Posts about Gas Taxes

For example, in Montgomery County, the state will build a $63 million interchange at Georgia Avenue (MD 97) and Randolph Road, to speed up traffic near the Glenmont Metro station. With ramps and longer crossings, the interchange will further degrade pedestrian access to nearby shopping from residences.

For the amount spent on this project, the county could build much of the long-discussed Georgia Avenue bus rapid transit project from Wheaton to Olney instead.

Montgomery County is pushing another grade-separated interchange at the Veirs Mill Road (MD 586) and Randolph Road. Based on past experience, we can expect that the planned Veirs Mill bus rapid transit project (the county's largest bus route) will continue to lose out to the expensive interchange for priority.

The interchange would not only compete for funds with this proposed rapid bus corridor, it would also make conditions much worse for the many pedestrians who cross these roads to stores and bus stops at the intersection. Read the whole list of the county's priority transportation projects here.

In Prince George's, despite numerous setbacks, the 6,000-acre greenfield Westphalia development project outside the Capital Beltway and miles from the nearest Metro station still maintains a top ranking on the list from local elected officials. The price tag for the road infrastructure to serve this massive tract of largely undeveloped land is $460 million.

The transportation projects would convert Pennsylvania Avenue (MD 4) into a freeway from the Capitol Beltway to Woodyard Road (MD 223), and add 4 interchanges along the way. The Westphalia plan calls for adding 14,000-15,300 new residential units and up 6 million square feet of commercial space.

The county transportation lists also contain important transit, bike, and pedestrian projects, but often these proposals languish while road projects advance. Other important transit, pedestrian, bicycle, and complete streets solutions never even make the list. We need to fund projects that meet the growing demand for more transportation choices that save time, energy, and money.

If Marylanders are asked to pay more, each dollar must be invested wisely. Residents need better and more affordable transportation choices. So where should this money go?

First, let's fix Maryland's existing infrastructure, like our aging roads, bridges and transit systems. Then, let's build modern transit to move more people efficiently and competitively, while providing alternatives to congested highways like the Beltway, I-95, and I-270. It's long past time for critical rail investments like the Purple Line, Baltimore Red Line and MARC expansion, and better bus service.

At the local level, state revenue to local governments should go to fix and maintain local street connections, sidewalks, and bikeways for existing communities.

Moreover, given high unemployment, smart growth transit options can help the economy. Public transportation and road maintenance are the biggest job creators. According to the Surface Transportation Policy Partnership, investments in road maintenance projects create 9% more jobs than spending on new highway capacity; increasing transit capacity creates 19% more jobs than new highway capacity.

If Marylanders are going to pay more, we deserve to know what the money will buy. We need a bill that that specifies smart, fix-it-first policies for the state. Otherwise, we're just throwing our money into the dark.

Maryland's gas tax goes into the state's Transportation Trust Fund, along with the sales tax on car sales, fares paid on MARC trains and MTA buses, and revenues from BWI Marshall Airport and the Port of Baltimore. When the gas tax was last raised in 1992, the 23½¢ state tax was 33% of the pretax price of gasoline. The sales tax on other pur­chases was 5%. The heavy tax on gas could be described as a user fee paid by drivers.

Today, though, the state gas tax is a little more than 7% of the price of gasoline. When drivers buy gas, they pay 7% into the transportation trust fund and get 6% back from the state's general fund through the exemption of gasoline from the sales tax.

Ending the exemption would convert the gas tax back into a true user fee. Drivers would then pay a share of the cost of maintaining roads, just as transit riders pay a share of the cost of transit operations through their fares.

Many myths surround the subject of transportation funding, in Maryland as in other states. Transit advocates need to be vigilant as the legislature debates this issue to make sure that new funding builds transit lines and walkable grid streets rather than repeating the mistakes of the past. The better the public understands the realities of the state budget, the easier this will be.

In an ideal world, I would not raise the gas tax this year or next year. Come out of this recession, but put in place increases that are going to occur over the next 10 years; have that revenue stream. I would borrow against the revenue stream to take advantage of record low interest rates and a bidding climate like we've never seen, fund the president's infrastructure bank to help move some of these forward, and work toward replacing the gas tax.

Blumenauer reminded the audience that his state was the first to institute a gas tax, and now Oregon is working to get rid of it and replace it with a vehicle miles traveled fee.

