Paying for Transportation

August 7, 2014 11:10 am

by Jon Richards · 8 comments

A committee formed to figure out how to fund Georgia’s transportation needs met for the first time on Tuesday, one of eight meetings it will hold around the state this summer and fall. The guest of honor was former U.S. Transportation Secretary Ray LaHood, a Republican who came to town to talk about what Washington and Georgia can do to pay for maintenance and improvements to its road, bridge and transit networks.

In his Thursday AJC column, Political Insider Jim Galloway casts LaHood’s talk as a preacher trying to convince his congregants to fill up the offering plate. Specifically, LaHood believes the federal gas tax should be increased by ten cents per gallon and indexed to rise with inflation.

As you may recall, Congress skedaddled home for its August break after passing a short term measure to fund the federal share of road construction. An increase in the gas tax wasn’t part of that measure. In fact, despite despite wailing about the country’s crumbling roads and bridges, President Obama himself opposes a federal gas tax increase. He would rather pay for it by closing tax loopholes.

While Galloway’s piece is well worth reading (as are Jay Bookman’s take from the left and Kyle Wingfield’s thoughts from the right), there is one point the former transportation secretary made that caught my eye. When recapping LaHood’s remarks on the need to get some Georgia representation on the House Transportation Committee, Galloway writes,

Tea partyers will not do, he suggested. Lately, the one member of the Georgia delegation who has focused specifically on transportation has been U.S. Rep. Tom Graves, R-Ranger. Graves has suggested that federal gas tax revenue simply be shipped back to the states to spend as they wish.

A non-starter, LaHood declared. “If that happened, we wouldn’t have an interstate system. Some states wouldn’t have the money to build them – like in North Dakota, South Dakota. States like that,” he said.

I’ve written about the Transportation Empowerment Act in the past. It would over time reduce the federal gas tax, allow the states to increase their state gas taxes by the same amount, effectively keeping the tax the consumer pays the same, but giving more leeway to the states on how to spend it. And because it wouldn’t be federal money, it wouldn’t be tied to as many federal regulations and hoops the state must go through before using it.

LaHood’s point that Graves’ bill is a non-starter echoes what I heard from House Transportation Committee Chair Bill Shuster when I asked him about it earlier this year. The fear is that if states control the money, there would be an inability to develop projects crossing state lines. Infrastructure in states able to generate less revenue would deteriorate, despite being used by travelers from other states. It’s a valid point, and one that supporters of the TSPLOST made a few years back, to no avail.

With Georgia not likely to get direct control of the money currently raised by the federal gas tax, and support for raising the federal tax being nonexistent, the committee has its work cut out for it. Right now the ‘fourth penny’ of the 4% fuel sales tax goes to the general fund, not transportation. Any credible funding alternative would use that penny to pay for transportation. Fractional SPLOSTs and allowing counties to team up on them will help around the margins.

But ultimately, additional revenue will have to be raised for the Georgia DOT.

Here’s a thought question: What if the Federal gas tax was raised by a dime, then a version of the Transportation Empowerment Act was passed and signed into law by the President that would back that dime out and allow the states to collect that revenue instead. What’s the difference between doing that and just raising Georgia’s gas tax by ten cents and being done with it?

{ 8 comments… read them below or add one }

Lwood August 7, 2014 at 11:37 am

So should we consider states like North Dakota and South Dakota “taker” states? Someone else paid for their interstates?

Jackster August 7, 2014 at 11:57 am

So the solution is raise the gas tax by a dime.

Wouldn’t it be more reasonable to have georgia pass this tax increase, than the fed? Or are we saying the fed needs to do it for some other reason?

Or is this to address the federal issue, not so much the georgia issue?

Charlie August 7, 2014 at 2:13 pm

I’m going to make a few quick comments going down the page here but leave most of my discussion for next week (most likely).

The problem with the highway trust fund is that it, like most other federal programs, relies on deficit spending. That’s why GA isn’t a “donor state”. Commissioner Golden in the committee on Monday pointed out that GA gets $1.14 for every dollar in gas tax we currently send to DC. The problem is that every other state also gets more than $1 back, too. Golden noted that this is “unsustainable”.

So if we decide to start collecting our own money and quit routing it thru DC, understand that we’ll still be getting less than we have now – and still not have enough money to pay for what is in backlog, and growing.

Charlie August 7, 2014 at 2:14 pm

And maybe this was the reply to Raliegh…

Raleigh August 7, 2014 at 12:02 pm

Personal Observations.

Graves’s bill would take the spending decision(s) from the federal government on 10 cents of the federal gas tax so states like North Dakota, South Dakota, etc would likely be affected. Just an observation not an endorsement.

Georgia’s extra penny gas tax idea sound good except the state will want to replace the revenue to the general fund so they can fund other things such as fishing museums. So if state spending isn’t reduced to compensate doesn’t this become just another tax increase? See, 911 tax, Tire recycle fee, etc. Changing the way the state handles revenue requires a change to Georgia’s constitution I believe.

Again just observations not endorsements.

How do we insure that taxes collected for specific purposes only are used for the specific purpose? I would like to see a fix to that problem but that’s another thread.

Charlie August 7, 2014 at 2:19 pm

You’ve lost me on the part about replacing the money in the general fund.

The GA Constitution requires motor fuel taxes to be spent by the DOT on transportation. The “4th penny” was deemed a sales tax when GA raised the state sales tax from 3 to 4%, and thus doesn’t go to the DOT. Virtually everyone now seems to be agreeing that moving that penny where it should have been all along is a place to start.

Additionally, there’s a statewide average of 11.2 cents per gallon of additional sales taxes charged on motor fuels via LOSTs and SPLOSTS that don’t go to the DOT. If these were to be allocated along with the extra penny, we’re talking about an additional $750 Million per year before we talk about raising taxes. That’s a better start.

But the problem we have appears to be about a $2 Billion one annually. Figuring out the pieces of the puzzle to close the gap between the $750M that is theoretically available and the $2BN need becomes a lot more delicate. But it’s an issue we need to figure out.

Will Durant August 7, 2014 at 1:55 pm

Anyone old enough to have traveled across the country prior to the interstate system being completed can appreciate the need of carrying a bottle jack to supplement the bumper jack and 2 spares. Louisiana and Mississippi seemed to have road surfaces that consisted of 50% potholes. Even if you never travel out of state however most of your groceries among other things arrive here via the interstate system. So we all have a vested interest in the interstate system staying intact and regulated by the feds. This is not to say that some of those regulations and expenditures don’t need some tweaking however.

All motor fuel taxes, regardless of labels (sales, excise, etc.), or type (federal, state, county…), should be used only for roads and highways. Transit and other projects need to be paid by other means. This is important so that all taxpayers realize that the motor fuel taxes are their user fees for driving on the public roadways.

Some of the useless regulations like noise abatement that doesn’t work and landscaping should be left as frills for the states. Cities and states overindulging into the federal money for urban renewal projects like the Big Dig should be either curtailed or require a bigger match from the local governments. Regulations requiring minimum standards of construction design should be enforced to the letter however.

Granted that this would also be a band-aid solution as cars migrate to other fuels, (is there a MFT on CNG?). But in conjunction with the taxes to make sure the trucking industry is paying its fair share for the wear and tear to the roadways it should do for at least another 40-50 years.

saltycracker August 7, 2014 at 2:00 pm

Can we get past step 1 because step 2 & on get complicated ?
The gas tax needs to go up and the money needs to be dedicated to transportation, mostly highway.

Holding my breath.