Christopher Conkey / WSJ | July 30, 2008

WASHINGTON — The Bush administration unveiled a plan to impose new tolls on freeways and encourage more private investment to finance road and mass-transit projects, a move aimed at stirring debate as lawmakers prepare for a major overhaul of transportation policy.

The White House says more tolls and public-private partnerships can solve perhaps the biggest problem confronting the nation’s aging infrastructure: There are limited funds available to upgrade transportation networks and too many federal funds are doled out inefficiently through earmarks and pet projects that do little to improve mobility or reduce congestion.

The search for alternative funding sources is ramping up because Americans are driving less and shifting to more fuel-efficient vehicles. That means they will be paying less in gasoline and diesel-fuel taxes, which traditionally have been the biggest source of federal funding for highway and mass-transit construction.

Many states are moving to increase existing tolls. Pennsylvania, for example, is hoping to win federal permission for new tolls on a standing interstate. Meanwhile, several states are turning to business consortiums to finance, build and operate new highways, bridges and tunnels, although a political backlash has slowed the push in recent years.

The administration’s proposal comes as Congress gears up to start work later this year on a six-year transportation spending bill that could cost well more than $400 billion. The last multiyear bill, which expires in September 2009, carried a $286 billion tab.

Earlier this year, a bipartisan commission concluded the nation is spending only about 40% of what is needed to reduce congestion, improve safety and spur economic growth. Transportation Secretary Mary Peters served on the commission but dissented from the majority view that gas taxes should more than double in coming years to support a big increase in transportation spending.

Ms. Peters says gas-tax rates should hold steady — at 18.4 cents a gallon for regular gasoline and 24.4 cents a gallon for diesel, where they have stood for more than a decade — and private money and toll revenue can address any needed increases in funding. She declined Tuesday to say how much more the U.S. needs to increase its overall spending on transportation infrastructure. Instead, she suggested ways to make transportation spending less wasteful.

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