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The highway repair fund is going broke

Dan Weissmann Feb 27, 2014

The highway repair fund is going broke

Dan Weissmann Feb 27, 2014

This week, President Barack Obama has been talking up his plans to pay for $302 billion worth of much-needed infrastructure repairs: roads, bridges, that kind of thing.

Here’s one thing that’s not on the President’s list of fund-raising tools: Raising the gasoline tax, which used to be the way we paid for roads and transit. (Think: How’d we build the Interstate highway system?)

The last time the gas tax went up was 1993. Two years later, a new Republican majority took over the House of Representatives with a promise to never raise taxes. The federal gas tax has stayed at 18.4 cents per gallon ever since.

Meanwhile, the cost of concrete, construction workers, and everything else has crept up. That 18.4 cents in 1993?

“That’s the equivalent of 29.8 cents today,” says Avery Ash, director of government relations for AAA.

But a less than 30 cent raise wouldn’t get us back to 1993 spending power, he notes — because cars get better mileage than they did 20 years ago. Great news, unless you’re trying to use the gas tax.

“If you factor in that increase in fuel efficiency, we’d need to see the tax be about 34 cents per gallon today,” says Ash.

Then: If we raise the gas tax, won’t people use less gas? A little. Shanjun Li is a professor of Energy Economics at Cornell. He’s worked out a formula that accounts for all of it.

“If we do a rough projection, based on this number, we would need to raise the gasoline tax by about 20 cents per gallon,” says Li, “in order to cover the deficit in the Highway Trust Fund.”

And: Nobodythinks we’re going to raise the gas tax at all. The Obama administration itself is officially opposed.

But at the state level, things are changing. Five states increased gas taxes or changed their formulas in the last year.

“States have seen that the federal government’s not going to bail them out anytime soon, in terms of their transportation budgets,” says Carl Davis is with the Institute on Taxation and Economic Policy. “So they’re taking matters into their own hands.

He says 18 states now peg gas taxes to inflation— or the price of gas. Which does tend to go up.

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