Gas tax issues still linger as the revenue shortfall grows

Whether or not the federal government is open or not, one thing (among many, to be sure) that remains largely inactive is the lack of any semblance of meaningful progress when it comes to fixing the many issues stemming from the federal gasoline tax.

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By Jeff Berman, Group News Editor

I know we have mentioned this here many times in the past, but, again, consider this: the federal gasoline tax has not increased from its current levels of 23.4 cents for diesel and 18.4 cents per gallon of gasoline since 1994. And diesel taxes represent about 90 percent of Highway Trust Fund (HTF) net revenues. These revenues are allocated for federal highway, transit, and highway safety programs. The current HTF tax levels have not been increased since 1993.

Even though the federal gasoline tax situation remains muddled, there are positive steps being made on a state level in certain states to increase taxes on their own in Maryland, Virginia, and Wyoming. And other states are starting to consider following suite vetting the possibility of raising their gasoline taxes to address their respective transportation infrastructure issues, which is both a state and national issue.

At a July hearing hosted by the House Subcommittee on Highways and Transit entitled “How the Financial Status of the Highway Trust Fund Impacts Surface Transportation Programs,” Representative Tom Petri (R-WI), the chairman of the House Subcommittee on Highways and Transit, said that in 2008 the HTF had insufficient revenues and cash balances to meet its obligations, which resulted in an $8 billion transfer from the United States Treasury General Fund. That transaction came at a time when the future of the HTF was dire, as it was facing the prospect of running out of money entirely. Petri added that by the end of 2014, a total of $54 billion will have been transferred from the General Fund into the HTF in order to remain solvent, including an $18.8 billion transfer signed off on by Congress as part of the federal transportation bill, MAP-21, which is set to expire in September 2014.

And the Congressional Budget Office said this year that the HTF will have a $15 billion shortfall in 2015.

Not surprisingly, no movement has been made on the fuel tax front, but a hearing hosted by the Senate Environment and Public Works (EPW) Committee last week revisited the issue as part of a hearing entitled “The Need to Invest in America’s Infrastructure and Preserve Federal Transportation Funding.”

Senate EPW Committee Chair Barbara Boxer (D-Calif.) floated the idea of replacing the tax with a fee that is paid by oil wholesalers, akin to what is currently being done in Virginia and Maryland, according to a report in The Hill.

Boxer explained that eliminating that tax lieu of a wholesale oil tax increase would help close an approximately $20 billion shortfall in transportation spending Congress is looking to solve.

“There are many ideas out there, and the one that I’m leaning toward myself, although this is going to be a decision of the [Senate] Finance Committee ... is to do away with the per-gallon fee at the pump and replace it with this sales fee as they’ve done in Virginia and Maryland,” Boxer said during the hearing, The Hill reported. “It would fund the highway program for six years ... I think, and it would do that by doing away with all the other fees.  It’s a very exciting idea.”

The CBO’s projected $15 billion shortfall is viewed as “the tip of the iceberg,” said Janet Kavinoky, Executive Director, Transportation and Infrastructure, U.S. Chamber of Commerce Vice President, Americans for Transportation Mobility Coalition, at last week’s EPW hearing.

The reason for this, she said, is that the cumulative shortfall in the highway and mass transit accounts of the HTF will exceed $80 billion by 2020 if spending levels are not dropped significantly.

It is easy to see these are serious numbers that need a serious solution. Given the juvenile antics getting in the way of progress in Washington, are we asking for too much?


About the Author

Jeff Berman, Group News Editor
Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman

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