A FUEL-SAVING DOWNSIDE LESS GAS PER CAR, LESS TAX COLLECTED HAS HIGHWAY FUND HEADING TO DEFICIT.

Byline: SUE DOYLE and HARRISON SHEPPARD

Staff Writers

America's growing love affair with energy-efficient cars is starting to take a toll on the nation's crumbling highways and roads.

Requiring fewer fill-ups at the pumps, the vehicles are putting a pinch on the federal Highway Trust Fund -- the major government funding source for highway and mass-transit projects.

And federal officials say the fund, financed by a federal tax on gasoline, is careening toward a deficit within two years.

To be fair, federal officials say, it's not just energy-efficient autos that are sucking the fund dry. Higher construction costs, congressional overspending and an aging highway system are also putting a growing strain on it.

But now a panel chartered by Congress is looking for new ways to finance the system, and the answer could mean an increase at the pump for consumers who already pay 18.3 cents into the fund for each gallon of gas.

"The bottom line with the Highway Trust Fund is that spending is at a higher level than funds coming in," U.S. Transportation Secretary Mary E. Peters said in an interview Wednesday. "This total dependence on gas tax isn't working anymore."

Peters also chairs the National Surface Transportation Policy and Revenue Study Commission that is reviewing the situation and will make recommendations to Congress in a report this year.

On Wednesday, the commission began a two-day hearing with California transit officials at the Metropolitan Transportation Authority's downtown Los Angeles office to discuss the region's needs.

Peters said one estimate shows the highway portion of the Highway Trust Fund -- which pays for roads and bridges and uses 80 percent of the federal gas tax that is collected -- will see a $230 million deficit by fiscal year 2009.

That doesn't mean the account will be at zero, but rather that it won't reach levels authorized by Congress. Some in the Congressional Budget Office believe the deficit will be even more substantial, possibly $3 billion to $4 billion.

The second portion of the fund -- used to finance mass-transit projects with 20 percent of the federal gas tax collected -- is not expected to go into deficit.

Field hearings on the fund quietly began in November in New York and Memphis, where the commission started to measure the nation's transportation needs.

Hearings in L.A. are taking place simultaneously with ones in Atlanta. Las Vegas is next, and the commission will conclude its hearings after visiting Minneapolis and Chicago in April.

After the commission files its report, legislators could decide to adopt its recommendations or use them as a guide for funding federal projects, said Chris Bonanti, special assistant to the administrator at the Federal Railroad Administration and staff liaison to the commission.

Brian Turmail, spokesman for the U.S. Department of Transportation, said commissioners are asking why all the increased spending on road projects isn't paying off. Roads are still congested. Traffic is getting worse.

"What we're spending isn't really getting the results we want," he said.

But Peters said funding also is a problem as Congress overspends its means, and revenue for the Highway Trust Fund has slowed as more alternative-fuel cars have hit the road.

People also aren't driving as much as they once did, she said.

Predictions of trouble with the federal Highway Trust Fund surfaced in 2005. A report commissioned by the U.S. Chamber of Commerce predicted that the fund would run out of money.

Later that year, President George W. Bush signed a $286.4 billion transportation law that also established a 12-member commission -- a mix of federal, state and business leaders -- to look for sustainable funding options.

Paul Taylor, chief economist for the National Automobile Dealers Association, said hybrids account for just a fraction of the car market and could not be playing a significant role in the decline of the Highway Trust Fund.

In 2006, 16.5 million cars were sold nationwide -- just 251,862 of them hybrids.

But Taylor acknowledged that over the years, automotive technology has made all cars and trucks more fuel-efficient and contributed to fewer trips to the pump.

"All vehicles are improving their gasoline mileage," Taylor said.

Jack Kyser, chief economist for the Los Angeles County Economic Development Corp., said the national highway system has been underfunded for years and that the problems are returning to haunt the government.

Blaming fuel-efficient cars for the decline of money in the fund is a distortion of reality, he said.

"There are still a lot of people out there who bought big pickup trucks and are driving them at a rapid rate of speed," he said.

At the same time, the price of construction has increased far quicker than inflation, partly driven by a development boom in China that has driven up the price of raw materials such as cement and steel, said Dan Beal, managing director of public policy for the Automobile Club of Southern California.

Beal said there are several alternative revenue options for the fund that are likely to come under greater scrutiny in California.

The first is to increase the number of toll roads and raise toll prices during rush hour.

Another possibility is to charge drivers by the mile, rather than the gallon -- similar to the way they pay for utilities.

There already is a pilot project on that option in Oregon, but it's not clear how that might affect how much the average driver would pay.

Ultimately, whatever solution public officials adopt will have to involve persuading drivers that they are getting good value for their tax dollars, Beal said.

"The public has to be convinced that what they're paying now is being used appropriately and wisely," he said. "Nobody wants to pay more if they don't think they're getting value for what they're currently paying."

sue.doyle(at)dailynews.com

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CAPTION(S):

photo, box, 2 charts

Photo:

(color) no caption (freeway, car-pool lane)

Box:

BY THE NUMBERS

Chart:

(1) Federal Highway Trust Fund

(2) Hybrid car sales

Sources: U.S. Department of Transportation; Federal Highway Administration; Hybridcar.com

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