly offset state fuel tax increases would not address the underlying national investment shortfall (even if policy makers agreed with reducing the federal funding role relative to the states).
A related issue concerns the ability of individual states to maintain higher fuel taxes in the face of cross-border competition. If fuel taxes are much higher in one state than another, there is an incentive for some of the residents of that state, particularly those living near the border, to purchase their fuel where the tax is lower. These pressures may work to keep state taxes lower than they would be absent such competition and therefore may result in less overall fuel tax revenue if an opt out program were to be implemented.
Another aspect of investment needs, beyond their aggregate amount, is their relationship to the national network. As mentioned earlier, while it may be possible (indeed desirable) to develop performance standards guiding the operation and maintenance of existing assets, it can be difficult to ensure that necessary enhancements are made to the national network. To the extent direct users are willing to pay for certain improvements (i.e., user fees can be monetized to generate the upfront capital required to undertake the improvements), those signals can be used to guide appropriate investments. But not all critical improvements can be funded this way. A major challenge to supporting the national network is identifying those improvements that generate broad public benefits that cannot be easily monetized directly. Such system improvements require a national perspective, national coordination, and national funding (as opposed to state-by-state determinations).