You probably haven’t heard because of all the press coverage over the government shutdown and the looming debt limit, but October 2013 represents an annoying milestone for people like me who care about our nation’s transportation infrastructure. Twenty years ago, the Omnibus Budget Reconciliation Act of 1993 went into effect, and buried on page 203 was a provision raising the federal gas tax to 18.4 cents per gallon. The gas tax pays into the Highway Trust Fund and the Mass Transit Account, both of which support maintenance, operations, and expansions to our surface transportation systems.
Today, the gas tax still stands at 18.4 cents per gallon, even though inflation has eroded the buying power of those 18.4 cents by 40%, leading to expensive bailouts from the general fund to keep the Trust Fund and Transit Account solvent. Isn’t it time we finally stop dodging the issue and address our inadequate transportation funding?
Inflation is constantly eating away at the purchasing power of money. For most taxes, this isn’t an issue since the tax rate is specified as a percentage of the total cost. However, since the federal gas tax was instituted in 1933 it’s always been codified as a flat price per gallon. There’s no reason why the tax couldn’t be given as a rate – maybe people don’t trust parcentages? – but that’s the way things are, and there’s no political will to change a tax that “automatically” “cuts” itself every year since as a flat price it simply doesn’t keep up with inflation. This was an especially large issue during the 1970s and 1980s, which saw the then-4 cent tax’s real value slump to its lowest level ever.
The state of transportation funding was so poor in the early 80s that even Ronald Reagan supported a move to more than double the gas tax, getting around his campaign promise to not raise the “gas tax” by calling it a “road user fee”. In a particularly un-Reaganesque move given his past opposition to urban public transit systems, 20% of this increase was directed into a newly-created Mass Transit Account to support the federal government’s desire to invest in capital-intensive public transportation projects. Although some commentators have openly criticized spending automobile user fees for public transit, research shows that commuters who take mass transit disproportionately take pressure off of the most congested roadways, with one case study finding that an abrupt month-long transit strike in Los Angeles (transit mode share: 11%) increased overall delays by 47% during peak hours due to increased car traffic.
But a discussion the quantitative benefits of public transportation on a city’s overall well-being are for another post. Here, we must stay focused on the impacts that a faltering funding stream will have given our increasingly aging infrastructure.
The simple fact is that our infrastructure is not getting any cheaper. We already pay huge sums of money to cover three basic aspects of transportation work: routine maintenance, capacity improvements, and end-of-life overhauls. The first two are pretty straightforward, but the issue comes when a project reaches the end of its serviceable life, which is typically about 30 years… and it just so happens that the last three decades were a period of unprecedented growth in our road network. The overhaul bill for all those bridges, cul-de-sacs, traffic lights, and highways is already starting to come due, all at a time when we can scarcely afford to pay for the normal stuff.
The decline in tax revenues stemming from inflation, increased fuel economy, and the relatively recent trend of decreasing vehicular travel has resulted in shortfalls between our transportation obligations and tax revenues. Between 2008-2010, Congress transferred $35 billion from the general fund (the pool of money we normally spend on schools and wars and keeping old people from having to live under highway overpasses) to cover the shortfall – approximately 30% of the $144 billion the federal government spent on highway and transportation projects during those years. If the 18.4 cent per gallon tax from 1993 had been indexed to inflation, that shortfall would instead have been a surplus that we could have used to start investing in better infrastructure rather than playing catch-up all the time.
There are many possible ways to fund transportation, and it would behoove us to have a nationwide discussion on whether we continue taxing fossil-fuel use, switch to a mileage-based system, or some other configuration. I wholeheartedly agree that gas taxes are a regressive tax that falls more heavily on lower-income households, but for the moment there does not appear to be a good way to address this inequality. With time, we may yet figure something out, but in the short term, we can’t continue to put off making needed infrastructure investments just because to talk of taxation is somehow taboo. Please, raise my taxes.