Traveling the open road may soon cost you
WELCOME, WHERE’S YOUR MONEY: Thoroughfares, including Interstate 20, i-59 and I-10 in Mississippi could have toll booths if a White House transportation bill passes, opening the way for tolls on America’s interstates.
By Steve Wilson | Mississippi Watchdog
Have your spare change ready.
States may soon have the option of placing toll booths on interstates, should a $302 billion transportation bill from the Obama administration pass.
“I would predict that would be extremely unpopular,” said Dick Hall, the Mississippi Central District transportation commissioner.”But it may happen.”
CHA-CHING: If a White House transportation bill is passed, tolls could be popping up on the nation’s interstates.
Why would states do such a thing? Would it be so bad?
“I definitely wouldn’t be in favor of it,” said Brandon resident Sam Kim. “It reminds me of when the price of gas jumped to $3.50 a gallon after Hurricane Katrina. It’s something that we have to use every day, and the thought is we’ll eventually get used to it.”
With the federal Highway Trust Fund in fiscal tatters, states might be left with little choice to continue funding road construction and maintenance. In fact, the trust fund won’t completely cover highway spending in 2015, according to the Congressional Budget Office.
If a transportation bill passes by July, federal money for highway projects dries up and planning for new capital construction becomes a chaotic mess — a veritable 20-car pileup.
States provide the highway money and are subsequently reimbursed. That’s how it works now, anyway.
“If it goes broke in July or so, they’ll have to reduce our reimbursement,” Hall said. “We don’t know if they’ll reduce it to 90 percent, 75 percent or whatever. It becomes very difficult for us to project what we can build on in the next few months and what we can’t without getting any guidance from Washington. This is the prime time for construction.”
Mississippi stands to lose $498,547,291 in federal highway funds in 2015, according to a report by Transportation for America. The state gets 64.8 percent of its highway money from the federal government.
Transportation for America, its website says, ”is an alliance of elected, business and civic leaders from communities across the country, united to ensure that states and the federal government step up to invest in smart, homegrown, locally driven transportation solutions — because these are the investments that hold the key to our future economic prosperity.”
If you ask Chris Edwards, the director of tax policy at the libertarian Cato Institute, having more local control is a good reason to transfer funding responsibility to the states. He testified before Congress this week about highway and transit funding.
“What would the average Mississippi person on the street say? When you pay your gas taxes at the pump, should those dollars stay in Mississippi to fix our roads, or should they go to Washington with some of it coming back to us?” Edwards asked.
“Washington isn’t Santa Claus. All the federal money comes from taxpayers who live in the states.”
Federal highway spending for fiscal 2015 is $45 billion — against $33 billion in projected tax revenue. Eighty-seven percent of the trust fund’s revenue comes from the 18.4 cent per gallon tax on gasoline and 24.4 cents per gallon tax on diesel. By 2024, if spending and revenue remain constant, the trust fund goes $120 billion in the red.
What follows are solutions to fixing the problem, all of which — one way or another — would involve a new tax:
- Cut federal highway spending and transfer the burden to the states
- Shift money from the treasury general fund
- Raise the gasoline tax
- Enact a vehicle miles traveled tax
Let’s take a look at the options.
Cut federal highway spending and transfer the burden to the states
Cities and states spend more on highways than the federal government. Government at all levels spent $155 billion to build, operate and maintain highways, with $110 billion coming from city, county and state governments — and the rest from the federal government.
Shift money from the treasury general fund
Since 2008, Congress has transferred $54 billion to the trust fund from the Treasury’s general fund to cover shortfalls, according to the CBO. Cars and trucks are getting more miles per gallon, so spending has increased and collections have flat-lined. Congress has filled that breach with money from the general fund. The trust fund would need $18 billion transferred in 2015 and between $13 billion and $18 billion every year for the next decade to remain solvent, adding to already ridiculous federal deficits.
Raise the gasoline tax
Hall doesn’t see raising the gas tax as a reasonable solution.
“The gas tax, over the years, has been one of the fairer taxes because it’s based on the fellow who uses it pays for it,” Hall said. “It’s a user-pays tax. An immediate increase in the gasoline tax would solve immediate problems.
“But that’s not the solution and we’ve got to find something else. That’s why this VMT is starting to get some serious conversation in Washington. It makes the guy driving the hybrid car and the electric car pay like the guy driving the gasoline automobile. Something like that is what we’re going to have to go to.”
Vehicle Mileage Tax
A VMT, according to a CBO report released in 2011, can be employed in several ways, including telemetry equipment installed in vehicles, equipment installed at gas pumps or, more simply, toll booths. A vehicle-mounted VMT system would relay information on miles traveled to government monitoring station.
Critics rightly worry about the cost of infrastructure needed to service such a system, and there are privacy concerns, as well.
“Raising revenue through the gas tax is still the best and most efficient way to fund highway projects,” said John Bowman, communications director of the National Motorists Association. “The systems to do so are already in place and work well. Toll roads and other revenue-generation schemes like a vehicle miles traveled tax require huge upfront investments, create costly and inefficient bureaucracies and require intrusive technologies to sustain.”
Contact Steve Wilson at swilson@watchdog.org
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