IV.  DETERMINING THE EXTENT TO WHICH THE HTF SHOULD BE AUGMENTED

To better demonstrate the magnitude of the results presented above, Exhibit A-3 shows the motor fuel tax increase or, alternatively, the fee level required on a per-mile basis (referred to as a vehicle miles traveled or VMT fee), that would be needed at the federal and state/local levels to close the associated funding gaps. (Note that these estimated tax levels are for illustrative purposes only and are not Commission recommendations.) These conversions to cents per gallon and cents per mile are rough approximations based on the average 2007-08 motor fuel tax yields of about $1.8 billion per penny (all motor fuels) and the 2008 total vehicle miles traveled of about 3 trillion (all roads). (It is estimated that during the 2008-35 period the annual motor fuel tax yield per penny will rise only slightly above the current yield (in nominal terms) to $2.06 billion; total VMT will increase to about 5 trillion, based on estimates supplied by the FHWA.)

The federal tax rate on all motor fuels would need to be increased by 25-27¢ per gallon to address the federal funding shortfall just to maintain the system. Funding the investment needed to improve the system would require a federal fuel tax increase of about 36-38¢ per gallon. Alternatively, a federal VMT fee (charged on all roads in addition to the existing HTF taxes) of about 1.5-1.6¢ per mile would generate the federal share of the funding needed to maintain the system. And a federal VMT fee of 2.1-2.3¢ per mile would be needed to generate the additional federal funding required to improve the system.

In terms of total highway and transit investment needs (from all levels of government), maintaining the system would require a fuel tax increase of about 53-58$ per gallon or the equivalent of a VMT fee of about 3.2-3.5$ per mile. Improving the system would require a fuel tax increase of about 7681 $ per gallon or the equivalent of a VMT fee of about 4.6-4.9¢ per mile.

Looking at near-term needs and revenues also creates a strong call for action. As summarized in Exhibit A-4, the federal HTF current-law revenues under the Baseline Forecast total just $235 billion (in nominal dollars) over the 2010-15 period (an average of $39.2 billion per year). The federal share of cumulative needs under the Base Case Investment Scenario, meanwhile, ranges from $509 billion (to maintain the system) to $632 billion (to improve the system). The annual federal funding gap, therefore, ranges from about $43 billion to $71 billion in nominal dollars for the six-year period.