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Moving Away From The Gas Tax

Moving Away From The Gas Tax. Price Armstrong Program Manager Massachusetts Bicycle Coalition. Presentation Structure. My Train of Thought Gas Tax as User Fee General Fund Contributions Public Goods Politics of the Gas Tax Potential Models. My Train of Thought.

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Moving Away From The Gas Tax

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  1. Moving Away From The Gas Tax Price Armstrong Program Manager Massachusetts Bicycle Coalition

  2. Presentation Structure • My Train of Thought • Gas Tax as User Fee • General Fund Contributions • Public Goods • Politics of the Gas Tax • Potential Models

  3. My Train of Thought • 2010 TRB Finance Conference • Bill Ankner in the “Provocateur” session • Description of TransLink funding structure

  4. Gas Tax As User Fee Short History 1919 – Oregon institutes the first gas tax 1932 – Federal government institutes a gas tax for the purposes of deficit reduction 1956 – Federal Aid Highway Act dedicates the gas tax to the highway trust fund 1982 – “Transit Account” created, receiving $0.01 of the gas tax 1990 – Under the Omnibus Budget Reconciliation Act (OBRA), the gas tax was increased with half of it going toward deficit reduction 1991 – ISTEA passed, broadening the potential uses of gas taxes to fund transportation projects 1993 – OBRA again raised the gas tax to the $0.184 that still exists today Today – Gasoline and diesel taxes account for 90% of federal highway funding and 80% of federal transit funding.

  5. Gas Tax As User Fee Short History

  6. Gas Tax As User Fee

  7. Gas Tax As User Fee • 1982 - Ronald Reagan raised the gas tax by five cents. He said, “Our country's outstanding highway system was built on the user fee principle—that those who benefit from a use should share in its cost.”

  8. General Fund Transfers • The Highway Trust Fund has received multiple general fund transfers over the past few years: • 2008 - $8 billion • 2009 - $7 billion • 2010 - $19.5 billion • MAP-21: ~$20 billion

  9. General Fund Transfers • GAO Report 2011: “All States Received More Funding Than They Contributed in Highway Taxes from 2005 to 2009”

  10. General Fund Transfers • Potential solutions to the struggling trust fund: • Raise the gas tax • Raise other taxes • VMT fees • New tolling • Innovative financing • - PPPs • - Infrastructure Bank • Reduce funding • Cut programs OR

  11. General Funds - Public Goods • Public Health • Environment • Equity • Economic Resilience

  12. Public Goods – Public Health • Obesity has overtaken smoking as the #1 cause of death in the US • Obesity cost $147 billion in 2008

  13. Public Goods – Environment • Climate Change • Hurricane Sandy may cost $50 billion

  14. Public Goods – Environment • Air Quality • After I-405 closed for three days in LA, air quality almost immediately improved • Ultrafine particulate matter dropped 83% • Larger particulate matter dropped 36%

  15. Public Goods - Equity • On average working class families pay 60% - 70% of their income on housing and transportation.

  16. Public Goods – Economic Resilience • High gas prices were correlated with higher foreclosure rates in 2008 • Rationale for “Location-Efficient Mortgages”

  17. Politics Of The Gas Tax • Of American voters: • 71% oppose increasing the gas tax • 58% oppose replacing the gas tax with a VMT fee • 64% oppose adding new tolls

  18. Politics Of The Gas Tax • American Energy and Infrastructure Jobs Act • Eliminated long-term transit funding • Eliminated most bike/ped funding

  19. Politics Of The Gas Tax • 2010 – Greg Cohen, CEO of American Highway Users Alliance, wrote, “I’m always amused when advocates of non-highway modes and other direct beneficiaries of motorist fees, earnestly and seriously sit before Congressional committees, declaring their support for increased user fees on motorists and truckers. Even more amusing is the common response, ‘How big an increase do you want?’”

  20. Potential Models Status Quo, with more money • Raise the gas tax, maintain the HTF • Formula funding for highways • (Mostly) competitive grant funding for transit • Myriad smaller programs with dedicated funding

  21. Potential Models All User Fees (Multiple Trust Funds) Figure out what it would cost to maintain the systems and then price the fees accordingly: Example: Highways – Fuel tax or VMT fee Transit – Fare surcharge Bike/Ped – Tire/shoe fee

  22. Potential Models All Dedicated Funding #1 Figure out the tax model, and the formulas for funding the various modes: Example: Highways – 78% Transit – 20% Bike/Ped – 2%

  23. Potential Models All Dedicated Funding #2 Figure out the tax model, and the criteria for funding transportation projects: Example: • Mobility Improvements • Air Quality Improvements • Reduction in GHG emissions • Promotion of Smart Growth • Promotion of Active Transportation

  24. Potential Models Status Quo #2 Let the gas tax dwindle, and the General Fund contributions increase. However, allocate General Fund contributions based on performance criteria.

  25. Questions? Price Armstrong Program Manager Massachusetts Bicycle Coalition Price@MassBike.org (617) 542-2453

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