We all know the U.S. Highway Transportation Fund, which is used to fund the Interstate highway system and other roads, is in trouble. Increasing fuel efficiency has led to declining revenues from the 18.4-cent-per-gallon gas tax that supplies the fund. Since 2008, the trust fund has been supplemented with money from the U.S. General Fund.
And it’s only going to get worse with the new federal fuel efficiency standards that will increase average fuel economy to 54.5 miles per gallon by 2025. According to the Congressional Budget Office, the trust fund will become insolvent as early as 2015 as expenditures outpace revenue growth.
Since 2009, highway funding has only been authorized in short-term funding extensions as opposed to multi-year renewals by Congress. The latest of these extensions will expire in the fall of 2014.
Meanwhile, states are having their own issues with depleting transportation revenue and raising fees or taxes while consumers are still recovering from the recession. Many are placing an increase in the state gas tax on the table noting the transportation infrastructure is in desperate need of being maintained and preserved.
No one wants to hear their taxes are being raised, but it seems the easiest, simplest solution to this problem is to raise the federal gas tax. Other ideas, such as taxing VMT (vehicle miles traveled) are still being studied, but we need a solution now.
In January, the nation’s top business advocate said it was time for the federal government to “quit fooling around” with funding the transportation trust that fuels many state and local infrastructure projects and called for an increase in the gas tax.
“You don’t need a lot,” U.S. Chamber of Commerce President Thomas Donohue said during a press conference that followed his annual State of American Business Address. “You do a little bit a year for a couple years, and it’ll make a big difference.”
A report by Wells Fargo analyst Randy Gerardes says a 5-cent increase in the federal gas tax would be sufficient enough to cover the $147 billion funding shortfall that is projected for the transportation fund through 2022.
We need money to maintain roads and bridges. Raising the gas tax may not be a long-term solution, but we need something to supply the highway trust fund now while we look at other options.
I enjoy a smooth ride on a well-maintained Interstate highway or down a back-country road, and I like knowing the bridge I’m crossing is going to remain standing while I’m passing over it. I’m willing to put my money where my mouth is — are you?