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.

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.

Indeed, members of this coalition applauded in October when former Transportation Secretary Ray LaHood — muzzled during his tenure from making any such proposals — came out in favor of a 10-cent hike in the gas tax. Within a few days, US Chamber of Commerce President Tom Donohue was touting that idea. According to the Congressional Budget Office, a 10-cent fuel tax increase would be enough to make the Highway Trust Fund solvent.

Meanwhile, Senator Barbara Boxer — whose opinion about these things matters most, as she heads the powerful Senate Environment and Public Works Committee — signaled that she’s most favorable to a wholesale oil fee — a percentage sales tax applied at the refinery level.

Such a fee looks a little less like a consumption tax than a straight gas tax hike would, though producers would most likely pass the costs along to the consumers all the same. Joshua Schank of the Eno Center for Transportation wrote a thoughtful response to Boxer’s proposal at the time, saying it had some potential for being more stable than an increase like Blumenauer is proposing, but it breaks with the longstanding concept of funding transportation through road user fees — although the federal transportation program hasn’t stayed true to that concept in recent years.

Boxer had previously indicated that she supported a VMT fee, though she considered it a non-starter with her colleagues. LaHood got in trouble with the White House a few years back for floating the idea as well.

MAP-21 expires September 30, 2014. Congress doesn’t have the luxury of dawdling through three years of extensions, like it did last time. There will be no money for transportation next year if something isn’t done.