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As U.S. becomes more fuel-efficient fund for roads/bridges nears empty

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The federal gas tax generates about $36 billion per year, but with spending outpacing that by several billion yearly, the Congressional Budget Office projected in January 2012 that the Highway Trust Fund would be running on empty by fiscal 2014. Attempts to increase the federal tax to shore up the Highway Trust Fund have invariably been met with staunch opposition by a public that feels gasoline prices are too high already and members of Congress who don’t want to be labeled as pro tax.

Twenty years ago, you could pump a gallon of gasoline for $1.09. Now, it’s almost three times that much where I live — even more in a number of states, where prices the third week in January ranged from $3.50 to $4.08.

While the cost of gas has ranged all over the map in the two decades since 1993, one thing hasn’t changed: the federal tax on gasoline, which supports the Highway Trust Fund, is still 18.4 cents per gallon (adjusted for inflation, now worth about only 11 cents).

During that period, however, construction/maintenance costs have gone through the roof, vehicle miles traveled have increased by nearly 30 percent, and the nation’s highway/bridge infrastructure is in increasingly pitiful condition.

The federal gas tax generates about $36 billion per year, but with spending outpacing that by several billion yearly, the Congressional Budget Office projected in January 2012 that the Highway Trust Fund would be running on empty by fiscal 2014.

Over the years, money in the fund, which is distributed to the states, has covered about 80 percent of federally-funded transportation projects, with states paying the balance. In the period 2008-2010, Congress took almost $35 billion from the general fund to pay for projects already committed, adding further to the national deficit.

Beyond that, it’s estimated that lack of funds to maintain and repair roads and bridges, plus the associated losses in productivity, add another $100 billion per year to the deficit.

Attempts to increase the federal tax to shore up the Highway Trust Fund have invariably been met with staunch opposition by a public that feels gasoline prices are too high already and members of Congress who don’t want to be labeled as pro tax.

Joe Consumer simply shrugs when the per gallon pump price goes up 10 cents a gallon from one week to the next, but suggest adding a 10-cent tax to support more, better roads and bridges, and he howls to high heaven.

Even in states with the highest federal/state gasoline taxes, the combined tax is only about one-fifth the price of a gallon of gas. As of January 1, New York had the highest combined tax, 69 cents. California was second, 67.1 cents, Hawaii third, 65.5 cents. The national combined average was 48.8 cents. Mid-South states were among the lowest: Mississippi 37.2 cents; Tennessee, 39.8 cents, Louisiana 38.4 cents; Arkansas 40.2 cents; Missouri 35.7 cents.

As vehicles become more fuel-efficient, as more electric and hybrid vehicles take to the road, revenue from gas taxes will continue to decline — but vehicle miles traveled are rising sharply, and unless ways are found to bring in new money, the nation’s vital roads/bridges infrastructure will continue to decay.

Among alternatives, more privatization of roads/bridges, i.e., toll facilities, less liked by the driving public than gas taxes. Also being eyed by some states, a Vehicle Miles Traveled tax that would be assessed on the number of miles a vehicle is driven in a year, based on GPS monitoring (and privacy advocates are already up in arms at the prospect of the government being able to track the movement of its citizens — although that capability already exists for virtually anyone who has a smart phone with built-in GPS).

However distasteful the motoring public may consider per gallon gasoline taxes, analysts say it has been, and is, a very effective method of paying for roads/bridges construction and maintenance, and that alternative systems would be een more costly.

 

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