Show Me the Money

Show Me the Money

by Cliff Lynch
20. February 2014 08:55

With the current transportation funding legislation due to expire in October of this year, Congressional and industry leaders are beginning to mull over how it will be replaced. There is no disagreement that the country's infrastructure is in a serious state of deterioration. The big question is how improvements will be funded; and so far, Congress has not been able to reach a consensus on a viable answer. The American Society of Civil Engineers has estimated that an investment of $2.7 trillion will be needed by 2020 in order for the country to stay competitive. There is no way that any plan can generate that kind of funding; but at a minimum, $50 billion annually will be required to fund critical projects. The Highway Trust Fund is predicted to have a shortfall by August.

The most obvious answer is to increase the fuel tax. First levied in 1932, the fuel tax is the primary source of revenue for the Highway Trust Fund. These taxes of $.184 on gasoline and $.244 on diesel fuel, however, are woefully behind the rate of inflation and have not been increased since 1993.

On February 12, Tom Donohue, president of the U.S. Chamber of Commerce, recommended to Congress that the tax be increased by 15 cents per gallon over the next three years, chiding the Senate committee to, "For once let's do what is right, not what is politically expedient." The same day, Representative Earl Blumenauer (D-Ore.) introduced a bill that would increase the gasoline tax to $.334 on gasoline and $.428 on diesel fuel.

The whole issue of course, is a political minefield, with which Congress hasn't dealt for over twenty years. The House Transportation and Infrastructure Committee Chairman doesn't believe Congress will support such an increase again this year. The states also levy fuel taxes averaging $.335 on gasoline and $.243 on diesel, and as Congress continues to kick the can down the road, they are enacting their own increases to pay for infrastructure improvements the federal government won't fund. Congress is right about one thing – many voting drivers no doubt will push back.

Some members of Congress have suggested that they abdicate their responsibility and have the federal government just turn the whole thing over to the states. Whatever the solution – private funding, tolls, tax increases, etc. – it is absolutely critical that Congress does not let the can be kicked any further. It is past time to act responsibly in spite of the political pain.

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