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Posts from the "Gas Tax" Category

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Building Cloverleafs Won’t Inspire Americans to Pay More for Transportation

This post by Ben Ross was originally posted at Dissent.

The federal transportation fund is running out of money, threatening the country with potholes, stopped construction, and economic downturn. Congress, which has kept the program solvent with short-term patches for years, now finds itself unable to do more than buy a few months’ time.

Mainstream opinion pins the blame for this state of affairs on partisanship and anti-tax extremism. But the crisis has a deeper cause. In transportation, as in so many areas of American politics, the terms of debate are controlled by an elite that has lost touch with the rest of the country.

Voters on both the Tea Party right and the urban left have lost the desire to pay higher taxes for new roads. Yet powerful highway bureaucracies and their political allies insist that added revenues must go toward ever more cloverleafs and interstates. They keep searching for money to build what voters don’t want to pay for, a quest doomed to end in futility.

The roots of the congressional deadlock are best seen far from Washington.

When Texas Governor Rick Perry took office in 2000, he found himself caught between campaign contributors’ yearning to build expressways and conservative hostility to tax increases. He sought a way out with an aggressive program of toll-road building.

But when the highways opened, drivers rebelled against the stiff fees. Revenue fell far below forecasts, and grassroots activists launched an anti-toll campaign. At last month’s state Republican convention, the insurgents triumphed. The state party platform now calls for no new tolls (as well as no new taxes).

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With No Transport Funding Fix, USDOT to Cut Payments to States Next Month

Click to enlarge. Next month, the Highway Trust Fund -- the funding mechanism for the nation's transportation system -- will become insolvent next month without Congressional action. Chart: FHWA

Click to enlarge. Next month, the Highway Trust Fund — the funding mechanism for the nation’s transportation system — will become insolvent unless Congress acts. Chart: FHWA

State transportation departments could see the federal funding they receive pared back as early as a few weeks from now if Congress doesn’t come up with a transportation funding solution.

A “cash management plan” to deal with the impending shortfall in the Highway Trust Fund — which actually pays for transit, biking, and walking projects in addition to roads — was outlined in a letter from U.S. DOT to state transportation officials yesterday [PDF]. U.S. Transportation Secretary Anthony Foxx wrote that “as we approach insolvency, the Department will be forced to limit payments to manage the reduced levels of cash.”

Federal transportation revenues have been faltering for a long time, primarily because inflation has eaten away at the gas tax, which hasn’t increased in more than 20 years. Congress and the White House have floated many possible solutions of varying merit — a gas tax increase, an excise tax on oil, “business tax reform,” even canceling Saturday mail service. Lacking an agreed-upon revenue source, the Highway Trust Fund has been propped up with general revenues over the last few years. It is unclear whether Congress will extend that stopgap before funding starts to run dry in the next few months.

In his letter, Foxx indicated that if the issue isn’t resolved by August 1, around the time when revenues are expected to dip below current spending levels, U.S. DOT will dole out the available money based on existing funding formulas. In other words, the funding cuts will be shared among all the states, based on population and other factors.

In a speech yesterday in Washington, President Obama urged Congressional action to ward off funding problems, saying inaction would put 700,000 jobs at risk — or about as many people as live in Denver or Boston. He blamed Congressional Republicans for failing to act to resolve the issue.

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Is Obama Opposed to the Bipartisan Gas Tax Proposal or Just Noncommittal?

Yesterday, The Huffington Post ran this headline: “White House Appears More Open To A Gas Tax Hike.” Minutes later, The Hill published this one: “White House opposes gas tax hike to fix transportation funding.” So, which is it?

Josh Earnest, on his first day as White House press secretary, said the president "would not support" a gas tax hike. But other officials have softpedaled the question. Photo: ##https://www.facebook.com/topic/White-House-Press-Secretary/108184749201716##Tamara Keith/Facebook##

Josh Earnest, on his first day as White House press secretary, said the president “would not support” a gas tax hike. But other officials have softpedaled the question. Photo: Tamara Keith/Facebook

The Hill’s headline was based on a statement by new White House press secretary Josh Earnest, who said about a gas tax increase: “That’s something that we’ve said a couple of times that we wouldn’t support.” But HuffPo got a different quote, which gave them a different perspective.

