Yesterday, the Obama Administration released the Grow America Act, a proposed bill that would extend MAP-21, the surface transportation program. MAP-21, which covers highways, transit and other programs but not intercity passenger rail, expires September 30 of this year. The Highway Trust Fund is expected to run out of money in late-summer.
If passed by Congress, the Grow America Act would convert the Highway Trust Fund into the Transportation Trust Fund, which would be funded by both the current gas tax and general revenue. Intercity passenger rail would be included in the surface transportation program for the first time ever.
The Grow America Act would replace the High-Speed and Intercity Passenger Rail program authorized by PRIIA with a $5 billion a year High-Performance Rail program that would include true high-speed rail, state corridors, Amtrak and freight improvements. It would also make important improvements to the Railroad Rehabilitation and Improvement Financing program, making that program more useful for high-speed rail development.
Clearly, a lot of thought has gone into the railroad portions of the bill. It is a big step forward in policy development.
Unfortunately, the proposed bill was not well received by Congress, primarily because it fails to raise the gas tax, which has not been raised since 1993.
I believe what is missing is a way to rank projects by financial efficiency, which would require you to undo the economic “time savings” methodologies for ranking projects by monetized economic B/C. A lot of people are not yet ready to admit that the incremental revenue collected on highways covers a fraction of the financial cost. I have seen some surveys that suggest people tiring of the “pot-o-money” idea.
It might do one thing, as long as the approach decreases Federal manipulation of the freight market and uses the free market …
“Subsection (e) (National Freight Policy, Network, Plan, and Data) would move and revise the provision currently located in section 167 of title 23, United States Code. Under current law, the focus of the national freight policy, network, plan, and data is highway focused. This provision would make the policy, network, plan, and data multimodal focused.”
But there is going to be a massive pushback from the ATA who got that in MAP-21 to start with. There needs to be a lot more analysis published in the public realm to explain why there needs to be such an equitable treatment, which the USDOT has not done.
If however it was done, the shift of more road freight to intermodal rail would only help the operation of passenger rail on the national network, with the associated extra sidings and trackage geared to timely delivery of freight.
They should index the gas tax increases to inflation and pass the last increase. The back and forth on the gas tax is stupid. I think I would also collect a portion of the State automobile license registration fees as maybe a surcharge to also pay for road infrastructure, index that to inflation as well and increase it to cover lost gas tax revenues as cars become more fuel efficient or electric…pretty easy and simple solution if you ask me.
Bad idea to tie it into the general revenue fund, IMO. That’s not only a political cop out but will ensure that future budgets are inadequate to the job as they will bounce all over the place based on what administration is in the Oval Office. We really need a fixed source of funding here that is indexed to inflation.
Ah, the gas tax. Next to the oil companies contributions, politicians favorite financial plumb! Nine tenths of one cent is Federal tax, then several other federal bites before the staties take a chunk. Some are whole numbers like the nine tenths of a penny per gallon or a nickle here or there. But the most lucrative taxes are the percents…one percent, 5 percent, and the best of all, the sales tax of 5 to 15% according to state and municipal combinations. So what politician is going to fight for lower gasoline prices when they have so much to gain…8% of two bucks is 16 cents and 8% of four bucks in 32 cents why would they want to get gas prices lower than even 2 bucks?
And what happens along the route of a gallon of gas? Driller/pumper sells it to the transporter who sells it to the refiner who sells it to the transporter who sells it to the branded company who sells it to a transporter who sells it to a regional wholesale distributor who sells it to a local franchise who sells it to a gas station who sells it to the unsuspecting customer. With at least doubling of price at each sale, plus certain applied taxes at certain levels the customer is still buying ten cents worth of gasoline no matter what price he pays! Alright, maybe I exaggerate. But not by much.
Henry, what in the heck are you talking about? The federal tax is 18 cents. And of course it ought to be raised after 20 years. American drivers can afford to pay twice that to keep our highway infrastructure in shape. While we’re at it, we’d better make arrangements for our crumbling water and sewer lines, too.
One of these days we will figure out that a modern society depends on more than the ever-popular income transfers to keep chugging.
Crude oil is currently selling for $100 per barrel. There are 42 gallons in a bbl, so crude is about two and one half dollars per gallon. After refining, much of the crude portion is in less valuable products than gasoline. The mark-up between the steps you mention is sometimes pennies, rather than the doubling you mention. You exaggerate by more than a little.
