The Wrong Way to Pay for Our Roads and Bridges
We need to raise the gas tax, but that's not the long-term solution for our transportation needs. It's time for an honest conversation with the public.
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BY: Noel Popwell | March 27, 2017
The federal Highway Trust Fund avoided going broke when President Obama signed the FAST Act, a $305 billion, five-year transportation bill, into law in December 2015. But because Congress failed to include a provision to raise the gas tax, it is all but certain that the fund will run out of money in 2020 -- right around the time of the next presidential election.
Now more than ever, we need to find a way to end the kind of stopgap-funding approach that the FAST Act represents. No one questions that our transportation network is in dire need of an overhaul. In its 2017 report card, the American Society of Civil Engineers gave our roads and bridges a grade of D and called for $543 billion in spending to fix the problems.
How did we get here? The federal government has largely relied on the tax on gasoline and diesel fuel paid at the pump, first levied in 1932, to maintain and upgrade our roads and bridges since the Interstate Highway System was created in the 1950s. But because the federal tax rate has not been raised since 1993, there is an increasing gap between the revenue raised and the money needed. In the meantime, inflation has increased costs and motor vehicles have become much more fuel efficient. The problem is expected to get worse as the demand for electric vehicles rises.
Most states also levy a gas tax but, faced with dwindling revenues, several of them have begun exploring other financing options. Systems that charge motorists based on the miles they drive rather the amount of fuel their vehicles consume -- more accurately reflecting the user-pays principle of the gas tax -- have been getting the most attention at the state level. Oregon has led the way in testing this approach, launching a voluntary program with a 1.5-cents-per-mile charge in July 2015.
These experiments have encountered some pushback from motorists. The use of GPS-enabled devices as a mileage reporting method, for example, has triggered privacy concerns, which forced Oregon to allow drivers enrolling in the program to use other options, such as their vehicles' onboard diagnostics ports, to track and report their mileage.
Nevertheless, later this year Oregon's legislature is expected to consider a mandatory statewide mileage-based system. But a recent study by Indiana University's School of Public and Environmental Affairs shows that public opposition to the concept goes much deeper than fears of "Big Brother." The researchers surveyed more than 2,000 Americans, asking them if they would support replacing the current gas tax with a mileage-based user fee. Only 21 percent of the respondents said they support the concept, and support drops even further if GPS technology is used. Perhaps more surprising was that a majority of the respondents also oppose the user-pay principle itself for financing surface transportation.
What does this all of this mean? Any widespread adoption of alternative financing methods such as those being explored by the states is -- if it occurs at all -- years away. With transportation funding needs growing more urgent every day, Congress needs to raise the federal gas tax, index it to inflation and end reliance on stopgap funding. States also need to make sure that their transportation taxes reflect modern realities.
Meanwhile, elected officials at all levels of government should be having a serious conversation with the public about how we should fund transportation projects over the long term. This discussion should include explaining why the gas tax has become unsustainable as a funding source and why it should eventually be replaced by some form of distance-based user-fee system. Shifting the burden to taxpayers who don't drive or to future generations by borrowing the money is inherently unfair and poor public policy.
It's hard to overstate the need for educating the public. One of the other findings of the Indiana University study was that most Americans have little knowledge of how road projects are funded. To change this, our governments must initiate an honest dialog with citizens on the importance of our transportation system and how best to pay for it.
More broadly, the anti-tax sentiment reflected in the study is an indication of a deeper general distrust in our public institutions. While most Americans understand that the good roads and bridges they want and need come with a high price tag, any attempt to impose additional burdens without enough transparency will be certain to meet with resistance.
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