Bill Millar, the outgoing president of the American Public Transit Association ("on Halloween, I turn into a pumpkin!"), said that before switching to a VMT fee, Congress needs to eliminate the federal guarantee, called "equity bonus," that states will get back at least a certain percentage of what they pay in gas tax receipts. (The GAO recently found that every state actually gets back more than it puts in, thanks to infusions from the general fund, but that hasn't stopped a lot of states from complaining that they don't get their fair share.)

"States that encourage more travel get more money back [under the equity bonus system]," Millar said, "so we've got to break that cycle too, to make sure instead it's an inverse relationship and states that give people more choice, more ways to travel, get more federal aid, not less federal aid."

Millar thinks the answer is simply to raise the gas tax. And he doesn't agree that it needs to wait. After all, the average price of gas in America went up by seven cents this week, he noted. But did anybody notice? "If you told Americans that, they wouldn't like it, but hey, it's gas, what can you do?" he said.

Either way, the U.S. has got to do something to avoid running up the deficit. Congress can continue to run up an infrastructure deficit, Blumenauer said, which will cost far more in the long run. Or the country can keep spending even the meager amount it does now on transportation maintenance and the Highway Trust Fund will run dry, requiring another general fund transfer, which adds to the deficit.

Why can't Congress move forward on any path out of the current fix? Transportation Secretary Ray LaHood has been pretty open with his frustration lately. "The last election elected about 70+ new members of the House," he said at Rail~Volution. "About 30 or 40 of those people came here to do nothing. And that's what they've done."

Blumenauer noted that his first public event in Congress was a bipartisan press conference with LaHood, then a representative from Illinois. They had called for civility in Washington.

"In the days when I served with Earl and others, there was a good mix of policy and politics," LaHood said. "Unfortunately, today, the policy part has dropped off and it's all politics. It's all about the next election."

He fumbled his call to action, though. "Everyone in this room has a member of Congress; everyone has two senators," he said—momentarily forgetting, I guess, that he was talking to hundreds of people in Washington, DC, where 600,000 residents have neither.

Just the day before, Mayor Vincent Gray had buttered up the Rail~Volution audience by talking about the Dulles rail extension and streetcars, and ended by asking the audience to push for democracy for DC so that residents there can be represented like everyone else as Congress debates the issues of the day.

For example, the jobs bill: That's what LaHood wanted everyone to call up their members of Congress about. Or passing a "five-year" [sic] transportation bill.

Bill Millar reminded the audience that transit activism isn't just about those big federal-level initiatives that get caught in big federal-level partisan gridlock. Eight cities and towns will vote on transit-related ballot initiatives in November. Millar noted that on the very same day last November when the American people voted in a new class of self-styled fiscal hawks, they also voted nearly three-to-one in favor of pro-transit measures—even when they involved taxation.

"You can't rest when you get home!" Millar exhorted Rail~Volution attendees.

They gave him a standing ovation.

The Camden and Brunswick Lines offer even less service. The Camden Line's 18 trains between Union Station and Baltimore accommodate reverse commuting, but only during limited hours, and with an average headway of almost 50 minutes. The Brunswick Line's 18 daily trains, between Union Station, Frederick, and Martinsburg, are useful only for an eastward commute during normal working hours.

None of the three lines offers weekend or holiday service, although Amtrak does serve a few Penn Line stops.

Such limited service is not enough to give people a meaningful alternative to driving. And it is surely not enough to support Governor O'Malley's designation of five MARC stations as priority sites for transit-oriented development (TOD). Would TOD at Laurel and Savage, on the Camden Line, actually reduce energy use by TOD's potential of a third to a half? Would TOD at Aberdeen, with 12 MARC trains per day, be a meaningful contributor to Maryland's goal of reducing greenhouse gas emissions by 25% by 2020?

To address inadequate service, the Maryland Transit Administration (MTA) released the MARC Growth and Investment Plan (MGIP) in September of 2007. Full implementation of the plan would triple passenger capacity by 2035. It would also reduce headways to 15 minutes on the Penn Line and 20 minutes on the Camden and Brunswick Line, provide all-day, two-way service on all three lines, and add weekend service as well. The estimated capital investment cost for the whole plan is $3.9 billion.

