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Brawner: How to fund the highways? Not this way

Posted: July 19, 2014 - 10:29am
Steve Brawner
Steve Brawner

How long could your family pay for today’s needs with tomorrow’s dollars before it would start to catch up to you? Congress is doing something like that, again.

The Highway and Transportation Funding Act of 2014 would provide extra highway funding for 10 months by pulling money from future revenues through a tactic known as “pension smoothing.” This allows employers to delay contributing to their employees’ pension plans, thus raising the employers’ taxable incomes now. Under a formula, they’ll make up the difference later, reducing their taxable incomes then, and at that point a future Congress will have to budget for that lost revenue. But that’s a problem for the future Congress.

The House of Representatives passed the $10.8 billion bill this past week, with all four Arkansas House members voting yes – which I guess they had to do, because the alternative was a train wreck. The Senate is expected to vote on the matter as early as this coming week.

This is happening because we’ve reached yet another unnecessary fiscal crisis. The Highway Trust Fund, which reimburses states for highway costs, will be dry within a couple of weeks — the result of too few dollars funding too many projects. The Arkansas Highway and Transportation Department (AHTD) has already delayed some contracts in case that happens.

Money flows into the fund as a result of federal highway laws passed periodically by Congress. In the past, these have been five- or six-year deals so states could make long-term planning decisions. It takes, after all, a long time to build a highway. The most recent, MAP-21, lasted only two years, and now it’s expiring. The Highway and Transportation Funding Act would extend MAP-21 only to May.

Highways are funded mostly through fuel taxes. These are easy to collect, they don’t require that much bureaucracy, and they are considered to be fair because they are user fees. The person using the government service, the highway, is the one who pays for it.

But the federal fuel tax has not been increased since 1993, which means inflation has eaten away at it. Meanwhile, cars have become more fuel efficient, so we’re buying fewer gallons to drive the same distance, thereby paying even less in fuel taxes. At the same time, construction costs have risen.

There’s waste in the highway system, of course, but even if all of that were eliminated, the country still would be investing far too little in its aging and decaying infrastructure. According to the American Society of Civil Engineers, the average bridge in America is 42 years old.

For now, the easiest, quickest, most efficient way of increasing highway funding is raising the gas tax, but politically that’s a tough sell. Even the Connecting Arkansas Program passed by voters in 2012 exempted fuel as part of its half-cent sales tax. Meanwhile, the fuel tax faces an uncertain future. As Scott Bennett, AHTD director, points out, reducing fuel consumption is a national priority, so how can consumption continue to be the primary way we fund highways? The Obama administration is suggesting letting states put toll booths on interstates — an inefficient way of collecting money that is inconvenient for drivers. Oregon is testing a vehicle miles traveled tax, where drivers’ mileage would be tracked, and they would be taxed accordingly.

It may be that the only solution now is for states to bear greater responsibility for maintaining and constructing the nation’s roadways. According to Bennett, 70 percent of Arkansas highway construction funding comes from the federal government, but other states pay more of their own way.

Arkansas voters have shown a willingness to pay for highways. In addition to the Connecting Arkansas Program, they also voted in 2011 for the Interstate Rehabilitation Program, which funds interstate improvements through a bond issue. Those two programs are funding $3 billion worth of work. On the other hand, they only apply to 4 percent of the state’s highway miles.

What do you think? Raise fuel taxes? Build toll booths? Track how far (and maybe where) we drive? Let the states take care of it?

Something has to happen. There are only so many times future dollars can pay for current work.

(Follow Steve Brawner on Twitter @stevebrawner)

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arkansan
1082
Points
arkansan 07/22/14 - 02:51 pm
3
0
pension smoothing

What a scheme. Coming from the same folks who order the Postal Service to prefund retiree health benefits for 75 years into the future. The cost is staggering. As much as $5.8 billion per year to pay the benefits of future postal workers who aren’t even born yet.

I guess the fuel tax could be raised a little, but first loop holes need to be closed letting corporations pay no federal income tax. These corporations use the roads and highways to transport there goods and make obscene profits.

Twenty-six of the most powerful American corporations – such as Boeing, General Electric, and Verizon paid no federal income tax from 2008 to 2012. Tax subsidies for the 288 companies over the five years totaled a staggering $364 billion, including $56 billion in 2008, $70 billion in 2009, $80 billion in 2010, $87 billion in 2011, and $70 billion in 2012.

Wells Fargo received the largest amount of tax subsidies - $21.6 billion - in the five-year period. The banking giant was joined on that list by the likes of AT&T, ExxonMobil, J.P Morgan Chase, IBM, Procter&Gamble ConocoPhillips, Chevron, Chesapeake Energy, Goldman Sachs, Coca-cola, Union Pacific, Intel, Wal-Mart and many more.

http://www.ctj.org/corporatetaxdodgers/sorrystateofcorptaxes.php

MessiahAndrw
1356
Points
MessiahAndrw 07/22/14 - 04:10 pm
3
0
I say let the states take

I say let the states take care of it. We have a really huge road network in the US compared to anywhere else in the world. I think it largely has to do with the fact that our pattern of development (our zoning system) separates uses by incredible distances.

