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One nay-sayer argument against greater federal spending for transportation goes like this: “Too many faceless bureaucrats in Washington have too much control over how states spend their money. Let states raise their own revenues and spend them as they wish.”

Georgia Gov. Nathan Deal wants to freeze the state gas tax. Photo: The Beacon

Besides, they say, the national government is broke. There’s no more money to spend on roads and trains.

There are a hundred reasons why leaving transportation revenue collection and spending to the states is a bad idea. First, states are in a worse fiscal crisis right now than the feds – in part because they have a balanced-budget requirement, meaning they can’t overspend their revenues in lean times. Second, just because I don’t live in Kansas or West Virginia doesn’t mean I don’t have an interest in those states’ infrastructure, when so much of what I buy rides the roads and rails of those states to reach me. And I start to care a lot about the infrastructure of New Jersey when I travel to New York from Washington.

But here’s another reason: it’s not that much easier to gain public support for raising taxes at the state or local level than at the national level.

Georgia Governor Nathan Deal is asking state legislators to approve his state gas tax freeze – saving drivers 1.6 cents a gallon, but costing the state $30 million. New York legislators have also drunk the tax-holiday Kool-Aid, despite the fact that it would cost the state $19 million over just three weekends. Massachusetts Governor Deval Patrick is trying to raise the gas tax, and Sen. Scott Brown is giving him a hard time about it. A Connecticut state senator is going around getting petition signatures against raising the state gas tax. Gas station owners in Carson Valley, Nevada are running their own campaign to keep the county from raising the gas tax five cents — which would just bring it on par with the neighboring county.

There is evidence that when voters know exactly what the revenues will go toward – and it will benefit them – they support higher taxes. But that doesn’t mean raising taxes is ever easy — even if it’s just to replace a federal tax that used to be in place. Once a tax is gone, you can bet people will fight against re-implementation. For proof, just look at the fight brewing over merely extending the federal gas tax that’s been in place for decades.

Connecticut state senators just voted to increase the state gas tax by three cents. The New Hampshire House Speaker has proposed cutting theirs by five cents – but only for two months, to help drivers bear the pain of high gas prices. In Georgia, the gas tax jumps every time gas prices go up by 25 cents. And at least one U.S. Senator is suggesting that more states start taking transportation funding into their own hands.

Sen. Lamar Alexander (R-TN) listens to mayors' concerns about federal funding for transportation. Photo: Alan Spearman / Commercial Appeal

After a meeting with mayors in his home state of Tennessee, where he listened as area mayors expressed concerns about the federal budget, Republican Senator Lamar Alexander said, “State and local governments will have to decide whether to have an increase in the gasoline tax.” He delivered the bitter news to the mayors that they may be getting even less money from the federal government over the next few years.

For many Republicans, that’s just as it should be. They think the federal bureaucracy is too big and more government functions should be left to the states. Alexander said that when he was governor in the eighties, he was able to fund and complete several state road projects without federal dollars.

But the mayors he spoke to were concerned. According to the Commercial Appeal, they explained that most transportation projects get 80 percent of their funding from the feds with just a 20 percent local match. They count on those federal dollars.

Alexander didn’t specify how much the state should raise the gas tax, but he indicated that tourists and truckers would “pay for a big share of it,” perhaps as a way to help local politicians sell the idea of a higher state gas tax to constituents.

Tennessee has one of the lowest gas tax rates in the country, taking into consideration the fact that sales tax is exempted on gasoline. The state gas tax is 15 cents a gallon (on top of the federal levy of 18.4 cents) but drivers essentially get back two-thirds of that cost (10 cents) since gas is exempt from sales tax. Tennessee dedicates its entire gas tax to highway-building.

Mayor Stan Joyner of Collierville, a Memphis suburb, told the Commercial Appeal he didn’t see a state gas tax hike as a solution to the funding problem. “Jiminy Christmas,” he said. “Gas is high enough and is taxed enough… If there are cuts or if they [federal officials] keep more, it puts a greater burden on us. It means we have an aging infrastructure with no funds to do anything about it.”

Donna Cooper, former secretary for policy under Pennsylvania Governor Ed Rendell, says state gas tax increases may be warranted in states that have not been able to meet local road repair needs. “But they should not be substitutes for the continued federal role,” she said, “in collecting gas taxes sufficient to ensure that our interstate highway system and transit systems are in good repair and have sufficient capacity to meet America’s transportation needs.”

The House Transportation and Infrastructure Committee just spent two days listening to 40 experts from different aspects of the transportation sector and advocacy community, from engineers to environmentalists to the Tea Party. Each person had just four minutes to speak and they crammed as much as they could into their time: observations, demands, recommendations for a better transportation bill. Their ideas were widely divergent on many points, but on one, they found unity: This should not be a smaller bill than the one that came before it.

