Fueling the fees

Winter Wonderland hit much of the country this past week through various storms.  The first major snow and ice-storms of the season remind commuters of the inadequacies of the transportation system.  Having driving across the US over the past couple of years I found most of the roads in pretty lousy condition.  To help remedy the situation Rep. Earl Blumenauer (D-Ore.) last week announced his sponsorship of a bill to raise the gas tax 15-cents per gallon and have those funds allocated towards road and highway improvement.  This would be a near-doubling of the current 18.4 cents a gallon.  Each State, of course, adds their own tax and fee.

 

Alaska boasts the lowest tax at 26.4 cents while New York charges 69.6 cents, just .6 cents more than California.  Combined with the Federal tax the NY and CA more than one-quarter of the cost of a gallon of gas is going towards the fee...and it doesn’t seem to be nearly enough.  The Federal excise fee raises approx. $25 billion a year and the U.S. Department of Transportation’s annual budget (expenditures) is approx. $72 billion.

The Washington Post story reports:   “Congress hasn’t dealt seriously with the funding issue for 20 years,” Blumenauer said. “With inflation and increased fuel efficiency, especially for some types of vehicles, there is no longer a good relationship between what road users pay and how much they benefit. The average motorist is paying about half as much per mile as they did in 1993.”

For years one of the arguments for higher gasoline taxes was environmental.  The more it cost to drive then it was likely to encourage carpooling, push manufacturers to come up with more fuel efficient vehicles and generally save the world.  According to Wikipedia, hybrid auto sales in 2011 hit 2 million.  According to the Congressman that’s had such an impact that more money is needed because fewer fees are being collected.

There’s little question that the U.S. infrastructure is in need of some significant overhaul.  ASCE’s quadrennial report card on U.S. infrastructure grades the country at a D+:  “Infrastructure is the foundation that connects the nation’s businesses, communities, and people, driving our economy and improving our quality of life. For the U.S. economy to be the most competitive in the world, we need a first class infrastructure system – transport systems that move people and goods efficiently and at reasonable cost by land, water, and air; transmission systems that deliver reliable, low-cost power from a wide range of energy sources; and water systems that drive industrial processes as well as the daily functions in our homes. Yet today, our infrastructure systems are failing to keep pace with the current and expanding needs, and investment in infrastructure is faltering.”

The Executive Summary of the report claims nearly $2.2 trillion in unmet projects – nearly the entire budget for the entire U.S. economy for one year.

 

 

Government has a vital role to play in public infrastructure.  It is one of the (few) things that the state should be doing for the citizenry, and therefore it should be funded fully.  Funding should come based on usage.  Rather than an arbitrary fixed amount per gallon, why not a percentage?   When the 18.4 center per gallon was instituted, the average gas price was $1.11 a gallon – so the tax was 16.5%.  Today’s average gas price is $3.30 – so instead of a tax of 5.5% at 18.4 cents, the same allocation would be generating $0.55.

There’s very little that Government does right – and an efficient and effective spending of tax revenue on infrastructure projects is unlikely in the current design of Government.  That, however, is a different problem and issue that should be remedied separately.