During a recent CNN town hall, Democratic presidential candidate Sen. Elizabeth Warren, Massachusetts Democrat, indicated that she was not in favor of a gasoline tax increase but gave no specifics on an alternative to fund improvements to our nation’s well-worn infrastructure.
Ms. Warren is right to be wary of endorsing a gasoline tax hike. Proposing one has been political poison for many politicians over the years; so much so, in fact, that the federal rate hasn’t changed since 1993. Even at the state level, any proposed change is inevitably subject to pushback and debate.
However, our nation’s highways are consistently underfunded and, as a result, are congested and crumbling. Even President Donald Trump understands how urgent this issue is. (How many times has it been “infrastructure week” since he took office?)
Looking to 2020, candidates should consider two solutions to shore up our infrastructure that do not involve a gasoline tax increase: in the short term, using the U.S. Treasury’s general funds to supplement funding shortfalls and, in the long term, replacing the federal gasoline tax with a “vehicle miles traveled” (VMT) fee.
Every time you fill your car with gasoline, 18.4 cents per gallon goes into an account at the Treasury Department called the Highway Trust Fund (HTF). The Highway Trust Fund bankrolls important highway improvement and maintenance projects, as well as some mass-transit projects. Yet since 2008, the U.S. Treasury has repeatedly had to bail out the the Highway Trust Fund. As cars have become more fuel-efficient and lawmakers have not adjusted the gasoline tax for inflation, the HTF ends up with less and less money every year. At this point, the Highway Trust Fund is scheduled to (again) run out of money in 2021.
An empty highway account has consequences. Americans are driving more than ever, and the number of miles driven by trucks is sitting at near-record highs. As a result, our highways are taking more wear and tear than ever before. If we can’t maintain our roads, our economy will suffer.
This is a complicated problem to fix, but it is not a problem we can run from forever — our roads and highways can’t fix themselves (yet). In the short term, Congress needs to own up to what it’s been doing since 2008: Supplementing the Highway Trust Fund with funds from general revenue. This will solve the immediate problem of the HTF going broke in 2021, but it isn’t a permanent solution. If the gasoline tax remains at the same rate, the transfers from the general fund will need to increase over time. Another less-than-desirable option is paring back federal highway spending by doing things like devolving more interstates to state highway authorities, which are loathe to take on new unfunded structures to maintain.
A fairer, more long-term way to fund our highways and mass transit exists: It’s called a vehicle-miles traveled (VMT) fee. Rather than charging a fee for every gallon of gasoline purchased, drivers would pay based on how many miles they drive. Several states, including Oregon and Washington, have experimented with this model and have seen promising results. In addition, this approach would prevent the problem of declining revenues as fuel efficiency continues to increase.
This idea isn’t without its critics, of course. Those against a vehicle-miles traveled fee have raised concerns about privacy and how the money would be used. These are legitimate issues, but not without relatively simple solutions. A VMT device should never track where or when a person is driving — it should only transmit the distance driven (Oregon’s system works this way). Additionally, any funds raised by way of a vehicle-miles traveled fee must be subject to a strict requirement that they are only used on infrastructure projects.
Right now, the debate about infrastructure and gasoline taxes at the national level is stagnant. Politicians on both sides agree that infrastructure is critical to our nation’s economy, but most don’t have the courage to take a stand on increasing the gasoline tax. The good news for the 2020 crop of presidential candidates is that they don’t have to; they can have their infrastructure without a gasoline tax increase if they look to a vehicle-miles traveled fee.
Image credit: vincent noel