“The Administration has not proposed and has no plans to propose an increase in the gas tax,” White House spokesman Matt Lehrich told HuffPo. “It is critical that we pass a bill that not only avoids a short-term funding crisis but provides certainty and lays the groundwork for sustained economic growth. So we appreciate that members on both sides of the aisle continue to recognize the need for a long-term infrastructure bill, and we look forward to continuing to [work] with Congress to get this done.”

HuffPo also reports that Ryan Daniels, a Department of Transportation spokesman, said that while the “Department has outlined a plan involving pro-growth business tax reform,” it was “open to ideas that Congress comes up with.”

Non-committal at best. But, it’s a far cry from Earnest’s claim that the administration “wouldn’t support” a gas tax increase. Earnest made that statement on his first day on the job — perhaps he overstated the case.

President Obama has come out in support of a convoluted plan to close corporate tax loopholes and repatriate some offshore profits as a means of paying for transportation — though such a scheme would upend the “user pays” ethic that has undergirded transportation policy for decades and would only pay for a four-year bill.

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Senators Murphy (D) and Corker (R) Propose 12-Cent Gas Tax Increase

There are several proposals on the table to stave off the impending insolvency of the Highway Trust Fund (which pays for transit, biking, and walking projects too) in two months. Just now, two senators teamed up to announce one that might actually have a chance.

The R after Sen. Bob Corker's name might make all the difference for this proposal. Photo: ##http://www.corker.senate.gov/public/index.cfm?FuseAction=Images.Display&ImageGallery_id=a36a3e1a-0103-b714-2285-f8fb90d613e1##Office of Sen. Corker##

The R after Sen. Bob Corker’s name might make all the difference for this proposal. Photo: Office of Sen. Corker

Sens. Bob Corker (R-TN) and Chris Murphy (D-CT) have proposed increasing the gas tax by 12 cents a gallon over two years. The federal gas tax currently stands at 18.4 cents a gallon, where it has been set since 1993, when gas cost $1.16 a gallon. The senators’ proposal would also extend some expiring tax cuts as a way to reduce the impact on Americans.

“I know raising the gas tax isn’t an easy choice, but we’re not elected to make easy decisions – we’re elected to make the hard ones,” said Murphy. “This modest increase will pay dividends in the long run and I encourage my colleagues to get behind this bipartisan proposal.”

This proposal — while still not introduced as a formal bill — has far more potential than anything else that’s been offered. President Obama’s corporate tax scheme was dead on arrival, even though it had support from the Republican chair of the Ways and Means Committee, Dave Camp. Rep. Peter DeFazio’s idea of a per-barrel oil fee and Sen. Barbara Boxer’s idea for a wholesale oil tax don’t have Republican support. Neither does Rep. Earl Blumenauer’s 15-cent gas tax hike, which was the most logical proposal on the table, until now. What the House Republicans want to do is fund the transportation bill by reducing Saturday postal service — a hare-brained scheme if ever there was one.

What gives this proposal a fighting chance, of course, is Bob Corker’s name on it. Not only is Corker a Republican, but he’s a respected leader on the Banking Committee. It’s also a sign that maybe, just maybe, as we stare down the barrel of a real funding shortfall, members of Congress might find the gumption to do what they all know needs to be done: raise the gas tax.

“In Washington, far too often, we huff and puff about paying for proposals that are unpopular, yet throw future generations under the bus when public pressure mounts on popular proposals that have broad support,” said Corker. “Congress should be embarrassed that it has played chicken with the Highway Trust Fund and allowed it to become one of the largest budgeting failures in the federal government. If Americans feel that having modern roads and bridges is important then Congress should have the courage to pay for it.”

