Oil prices go up. Gas prices go up. American consumers switch en masse to the kind of vehicles promoted by CAFE (Corporate Average Fuel Economy) regs since 1975. They also help reduce American oil imports (and pollution) by driving 3.7 percent less over the first five months of '08. The reduced demand lowers the price of gas (OK, in theory). Everyone happy? Of course not. The same feds who want us to reduce our dependence on foreign oil are hit with a drop in federal gas tax revenue (currently 18 cents a gallon). And so the "acting head" of the Federal Highways Agency declares [via The Detroit News] that "without a doubt, our federal approach to transportation is broken." No, REALLY. "No amount of tweaking, adjusting or adding new layers on top will make things better." And he drops the other shoe. "Ray [that's MR. May sonny] said the Bush administration was in favor of a 'more progressive direct user fee' similar to a system that is currently being tested in Oregon. Under that pilot program, cars were equipped with on-board mileage counting equipment that was read by pumps equipped with mileage reader devices." Can you drop a third shoe? Sure! May also wants to "encourage" private companies to lease federal highways and maintain them through tolls. With ideas like that, what's the bet that the acting head is shuffled off-stage, and soon?
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Perhaps the Feds can do something to match the legislators in Maine who passed an automatic CPI escalator for the State gas tax a few years ago. Amazing.
The gas tax is a poor way to fund highways – because it’s assessed on every mile you drive, whether or not that road ever sees a dime of gas tax revenue when it’s time to maintain, rebuild, or expand it. In some states, like mine, this functions as a huge subsidy from urban drivers to suburban and rural drivers (and a subsidy from urban non-drivers to those drivers as well, since the large locally maintained arterial network which doesn’t get any money from the gas tax has to be paid for from property and sales tax; while suburbs generally have a much higher share of their infrastructure funded by the gas tax).
Here in Indiana, the Indiana Toll Road was leased to a private company, after the state once spent more money collecting tolls then the tolls brought in! Can you say bureaucracy?
Well despite the doom-and-gloom forecasts of the state not running the toll road, the sky did not fall. When it snowed, the road was plowed, plus a major construction program has been initiated, electronic tolling was rolled out and improvements put into the works. Plus the state is earning $500,000 a day to spend on new road construction projects ($11.9 billion by 2015). Whereas in Ohio, they have been scaling back projects until funding can be secured.
The bottom line is that after the first year, Indiana is better off having leased the Indiana Toll Road to a private company. So I’ll end with saying I’m all for leasing Federal highways too. Each time that I drive through Kansas, the Kansas toll road to Topeka is always well maintained and worth the few dollars I pay to drive on it.
Toll roads make more sense with the “pass” technology that can scan your car for payment. If they can get them to read your car’s bar code at 80mph, I think toll roads are the only way to go. Or some type of transponder.
Privatize highways!
“Privatizing” government owned highways has elements that might not be considered, of even knowable, that make them less than favorable to the tax payers. Such as depreciation and amortization so that money is taken from one pocket and moved to another. I’m wary of these kinds of deals since so much money is at stake thus big incentives for favorable deals to a few that don’t get a lot of scrutiny. It would be interesting to track ‘contributions’ to politicians by companies and their employees who stand to benefit from these deals. Call me skeptical.
Well despite the doom-and-gloom forecasts of the state not running the toll road, the sky did not fall.
We’re dealing with that in Texas. The state put a two-year moratorium on privatizing toll roads due to the public outcry. I’m glad to hear it’s working in Indiana; maybe that news will help settle the debate in Texas.
This is akin to the debate over privatizing Social Security. Some people think that only the government can handle that money, but we all know how well that’s going. Galveston County chose to leave Social Security in 1981 and go to a private system. The results speak for themselves:
Galveston vs. Social Security. Upon retirement after 30 years, and assuming a 5 percent rate of return {the actual rate has been about 6.5 percent} — more conservative than Galveston workers have earned — all workers would do better for the same contribution as Social Security:
* Workers making $17,000 a year are expected to receive about 50 percent more per month on our alternative plan than on Social Security — $1,036 instead of $683.
