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Timing has precedent to raise gasoline tax for federal highway improvements

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By Bloomberg News
Friday, Nov. 9, 2012, 6:22 p.m.
 

The next Transportation secretary — whether it's Ray LaHood or someone else — will confront a highway system starved for cash and financed by a gasoline tax almost no one wants to raise.

How President Obama and his DOT leader respond may set transportation's course for decades. Besides shoring up highways and transit systems vital to the economy, the president's second term may provide another chance for him to push his vision for high-speed passenger rail, which was stalled by Congress's refusal to keep paying for it.

Talks between the White House and Congress to avoid Dec. 31's so-called fiscal cliff, when some tax cuts expire and automatic spending reductions are set to kick in, won't have transportation as a main focus.

Yet the last two gasoline-tax increases, in 1990 and 1993, only happened because of deficit-reduction deals, said Mort Downey, a former deputy transportation secretary who's a senior adviser at Parsons Brinckerhoff Inc.

“They have a considerable opportunity to make a mark on transportation,” Downey said.

Whether LaHood stays as secretary to lead the effort is an open question.

Raising money

Congress and Obama's administration in June reached a two- year deal on roads and transit. Instead of raising the gasoline tax, the largest source of revenue for road, bridge and transit spending, the legislation used $18.8 billion in general taxpayer money, on top of fuel taxes, to keep spending at current levels — about $52 billion a year — through fiscal 2014.

Obama spent part of this year's presidential campaign talking about the need to do “nation-building here at home” after spending years and billions of dollars on the wars in Iraq and Afghanistan. Last year, he proposed a six-year, $556 billion transportation plan.

The president hasn't specified ways to pay for the plan. LaHood killed a 2009 proposal by Minnesota Democrat James Oberstar, then chairman of the House transportation committee, to raise the 18.4 cents-a-gallon federal gasoline tax, which has been the main source for highway, bridge and transit expansions since Ronald Reagan's presidency.

Part of the job entails building public support for any spending increase, said Marcia Hale, president of Building America's Future, a non-profit group founded by former California Gov. Arnold Schwarzenegger, former Pennsylvania Gov. Edward Rendell and New York Mayor Michael Bloomberg, majority owner of Bloomberg LP, the parent of Bloomberg News.

The superstorm Sandy focused attention on essential systems, with Bloomberg, New York Gov. Andrew Cuomo and New Jersey Gov. Chris Christie all speaking about the need to rebuild, Hale said.

Janet Kavinoky of the U.S. Chamber of Commerce, said the chamber has supported raising the gasoline levy despite its aversion to higher taxes in general.

If LaHood leaves, Rendell, the former Pennsylvania governor, and Los Angeles Mayor Antonio Villaraigosa, an advocate for California's high-speed rail project, may be potential replacements, Kavinoky said.

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