Wednesday, September 28, 2011

Why Aren't Gas Taxes Taking Care Of Our Crumbling Transportation System

For decades, each of our state and federal governments have been collecting gasoline taxes to help build new roads and bridges; and, at the same time, repair or replace those that are in disrepair. Yet, we continue to hear -- in so many recent Obama tax-the-rich speeches -- that we have hundreds of roads and bridges that are simply crumbling due to neglect. So, what gives?

Obama is right. The problem is neglect. But, the neglect has been caused by one Congress after another (and by some state legislatures too) by not putting into place a fuel tax that increments itself each year so that increased costs for road/bridge construction/repair are gradually addressed over time. Instead, every time the gasoline tax needs to be raised, it has always to be done on a one-off basis and at a time when funds have fallen to a critical level; resulting in the possibility of "sticker shock" at the local gas pumps.

The last time the federal gasoline tax was raised was in 1993 when it was set at 18.4 cents per gallon of gasoline (24.4 cents for diesel). Since that time, all the costs associated with building and maintaining this nation's transportation system have logically gone up. Many studies have been conducted over the years to determine what the tax should be today, and by most accounts, that 18.4 cent tax should have been raised to at least 40 cents per gallon by now. All too often, for political reasons, the gasoline tax increases are ignored because raising it would cause that "sticker shock" I mentioned and because it would disproportionately hurt the working poor. So, as a consequence, our complete transportation infrastructure suffers while our lawmakers avoid telling the truth to the country.

But, the funding problems don't stop there. Another problem with the federal fuel tax is that our U.S. Treasury prefers to directly collect those taxes and, then, distribute the funds as federal projects. This way, all these federally-funded projects fall into the federal work rules for road and bridge construction. Once such rule, the one that comes from the recession-era 1931 Davis-Bacon Act, requires that all workers on federal projects be paid the prevailing wage; or, in other words, a union wage. Because of this, all too often, road and bridge work is done at the highest possible cost for labor; thereby reducing the overall funds available and, subsequently, the amount of work that can be done. Additionally, like all money being collected by the federal government, 40% of federal tax money must be diverted to payoff the recurring national debt. The states would be better off collecting the taxes themselves and directing the work as state-run projects; avoiding federal work rules. Then, when needed, forward a percentage of those taxes to the federal government to fund any fed-only kinds of work.

It seems that, whenever you dig into some kind of problem facing our country, political fingerprints are all over it. Mr. Obama would be better off revising how we collect and use the fuel tax and at what amount; rather than using the disrepair of our infrastructure as a means of class warfare for his reelection campaign.

Instead of making infrastructure projects a one-time thing as part of a reelection plan through a mini-stimulus package, let's make them a permanent activity so that the jobs are more permanent. Let's raise the gasoline tax over time so its less painful to society; but, at an accelerated rate in order to play catchup. Let's put in place a cost adjustment system so that the tax is appropriately raised each year. Lastly, repeal the Davis-Bacon Act so that any federal transportation project can be done a best-bid price basis.

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