$3.9 billion over 27 years sounds like a lot of money. But compare it to the $2.5 billion cost of the Wilson Bridge replacement, the projected $2.6 billion cost of the disastrous Maryland Intercounty Connector, and the up to $4.6 billion cost of the absurd proposed widening of I-270 in Montgomery and Frederick Counties.

Putting money towards the MGIP instead would be far more cost-effective, making rail a viable choice in the dense I-95 and I-270 corridors. It would link residents in eastern Montgomery and Prince George's Counties to the jobs in the western parts of Montgomery County and enable the development of real TOD around MARC train stations. Further, it would reduce traffic congestion, dependence on foreign oil, air and water pollution, and our region's contribution to anthropogenic global climate change.

Unluckily for all of us, however, the MTA proposed the plan just in time for the recession. As a result, MARC service was actually cut. And although a few more trains were recently added to the Penn Line, there has been no funding of the MGIP.

Until (perhaps) now.

There is new and increasing political support for raising Maryland's gasoline tax, which makes up a significant proportion of the revenues that go into the state's Transportation Trust Fund. (Note that gas is exempt from the state sales tax.) Because Maryland's gas tax has been 23.5 cents per gallon since 1992, Transportation Trust Fund revenues have not even kept up with inflation. They are now inadequate for basic maintenance of existing transportation infrastructure, let alone expansion.

In the 2011 General Assembly session, 37 Delegates sponsored a bill to add ten cents per gallon and adjust the gas tax for inflation; the Montgomery and Prince George's County executives and the mayor of Baltimore testified in favor. Montgomery County state senators Roger Manno and Rob Garagiola also sponsored legislation, and Senate President Mike Miller was in favor of the idea. The 2012 General Assembly will surely consider gas tax legislation as well.

This is great news—but only if the money goes to useful projects. It must not be spent on building new roads, which will only increase traffic, pollution, and future maintenance costs.

Instead, much of the money must go towards maintaining existing transportation infrastructure, including mass transit, roads, and bridges. And it is crucial for the rest to go towards expanding mass transit and pedestrian and bicycle facilities, within and between Maryland's cities and towns. Not only will this benefit everybody, it will also offset the regressive effect of the higher gas tax on the people who are least able to afford driving.

Ideally, as Senator Manno's bill did last year, the gas tax will have earmarks for mass transit, including the MARC Growth and Investment Plan. The tax should go up as transportation infrastructure costs go up, either through annual adjustments or by switching from a per-gallon to a per-dollar levy. And, to increase political support, it will return some of the revenue to the counties to spend on their own transportation priorities.

Funding all-day, two-way, weekday and weekend MARC service through higher gas taxes will pay off with better mobility and a cleaner, healthier, and more sustainable future for the region's residents. The alternative is more cars, more traffic, more sprawl, and more pollution. Is this really such a hard choice?

Virginia, Maryland, and DC are also raising record low amounts of revenue, adjusted for inflation, compared to almost any time in the history of their gas taxes.

Cantor says that federal bicycle and pedestrian funding in FY 2011 was around $1 billion. He claims that we spent $53 billion on highway and transit projects, which are the only types of transportation projects he considers appropriate. That means we spent 1.85% of our transportation budget on bikes and peds.

Unfortunately, the gap in our transportation budget is much larger than $1 billion.

The actual problem with the highway and transit trust funds is inflation. The federal gas tax was last raised in 1993. And since a penny buys less every year, so does the gas tax.

The federal motor fuel tax rate is currently 18.4¢ per gallon. That's the highest it's ever been in nominal dollars. But if we adjust for inflation, we see that in January 1994, 18.4¢ was worth 28¢ in 2011 dollars. That's a reduction of 34% in the value of the tax.

In actual buying power, the high point of the federal gas tax was in 1960. That year, the rate was just 4¢ (raised from 3¢ in 1959). But if we adjust for inflation, we find that 4¢ in 1960 is equal to 31¢ today.

In fact, at present we're on the cusp of dropping below the value of the gas tax when it was implemented in 1932. That year it was just one penny per gallon, which translates to 16.7¢ in today's dollars. That's not much less than the 18.4¢ we pay now.

In Cantor's home state, Virginia, the trend is even more stark. The gas tax is bringing in less money than at any time since the Commonwealth instituted the tax in 1923.

