By Keith Laing
The American Road & Transportation Builders Association (ARTBA) is defending its proposal to increase the federal gas tax by 15 cents per gallon to help pay for infrastructure improvements amid GOP opposition.
Republican lawmakers in Congress have ruled out asking drivers to pay more at the pump, even as they struggle to find a way to pay for an extension of transportation funding that is currently set to expire on July 31.
ARTBA President Pete Ruane said in a letter to the leaders of the House Ways and Means Committee on Wednesday that a gas tax hike would only add a small amount to the cost of filling up for drivers and would generate $400 billion that could be used to pay for a long-term transportation bill.
"Over the last seven years, our presidents and the Congress have added more than $50 billion in debt to cover current year highway and transit program expenses. That is so unfair to the next generations of Americans in many ways," he wrote.
"A 15 cent increase in the gas tax, which would restore the user pays principle and cost the average motorist less than 25 cents a day, would end this morally bankrupt cycle of dumping more and more debt on our children and grandchildren to pay today’s highway and transit bills,” Ruane continued.
With the July 31 deadline looming, lawmakers are deadlocked on how to pay for an extension of current infrastructure funding.
The federal government's transportation spending is typically funded by a combination of the gas tax and transfers from other areas of the budget.
Republican leaders in Congress oppose increasing the gas tax, even as they complain about the transfers from other parts of the federal budget.
"Ever since we built the Interstate Highway System, we’ve had a simple principle: 'user pays.' The people who use the highways should pay for the highways — so far, mostly through the gas tax," Ways and Means Committee Chairman Rep. Paul Ryan (R-Wis.) said during a hearing last week.
"The problem is, the current 'user pays' system just doesn’t pay enough" Ryan continued. "Ever since 2008, the trust fund has spent more than it took in. And the reason is simple: People have been using less gas. They’re driving more fuel-efficient cars. You get a lot more miles to the gallon than you used to. And so gas just doesn’t track use as well as it used to. And we can’t just chase fuel efficiency with higher taxes."
The gas tax, currently 18.4 cents-per-gallon, has been the traditional source of transportation funding since its inception in the 1930's. But the tax has not been increased since 1993, and improvements in auto fuel efficiency have sapped its purchasing power.
The federal government typically spends about $50 billion per year on transportation projects, but the gas tax only brings in approximately $34 billion annually.
The Congressional Budget Office has estimated it will take about $100 billion to close the gap long enough to pay for a six-year transportation funding bill, which is the length sought by the Obama administration and transportation supporters.
Ruane said Wednesday that Congress has played a bigger role in creating the transportation funding shortfall than improvements in auto fuel efficiency have.
"The real and substantive reason why the HTF [Highway Trust Fund] has a cash flow problem is that in 2005, 218 House Republicans and 198 House Democrats voted to enact annual highway and transit program authorizations... that exceeded the revenue stream into the HTF," he wrote.
Ruane noted that they did the same in 2012. "These authorizations were also endorsed by very substantial votes in the Senate and signed into law by Presidents Bush and Obama, respectively," he said. "While annual highway program funding has been cut by $800 million from its FY 2011 level, the fact is, Congress has chosen not to match the HTF outlays with incoming revenue."
A panel of lawmakers in the Senate on Wednesday approved a plan to spend $275 billion on the nation's roads over the next six years, but Congress still has to find a way to pay for it.
Ryan has said he would prefer an alternative plan that would tax overseas corporate revenue to pay for a long-term transportation bill instead of increasing the gas tax. The proposal, known as "repatriation," calls for giving business a reprieve from penalties for avoiding prior taxes if they agree to move money back to the U.S. and pay a 6.5 percent tax rate on it.
The Obama administration has also embraced repatriation but the president argues tax on overseas profits should be mandatory and collected at a higher rate.
Ruane said Wednesday that nearly doubling the gas tax is the still the easiest solution to the transportation funding problem, however.
"Treasury could being collecting additional revenue from a rate adjustment as soon as Congress and the president give it statutory authority to do so," he wrote. "It could even begin on August 1, 2015. It would be like flipping a light switch."