The gap between the investment needed for U.S. transportation infrastructure and the available taxpayer funding continues to grow. And neither Congress nor the White House has not gotten significantly closer to solving this problem. A new report from the University of Michigan’s Transportation Research Institute (UMTRI), released just 2 months before the latest temporary Congressional funding patch for transportation is set to expire, provides further evidence that the federal funding transportation pool will continue to shrink unless Congress takes action.
Navigant Research has been writing about the problem of the Shrinking Gas Tax Fund for many years. Created by Congress in the 1950s, the fund was set up to pay for transportation from direct taxes, rather than from the general Treasury. The current tax rate of 18.4 cents per gallon was set in 1993, 22 years ago. Congress and the White House are loath to propose raising the gas tax, which has long been the third rail in American politics. Today, unfortunately, the drop in gasoline consumption combined with the shrinking purchasing power of 18.4 cents per gallon has made the unthinkable closer to becoming reality.
Mainstream business groups have proposed raising the gas tax, and the Republican leader of the Senate Transportation Committee, John Thune, said that raising the gas tax would be on the table for the current Congress. The head of the Senate Environment and Public Works Committee, climate change denier James Inhofe, agreed with that statement.
As of the end of March, though, there was still no clear legislative pathway to raising the gas tax. The UMTRI report should set off alarm bells in Washington about the future of the Highway Trust Fund. The report points out that U.S. gasoline consumption has been dropping steadily since well before the 2008 recession. From 2004 to 2013, fuel consumption by light duty vehicles in the United States dropped by 11%. The report’s author, Michael Sivak, also noted that the U.S. passenger car population has decreased since 2008, which could be considered an artifact of the economic downturn, or a foretaste of millennials’ mobility habits.
This data confirms reports about the shift in attitudes about car ownership among millennials that have been widely reported, albeit mostly anecdotally. A 2013 U.S. PIRG report found that there is a permanent change in expectations about how to get around–with driving seen as just one of many options that millennials regularly use. And increasingly stringent fuel economy standards are likely to further reduce total gasoline consumption.
Unfortunately, the White House’s proposal for the new transportation bill does not include a gas tax increase, so it will be left to Congress to determine whether the time is finally right to increase the rate–or find a new mechanism to pay for the maintenance and improvement of U.S. transportation infrastructure.
Tags: Clean Transportation, Finance & Investing, Policy & Regulation, Transportation Efficiencies
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