President Obama and Vice President Biden spoke with Transportation Secretary Ray LaHood Tuesday at Transportation Department headquarters, where they announced the first batch of stimulus funds getting distributed. In an interview with The Wall Street Journal, Mr. LaHood talked about spending stimulus money wisely, his opposition to an increase in the gasoline tax, new fuel emission standards and more. Below are edited excerpts from the interview.

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The Wall Street Journal: What's being done to ensure that the $48 billion going to transportation projects in the stimulus bill is spent wisely?

Mr. LaHood: Our people are in touch daily with these DOT secretaries. We generally, having worked with them for years and years and years, know what is fundable. It really falls under two categories. Projects that were started and then stopped because they ran out of money, and something that's been sitting on a shelf in a DOT office because they didn't have the money to fund it. Some of these, like the one we announced today (a road repaving project in suburban Maryland), have been in process...These are projects that these folks have known about and have been talking about for some time. This isn't something brand new that's been sprung up on them...I don't think you're going to see something weird pop up...It's pretty traditional stuff. It really is.

WSJ: Are you concerned when you hear squabbles between mayors and governors over how to spend the stimulus money?

Mr. LaHood: [Cities] are concerned that 70% of the money is going to the states and they're only going to get 30%...These disputes, look it, they're going to take place....In the end, I'm not going to be able to change the idea that 70% of this is going to the states and 30% are going to them. I tried to make a case for them. But the way it's designed here&hellip;it is what it is.

President Obama waved as he walked on to the stage at the Department of Transportation Tuesday. Transportation Secretary Ray LaHood, left, and Vice President Joe Biden, right, looked on. Mandel Ngan/AFP/Getty Images

WSJ: The National Surface Transportation Infrastructure Financing Commission last week said the U.S. faces a growing gap between its transportation needs and the revenue available to address them. What's your assessment of the situation and the commission's call for raising the federal gas tax?

Mr. LaHood: If you talk to the people who served on this commission, they will tell you rightly so there is not enough money in the Highway Trust Fund to do what we want to do. We need to have an open mind about this. We need to think outside of the box. I met with two senators before you guys came by. I told them that if [Congress doesn't act], the Highway Trust Fund will be in the same position it was a year ago in September. They're going to have to plus it up. The stimulus money is really, it's extra.

I saw the recommendations. I actually met with the commission. With the economy the way it is right now, trying to propose a 10-cent a gallon increase in the gasoline tax is not going to fly anywhere in America, including Washington, D.C...Ten cents a gallon increase is not modest, it's impossible...We are in one of the worst economies we've been in since 1982. I was a staffer on Capitol Hill in 1982 and I know how bad it was because I was working for a guy who was representing Caterpillar and things were bad. We've got to be talking differently than raising taxes.

WSJ: So what's the answer?

Mr. LaHood: There are a lot of ideas out there. We need to be open minded and think outside the box on this. We need to take everybody's ideas, whether it's tolling a new road, tolling a new bridge...

WSJ: Should there be a greater role for public-private partnerships?

Mr. LaHood: That's the kind of out-of-the-box stuff we need to be thinking about...It's going to be up to Congress to decide these things. I want to get some principles together that we believe in...and give them to the Congress.

WSJ: What's the latest thinking on vehicle fuel economy standards, California's waiver request and how all that overlaps with potential new regulations on greenhouse gases?

Mr. LaHood: I was present at one of the first executive orders, saying to the Department of Transportation that we're going to do these [fuel economy] standards. Let's get it out the door, get it published, by 2011 the car manufacturers have to meet a certain standard. Right from the get-go of this administration we've had a role in this. I've attended four or five meetings chaired by [White House energy czar] Carol Browner. I believe she will be the lead. She'll be the one making recommendations to the president. We're a part of that process. That's the extent of our role.

WSJ: Is the goal to take the different approaches and get a single national standard?

Mr. LaHood: I think that's her role and her goal.

WSJ: When will the administration nominate someone to head the Federal Aviation Administration, and what will the priorities be there?

Mr. LaHood: We've submitted a name to the White House...We want them [the new administrator] to do two things, resolve the dispute between the FAA and [air traffic] controllers, number one, and we want to get to Next Generation [air traffic control system].