Best of Blog: Some perspective on the gas tax

Anyone who has been here a while knows that I'm not a fan of organizations like the American Society of Civil Engineers or activist groups like Move MN, our version of a transportation coalition here in Minnesota. I've called these and similar groups the Infrastructure Cult, a collection of individuals and organizations whose beliefs in the power of infrastructure investment to improve America (or, if not, at least line their own pockets) is so strong that it cannot be shaken, no matter how absurd it becomes.

For example:

  • In a 2011 report, the ASCE indicated that, unless we fully-funded their version of an American transportation system to the tune of trillions of dollars, America would have 400,000 fewer jobs over the next 30 years. That seems like a large number until one understands that in just the one week the report was issued there were 400,000 new jobless claims. 
  • In that same report, the ASCE claimed families and businesses would suffer $1 trillion dollars in losses in the near term due to time stuck in congestion and wear-and-tear on their vehicles if those same families and businesses were not willing to pay $2.2 trillion dollars in hard cash for transportation enhancements.
  • In the same report, the long term projection for lost federal revenue if we "under-invest" in transportation is $540 billion. The cost to fully-invest: $6.6 trillion.

This would all be a sad sideshow if the media weren't so willing to mindlessly parrot the Cult's propaganda, the latest example being an extremely one-sided report on 60 Minutes.

Recently, the call to action has been to index the federal gas tax to inflation. As I said in my recent ebook on transportation -- A World Class Transportation System -- we're going to need more revenue at some point, but without a serious rethinking of our approach to transportation, we are just going to be throwing good money after bad. And really, with $18+ trillion in simply federal debt, we've long run out of "good" money.

We need just nine new members today to break through the 600 threshold and get us that much closer to our year-end goal. If you've been meaning to become a member and support the Strong Towns movement, today is the day to make it happen.

The federal highway trust fund is going broke, one of those long-known realities that is finally starting to sink in among the official nattering nabobs. Whether it is the New York Times, the USA Today or Slate (the hysterics of which I found particularly laughable), the analysis comes right from the American Society of Civil Engineers’ (ASCE) talking points. Even the Daily Show has weighed in. Here’s what we are to believe:

The gas tax needs to go up because (1) it has not been increased since 1993 so inflation has eroded a lot of its purchasing power (wait – I thought inflation was good). Then there is (2), our cars have gotten more fuel efficient and so the gas tax doesn’t go nearly as far as it once did. Finally, (3) we have horrible congestionsafety problems and we need the economic growth that comes with transportation investments.

I started wondering….how big would the funding gap be if we had indexed the gas tax to inflation back in 1993? What if we had indexed it to economic growth? We if we had adjusted it for average daily traffic, probably the best measure of demand given the fuel efficiency issue? Here’s what those answers look like when compared to the revenue the ASCE indicates is needed to continue on the current path ($94 billion additional per year).

I’ve passed this around and people want to know the math, which I’m going to provide below, but here’s the takeaway: we may have a funding problem, but that’s not what is going to take us down. Our real problem is that we have not had to think about what we are doing for a long, long time. We’ve been so wealthy and affluent that funding the most bizarre transportation arrangement on earth became akin to the American way of life. Congestion-free roadways and ample parking are to the United States what bread and circuses were to Rome. Get out your fiddle, that smoke is real.

The question facing us now isn’t whether or not to increase funding for transportation but whether or not to reform – or even question – the very nature of our approach to transportation. An increase in the gas tax, additional sales taxes/fees or more deficit spending only allow us to continue to distort – for a few more years – a transportation system that is not financially viable. Without any price signals providing supply/demand feedback, we are destined to build ourselves into insolvency (again).

And a final word to you transit and bike/ped advocates who have been promised riches if you’ll get behind calls for more money for this system: you are fighting for scraps today with disingenuous partners when, if you simply walked over the next ridge, you would find more financial support than you ever dreamed. That ridge: localization.

We had the greatest transit and the greatest pedestrian facilities before we had centralized transportation policy. Bike/ped and (when not done by highway engineers) transit improvements are the highest returning transportation investments a city can make. Phase the federal and state governments out of this game and you open up enormous possibilities for bringing about the world you desire. Stick with this tired approach and you will continue to be an afterthought in a system that is going bankrupt.

Click here for the math behind this analysis.