Thanks to soaring gasoline prices and the ongoing recession, motorists traveled 100b fewer miles in fiscal 2008. Transportation officials seized upon these facts to argue that the gas tax is unsustainable and that the country must quickly shift to tolling to save the highway trust fund. “As driving decreases and vehicle fuel efficiency continues to improve, the long term viability of the Highway Trust Fund grows weaker,” Transportation Secretary Mary Peters said in a December 12 statement. “The fact that the trend persists even as gas prices are dropping confirms that America’s travel habits are fundamentally changing. The way we finance America’s transportation network must also change to address this new reality, because banking on the gas tax is no longer a sustainable option.” Turns out it was an argument built on sand…
The federal Highway Trust Fund took in $3 billion less in revenue in fiscal 2008 than it did in 2007. Federal Highway Administrator Tom Madison placed the blame squarely on the gas tax.
“This (drop in revenue) underscores the need to change our policy so American infrastructure is less dependent on the amount of gas American drivers consume,” Madison said.
The American Road and Transportation Builders Association (ARTBA) crunched the numbers and found this assertion to be entirely untrue.
In fiscal 2007, the US Treasury reported that a total of $29.4b was collected from the taxes on gasoline and diesel fuel. In 2008, the total figure grew by $185m to $29.6b. Lower traffic volumes did cause gasoline tax revenue to drop $70m, but this figure was more than offset by a $256m increase in revenue from the tax on diesel, which is primarily paid by the commercial trucking industry. View revenue chart.
These truckers, hit by tough economic times, cut expenses significantly. Sales of new rigs plunged in 2008. That caused a $2.4b drop in revenue from the 12 percent tax on the retail sales of trucks and trailers. An accounting change in the way kerosene and similar taxes were transferred ended up showed a paper loss of $722m from the fund. Together these factors, which are unrelated to the number of vehicle miles traveled (VMT) in 2008, accounted for the $3b drop in trust fund revenue.
“The US DOT misused that data to suggest the federal motor fuels tax can no longer finance federal investments in highway and mass transit improvements,” ARTBA Vice President William Buechner said. “The data in fact suggest that the federal motor fuels taxes can remain a viable source of revenues for highway investments for the foreseeable future. The trust fund’s real problem is not the decline in VMT, but rather the economic slowdown and the fact the federal motor fuel tax rates have not been changed since 1993.”
TheNewspaper has previously reported that gas tax revenues have not plunged at the state level. In Virginia, for example, fuel tax revenues were up 2.6 percent in fiscal 2008 (more). Motor carrier fuel tax receipts likewise increased in Illinois (more). At the same time, overall traffic has plunged on toll roads forcing huge increases in the tolling rates to prevent a loss in profit for private investors (more).
I love how every sector of our society now responds to every economic change as permanent. Remember when oil was $140 a barrel and we were going to stop using gas and buy windmills and ethanol was the way to go. The hew and cry of the new permanent change to our society. Now oil is $40 a barrel, ethanol is dead, T Boone Pickens can’t scrape a dollar together for a windmill and small cars are dead (again).
If anything, the wild swings in the economy should be showing people that we need to be ready for whatever, not continually plan our future as if the present circumstances will hold for ever.
So now we have the gov’t telling us they need a new tax because the old tax isn’t working. How about an array of smaller taxes so the revenue stream is constant despite changing circumstances?
Tax oil at the producer level as a % of the barrel price, where the % would fall as the price rises. Tax either the CO2 an engine produces or the engine size to encourage smaller engines, tax over the road shipping based on the miles driven (would have the dual function of encouraging local production of goods as well as charging for the actual use of the roads.
Tolls are a dumb idea. They employ too many people as collectors (cutting into the profits), slow down traffic and cause accidents.
“Tolls are a dumb idea. They employ too many people as collectors (cutting into the profits), slow down traffic and cause accidents.”
See Highway 407 in Toronto. All electronic with no toll boths.
http://www.407etr.com/
See Highway 407 in Toronto. All electronic with no toll boths.