* Workers making $26,000 a year will make almost double Social Security’s return — $1,500 instead of $853.
* Workers making $51,000 a year will get $3,103 instead of $1,368.
* Workers making $75,000 or more will nearly triple Social Security — $4,540 instead of $1,645.
* Galveston County’s survivorship benefits pay four times a worker’s annual salary — a minimum of $75,000 to a maximum $215,000 — versus Social Security, which forces widows to wait until age 60 to qualify for benefits, or provides 75 percent of a worker’s salary for school-age children.
In Galveston, if the worker dies before retirement, the survivors receive not only the full survivorship but get generous accidental death benefits, too. Galveston County’s disability benefit also pays more: 60 percent of an individual’s salary, better than Social Security’s.
http://www.ncpa.org/pub/ba/ba514/
TexasAg03 :
The article in your link was dated 2005; any info on how the recent bear market has affected things?
Also, regarding highway maintenance costs: I remember reading over the years about several increases in the max loads trucks could haul on the interstates. It’s understandable that the trucking industry would be supportive of these increases, but the highway builders were as well. What does that tell us? From what I can find now, the limits were about 60k lbs around 1960, vs. today’s limits of 80k with waivers to 100k in 29 states. There’s legislation now pushed by Maine’s senators to raise the limit to 100k there.
currently .18 cents a gallon
0.18 cents a gallon? As in $0.0018/gal? We’d be so lucky… I thought the gas tax holiday was nixed?
The article in your link was dated 2005; any info on how the recent bear market has affected things?
I found some articles recently that reference articles from 2005, but not much recently. One article stated that the current return on the Galveston plan was about four percent which, according to some other articles, is still better than Social Security.
Engineer:
currently .18 cents a gallon
0.18 cents a gallon? As in $0.0018/gal? We’d be so lucky… I thought the gas tax holiday was nixed?
Tough room. Text amended.
So, let’s see: a 10% drop in the amount of gas purchased would mean a 10% loss in federal revenue; that could be matched by a staggering increase of 1.8 cents in the gas tax.
These idiots at DOT just want to make the case for tolls and private highways. The fact that their term is coming to an end and they are going to work for infrastructure companies after this has nothing to do with their advice, I’m sure.
Also, this entire “private highway” thing is going to collapse. It is mostly a financing trick, and with the dry-up of capital it won’t generate returns.
The third shoe has already dropped here in Texas. On many of the newly opened tollways the toll costs more than the gasoline used to travel on that bit of roadway.
My last experience with Indiana toll roads–driving Omaha-to-DC– was a negative one. Nowhere to pull off for rest but nasty gas stations and fast-food joints that were that way because they dealt with a captive market via exclusive contracts.
The return trip,via the toll-free Interstate 70, was much better. The surfaces were smoother,and they had real rest areas with clean restrooms and no rancid grease smoke.
Has the new contractor fixed the potholes, put in proper rest areas, and opened gas and food at interchanges and service plazas to competition?
Time to expose the scam:
Out of the 18.5¢ highway “fund trust” taxes that you pay at the pump, only 63% goes to roads and bridges. The rest goes to government pork, A.K.A. “mass transit”.
Per the U.S. Department of Transportation, May 21, 2008: 37% of gasoline taxes are not used for roads, bridges, highways, etc. Easy:
First, 16% of gasoline taxes go directly into mass transport projects.
Second, of the remaining 84% that in theory is for roads, a full one fourth is “flex funds” which are diverted from construction, reconstruction, and improvement of highways and bridges and into “transit projects” and “other projects”. Net/net, 21% is “flexed” into pork.
Add 16% direct pork plus 21% “flex” pork, and there you have 37% in subsidies to mass transportation paid by car drivers at the pump, including drivers from Pukwana, South Dakota.
A copy of the U.S. Department of Transportation powerpoint charts can be seen here:
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I’ve been a lurker here for years, but this tax misuse topic boils my blood enough to bloody register here.
I love the idea of privatizing roads… and schools and social security, too. Let’s face it – These government funded programs were put in place at a time when government could be trusted to (somewhat) competently spend money. Clearly, that’s no longer the case. I trust GE more with my money than the dopes representing CA.
