In 2017, California plans to pilot a new mileage-based Road User Charge designed to potentially replace the current state gas tax. Photo Wikimedia
Earlier this week, I attended a California Sustainable Transportation Funding Workshop, hosted by Caltrans, Southern California Association of Governments (SCAG), the California Transportation Commission (CTC), and the Mileage-Based User Fee Alliance (MBUFA). The half-day program focused on how the state of California could shift from our current gas tax funding stream to one based on a per-mile fee.
Let me first say that I usually mostly hang out with a bunch of left-of-center city people like me; we get around mostly by bicycling and walking. My friends and colleagues tend to support the idea of a per-mile fee, because we expect that it could help motivate people to drive less, and use other modes more.
This workshop wasn’t populated by a bunch of people like me. I don’t think anyone else arrived there by bicycle. As far as I could tell, it was primarily people who are more mainstream: people who drive and who, for the foreseeable future, expect our car-centric transportation system to look more or less like it does now. Among the program’s sponsors was the libertarian Reason Foundation.
What was interesting about the workshop was where the left and the right agreed: gas tax revenues aren’t enough to cover transportation infrastructure costs, and per-mile fees could work better. Similar right-left agreements occur with some Shoup-inspired parking reforms and Express Lane toll programs.
In 1994, California’s Gas Tax was set at 18 cents per gallon. It remains unchanged today, but, due to inflation, that 18 cents is now worth about 11 cents. Graph via Caltrans
Speakers at the conference set the stage by describing the situation, which they described as “The Federal & California Financial Cliff.” The federal gas tax is 18.4 cents per gallon. The California gas tax is an additional 18 cents per gallon. These amounts were set in the early 1990s. Unlike percentage-based sales taxes, which fluctuate with price changes, the gas tax remains at a flat rate. Since the ’90s, inflation has effectively reduced California’s gas tax to its lowest inflation-adjusted level since California gas taxes began in 1923.
Gas taxes are dedicated to be spent on transportation only. As the gas taxes lose value over time, governmental transportation budgets are increasingly subsidized by other taxes paid by everyone, including sales taxes, property taxes, etc. Recent estimates show that only about half of overall transportation funding is paid for by dedicated gas tax revenues. To some extent, this is fair: even non-drivers derive some benefits from highways, because everyone buys goods shipped by truck. The unfair aspect of this system is that non-drivers’ taxes go, in part, to freeways that non-drivers do not use.
Transportation leaders are generally aware that general funds subsidize transportation expenditures, but many drivers assume that driving-based taxes are what pays for roads. Many drivers, though already subsidized by non-drivers, still think they’re paying too much.
There are at least three more factors that influence the gas-tax-income vs. transportation-expenditures mismatch. Read more…