Exactly. That’s what Big Brother really wants. It would be simple enough to ratchet up the gas tax (which is arguably sound tax policy anyway), but with universal electronic tracking the govt. can keep tabs on us under the guise of raising revenue. Building toll roads is one thing, but assessing tolls on existing roads is bullshit.
Strippo:
My thoughts exactly. That would be a great way to get me never to drive again – attach a Big Brother device to my car to monitor my every move.
The real motivation behind the current government’s drumbeat for toll roads is their ongoing push to privatize everything. Fold, spindle and mutilate all available facts in support of the real agenda. That is what you are seeing here. Conservative Republican dogma says everything should be privatized except the military, and even its sub-operations should be outsourced as much as possible (see Blackwater, Halliburton, et. al.)
Less than a month of these bozos left. Hopefully they haven’t been too effective at burrowing in their ilk.
Mary Peter has been angling for a job at the private infrastrutucte company for about two years. She’s been predicting the “collapse”of gas tax revenue and advocating tolls.
Someone should tell her the age of private infrastructure is over. With $850 billion in Obama money I don’t see the majority of that being used for toll roads.
Here is a question I want an answer to.
Did Mary Peters knowingly speak about this drop in gas tax, preaching for tolls, and willing forgot to tell us to REAL reasons for the lower revenues?
Mary, are you just another dirty politician?
“Building toll roads is one thing, but assessing tolls on existing roads is bullshit.”
Highway 407 was purpose built as a toll road to relieve congestion on the existing Highway 401 through Toronto. Expensive, but it works. I routinely cruise at 110 km/hr or faster during rush hour.
dwford:
There are public road alternatives, just don’t expect congestion free travel during peak times. BTW – I pretty much agree with your comments on a variety of smaller taxes, especially with a floating tax on oil. Highway 407 wasn’t built as a tax scheme but to cover the cost of a new highway through Toronto. Too bad the previous Conservative government sold it to a private consortium who began jacking up tolls. OTH – it does keep the highway uncongested if one can afford the 18 cents per kilometre charge.
Those who have seen “the fifth element”, a bruce willis over the top sci-fi, might recall how he has to swipe in his Driver’s License. At some point, he breaks a law and tickets issue from the dashboard.
The real problem is that the planners have this great “Intelligent Highway System” where they can monitor, control, and in some alternate reality, make more efficient our nation’s roads.
That’s their idea.
What we will see is Congestion Pricing, Tolls in places they didn’t exist, and eventually automated in car traffic enforcement. Your moves will be Discoverable in Legal Proceedings, if not “public record” by virute of the public nature of travel. In Australia, they are experimenting with “intelligent speed adaptation” which means a “speed governor” courtesy of the State. (AU is also trying to censor the internet, but that is whole other story)
The problem is that they can’t come up with a way to force everyone to go with the transponders and such needed to make this a reality. NYC already has the over highway structures in place, and the towers for the microwave links.
The only way that they can do this is to make it a financial imperative. Expect this aimed at truckers first, probably with “safety” as the reason. Once it is up and running with our commercial drivers, then the pot gets a bit hotter, but the frogs (us) don’t jump out.
GM already has a “stolen car shutdown” in some of the newer onStar cars. Expect this sort of thing to spread, all for “the children”, etc, but with the long term goal of your car being under official control and monitoring.
Remember that the only reason communism failed is because the invention of the microchip came 25 years too late.
Great, charge tolls on all the roads, that way everything that gets shipped by truck will increase in price as the costs get passed down to the consumer. However, if I worked for the railroads I’d be paying lobbyists to go to Washington to get more roads turned into privately owned toll roads.
Sounds like the system is working fine to me. Less driving means less road maintenance needed.
Then just raise the gas tax a bit, duh!
John
However, if I worked for the railroads I’d be paying lobbyists to go to Washington to get more roads turned into privately owned toll roads.
To Usta Bee: Both the railroads and the truckers (American Trucking Association) (http://www.truckline.com/Pages/Home.aspx) fund huge lobby installations in Washington D.C. They routinely attack and sabotage each other with great veracity.
By the way, the ATA has NEVER seen a truck that is too long, too wide, too high, or too heavy for our streets.
