In Virginia, controversy is a-brewin' over Governor Bob McDonnell's plan to eliminate the state's gasoline tax. The funds generated from that tax have traditionally been earmarked for maintenance and construction of Virginia's roads.
To replace gas tax revenue, McDonnell plans to do three things: (1) raise the state's sales tax by about 16%, (2) increase vehicle registration fees, and (3) siphon off money from schools, mental health programs, and public safety initiatives.
Which is to say, he's planning to start a fight with elected officials on both sides of the aisle.
On the right, many groups take issue with McDonnell's plan to rely on sales taxes for roadway funds. The Competitive Enterprise Institute, a libertarian think tank, says that McDonnell is correct when he insists that the gas tax is stagnating. However, CEI also points out that the gas tax may be the most accurate gauge of road usage and therefore, the best source of revenue.
CEI's Marc Scribner insists that "New vehicle fleet and driving trends are quickly rendering the fuel tax obsolete. But abandoning the user-pays/user-benefits principle, which has long guided transportation funding in the United States, is not the answer." Instead, he says that "[s]trengthening the user-pays principle through all-electronic tolling and other mileage-based charges is the most prudent and fiscally conservative approach."
Translation: the people who use roads should pay for their upkeep, and money should be collected from those folks via tolls and other charges, based on how far users drive.
On the left, McDonnell is likely to face opposition from Democrats, who have often been very uncomfortable taking funds from education, healthcare, and other public/social services to pay for transportation infrastructure.
In the middle, we find the Washington Post, which agrees with McDonnell that the gas tax is an inadequate source of revenue for roadway maintenance, but also points out that his plan to rely on sales taxes and money pilfered from other state programs won't meet the anticipated costs. On average, the pricetag for maintaining and constructing new roads in Virginia is about $1 billion per year; McDonnell's new plan would only generate about $600 million.
AND AT THE FEDERAL LEVEL...
Meanwhile, just down the (increasingly bumpy) road to Washington, D.C., the Government Accountability Office seems to echo some of Scribner's ideas. After studying the issue, the GAO suggests that the federal government should consider taxing drivers on vehicle miles traveled (VMT).
But doing so would not be easy. The GAO points out that there are significant privacy concerns in using devices like GPS to track drivers and, in turn, tax them on their travels. Nor would such a system come cheap. In a press release, the GAO states that "implementing a system to collect fees from 230 million U.S. passenger vehicles is likely to greatly exceed the costs of collecting fuel taxes" -- at least for the first several years.
Once the VMT system is set up, it would need to generate $34 billion each year just to replace current gas tax revenues. If things went extremely well and the feds generated $78 billion, they'd be able to maintain the roadway status quo. To truly improve the quality of our highways and byways, the government would have to raise significantly more moolah.
Naturally, this would mean added costs for drivers. On average, motorists in the U.S. now pay $96 in federal gas taxes. To reach the $34 billion mark, drivers would need to pay slightly more: $108 per year. (Though the GAO doesn't explain the discrepancy, it may involve offsetting the cost of VMT implementation.) To generate $78 billion per year, each driver would need to fork over about $248.
There's no question that America's roadways are in need of repair. Pew Research recently revealed that over a third of U.S. roads are in "substandard" condition. Our bridges aren't faring much better: roughly 25% of them are quietly crumbling. This may explain why preliminary reports indicate that U.S. traffic fatalities increased in 2012, after many years of declines.
There's some truth to the CEI's claim that relying on sales taxes for roadway funding is a bad idea. Sales taxes fluctuate wildly and don't necessarily reflect roadway usage. (And theoretically, you'd like the two to mirror one another.) Moreover, sales taxes typically place a heavier burden on lower-income Americans, some of whom may not drive at all.
On the other hand, taxing gasoline may be a losing game, too. With fuel economy set to reach 54.5 mpg within 12 years, gas usage will slowly fall. And as gas usage falls, so will gas tax revenue.
In theory, VMT seems like the fairest way to generate revenue for America's infrastructure, but can it be done while keeping costs in check and keeping drivers' data private? The GAO suggests instituting a pilot program so that Congress and federal agencies like the Department of Transportation have more data to make an informed decision.
This story originally appeared at The Car Connection