Raymond Poupore of the National Construction Alliance II asked for robust investment in infrastructure.

The specter of a new reauthorization that starves the transportation sector for the next six years has become a very real possibility, as the fact sinks in that Congress is not willing to overspend the Highway Trust Fund, and neither Congress nor the White House is willing to get behind any new revenues for the fund.

Here are just a few of their pleas for a renewed commitment to a viable funding source for transportation.

Kathy J. Caldwell, P.E., President, American Society of Civil Engineers

ASCE remains concerned with the increasing and continued deterioration of the nation’s infrastructure. In our 2009 report card, the nation’s roads received a grade of D-, bridges a C and transit a grade of D. A multiyear surface transportation bill with increased funding levels is necessary to address this documented gap.

Raymond Poupore, Executive Vice President, National Construction Alliance II

Congress should focus on shoring up the trust fund to meet the nation’s surface transportation deficiencies and revive the ailing construction economy… For Congress to enact a reauthorization that falls short of our demonstrated transportation needs would, in our judgment, lead to weaker economic recovery, persistent high unemployment in the construction sector, unstable Highway Trust Fund, more dangerous bridges and highways, and American economic vulnerability in the face of unrelenting global competition. Yet as you well know, the revenue question remains. That is most politically challenging issue facing reauthorization.

Paul Diederich, President, Industrial Builders

When Eisenhower signed the first highway bill in 1956, the user fee was three cents a gallon and a first-class postage stamp was exactly the same amount. Today the user fee stands at 18.4 cents per gallon, which is about six times the rate of 1956. On the other hand, a first-class stamp costs 44 cents, which is roughly 14 times the amount it was in 1956. It is critical that we continue to invest in our nation’s infrastructure in order to maintain the integrity of what we have as well as to improve in areas of need.

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Senator Barbara Boxer got down to brass tacks on transportation funding in a committee hearing yesterday, even as DOT Secretary Ray LaHood remained vague on how to pay for the president’s ambitious proposal. Boxer said she’s not in favor of raising the gas tax, but she’d like it to be indexed to inflation. “We don’t even know if the president would go that far with us,” she said, but clearly something needs to be done.

Barbara Boxer wants to see TIFIA strengthened, the gas tax indexed, and TIGER maintained. Photo: Tanya Snyder

Boxer: It’s a good news, bad news story. Good news, because people are getting better fuel economy; bad news because the Highway Trust Fund is slipping. And I’m looking for ways to get more money in there but they’re hard to come by. And because I drive a hybrid I’m not paying my fair share.

Ranking Member James Inhofe: That’s all right, you ought to see what I’m driving. We average out.

Boxer: I’m sure we average out. But you’re paying more for the roads than I am. I may be on the road as long as you are but I’m getting 50 miles to the gallon. So I’m not filling up the car and you’re paying more than I am. So it’s not fair to him [Inhofe] – I mean I think I’m wise to this, but we all should pay our fair share. So I think vehicle-miles-traveled is the way to go but I don’t seem to get much excitement when I mention it. I think we could do it easily, when you re-up your registration, this is how many miles I have now, then – but I don’t have any takers. Indexing the gas tax – indexing, not raising it – I could do that.

Boxer started the hearing with a ringing endorsement for a major expansion of the TIFIA loan program. She said both she and House Transportation Committee Chair John Mica “embrace a much more robust TIFIA program.”

She said the federal government is almost entirely shielded from risk with TIFIA. She alluded to the leveraging that is possible when federal funds are used right, using as an example the Crenshaw/LAX Light Rail project in Los Angeles, which made more than $500 million available at a cost of just $20 million to the federal government.

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Gas prices are up to $3.23 a gallon this week, according to AAA. But before drivers complain about “pain at the pump,” they should compare U.S. gas prices to those in the rest of the developed world. A liter of gas costs about 80 cents. A liter of Fiji bottled water costs about $4.00.

According to Ryan Avent at the Economist, the low prices are “almost entirely due to the rock bottom level” of gas tax rates in the U.S. Avent goes on:

The low cost of petrol encourages greater dependence; the average American uses much more oil per day than other rich world citizens. This dependence also impacts infrastructure investment choices, leading to substantially more spending on highways than transit alternatives. And this, in turn, reduces the ability of American households to substitute away from driving when oil prices rise.

The gas tax brings in far less than it did back in 1993, the last time it was raised, because of greater fuel economy in cars. And it’s a set price and not indexed to gas prices (which are three times higher than they were in 1993.)