Very, very sad.
RF,
He won’t be shoveled off until after the new administration comes in. The current admin is much influenced by Robert Poole of the Reason Foundation. Mr. Poole is a very intelligent and open minded guy. I once had a fairly long exchange with him over aviation policy. I believe he is wrong about a lot of stuff, but he is a totally respectable guy.
The user fee is straight out of Poole’s playbook, and is simply a terrible idea. What isn’t calculated into the cost is any externalities including the hassle factor. While it does have some great benefits for economists, bureaucrats, and law makers, it is simply rotten for drivers.
As an airplane owner and aviation consultant, I can also tell you that they have been trying to push user fees on our air system as well. This has not worked well around the world, and nearly destroys general aviation while leading to no discernible benefits for airline passengers. Since we are on the verge of a technical revolution in aircraft that could easily lead to greatly expanded air travel options for everyone (not just the rich), the user fees are being pushed heavily by the airlines to eliminate the threat to their business.
RayH : In California, FastTrak can read your radio transponder instantaneously so you don’t have to slow down through any booths. People without passes are tagged and fined based on their license plate numbers.
Another important point.
The whole “highways are falling apart” issue is simply the latest big government move in the “hide the dollars” shell game.
They will want to raise gas taxes as soon as the cost of gas goes down. There must always be a new crisis to allow them to raise taxes. Notice how taxes rarely if ever go away or actually get lowered in real dollars, nevertheless percentages.
We will suffer until we get another JFK or Reagan. After that, I guess the cycle will start again.
A 10% drop in gasoline sales corresponds to a 10% drop in traffic so that roads last 10% longer before needing repair. Also, 10% brings us back to the gasoline use of just a few years ago. Why were the roads just fine then but now all of a sudden they are not? It sounds to me that the $0.18 has been spent inefficiently or used/wasted on other projects.
Some posters above mentioned that the amount of use of a road should dictate how much care it gets. However, it’s not all that simple. For example: a fire access road gets just about no use at all, but when it does get use, it all of a sudden become really important.
Do the people in the suburbs really get a subsidy from those in the city? They certainly drive more miles and on a larger set of roads, but they also use more fuel and so pay more of those $0.18 tax units. This sounds like only a modest amount of subsidy; I, for example, pay $9500/year property tax on my shack that goes to the local schools… but I don’t have any children!
Geez, Louise…….
vww12 :
Time to expose the scam:
Out of the 18.5¢ highway “fund trust” taxes that you pay at the pump, only 63% goes to roads and bridges. The rest goes to government pork, A.K.A. “mass transit”.
“Pork” is in YOUR mind. Areas with mass transportation systems have seen usage take a huge jump over the past months, with the high gas prices. What are we going to do when those who work in low-paid service-type jobs can’t afford to drive cars to their workplaces, and there are no alternatives like mass transit? Just line ’em up and shoot them?
Per the U.S. Department of Transportation, May 21, 2008: 37% of gasoline taxes are not used for roads, bridges, highways, etc. Easy:
Second, of the remaining 84% that in theory is for roads, a full one fourth is “flex funds” which are diverted from construction, reconstruction, and improvement of highways and bridges and into “transit projects” and “other projects”. Net/net, 21% is “flexed” into pork.
Again, “pork” is in YOUR mind. Transit systems are one part of the structure we can use to manage our transportation needs. “Other projects” are other programs that attempt to manage the demand on our highway systems by getting more drivers into fewer vehicles. “Other projects” can be safety-related, such as paying for extra police patrolling around construction zones. And so on. It’s all put to some good use or another.
Add 16% direct pork plus 21% “flex” pork, and there you have 37% in subsidies to mass transportation paid by car drivers at the pump….
By the way, you really ought to look into those numbers like “5307” and “5311” and so on. Plenty of this “mass transit” money goes for ordinary city bus systems and other on-road systems, and not the “pricey rail systems” I presume you’re salivating over.
