Reduced driving threatens highway fund

Amy Scott Jul 28, 2008

Reduced driving threatens highway fund

Amy Scott Jul 28, 2008


Kai Ryssdal: You heard Budget Director Jim Nussle say it up at the top of Nancy’s piece: Slower economic growth and so lower tax revenues helped drive the budget deficit higher.

As the economy slows — in part because it slows — so is our driving and here’s a great thought experiment to put it in perspective for you: Imagine driving from the Earth to the Moon, then repeat, oh, about 40,000 times. That’s about the number of miles American drivers cut back during the month of May.

The out-of-this-world price of gas is keeping more cars parked in the garage and The Department of Transportation said today the May decline is a record and it’s taking a big bite out of taxes that are used to support highway funding.

Our New York bureau chief Amy Scott reports.

Amy Scott: Last fall, Nick Seguin’s Ford Escort broke down, so he started taking the bus to work in Detroit. With gas prices so high, Seguin opted not to replace the car. Without the car and insurance payments and the gas, Seguin says he’s saving about $300 a month.

Nick Seguin: It actually ended up saving enough to pay for the majority of our trip to Disneyworld.

Between last November and May of this year, people like Seguin drove more than 40 billion fewer miles on U.S. highways compared to the year before. The Transportation Department says that’s the steepest six-month decline in the 66 years it’s been keeping records and it raises serious questions about highway funding.

As people buy less fuel, that means less tax revenue to pay for road repairs and construction. The federal Highway Trust Fund is facing a multibillion-dollar budget gap next year.

Pat Choate directs the Manufacturing Policy Project. He says the solution is simple: Congress should raise the federal gas tax from just over 18 cents a gallon to 27 cents and then adjust for inflation in the future.

Pat Choate: At $4 gasoline, that doesn’t really mean much, particularly with the swings that we’ve had in prices in the past several years. If they’ll take that one action, it’ll solve the problem.

Raising the gas tax would be a political challenge to say the least, but drivers may end up paying more, regardless. The Transportation Department has been pushing for more toll roads.

Choate says on one stretch of highway in Virginia, the tolls could end up costing commuters more than gasoline.

In New York, I’m Amy Scott for Marketplace.

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