Raising Revenue to Fix the National Infrastructure Deficit

December 9, 2013

By Leslie Wollack

Oregon Congressman Earl Blumenauer recently introduced two proposals to provide a fix for the nation’s “infrastructure deficit” by raising additional revenue from drivers.  One proposal would increase the federal gas tax by fifteen cents over three years and index the gas tax to inflation.  The current 18.4 cents per gallon tax has not been raised since 1993.   

Joined by the U.S. Chamber of Commerce, AFL-CIO and representatives from the construction industry, Rep. Blumenauer introduced the Update, Promote, and Develop America’s Transportation Essentials (UPDATE) Act that would phase in the tax increase on gasoline and diesel fuel over three years.  

“Today, with inflation and increased fuel efficiency for vehicles, the average motorist is paying about half as much per mile as they did in 1993. It’s time for Congress to act,” said Blumenauer.  

Rep. Blumenauer noted that Congress has continued to shift $50 billion in funds from the Treasury to pay for transportation programs as gas tax receipts have fallen. “In order to maintain current funding in the following years, the Highway Trust Fund will need almost $15 billion a year in addition to current gas tax receipts. Continuing down the current path will mean a 30% drop in federal transportation spending by 2024. The UPDATE Act would raise around $170 billion over ten years.”

The second proposal from Rep. Blumenauer would expand a pilot program instituted in Oregon to let states experiment with charging drivers a fee for using the roadways – the so-called vehicle miles traveled (VMT) fee. The experiment in Oregon has proven successful and several other states are looking into it as well. However, the VMT proposal faces many challenges, including a House proposal last year that would have barred the U.S. Department of Transportation from spending federal funds to implement a vehicle miles traveled program.  

According to the Congressional Budget Office, the U.S. would require over $100 billion over the next 10 years just to maintain current highway spending levels. House and Senate transportation leaders will face the transportation funding shortfall early in the new year, as they try to come up with a plan for the successor to the current federal transportation program, MAP-21, when it expires in September, 2014. 

States and local governments are not waiting for the federal government however; many have been raising their own transportation fees. Six states enacted legislation to raise transportation funds in 2013. Virginia instituted a wholesale percentage tax on petroleum products estimated to provide $3.4 billion over five years for transportation programs. 

Many local communities approved tax increases to support transportation this November at the ballot box.  Voters adopted a total of 21 measures in 12 states, from California to Maine to fund local transportation programs. With a success rate of 73 percent, voters across the country chose to increase a range of revenue-generating mechanisms, including sales, property and gas taxes to provide public transportation in their communities. Michigan voters supported property tax measures for public transportation and Orange County, N.C. approved a half-cent sales tax for transit. Voters in Michigan, Ohio and Maine also rejected efforts to eliminate local transit service.