Back then, Virginia drivers had to pay a whopping 3¢ on each gallon of gasoline. But three pennies in 1923 is the equivalent of 40¢ today. That alone is more than today's Virginia and federal gas taxes combined, which add to 35.9¢/gallon.

Like the federal tax, the buying value of Virginia's state motor fuel tax has declined almost steadily since its peak in 1933, when it was at 87.8¢ in 2011 dollars (a nickel in 1933 dollars). It was last raised in 1987, when it went from 11¢ per gallon to 17.5¢ per gallon (raised from 22¢ to 35¢ in 2011 dollars). Due to inflation, Virginia's gas tax has lost 50% of its value over the last 24 years, and is now lower than ever before.

This is a difficult concept for many people to understand, at least in the abstract. That makes it easy for people to accidentally or purposefully mislead with figures. Consider the position of the Virginia Petroleum, Convenience and Grocery Association, the industry group representing many convenience stores in the state:

Whereas, In 1987, the first full year after Virginia's motor fuel taxes were last increased, the state collected $468 million. For 2009 motor fuel tax collections were $904 million, an increase of 93.1 percent; ... Now Therefore Be It Resolved, ... VPCGA opposes any effort to expand local motor fuel taxation, as well as any effort to increase the rate of the existing local taxes...

Did you see what VPCGA did there? They looked at the revenues from 1987 and the revenues from 2009 and compared them directly. But a 1987 dollar is not equivalent to a 2009 dollar. It is intellectually dishonest to suggest that tax collections increased by 93%.

If we adjust the 1987 gas tax revenue to 2009 dollars we can make a more valid comparison. $468 million in 1987 would be a touch over $872 million in 2009 dollars. That means that the 2009 revenue of $904 million is only a 3.67% increase over the 1987 revenue.

Another problem with gas tax revenues is the growth in Vehicle Miles Traveled (VMT). VMT growth is outstripping growth in gas tax revenues. This is due somewhat to an increase in gas mileage. In Virgina, VMT increased from 54.8 billion in 1987 to 80.9 billion in 2009. That's a VMT increase of 48%, while motor fuel tax revenues increased by less than 4% (inflation adjusted) over the same period. This means that people are driving a lot more without paying the correspondingly higher taxes that would be needed to keep the transportation system fully funded.

Like the rest of the country, Virginia is facing ever greater demand for all modes of transportation, but it has not raised the primary tax funding these programs in 24 years. And in fact, due to inflation, that tax's value has been dropping.

The other jurisdictions in the region face the same issues.

Maryland last raised its gas tax in 1992. It's been declining ever since in inflation-adjusted dollars. The current tax of 23.5¢ was worth 37¢ of 2011 buying power in 1993. The high point for Maryland's gas tax was in 1933, when the 4-penny tax was worth 70¢ in 2011 dollars.

The District just raised its gas tax by 3.5¢ to match Maryland's, from 20¢ to 23.5¢. DC hit its peak in 1955, when its 6¢ tax was worth 51¢ in 2011 dollars.

Raising taxes is a hard proposition for many politicians these days, but if we're going to keep our transportation infrastructure competitive then we need to find new revenues. The gas tax may be all or part of the solution, and it is overdue to be raised.

It's been over 700 days since the transportation bill (SAFETEA-LU) expired. It's been extended 7 times since then. It's now set to expire on the 30th of this month. If Congress lets the extension expire, the federal gas tax will stop. So will construction projects and grants all over the country.

We need a new bill, not just an extension. And this bill needs to be more progressive than the last one. We need a bill that encourages complete streets, recognizes the ability of livable communities to affect transportation demand, and one that gives states and regions more flexibility to decide the best course.

But the only way we'll be able to catch up on our decaying infrastructure and prepare for the future is to deal with the decline of the value of the gas tax. Now that Congress is back in session, it's time to deal with this mess.

If our elected officials do decide to raise the gas tax, one way to stop continued inflationary slide in its value would be to make it a sales tax rather than an excise tax. So, instead of charging a tax each gallon, the tax could be levied on each dollar spent on gasoline.

Whatever the solution is, it won't be found merely by cutting bikesharing programs, even if that does make a good soundbite in Mr. Cantor's district.