Avent concludes, “It’s hard to take any fiscal hawk seriously so long as this measure isn’t on the table. It’s as close to a win-win solution as one is likely to find.”

The idea may be finally gaining traction. Everyone from the deficit commission to some U.S. Senators are warming to the notion that a gas tax hike is the best way to pay for the ambitious transportation agenda that President Obama laid out and finally address some of the country’s backlogged infrastructure needs. According to our back-of-the-envelope calculation, we estimate that we could raise $556 billion over six years by roughly doubling the federal gas tax (bringing it up to 39.3 cents a gallon for regular gas; 52.2 cents for diesel). And it would still be puny compared to other developed nations.

Business Insider magazine has an editorial today called, “It’s Time For a Gas Tax.” Tom Friedman proposed a one-dollar gas tax hike in the New York Times this week. Indeed, you could add a dollar to our gas tax and gas would still be a bargain compared to some countries. But it could be just enough to encourage more sensible transportation options.

Since 1947, American highways have run up a deficit bigger than $600 billion, in 2005 dollars. Source: U.S. PIRG

You’ve heard it a thousand times from the highway lobby: Roads pay for themselves through “user fees” — a.k.a. gas taxes and tolls — whereas transit is a drain on the taxpayer. They use this argument to push for new roads, instead of transit, as fiscally prudent investments.

The myth of the self-financed road meets its match today in the form of a new report from the U.S. Public Interest Research Group: “Do Roads Pay For Themselves?” The answer is a resounding “no.” All told, the authors calculate that road construction has sucked $600 billion out of America’s public purse since the dawn of the interstate system.

The Myth of the User Fee

First, let’s dispense with the idea that the gas tax – the primary source of financing for federal transportation projects – is a user fee.

“If you go to a state park and pay the fee to get in there, that’s a user fee,” report author Dan Smith, U.S. PIRG’s transportation associate, told Streetsblog. “If you’re driving down the road and you have to pay the toll for driving on that specific road, that’s a user fee.”

But people also pay gas taxes to fill up their lawnmowers. And those lawnmowers don’t usually end up on the highway. Just because you fill your tank doesn’t mean you ever drive on the roads funded by the gas tax you pay.

The Catch-22

Then there’s the huge contradiction underpinning the core arguments for highway expansion. Do new roads cut congestion, or do they “pay for themselves”? Highway lobbyists try to have it both ways, but the truth is that neither of these propositions hold water.

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Photo: Myleen Hollero/Orange Photography

(Editor’s note – If you don’t read Streetsblog San Francisco, you’ll be saddened to hear that our friend Matthew Roth, our sister site’s Deputy Editor, is leaving to pursue other ambitions. This is his last post. Matt, you’ll be missed. – DN)

The California Department of Insurance has approved a pay-as-you-drive insurance program encouraged by environmental advocates and transportation planners because it provides an incentive to drive less by reducing premiums for low-mileage drivers. Widespread adoption of similar insurance policies could reduce driving in the U.S. by as much as eight percent, according to a Brookings Institution study.

“The voluntary pay-as-you-drive initiative is an innovative program that will allow insurers to offer plans based on more accurate mileage, so that people who choose to drive less will pay less for auto insurance,” California Insurance Commissioner Steve Poizner said recently when he announced the program with the participation of State Farm Insurance and the Automobile Club of Southern California.

Though other insurance companies, notably Progressive Insurance, have experimented with pay-as-you-drive policies, because of the large number of drivers in California and the scale of the program, it could have national significance.

State Farm — the state’s largest automobile insurance company with 3.3 million policy holders and premiums of $2.5 billion — had previously required mileage to be self-reported by customers, who then got a small discount if they drove less than 7,500 miles in a year. Starting in late February, State Farm will offer an initial 5 percent discount for the first policy term to drivers who opt-in to the Drive Safe and Save program and agree to self-report their odometer readings at the beginning and end of each policy period. Policy holders with an active On Star system, which comes with many vehicles made by General Motors, can agree to allow State Farm to access their mileage data automatically.

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Add another vote in favor of increasing the gas tax to pay for infrastructure investment. A few weeks ago, a couple of senators proposed raising it 25 cents. Then the deficit commission came out in favor of a 15-cent hike. And now, three left-leaning think tanks – Demos, the Economic Policy Institute, and The Century Foundation – are calling for a bump in the fuel tax too.

Another push for a higher gas tax will be met by yet another pushback by anti-tax policymakers. Photo: Pop and Politics

The three groups have come together in a coalition they’re calling Our Fiscal Security to release a new report, Investing in America’s Economy: A Budget Blueprint for Economic Recovery and Fiscal Responsibility. In it, they throw their support behind a gas tax proposal made last year by the Congressional Budget Office [PDF].