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Sen. Bob Corker Sets Up for Gas Tax Increase, Yanks the Football

Last week — Infrastructure Week, as it happens — Sen. Bob Corker (R-TN) sent an urgent plea [PDF] to the leaders of the Environment and Public Works Committee the day before they unanimously approved the committee’s transportation reauthorization bill and sent it to the full Senate. Corker also sent his letter to the top members of the Finance Committee, who are actually in charge of finding funding for the bill, since the Highway Trust Fund alone comes $100 billion short.

Sen. Bob Corker can't quite get behind a gas tax hike, though his entire argument points in that direction. Photo: ##http://www.corker.senate.gov/public/index.cfm?FuseAction=Images.Display&ImageGallery_id=a36a3e1a-0103-b714-2285-f8fb90d613e1##Office of Sen. Corker##

Sen. Bob Corker can’t quite get behind a gas tax hike, though his entire argument points in that direction. Photo: Office of Sen. Corker

What Corker is calling for, in essence, is a pillaging of the U.S. budget to subsidize driving.

“In the last few years, Congress has allowed the [Highway Trust Fund] to become one of the largest budget gimmicks in the federal government,” he wrote.

So far so good — no one could argue with that. The gas tax is worth less than two-thirds of what it was worth in 1993, the last time it was raised, and Congress was forced to bail out the HTF three times between September 2008 and March 2010 — not to mention the $18.8 billion bailout in the form of MAP-21.

That’s a lot of taxpayer money spent on something that’s supposed to be funded with a user fee, which just about everyone in Washington holds as ideal. But when costs rise with inflation and revenues don’t, Congress has shoveled general funds into the HTF rather than buck up and raise the user fee.

Corker says these transfers make a mockery of the idea of “a self-sustaining ‘trust fund.’”

“These transfers are also causing highway program spending to look more and more like an appropriated discretionary program,” he wrote, “but without any of the budget oversight Congress can exercise over other spending bills.”

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T&I Chair Bill Shuster Complicates Matters With Push for VMT Fee

All options may be on the table for funding transportation, but Bill Shuster has chosen his.

Rep. Bill Shuster’s choice to bring more transportation funding may be the most effective long-term, but in the short term, its prospects are dim. Photo: Bloomberg

Rep. Shuster, head of the House Transportation and Infrastructure Committee, hasn’t been willing to commit to any one proposal for funding transportation until now. And his choice may make things complicated.

At a Bloomberg Government event yesterday, Shuster came out in favor of a plan to tax drivers not per gallon but per mile.

It seemed that after years of being too gun-shy to raise the gas tax, which hasn’t gone up for 20 years, there was beginning to be some resignation to the idea that it was necessary. In addition to the usual chorus from industry, a bipartisan group of governors recently urged Congress to act. Former Pennsylvania Gov. Ed Rendell and his new co-chair at Building America’s Future, former Transportation Secretary Ray LaHood, are promoting a 10-cent tax hike.

Lawmakers who had previously declined to go on the record were starting to line up behind various proposals, with Rep. Earl Blumenauer suggesting a gas tax hike and Sen. Barbara Boxer offering a wholesale fee on oil.

After all, the bitter reality is this: U.S DOT’s new Highway Trust Fund web ticker says the Highway Account will go dry in August of this year, with the Transit Account staying solvent through the end of September, though just barely.

At the same time Shuster announced he was for a vehicle-miles-traveled fee, he also brought the hammer down on the idea of a gas tax hike.

“Economically, it is not the time” to raise the gas tax, he told the audience. “I just don’t believe the American people have the will out there, in the public or in Congress; even our president has said we’re not going to do that. We’ve got to figure out a different way at this point in time.”

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The Next Transpo Bill: Can Congress Solve the Funding Problem?

