While some members of Congress are pressing for an increase in the federal gas tax, responsibility for funding transportation projects is increasingly shifting from the federal government to the states.
With gasoline prices nearing a five-year low, a chorus of voices, including several influential Republican senators—John Thune (R-SD), Bob Corker (R-TN), Jim Inhofe (R-OK), and Orrin Hatch (R-UT)—seem to think this the perfect time to raise the federal gas tax.
President Barack Obama does not seem to agree, though.
He did not include a gas tax increase among his tax proposals in the January 2015 State of the Union address, nor did he mention it in the context of his proposed “bipartisan infrastructure plan,” his perfunctory mention of which disappointed transportation advocates.
White House Press Secretary Josh Earnest has repeatedly reminded reporters the Obama administration continues to believe the best option to pay for a long-term surface transportation bill is through a windfall from corporate tax reform.
However, a tax reform bill isn’t a sure thing, and it certainly is not likely to be passed before the current transportation measure expires at the end of May 2015.
Dead on Arrival
In the House of Representatives, the probability of a gas tax hike is virtually zero.
“While there may be some voices in the Senate in favor of raising the gas tax, the sentiment in the House is overwhelmingly against it, and this includes Speaker Boehner,” one senior House aide told reporters.
Paul Ryan (R-WI), chairman of the tax-writing House Ways and Means Committee, and Bill Shuster (R-PA), Chairman of the Transportation and Infrastructure Committee, have also ruled out a fuel tax increase.
Given the House Republicans’ solid opposition, political observers do not see a gas tax increase as a practical reality.
If that is the case, perhaps the time has come to reconsider the way we pay for transportation.
Bigger Role for States?
The transportation advocacy group Transportation for America argues the solution lies in shifting a larger share of funding responsibility to the state and local level.
“States that want to continue investing will have to explore new ways to raise funding for transportation on their own,” said T4America director James Corless, announcing the November 2014 launch of a new supporting states’ efforts to increase transportation funding through state legislation.
For a growing number of states securing a stable source of funds for their transportation programs, a long-term federal transportation authorization is no longer a necessity.
‘Laboratories for Fiscal Innovation’
Surveys by the American Road and Transportation Builders Association and the National Conference of State Legislatures show state governments have become laboratories for fiscal innovation.
For example, seven states—Maine, Maryland, New Hampshire, Pennsylvania, Rhode Island, Vermont, and Wyoming—have increased local fuel taxes. Other states—Delaware, Florida, and Ohio—have floated the idea of toll revenue bonds or increasing highway tolls. Arkansas, Minnesota, and Wisconsin have enacted or are considering dedicated sales taxes for transportation.
In total, at least 20 states are poised to tackle transportation funding in 2015, according to the Council of State Governments.
States Saving Themselves
States are not standing idly by, waiting for Congress to come to the rescue with higher federal gas taxes and more money. Instead, governors, state legislatures, and local governments are responding to uncertain prospects for future federal funding by taking aggressive steps to become less dependent on federal aid.
Collectively, these measures will generate billions of dollars of additional revenue for state and local transportation programs. The states’ added revenue should largely replace the absence of increased federal funding.
With the 2014 midterm elections boosting Republican majorities in statehouses to historic highs not seen since the 1920s, the movement toward greater self-sufficiency and financial innovation at the state and local levels is likely to grow in strength.
Kenneth Orski ([email protected]) is a public policy consultant and former principal of the Urban Mobility Corporation. Used with permission of Innovation NewsBriefs, www.innobriefs.com, where an earlier version of this article appeared.
“States to Watch in 2015: Transportation Funding,” Sean Slone, http://heartland.org/policy-documents/states-watch-2015-transportation-funding/