Gasoline tax unable to fill federal highway fund's tank

Levy's been 18.4 cents since 1993, and some think system obsolete

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When you were pumping $1.09-per-gallon gas in 1993, $4 gas last summer and the deflated $1.79 product this month, there was one constant -- 18.4 cents of the price of each gallon went to the federal government to pay for roads, bridges, transit and other needs.

The federal gasoline tax hasn't changed since 1993, and that 18.4 cents is no longer filling Uncle Sam's tank.

A host of forces, including runaway construction costs and reduced driving, have depleted the federal Highway Trust Fund, which pays for much of the road work that keeps the nation in gear.

The fund needed an $8 billion emergency transfer from the government's general fund last year, and is projected to run out of money this year.

Congress in 2009 is set to debate and enact a new multiyear highway funding authorization bill, which will, along with any economic stimulus bill Congress enacts, serve as the principal source of funding for highways, bridges and transit.

Part of the debate will be whether to raise the gasoline tax, a touchy political matter in a nation with fresh memories of last summer's price shocks.

Two panels commissioned by Congress as part of the last highway bill in 2005 are recommending increases in the tax.

Many transportation advocates, however, think a cents-per-gallon gas tax is becoming obsolete, particularly with the advent of hybrid and electric cars and alternative fuels.

A vision of the future has emerged from pilot projects in Oregon and Iowa. Both point to a day when motorists will be taxed based on miles driven, the size and fuel efficiency of their cars, and how many of those miles were traveled on chronically congested highways or at peak rush times -- all made possible by onboard tracking devices that use Global Positioning System technology.

Advocates see it as a much fairer way to assess motorists for their use of highways, roads and bridges. But to others, it's Big Brother in the shotgun seat.

Gas tax on empty

In a recent report, the National Governors Association concluded that the current system of federal and state gasoline taxes "is not producing adequate revenue to meet system needs."

The National Surface Transportation Policy and Revenue Study Commission, created by Congress, last year recommended spending $225 billion to $340 billion annually on the nation's transportation system -- a far cry from the $90 billion currently spent at the federal, state and local levels.

But gasoline tax collections at the federal and state level have dwindled as Americans drove less, first because of skyrocketing prices and later because of the sputtering economy.

The federal levy and most state gas taxes are not indexed to inflation, but the construction costs they pay for have shot up.

The American Road and Transportation Builders Association measured a 15.1 percent increase in the cost of highway and street construction from October 2007 to October 2008.

"There is an emerging debate over whether fuel taxes are well-suited to meet long-term revenue needs and other objectives," the governors association report said. "Unless they are increased at regular intervals, these taxes face eroding purchasing power over time."

Pennsylvania levies a 32.3-cent-per-gallon tax, bringing the total federal-state levy to 50.7 cents, 12th-largest in the nation and slightly higher than the 48.4-cent national average.

Although the state has been grappling for a way to finance its long-term transportation needs, there has been little discussion about raising the state gasoline tax.

Mileage-based fee explored

The National Surface Transportation Policy and Revenue Study Commission last January recommended a 25- to 40-cent increase in the federal gas tax spread over five years.

The similarly named National Surface Transportation Infrastructure Financing Commission is expected next month to call for a 10-cent increase, with the tax indexed to grow with inflation.

At the same time, those panels have endorsed an eventual switch to what is known as a "vehicle miles traveled" fee, or VMT.

In its simplest form, a motorist periodically would report odometer readings to the state -- possibly in connection with car inspections or registration renewals -- and be billed a flat amount per mile instead of a per-gallon tax.

A more sophisticated version could use GPS technology to charge premium rates for miles traveled on congested highways or at peak periods, to discourage such driving.

The GPS devices would communicate the miles-traveled data to gas stations, and the fees would be automatically added at the pump.

Such a system has been tested in Oregon, where lawmakers realized years ago that a per-gallon gasoline tax would not adequately fund the state's transportation needs.