Ok…first Dave, Federal Taxes might be 18 cents but that includes the nine tenths of a cent shown at the pump. But my point was that through each process the oil is passed on to the next process by selling to the next processor even if the processor/transporter/wholesaler is the same company. The other point is that taxes based on per cent rather than a fixed number at any point yields a higher income for the posting political entity so politicians like higher prices.
The United States federal excise tax on gasoline is 18.4 cents per gallon and 24.4 cents per gallon for diesel. These are fixed rates. State excise taxes vary, but they are also per gallon. Since vehicles get far more miles per gallon than when the rate was put at 18.4 cents in Oct. 1993 (briefly lowered to 18.3 cents 1996-97), the tax clearly needs to be raised to pay for infrastructure.
Some states and large municipalities also charge a percentage sales tax, usually calculated on the wholesale price per gallon. NJ ranks # 48 (14.5 cents total state and local) while next door NY ranks # 3 (58.82 cents).
Another consideration is that, the Interstate system having been built within a relatively short time window, it is now (after 50 years) basically wearing out all at once, periodic (and piecemeal) reconstruction efforts notwithstanding. Recovery will require a mobilization of capital equal to the original effort, adjusted upward for inflation.
As railroad fans, we might be cheered by the advantage to rail freight. But we know in our hearts that we still need our highways for trucks – for that “last mile,” if nothing else! – as well as for our personal travel.
According to a report I saw recently on NBC, I think, Congress will be asked to allow states to start charging tolls on the Interstate highways of their choice. The taxes on gasoline would remain the same under the proposed legislation. The idea is to make those who use the road pay for its renewed infrastructure. There seems to be no political will to raise the gasoline tax. Also, the states could treat the gasoline tax afterwards as a source of money that could be used on any state transportation project, presumably including rail projects.
Let’s not forget that demographic trends indicate less interest in Interstate highways in the future. Imagine, then, funding the massive re-building of our Interstates, only to discover that the next generation of drivers significantly eschew them in favor of expanded public transportation! Talk about a day late and a dollar short!
Bottom line: I wouldn’t worry about Congress raising gasoline taxes anytime soon.
I think some members of congress like making the interstates toll roads, because it sets the stage for privatization, as has been done with he Indiana Toll Toad.
The gas tax is unpopular because some view it as a regressive tax that hits the poor harder. I’d throw the BS flag on that though and argue that anyone filling a cars gas tannk with gas needs to pay the darn gas tax and we shouldn’t attempt income equalization at the gasoline pump.
Interesting I am paying more tax for my clean burning BLUETEC Diesel than you guys with the gasoline engines are paying (that pollute more). Not sure why that is but it’s fine as I get better mileage with a Diesel than I would with a gasoline engine so it is probably a wash.
The federal tax alone is 6 cents higher than for gasoline cars. Sometimes diesel is actually cheaper than gasoline, but in Europe it is always cheaper.
The higher tax is justified because trucks, the main user, are harder on the roads. Probably it should be a lot higher yet (with maybe you passenger guys allowed to file for a refund on your taxes).
NKP, I wonder if the increased interest in public transportation isn’t mainly for metro travel, to and from work. In any case, I think our growing population will ensure plenty of traffic for the Interstates for at least as far into the future as the life of a rebuilt system.
I will say, I sure as heck don’t want to undertake this massive expense for the exclusive benefit of trucks!
An “Act” is when a bill is passed (enacted) by both houses. It is promulgated when signed by the president, or if he vetoes, it is promulgated into law once overridden by a 2/3 vote in each house, not needing his signature.
"The higher tax is justified because trucks, the main user, are harder on the roads…
Several years ago, if I remember correctly, I read an article claiming that drivers of personal vehicles, i.e. cars, vans, SUVs, pick-up trucks, etc., made up 80 per cent of Interstate highway users.
According to Face the Facts USA, A Project of George Washington University, big trucks make us 4.3 per cent of all highway vehicles. And they account for 10 per cent of total highway miles traveled. The same reports says that half of all big truck miles are racked up on Interstate highways and, in some areas, they account for 1/4 of all the vehicles on the Interstates.
“In 2010, trucks transported 34.2 million tons of freight around the U.S. every day. These trucks pay extra taxes to offset extra wear and tear on roadways. In 2009, these taxes amounted to $3.2 billion – 11 percent the Federal Highway Trust Fund’s total revenue.”
These numbers appear to support the notion that the major users of the Interstate highways are every day drivers like most of the folks who post to these forums. A substantial percentage of them are commuters.
The project cites two Federal Highway Administration studies to support its findings: The Freight Transportation System and Freight Facts and Figures 2011.