From left to right, Oklahoma Governor Mary Fallin, Catepillar Group President Stuart Levenick, Atlanta Mayor Kasim Reed and Lawrence Hanley, president of the Amalgamated Transit Union, testified before House transportation leaders today. The event kicked off a new transportation bill reauthorization process. Image: ##http://transportation.house.gov/calendar/eventsingle.aspx?EventID=364867## House T&I Committee##

From left to right, Oklahoma Governor Mary Fallin, Caterpillar Group President Stuart Levenick, Atlanta Mayor Kasim Reed, and Larry Hanley, president of the Amalgamated Transit Union, testified before House transportation leaders today. The event kicked off a new transportation bill reauthorization process. Photo: House T&I Committee

It’s that time again. Just 18 months after the passage of the latest federal transportation bill, known as MAP-21, Congress has to get serious about the next one. The first hearing on the bill that will replace MAP-21 took place today in the House Transportation and Infrastructure Committee.

With gridlock the order of the day in Washington, expectations for sweeping policy reforms are low. This round of legislating will focus mainly on how to pay for the federal transportation program. The speakers today, who represented interests ranging from the construction lobby to transit unions, all stressed the need for greater certainty and pushed for a funding mechanism to support a long-term, six-year bill.

Members of the committee heard testimony from Oklahoma Governor Mary Fallin, Atlanta Mayor Kasim Reed, Stuart Levenick of industrial manufacturer Caterpillar, and Larry Hanley of the Amalgamated Transit Union. Those who testified even went so far as to suggest an outright funding crisis would be preferable to another series of short-term extensions, like the endless foot-dragging that preceded MAP-21, which itself lasted barely longer than an extension. A scenario where lawmakers let funding for transportation totally run out would at least add a sense of real urgency to negotiations, the thinking goes.

Wisconsin Congressman Tom Petri (R-Wisconsin) asked the panel which outcome they’d prefer, in the case of another stalemate between Republicans and Democrats in the House.

Reed responded, “I would err on the side of short-term pain.”

Those who testified pressed for bold solutions, including alternatives to the gas tax. ”What we need to do is have a conversation in this committee where we put all options on the table,” said Reed.

Hanley suggested Congress consider a tax on financial transactions, the so called “Robin Hood” tax, to fund a 100 percent increase in transit funding, which he said was warranted by growth in major cities and young people’s declining interest in driving.

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Concrete Proposals for Raising Gas Tax Finally on the Table

After a lot of vague talk about transportation revenues since the passage of MAP-21 — “everything is on the table” and “we need to think outside the box” — real proposals are finally being presented.

Rep. Earl Blumenauer is introducing a bill to raise the gas tax by 15 cents a gallon. Photo: Michael Clapp/##http://www.opb.org/news/article/wyden-blumenauer-address-security-and-privacy-concerns/##OPB##

Rep. Earl Blumenauer is introducing a bill to raise the gas tax by 15 cents a gallon. Photo: Michael Clapp/OPB

A few months ago, House Transportation Committee Chair Bill Shuster told me, “The surest way to kill something is to get out there way far in front before anything is possible.” He said you’ve got to figure out when the timing is right.

Apparently, it’s right now.

Tomorrow, Rep. Earl Blumenauer (D-OR) will introduce a bill to raise the federal gas tax by 15 cents a gallon, the amount suggested a few years back by the Simpson-Bowles deficit commission.

The proposal would go a long way toward solving the immediate problem: The Highway Trust Fund is projected to be flat broke by the time a new transportation bill needs to be negotiated next year. But it still doesn’t tie the tax to inflation or the price of gas, so Congress would still periodically need to take on the politically difficult task of voting to raise it. And in the long term, it could prove unsustainable to keep transportation funding tied to gas consumption, which is dropping with greater fuel efficiency and less driving.

Still, when Blumenauer announces his bill tomorrow, he’ll be flanked by people representing labor, business, transit, transportation reform groups, and road builders. All of those interests have been banging the drum for greater transportation investment for years. They are not picky about how the revenue gets raised.

