GAS TAX FREEZE FORCES NEW METHODS OF FUNDING

May 22, 2007

The federal tax on a gallon of gas has not risen in 14 years and Congress is reluctant to increase it.  As a result, a cash crunch is fast approaching for the government trust fund that pays to build and repair highways and bridges, says the Associated Press.

Consider:

  • At the end of 2000, the highway trust fund had a balance of almost $23 billion.
  • By the end of 2006, that balance had fallen to $9 billion.
  • The Congressional Budget Office predicts the fund will run a deficit of $1.7 billion at the end of 2009 and $8.1 billion by the end of 2010.

As a result, states have already begun looking for other places for road-building money.  For example:

  • Indiana negotiated a $3.85 billion deal with an Australian-Spanish consortium to lease and operate the Indiana Turnpike for 75 years.
  • Voters in Washington state approved a 14.5-cent increase in state gasoline taxes over a five-year period.
  • In California, voters decided to borrow the money, approving bond issues totaling $19.9 billion to be used for highway and transit projects over the next 10 years.
  • Texas, Virginia and Minnesota are among states that have built or are building high-occupancy toll lanes where drivers can pay to have a congestion-free path before them.
  • Revenues from tolls, bonds, federal loans and local contributions allowed most of a new turnpike around Austin to be completed more than 20 years sooner than if the state had relied solely on state and federal taxes.

Whatever the solution, one thing seems certain: the public will not support new taxes just to throw money in the maw of the federal government, says Rep. Peter DeFazio (D-Ore), chairman of the House Transportation and Infrastructure subcommittee on highways and transit.

Source: "Feds' tax freeze drives up state gas tax, tolls," The Daily News, May 21, 2007.

 

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