The way we currently fund our transportation system is falling short in many ways. MIT researchers anticipate electric vehicles will account for 50% of the national fleet in 15 years and 80% by 2050, which means gas tax revenues will decline by around 30% in just 14 years. Their new study, Replacing the Gas Tax, offers a useful lens for evaluating the alternatives.
From flailing transit systems to inadequate maintenance, states throughout the country are struggling to adequately fund their transportation infrastructure. Making the problem more difficult is the fact that one of their primary funding mechanisms, the gas tax, is failing to cover added costs. Due to projected revenue decline from increased fuel efficiency and EVs, the political aversion to raising the tax, and looming fiscal cliffs, some state legislatures are beginning to consider how to supplement gas tax revenue to sustainably fund their transportations systems.
Subsidies are common across transportation modes, but it’s useful to have the numbers. A recent report by the Tax Foundations, updated data on the portion of roads paid for by travelers and shippers—fuel tax, tolls, and other user fees—by state. The figures range from 12 percent in Alaska to 76 percent in Hawaii, based on fiscal 2014 figures. The report does not give a national figure, but a previous version estimated user fees cover just 50 percent of road costs.
The Mineta Transportation Institute has released its seventh annual survey report of public opinion on a variety of tax policies for funding transportation. Over the years, support for transportation taxes—with the notable exception of a flat rate mileage tax—has grown across demographic groups. However, those who drive the most were the least likely to support user fees. The study found support for a new tax or fee was highest if the new revenue went to maintaining existing streets and highways or if the revenue was dedicated to improving safety.
A recently published study from two Michigan State University sociologists found that the telling factor for whether an increased gas tax would be supported by the public was how the justification for the increase was presented. Their suggestions for framing the reasons for an increase are based on research on “fear appeal.”
The first program to charge a per-mile fee to drivers will launch July 1 in Oregon. Although beginning with only 5,000 volunteers, the program will continue to expand as an alternative to reliance on the gas tax. Three payment and processing options have been authorized for participants.
Many states are facing the same challenges as the federal government, with decreasing buying power from gas tax collections and little political support for raising the tax. Oregon has decided to take steps to circumvent the transportation funding cliff by implementing a pay-per-mile program that will launch in July 2015. A new report by ODOT describes Oregon’s evolving pay-per-mile fee.
Flat-to-declining highway transportation demand has been with us for about a decade, and consensus is building for the position that it is not a historic aberration but rather a durable trend. A roundup of recent VMT-related news.
The Washington Roundtable, a group comprising many of the state’s largest businesses, is urging passage of a nine-cent increase in the fuel tax. What’s most interesting about the proposal, however, is not the revenue ask, but where the group wants the money to go: for major increases in operations and in system preservation.
In the post-Interstate-building era, questions about the role of the federal government in funding surface transportation have become more common. Most of these arguments have come from conservatives. A new call for eliminating the federal role comes from a different perspective, though—a green one.