Here’s what Demos, et al. have to say about it:

Increasing taxes on motor fuels would raise significant revenues while decreasing negative social externalities such as pollution and traffic congestion. Revenue from the tax would recapitalize the highway trust fund, thereby providing badly needed funding for transportation infrastructure.

Including state and local taxes, CBO estimates that the average national tax rate per gallon of fuel is 40.3 cents on gasoline and 46.6 cents on diesel. CBO projects that raising federal fuel excise taxes by 25 cents a gallon would generate $305.1 billion over 2010-19… Raising federal fuel excise taxes by 50 cents a gallon, for example, would generate $604.8 billion over 2010-19 (CBO 2009).

Even better, their priority for the revenue is mass transit. They say transit reduces emissions and improves access for the poor.

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Despite the anti-tax rhetoric of this round of elections, there’s been a little flurry of support for raising the gas tax lately. Two senators just proposed bumping it by 25 cents to replenish the highway trust fund. And the National Commission on Fiscal Responsibility and Reform included a gas tax hike in its proposal for reducing the deficit by $3.8 trillion. Their proposal [PDF] is simple.

Gradually increase gas tax to fund transportation spending

• Raise gas tax gradually by 15 cents beginning in 2013
• Dedicate funds toward fully funding the transportation trust funds and therefore eliminating the need for further general fund bailouts

Raise the gas tax, cut the deficit. Image from Utanito via Treehugger

Well, that’s clear enough. Highways cost money. You gotta pay to pave, and Americans aren’t paying.

Bloomberg quotes leaders on both sides of the aisle who lambasted the report. “Democratic House Speaker Nancy Pelosi called the targeting of Social Security and Medicare ‘simply unacceptable,’ and Republican Representative Jeb Hensarling of Texas expressed opposition to proposals to raise taxes.” Everyone from AARP to the AFL-CIO lined up to slam the plan.

The co-chairs of the Commission even joke about the unpopularity of their proposals. “We have harpooned every whale in the ocean and some of the minnows,” said Republican former Wyoming senator Alan Simpson. Erskine Bowles, former chief of staff to President Bill Clinton, joked that they’d have to enter a “witness protection program.”

They also proposed eliminating the tax deduction for mortgage interest payments – or at least restricting the tax breaks so that second homes, expensive homes, and home equity loans weren’t eligible.

The mortgage tax break is a sprawl-inducer, encouraging people to buy “more house” for their money. Besides, home ownership rates are higher in the suburbs, since urbanites are more likely to rent. By removing the tax break, as the deficit commission recommends, they would require people to pay the full cost of the house they buy – and stop subsidizing the choice to live in the suburbs instead of cities.

Which brings us back to the gas tax. Politicians cower when drivers complain about paying more at the pump, so instead they just let the highway trust fund run dry and then raid the general fund to replenish it – meaning we’re all paying for their refusal to cover the cost of highways.

Public support for increasing the federal gas tax rises if revenues will be spent to combat global warming. Graphic: Mineta Transportation Institute

Last week, USA Today reported rather gleefully that the U.S. gas tax has never been lower. Having remained unchanged at 18.4 cents per gallon since 1993, American drivers are now paying half as much in inflation-adjusted gas taxes, per 1,000 miles driven, that they did in 1975. We can pretty much forget about investing in new and expanded transit systems — or even just holding up our bridges — as long as this is the case.

USA Today also cited a recent national survey by the Mineta Transportation Institute, which pegged public support for a 10-cent gas tax increase at a paltry 23 percent. Thanks to a post from Streetsblog Network member TrailBlog, penned by Steve Schweigerdt of the Rails to Trails Conservancy, we have a more complete — and interesting — picture of what this survey actually revealed. Schweigert reports from a recent panel discussion about the survey:

A couple key points from the survey were that:

• Linking transportation tax to environmental benefits will increase support, specifically if the tax helps address global warming.
• Support for gas taxes can be significantly increased with good program design.

The panelists portrayed the gas tax increase as a needed short-term fix, but a restructuring of transportation financing is necessary for long-term investment in the system. William Millar [of the American Public Transit Association] reminded the audience that we shouldn’t assume that the way things are can never change. We spent the last 60 years building the system we have, he said, and we can spend the next 60 building a better system.

You can download the survey results here. Of particular note: Support for the 10-cent gas tax hike rose to 42 percent if the revenue would be spent to reduce global warming. The survey also gauged public opinion on a mileage tax, finding that support increased from 21 percent to 33 percent if the rate would vary according to the fuel efficiency of the vehicle.

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