Financing Improvements

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Fuel taxes dedicated to surface transportation will continue to be the mainstay of funding for some time, but better alternatives – tolling and other forms of direct charging for use -- should be used more extensively in the future. Broad based, dedicated state and local taxes, such as sales taxes, should be used for transit. Technologies allow for efficient direct charging for road use, but systems will need to be designed that protect privacy and are equitable. The transition toward alternatives to fuel taxes will take some time to prove concepts and build public support; large-scale technology demonstrations of alternative mechanisms should be supported by the federal government for these purposes.

Greater public investment in facilities to interconnect freight modes is warranted, but should only be made following a careful assessment of public and private costs and benefits, including social and environmental costs.

Improved estimates of externalities within and across freight modes, both positive and negative, are critical for ensuring that they are reflected in the prices charged for use of public facilities. To ensure that market competition across modes will result in efficient resource allocation, USDOT should fund a study using the methodology in Special Report 246 to improve the available estimates of externalities across all modes.