- It’s time to pay for highways not at the gas pump but through the transponder.
- The gas tax worked tolerably well for nine decades. But technological progress, behavioral change and government mandates have rendered it obsolete.
- Gas tax receipts are on a downward trajectory, for multiple reasons.
Last month, Barack Obama traveled to snowy St. Paul, Minn., the same place where in the sunnier days of June 2008 he predicted that his clinching of the Democratic presidential nomination would be remembered as “the moment when the rise of the oceans began to slow and the earth began to heal.”
This time in St. Paul he addressed a lesser problem, one within the ambit of a president’s powers: transportation.
He mentioned the most common form of transportation — auto travel over streets and highways — only in passing. Instead, he hailed St. Paul’s “spiffy new trains,” one of which was derailed downtown two hours later.
But he did make one very practical and sound point. And that is that you have to find a way to pay for these things.
What he failed to mention is that the funding source for federal transportation spending is drying up, in part because of his own policies. That’s the federal gas tax, enacted as part of the Interstate Highway program in 1956 and last raised in 1993.
Gas tax receipts are on a downward trajectory, for multiple reasons. One reason is that people have been driving less, and not just because of the recession. Average monthly driving, the Volpe National Transportation Systems Center reports, peaked at 900 miles in 2004 and was down to 820 in 2012.
Young people, glued to smartphones and video games, are less likely to drive or even get driver’s licenses. Commuting is down, with employment still below pre-recession levels.
And the Obama administration raised gasoline mileage standards to 35.5 miles per gallon in 2016 and 54.5 mpg by 2025 — far above the 2013 average of 23 mpg. These sharp increases mean that less gas will be sold and much less revenue will be generated by the 18.4 cent per gallon federal gas tax.
In addition, the government is promoting hybrid and electric cars, whose owners pay less or no gas tax — even though they cause wear and tear on highways. Owners of natural gas vehicles — promoted on a bipartisan basis by Sens. Jim Inhofe and Carl Levin — would pay no gasoline tax at all.
This has left congressional transportation committees in a quandary. Raising the gas tax is considered highly unpopular. Obama’s solution in St. Paul — “simplifying the tax code” — doesn’t seem to be in the cards any time soon.
All of which undermines the argument that the gas tax is a user tax, in which those who use roads tend to pay for them.
Fortunately, there is another and better kind of user tax available. That, as the Reason Foundation's Robert Poole has argued, is per-mile tolling.
Poole proposes that limited-access highways — interstates and expressways — be funded by tolls. He would leave local streets and rural roads to be funded by states and localities.
The technology is available. Transponders are used to assess tolls today in California's Orange County, Dallas County in Texas, and Northern Virginia. The charges go to your credit card and you hardly have to slow down through the toll plaza.
Computer-generated tolls are a superior form of user fee. They tie revenues to the highways in proportion to their use, and can be adjusted to reflect the cost of maintenance and improvements.
Per-mile tolling also would eliminate the use of federal gas tax funds for ancillary forms of transportation — subways, light rail, bike paths and trails — which have been gobbling up revenue needed for highways. States and localities valuing such amenities could pay for them.
Tolling would also pay for proper ongoing maintenance. Too often that is left unfunded by local officials or congressmen eager to cut ribbons on new projects.
In addition, per-mile tolling would enable public-private partnerships or private firms to fund construction or operations by borrowing in bond markets instead of paying for future needs out of current funds.
That's already happening too: The Canadian government is funding the new Detroit River bridge through a public-private partnership.
Private firms would have an incentive to keep roads in good shape. Otherwise, traffic and toll revenues would decline and profits would disappear. And per-mile tolling can also reduce traffic congestion by varying fees according to usage or time of day.
The gas tax worked tolerably well for nine decades. But technological progress, behavioral change and government mandates have rendered it obsolete.
It’s time to pay for highways not at the gas pump but through the transponder.