Is Indexing the Key to Fixing the Federal Gas Tax?

It's not too early to think about "fixing the Highway Trust Fund", a prerequisite to renewing MAP-21 transportation legislation that expires Sept. 30, 2014. Rep. Peter DeFazio may have the fix in the form of an indexed gas tax - but which index?

2 minute read

April 4, 2013, 10:00 AM PDT

By Irvin Dawid

It hasn't even been a year since Congress passed the Moving Ahead for Progress in the 21st Century (MAP-21) transportation reauthorization legislation. But because it only covered a little more than two years, Congress needs to begin work now on the next surface transportation reauthorization bill to keep roads and transit funded, writes Caroline Macheska, Manager of Federal Government Relations for the American Society of Civil Engineers (ASCE). The challenge is to find funding to supplement the current 18.4-cent gas tax.

Haven't we been here before? Increasing the gas tax and/or implementing a vehicle-miles-traveled fee mechanism have been discussed here countless times.

One of the more recent proposals comes from Peter DeFazio (D-OR), the Ranking Member of the Highways and Transit subcommittee of the House Transportation and Infrastructure Committee and he does touch upon the federal gas tax.

Fazio's proposal calls for "indexing the current 18.4 cents-per-gallon tax to inflation in construction costs and to increases in auto fuel efficiency standards." Indexing it to the Transportation’s National Highway Cost Construction Index would produce an additional $150 billion over ten years, three times the revenue of tying it to the consumer price index (CPI), according to Defazio's office, Macheska writes. Furthermore, the indexed gas tax could be the basis for "$100 billion in bonds that would be paid off in 10 years."

So far, reactions from President Obama and Chairman of the full Transportation and Infrastructure Committee, Bill Shuster (R-PA) have been promising.

If history is to repeat itself, MAP-21 will be extended, and extended,.....just as its predecessor, SAFETEA-LU was nine times over three years. However, if funding is to be continued at the levels specified in MAP-21, additional sources to the gas tax will need to be identified which no longer pays for all Highway Trust Fund expenditures. Then again, there's always the federal General Fund.

Wednesday, March 27, 2013 in American Society Of Civil Engineers

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