There is no “scam” — your fuel taxes pay not just for “roads,” but for our various “transportation systems.” What’s so wrong with that? Sure, you’d hope that these systems would pay for themselves by rider fees, but that’s just not the reality of the situation here in the US. If you haven’t noticed lately, the handwriting on the wall is looking more and more like we just may not be able to afford to drive personal vehicles everywhere we want to go in the future. And so you’re advocating sticking our heads in the sand, and ignoring the future of transportation in our country?
In the end, once again, it just boggles my mind how people who care about cars enough to get involved with this site can be so negative towards taxation that provides and maintains the roads over which we drive our cars. Your fuel taxes are perhaps the most “transparent” of all the taxes you pay — to a very great extent, they pay for private design companies to design road construction and improvements, and for private contractors to construct those projects. And yes, a share of it goes to other programs. I think your generalization of much of it as “pork” is utter nonsense.
thoots,
“What are we going to do when those who work in low-paid service-type jobs can’t afford to drive cars to their workplaces, and there are no alternatives like mass transit?”
Let localities decide and pay for mass transit. Why do the feds need to get involved? Why does the money need to go all the way to DC, get skimmed once, and then come back to us with all sorts of strings attached that make the projects more expensive as well? Why do you assume without the feds, there is no solution?
I believe if you look at the many transportation projects funded from congress, you will find plenty of questionable programs that groups from BOTH sides of the aisle will admit are pork.
Lastly, no one here will complain about taxes to maintain roads, but most want little or nothing to do with taxes that are levied on drivers that go to other things. Your point here was completely off base.
Tax at 18 cents a gallon – incredible. In the UK petrol is currently in the region og $10.50 a gallon and some 87% of that price is tax going to the government. 18 cents seems pretty good to me!
Privatizing (and enacting tolls where none existed before) will have its own problems.
Since non-government entities need to make a profit, it will need to be a well-run, efficient operation, free of corruption to serve the customers well. This will require government oversight (at taxpayer expense), to ensure that the roads are maintained in a safe manner, with competent contractors and durable materials. Anything less will likely result in cost-cutting, poor maintenance, and eventually having the Gov’t to come in and take over the operation (bailout) to ensure the public safety.
It’s not like you have a choice, either (which is the foundation of the “free market” system). If you think that the private-owned I-80 through Pennsylvania is a crappy road because the tolls are high, and Company X does a poor job on safety, what do you do? Take another Interstate that will add 200 miles to your trip?
And worse, adding tolls to roads (as in the expressways I-294 around Chicago) wastes MILLIONS of gallons of gas, as non EZPass customers have to slow, pull over, stop to pay a measly 80-cent toll, then accelerate like mad to get back into the 70MPH traffic they just left. And you get to do this several times to get around Chicago!
Don’t even get me started on the Indiana Turnpike, a narrow-laned, grass median, no guard rail nightmare to drive; I sat on this road for 2.5 hours last year as they had to pull a woman from her crushed Chevy Cavalier, who died when her car drifted into the center grass median, which grabbed her front tire, causing her to lose control, which launched her into an oncoming tractor-trailer on the other side of the highway.
I once spent a terrifying night drive though fog on that road (headed to Wisconsin), where my stress was only compounded by the lack of guard rails and reflectors, and the worn-out lines on the road were barely visible at times. And on windy days, it’s common to see several tractor-trailers blown off the road, lying in the center or right-side ditches.
I have a lot of issues with privatization. There really is not a lot of advantage to privatizing many government functions because those functions cannot be allowed to become true markets. Market gimmicks are not markets (as we learned in the California energy crisis).
I think much of the move to privatize has been motivated by a dislike of government which has led some on the right to think that its some sort of panacea. It’s not. Sometimes, we are just better off keeping things as government functions because they simply aren’t ever going to be true markets.
Toll roads are a good example. I believe that toll roads are now being built with their eventual privatization in mind. This even worsens the main problem with toll roads. There is an incentive to force traffic to the toll road rather than build “competitive” routes for free.
Most toll roads in my area were originally built with promises to only charge the toll as long as it took to pay off the road. Now they are claiming they need the tolls to build more toll roads. So once again, why are we sending our money to washington?