The Oregon test drive

In 2006 and 2007, the state's transportation department oversaw a pilot program that put mileage-counting GPS devices in 285 cars.

Pumps at two service stations in Portland were equipped with readers. Each time the project's volunteers refueled, the readers captured their mileage and added a user fee to the purchase price in lieu of the gas tax.

The fee will produce a more stable and reliable revenue stream than the gas tax, said James Whitty, manager of the Oregon Department of Transportation's Office of Innovative Partnerships and Alternative Funding.

While the pilot program concluded that VMT is a viable concept, its implementation is likely at least eight years away, Mr. Whitty said.

Two big hurdles are getting automobile manufacturers to put the devices in new cars -- retrofitting cars is prohibitively expensive -- and the fuel distribution industry to equip stations and pumps.

But the biggest obstacle might be the public's fear of having a device that seems to track one's every turn.

"Privacy concerns were there right from the start," Mr. Whitty said. "This is a big issue with the public, because the public doesn't want to be tracked."

The Oregon system used receivers that emitted a weak signal that could not be picked up and followed by someone. Also, no data was compiled about specific roads traveled.

Instead, the devices collected generalized data on miles traveled in certain zones, including miles driven in congested areas during rush hours.

"We were very careful to eliminate privacy issues. But how do you convince the public of that? That's kind of a hard thing, with people's mistrust of government," Mr. Whitty said. "It's definitely an issue, but one of perception rather than reality."

In 2005, the University of Iowa began a similar four-year study with 2,700 participants in six areas: Austin, Texas; Baltimore; Boise, Idaho; eastern Iowa; the "research triangle" of North Carolina; and San Diego.

The Pennsylvania Department of Transportation has no current plans to study a switch to a vehicle-miles fee, spokeswoman Erin Waters said.

Gas tax increase?

A more imminent question is how to raise money in the short term to address the nation's infrastructure needs.

The economic stimulus bill pending in the U.S. House would provide $30 billion for highway and bridge projects, only a fraction of what Congress' study commission recommends in annual spending.

The American Highway Users Alliance, a leading nonprofit, nonpartisan group that advocates for improved mobility and safety, supports a federal gas tax increase.

"We recognize that the Highway Trust Fund is in a great deal of trouble, facing a shortfall that could cut funding for highway construction in half," alliance President Greg Cohen said.

The group will urge that the extra revenue "be spent on good projects" that improve safety and relieve congestion, and not on lawmakers' pet projects.

"What we don't want to see is a gas tax increase coupled with headlines about bridges to nowhere and waste," Mr. Cohen said.

A gas tax increase "is going to be a very difficult thing to get done but I think a majority of members realize that it's the right thing to do," he said.

The alternatives, increased tolling and privatization of highways, "are worse."

The American Road & Transportation Builders Association, which represents 5,000 public- and private-sector members with a stake in the highway and bridge program, has endorsed a gas tax increase of 10 cents per gallon, with future increases tied to inflation. Without it, the group fears the loss of tens of thousands of construction jobs in the highway industry.

U.S. Rep. James L. Oberstar, chairman of the House Transportation and Infrastructure Committee, also has called for a gas tax increase to help fund the new highway aid bill that Congress is expected to pass this year.

Mr. Oberstar said this month that he intends to introduce "the largest transportation investment package since the creation of the interstate highway system in the 1950s.

"The need is certainly there; we have been shortchanging our roads and bridges for decades. We have been lax with our maintenance, and we have failed to upgrade our roads and bridges at a speed that has kept pace with the growth of our economy. Congestion on our roads is costing $78 billion a year in wasted time and fuel alone."

U.S. Rep. Jason Altmire, D-McCandless, who sits on the transportation committee, said he is opposed to a gas tax increase, saying the need to reduce consumption of foreign oil makes the tax a poor long-term solution to funding needs.

"I need to see a full plate of options," he said. "There's no way we can reauthorize the highway [funding] bill without a revenue stream."

Jon Schmitz can be reached at or 412-263-1868.


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