- LAURA BLISS
- May 8, 2017
Last week, President Trump saidhe’d “consider” raising the gas tax. But Republicans in Congress swiftly doused the suggestion with cold water. That’s not much of a surprise: The national gas tax has been, for many years, a “third rail” for tax-averse Republicans and Democrats alike. Americans pay Uncle Sam 18.4 cents per gallon at the pump, a number that hasn’t budged since 1993 as lawmakers are loathe to levy what many view as a regressive fee.
On the government side, that revenue buys nearly 40 percent less today than it did that year, as construction costs have steadily risen. Meanwhile, badly needed transportation infrastructure repairs are estimated at $3 trillion nationally. By 2020, only half of the Highway Trust Fund—the primary source of federal funding for highways and transit—will come directly from the gas tax. The rest will come from tens of billions of dollars transferred from the general fund, and a chunk that previously helped manage leaking gas storage tanks.
That’s because every year the HTF drags with it a multi-billion dollar shortfall. The Congressional Budget Office estimates it’ll be up to $18 billion from 2021 through 2026. Federal gas tax revenues—the fund’s primary intended feeder—dropped off in the recession and have recovered only modestly since as vehicles become more fuel-efficient and Americans drive less overall. And once more electric vehicles take to the roads, those revenues could take a nosedive.
To make up for spending gaps, strapped states are scrambling in different directions. More than twenty, including California, Tennessee, and New Jersey—note the mix of red and blue—have raised gas taxes on their own.Others are beginning to index taxes to at least keep pace with inflation. Ten states have slapped extra registration fees on electric and hybrid vehicles, and a growing number are looking to tax cars that use alternative fuels.
Still more, like Indiana, are turning to toll roads with higher and higher fees. Drivers pay on more than 5,000 miles of U.S. roads today, up 15 percent over the past decade. And a growing share of these roads are financed, built, and operated by private investors and companies, an arrangement that can seem to spell “free road” in the eyes of public leaders. But the public always winds up paying for them, in the end—and sometimes more dearly than they would have through more traditional means.
On their own, none of these options are likely to make up for shortfalls in transportation funding. No one likes to pay for a something that has long seemed “free,” and no politician likes to try to convince constituents that they should.