53-foot trailers that are unable to turn a normal corner, heights that are causing billions of dollars to be spent on increasing overpass clearances, elimination many of the trailer lights, and blocking all “splash and spray” legislation are just a few of their “victories.”
«Then just raise the gas tax a bit, duh!»
No need to.
Per USDOT data, 38% of the 18¢/gallon is “flexed” (read:diverted) away from the Highway Trust and into mass transit and other projects.
If these people really wanted to maintain our highways, they would simply siphon, err… “flex”, less dollars to their pet projects.
– * –
I used to link to the actual Department of Transportation slides that show this, but the moderators keep deleting these links.
Simpler solution: End both federal fuel taxes and the federal highway fund and return responsibility for highways back to the states. States could then increase their fuel taxes by the amount the federal government used to collect and have more than enough money for roads and bridges. Never understood why two separate layers of government bureaucracy were needed to maintain roads and bridges.
The real motivation behind the current government’s drumbeat for toll roads is their ongoing push to privatize everything.
The public-private partnership building the upgraded Route 28 here in Virginia has been on-time, under-budget, and much quicker than the all-public Woodrow Wilson Bridge construction. Your scare stories about privatization don’t really affect me.
The Newspaper does its own job of misreprenting the linked article about toll roads. At the same time, overall traffic has plunged on toll roads forcing huge increases in the tolling rates to prevent a loss in profit for private investors.
The linked article was written in August, when traffic on all roads was down 5.6% from a year earlier. We’ve had the largest decline in traffic in decades on all roads, the largest since the previous two gas crises. The article mentions declines in Massachusetts of around 10%– but all rural arterial roads in Massachusetts showed a 12.6% decline in vehicle miles traveled.
The Newspaper is at least as dishonest as what it’s criticizing. It’s pretending that toll roads, seeing traffic declines similar to public highways in a time of high gas, are seeing those declines solely because of tolls. Yes, the toll road operators are losing money because people are driving less, but people are driving less overall.
It’s interesting to me that the truckers cut purchases of new rigs so sharply, yet their total tax on diesel paid increased. Wouldn’t you think that since so many fewer rigs were sold, there’s a chance that future diesel tax payments could decline? It’s also interesting to me that the truckers believe that there’s nothing wrong with truckers paying an increasing share of fuel tax, with gasoline tax declining but being overcome by diesel tax increases. They find nothing wrong with that?
John Horner,
Hey, I just got back from a meeting of the vast conservative conspiracy, and there was no large agreement on the “privatize everything” plank.
The real push for this idea is coming from a bunch of Reagan repubs that really don’t get it. All they know is that government is bad, inefficient, and less is better. Thus they are trying to push the pendulum the other way. The subtleties are lost on this group.
Tax oil at the producer level as a % of the barrel price, where the % would fall as the price rises.
At the producer level? You do realize that the US can’t tax the foreign operatins of foreign companies, right? The only effect of such a “producer tax” would be to decrease oil exploration inside the US, and to cause US oil companies to sell their foreign operations to Royal Dutch Shell, Total Fina Elf, and other non-US companies. It’s rare that you see a proposal so intent on the opposite of the chimerical “energy independence,” one that would encourage us to import more oil from other countries and from non-US companies.
Higher gas taxes make sense. Phase them in over time, use a chunk of the initial revenue to fund vehicle replacement for low income drivers (based on reverse income tax principles) and build the tax up over 12-24 months incrementally. We’ve already shown we can survive $4 gas, using taxes to raise the price back to $2.50 wouldn’t kill us all.
This is an interesting thread, full of strong beliefs…
I know quite a few people in the transportation world. Some basic facts are: 1) wear on roadways is roughly proportional to miles driven. 2) increasing gas mileage reduces funds available per mile. 3) the gas tax hasn’t been adjusted for inflation for years 4) we’ve been systematically underinvesting in maintenance for years 5) our initial capital investments in roadways has been first-cost instead of lifecycle cost driven (e.g., we don’t build up the base layers for durability).
So we structurally have a funding problem for the roads….we need to have some way to invest more either through taxes or tolls or something. Or we just let the roads keep deteriorating.