Like so much else in Congress, lawmakers lurch from crisis to crisis when it comes to paying for the nation’s infrastructure, especially our highways. A crisis is looming as the highway trust fund is set to run out of money next month. Lawmakers repeatedly have taken money from the general fund — and they likely will again — to continue funding for construction projects.
Instead of the usual cobbling together of funds to pay for another year of construction and maintenance, lawmakers need to take a fresh look at infrastructure funding as part of a revamping of the country’s transportation policy.
For decades, taxes on motor vehicle fuels have been the major source of highway funding. But lawmakers are loath to raise taxes, and the gas tax hasn’t been increased since 1993. As a result, highway funding has fallen far short of what is needed. Adjusted for inflation, revenue from the gas tax peaked in 1994, according to analysis by the Brookings Institution.
The current federal tax is 18.4 cents per gallon of gasoline and 24.4 cents for diesel. Money raised through fuel taxes, mostly gasoline, long has been the majority source of highway fund revenue. Some money also comes from taxes on commercial truck tires and truck sales.
In addition to the tax rate remaining flat, fuel efficiency has increased and Americans are driving less, which means they are buying less fuel, further dampening gas tax revenues.
This is not just a federal problem. Like the federal fund, the state highway fund gets much of its money from fuel taxes. The state’s tax on gasoline is 30 cents per gallon. The tax rate was adjusted yearly for inflation in 2011, when indexing was repealed. Now, like the federal tax, it is not keeping pace with transportation needs.
All this points to the need for a new way to fund highway and other transportation infrastructure needs.
In testimony before Congress in 2014, Joseph Kile, the Congressional Budget Office’s assistant director for microeconomic studies, laid out three options: decrease funding for projects, which means fewer projects get funded; raise revenue, primarily through an increase in the federal gas tax; or keep taking money from the Treasury’s general fund.
Lawmakers must be more bold than this.
A common alternative, which is used in New Zealand and several countries in Europe and is being tested in Oregon, is to charge based on vehicle miles traveled. Although this requires an extensive metering system and electronic devices in all vehicles, it can more accurately assess costs based on miles traveled and vehicle weight. It also can be adjusted to charge fees based on time of day and location, to reduce congestion and air pollution.
A Congressional Budget Office study found that VMT fees are less onerous on low-income and rural households than fuel taxes because these households tend to own older, less fuel-efficient vehicles.
During a hearing last month on finding a long-term solution to transportation funding, House Ways and Means Committee Chairman Paul Ryan emphasized there are many ideas worthy of consideration. But the Republican from Wisconsin, who has made cutting federal spending his hallmark, said raising the gas tax wasn’t one of them. Potential solutions he mentioned included more tolls, turning more roads over to states and privatization.
Looking at numerous options makes sense, but history shows that changes in funding must be part of a larger transportation policy reform. In 2007, nearly three dozen transportation, planning and economic development experts met at a retreat center in New York. One of their key recommendations was that policymakers should ensure that future transportation policy be grounded in the current trends of America’s growing population and its concentration in “megaregions” and the country’s increasing reliance on imports while being mindful of America’s impact on climate change.
“Transportation investment could help shape the new America or it could continue to contribute to a pattern of development and energy use that exacerbates our problems,” the group wrote.
Fixing the short-term high funding shortfall is important. But more crucial is developing transportation policy that reflects America’s demographic reality.
