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Abolish the federal fuel tax?

Commentary by Evan Lockridge, Contributing Editor

UPDATED — It seems these days the only thing Congress can agree on is that they disagree on most everything. Now that the debt ceiling crisis has passed, the next battle could affect you.

At the end of September, the current extension to the federal transportation funding authorization expires. And the anti-tax, anti-government rhetoric we saw in the debt ceiling “debate” could put the nation’s surface transportation system in peril.

Two years ago, the previous multi-year program wrapped up, and since then, it’s been temporarily extended several times.

Commonly known as the “highway bill,” this authorization is the legal “go-ahead” that lawmakers give the U.S. Department of Transportation to allocate money to the states for roadbuilding and repair. It’s funded from the federal Highway Trust Fund, which gets most of its money from the federal fuel tax, which has been at 18.4 cents a gallon for gasoline and 24.4 cents for diesel for nearly 20 years.

When Congress gets back to work after Labor Day, the idea is to have a new multi-year program passed and signed into law by the president by the end of September. However, it’s increasingly likely that they will kick the can down the road and pass another short-term funding extension.

Anti-Tax Talk

There’s been a lot of anti-tax and anti-government talk during the recent deficit debate. Highway funding advocates are now very concerned that these same positions will put highway funding at risk.

Without a new long-term, or even short-term, agreement, the government cannot collect the fuel and other taxes that go into the Highway Trust Fund that pay for road and bridge work. If that happens, some projects would come to an abrupt halt.

Grover Norquist, founder of the anti-tax group Americans for Tax Reform, has said in published interviews that his focus has moved from the battle over the debt ceiling to transportation. He wants Congress to shift federal transportation planning and policy making to the states and eliminate federal fuel taxes.

However, Bloomberg reported today, Norquist said he won’t oppose an extension of U.S. gasoline and diesel- fuel taxes set to expire Sept. 30, as he pushes for broader transportation-funding overhaul.

An extension with no changes wouldn’t violate a pledge signed by many congressional lawmakers not to raise taxes, he told Bloomberg. (Never mind the fact that more than one independent panel has said we need to raise taxes to keep up with infrastructure demands.)

“We’re interested in the broader issue that states should keep their own fuel taxes. We don’t want it run through Washington,” Norquist said in a telephone interview with Bloomberg. “Why should Connecticut pay for what’s going on in Wyoming and Wyoming pay for the New York City subway system?”

The federal government receives 18.4 cents from the sale of every gallon of gas for the Highway Trust Fund, which pays for road and bridge construction projects, and uses a formula to determine how much money each state gets in return. Under the current plan, some states receive less money than they send to the federal government while others get more.

But he still wants to eliminate the federal fuel tax eventually, and predicts it will take two to five years. Norquist hopes to gain support for two bills that allow states to opt out of the Highway Trust Fund.

States and highways

Norquist’s plan is ridiculous on many levels, the most basic being that states are too cash-strapped already. And it’s not just because the government wastes money. I will agree there is financial waste in all levels of government, from Uncle Sam to the smallest town in America.

But the amount of taxes collected by governments fell dramatically during the recession. States would undoubtably have to raise their fuel taxes to pay for road and bridge projects. Many already are looking at alternative funding methods that most in the trucking industry aren’t fond of, including building more toll roads in public-private partnerships, leasing public toll roads to private companies, and even getting federal permission to put tolls on existing Interstates.

Now, it doesn’t take a PhD in economics to figure out that paying tolls is way more expensive than paying the federal fuel tax — even if the federal fuel tax was raised to, say, 30 cents a gallon for everyone. So if you think scrapping the federal fuel tax is going to put more money in your pocket, think again!

Funding aside, show me any state that has a firm handle on the transportation needs of all the other continental states. How smoothly will interstate commerce flow when one state makes Interstate A a priority, while its neighbor puts it on the back burner in favor of Interstate B? What if a state with large cities decides to pour its efforts into urban mass transit?

You’re kidding, right?

If you think this whole scenario is unlikely, remember, more than 200 of the nation’s 535 members of Congress signed a pledge from Norquist’s group not to raise taxes in any shape, form or fashion.

Not only that, but Norquist is supporting Rep. John Mica’s highway funding plan, which also would pave the way to turning more responsibility for the nation’s infrastructure over to the states in his reauthorization proposal, a dramatically smaller program that seeks to leverage federal funds by giving states more flexibility.

You know, I’ve got more faith in the U.S. DOT, which at least has information about where freight movements are in the United States and along what routes, than some career bureaucrat in Alabama, Indiana, California or any other state who doesn’t have a clue about it, making decisions that affect interstate freight movements.

The bottom line is, Grover Norquist is dangerous, especially to the trucking community. I can’t help but suspect that he and others like him are pushing for states to take over, not because he feels they could do a better job of maintaining roads and bridges, but because he and those who back him stand to make piles of money from public-private partnerships and they feel they can control states better than they can control Uncle Sam.

Norquist and a lot of people in Congress are making a living out of getting people wound up, wasting your hard-earned money while they blather on the cable news networks, on the radio and online, about how evil this or that is from the federal government — while totally ignoring the fact that if it were not for the federal government, we would not HAVE an Interstate system, and would likely be relying on roads in such poor shape they would resemble what inspired President Eisenhower to create the Interstate system in the first place.

Updated to add information from Norquist’s interview with Bloomberg.

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