The more you space things out, the farther you have to drive to somewhere - the more miles per day people are driving on your roads and the more traffic you have. I'm not talking about density, but the configuration of what we've already built. We plan it so most of our retail is over one side, and most of our houses are on the other side.

We have a traffic problem because our so-called planners planned for one. http://www.strongtowns.org/journal/2014/5/21/car-dependent-by-design.html

No other country has this many traffic lights, 4 lane + turning lane connecting to nearly every subdivision, to handle so many cars per population. Then we hear about how the highway trust fund is constantly running out of money. -.-

It really doesn't have to be that way, and in a true free market system the market tends to optimize land usage to minimize traffic (I am planning to write a computer simulator in the near future showing this.)

lachowsj
6014
Points
lachowsj 07/23/14 - 08:15 am
1
0
Two thoughts

1) This article reminds us that the use of automobiles is a subsidized activity in this country, just like buses and light rail and bicycle lanes. Sometimes automobile users forget this basic fact. We can argue whether various subsidies are desirable and at what level, but we can't pretend they don't exist and try to demonize one kind of transport over another. We should work toward a reasonable balance.

2) As Mr. Brawner has pointed out before, both Republicans and Democrats are guilty of smoke and mirrors budgeting. All politicians know that it is an appealing message if you can convince voters that you can get something without paying for it. You can't. At some point we must reduce services or raise additional revenues or both. Voters need to stop buying the political BS and to throw out the rascals who attempt to hide that basic truth.

MessiahAndrw
1356
Points
MessiahAndrw 07/23/14 - 12:57 pm
0
1
I agree. Driving is the most

I agree. Driving is the most subsidized activity. Think of all the federal Highway Trust Fund, the Arkansas State Highway and Transportation Department, and our local counties and cities pay.

conwayville
558
Points
conwayville 07/23/14 - 05:23 pm
1
1
fuel tax

Fuel tax is slightly unfair. Maybe it was a little more fair in 1993. If you think about vehicles and how they've changed over the last 20 years or so, you'll notice that diesel fuel is taxed a good bit more than gasoline. That is because all big trucks (18 wheelers) that are responsible for most of the destruction of our roads are powered by diesel fuel. But wait. Why is it that if I go buy a Volkswagon Jetta that weighs 3200 lbs pays the same tax as OTR trucks that weigh 80,000 lbs, sometimes more?

I'm sure the bureaucrats have it all figured out.

jsegraves99
176
Points
jsegraves99 09/07/14 - 12:07 pm
0
0
Congress has been...

...doing something like that for decades.

Drew67a
19
Points
Drew67a 09/09/14 - 07:20 am
1
1
This is nickel and dimes.

Raise the fuel tax another 10 cents from the current rate of around 18 cents and it will cost us an additional $2.00 a tank for larger vehicles.

I fuel up once a week - so it would cost me a whopping #2.00 a week. Half the stupid sugary latte from Starbucks I get every morning. We would generate nearly 50% more revenue for the roads and no one would even notice it. The jobs that it would immediately create nationally would be tremendous. A 50% increase in road projects means for every two you see now - there would be three instead. Lots of jobs. Huge benefits for those of us who use the roads and everyone else to boot.

Complainers need to remember that they're paying dang near $35 a gallon for that latte.

mikeng1994
0
Points
mikeng1994 09/09/14 - 08:12 am
3
1
Real people drink coffee. Tax

Real people drink coffee. Tax loving liberals drink lattes

Drew67a
19
Points
Drew67a 09/10/14 - 04:55 am
0
0
Hahaha - No doubt right :)

Hahaha - No doubt right :)

While usually this right-wing conservative is against any new taxes, this is really the ultimate and fairest type of tax we have - a use tax. It is paid by those who use the roads the most. But it is also shared by everyone to a certain extent.

AND this is also a much better way to fund infrastructure then the moronic ways of late.

PS: Straight and strong regular coffee for me thanks.

c'mon man
1364
Points
c'mon man 09/10/14 - 08:39 am
1
0
More orange barrels

"A 50% increase in road projects means for every two you see now - there would be three instead."

This would also increase the number of orange barrels on the roads by 50%. That would be a nightmare.

I would rather see them have the same number of projects going on, but have the workers working around the clock to get them finished much faster. This would open up the roads much quicker and have less traffic problems. Plus, they could move onto the next project much sooner. They would be able to get more projects done in the same amount of time and each individual project would be finished quicker too.

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