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Lawmakers Score Conservative Bona Fides By Attacking Efficient Transport

Senator Mike Lee (R-Utah) and Congressman Tom Graves (R-Georgia) have introduced a bill to eliminate federal involvement in transportation policy, which would spell disaster for funding that supports transit, biking, and walking. A largely symbolic vote in favor of “devolution” will allow Republican members of Congress to demonstrate their conservative bona fides.

Senator Mike Lee is one of 21 Republicans sponsoring a bill to eliminate the federal role in transportation. Image: ##http://blog.heritage.org/2013/11/15/changing-transportation-status-quo-empowering-states/## The Foundry##

Senator Mike Lee is one of 21 Republicans sponsoring a bill that would decimate funds for transit, biking, and walking. Image: The Foundry

The Transportation Empowerment Act (TEA) — get it? — is sponsored by 21 lawmakers, all Republicans. The Hill reports that the arch-conservative Heritage Action group will be scoring lawmakers on how they vote. The bill would reduce the federal gas tax from 18.4 cents per gallon to 3.7 cents over five years and turn all spending decisions over to state governments.

Heritage Foundation writer Emily Goff, in her report on TEA, specifically notes that the bill would decimate dedicated funds for transit, biking, and walking projects. Heritage sees that as a big plus:

Under the current highway bill, Moving Ahead for Progress in the 21st Century, at least 25 percent of authorized funding for FY 2013 was diverted to non-general purpose roads and bridges. Transit, the largest diversion, received $8.5 billion, or 17 percent, of authorized funds. Other diversions include $809 million authorized for the transportation alternatives program (TAP), which pays for bicycle and nature paths, sidewalks, and community preservation activities, none of which reduce congestion or improve mobility for the motorists paying for them.

Heritage remains oddly silent on the massive subsidies that pay for roads. Nor do they seem to notice the enormous, wasteful boondoggles perpetuated routinely by states.

And Heritage doesn’t seem convinced that making transportation systems more efficient in the nation’s economic hubs, lowering the death toll from nearly 34,000 traffic fatalities per year, and reducing dependence on fossil fuels are in the national interest. Your state might not lie along a major freight corridor, but freight bottlenecks and delays cost all of us.

Conservative lawmakers have been trying unsuccessfully to enact devolution since the mid-1990s. House Transportation Committee Chair Bill Shuster (R-Pennsylvania) has made it his mission to persuade even the most conservative of Republicans that the founding fathers and free-market thinkers including Adam Smith intended a strong federal role in transportation — and he intends to keep it that way.

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The Dangerous Myth That States Give More Than They Get For Transpo

The states in red get the biggest federal transportation subsidies relative to the amount they contribute in gas taxes. The states in violet get less than 100 percent of their gas taxes back in transportation money. What, there are no states in violet? Exactly. Source: FHWA (Click to enlarge.)

There is a pernicious myth among some states that they give more to Washington in the form of gas taxes than they get back in the form of federal transportation funding. A recent rash of federal bailouts — $35 billion between September 2008 and March 2010 — ensured a windfall for every state in the union. And yet many still believe that federal bureaucrats are skimming off the top of their payments to give their hard-earned highway money to the liberal subway-riders in New York or something. It’s a dangerous lie with serious repercussions.

FHWA has published a comparison of each state’s highway payments and allocations for fiscal year 2012 [PDF]. Two years after the last federal infusion to the trust fund, states are still profiting. Alaska gets back 7.28 times what it sends to DC. DC itself gets back its gas taxes 10 times over (because of all the federal infrastructure the city maintains). Montana and North Dakota get back three times what they pay. Vermont, almost five times. And not a single state gets back less than 100 percent of what they pay in. Kansas draws the shortest straw of all, which is still a five percent boost from the gas taxes the state contributes.

Even more telling: Looking at the cumulative ratios going all the way back to 1956, only five states — Indiana, Michigan, North and South Carolina, and Texas — have recouped less than 100 percent of the gas taxes they’ve sent to Washington. And those only by the barest margins.

There are two dangers to the falsehood that states get back less than they give.

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