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Posts from the "Gas Tax" Category

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Michigan Gas Tax Hike Could Provide Some Relief for Detroit Transit Riders

Michigan state senators voted last week to approve a gas tax hike expected to net more than $1 billion annually to fix the state’s notoriously potholed roads, reports the Free Press. The measure, if it passes the House intact, could also be good news for Detroit’s woefully inadequate transit system.

A provision of the bill would allow Detroit to spend 20 percent of its portion of the proceeds on transit. Detroit has been funding transit only through its general fund — with no dedicated revenue stream — and it has arguably the worst transit system of any major city in the nation. With the city in bankruptcy, general fund revenues for transit have been in short supply. Riders report two-and-a-half-hour one-way commutes, or buses that never show, making it nearly impossible to hold down a job without a car.

Although the region is in the process of merging Detroit’s transit system with SMART, the suburban transit provider, establishing a seamless system has been fraught with political challenges. Regional planners, for instance, recently shifted millions of dollars in transit funding from Detroit to the suburbs. A new funding source would be huge.

Under the plan approved by the State Senate, Michigan’s gas tax would incrementally rise 17 cents per gallon over the next few years. Raising the tax to fix the state’s roads has been a top priority of Governor Rick Snyder, and Republican lawmakers apparently felt comfortable advancing it following the election.

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Lesson From the States: Index Your Gas Tax to Something, Anything

By tying its gas tax to gas prices, Kentucky has seen its revenues rise while Massachusetts -- whose attempt at indexing to inflation failed last week -- has lost ground. Image: Tax Policy Center, using U.S. Census data.

By tying its gas tax to gas prices, Kentucky has seen revenues rise, while Massachusetts — where voters rejected indexing the gas tax to inflation last week — has lost ground. Image: Tax Policy Center, using U.S. Census data.

Amid all the hand-wringing in Congress about transportation funding is one simple fact: The federal gas tax has been unchanged at 18.4 cents per gallon for 21 years. During that time, rising fuel efficiency and inflation have chipped away at how much the tax brings in and eroded the value of what remains.

To make up for the federal paralysis, states have increased revenues on their own. Since 1993, 42 states and the District of Columbia have raised gas taxes.

That shows real courage on the part of state and local lawmakers — a courage that’s been conspicuously absent on Capitol Hill. And that courage has been vindicated: Even where voters have beaten back attempts to raise the gas tax — most recently in Massachusetts, where an Election Day ballot measure repealed the state’s new practice of automatically indexing the gas tax to inflation — they haven’t punished lawmakers who voted for them.

Still, only half of the states that raised the gas tax have done so by more than 5 cents a gallon. And the vote in Massachusetts could have a chilling effect on other states that would like enact a mechanism to keep the gas tax in line with costs without having to take frequent, politically difficult votes to raise the rate.

In a report released just after Election Day, Richard Auxier of the Tax Policy Center — a joint project of the Brookings Institution and the Urban Institute — makes the case for state-level gas tax reform.

Making the gas tax a simple sales tax seemed like an appealing option when gas prices were rising steadily, but over the past few months it’s seemed like a less wise choice. Still, over time, it would have made a big difference: Combined federal and state gas taxes have dropped from 28 percent of the total cost of gas in 2000 to just 12 percent in 2013 as the price of gas jumped 136 percent.

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Talking Headways Podcast: Uber and the Case of the Hidden Gas Tax

podcast icon logoUber is celebrating. DC passed an Uber-legalization law that Uber thinks cities the world over should follow. The problem is, most cities have much more tightly regulated taxi industries than DC, with a far higher cost of entry. In those cases, letting Uber get away with providing taxi services while complying with none of the rules is unfair. The taxi companies have been screaming about this for a while now. Uber’s response is something like, “Catch me if you can, old geezer.” DC’s contribution to that conversation strengthens Uber’s position.

In other news, a front group for the oil industry is trying to cause panic among California drivers about a “hidden gas tax” that’s going to hit come January. What they’re really talking about is California’s landmark cap-and-trade law to limit greenhouse gas emissions, which will start including transportation fuels at the beginning of the year. Jeff and I called up Melanie Curry of Streetsblog LA to explain to us a campaign that didn’t seem to really make any sense and she assured us that we’re not crazy; it really doesn’t make any sense.

Stay tuned; our election recap edition will be coming out shortly.

You can find this podcast on iTunesStitcher, and the RSS feed, or wherever cool kids gather.

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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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