LaHood to Congress: It’s Time to Talk About a Gas Tax Increase

As Congress maneuvers to end the political impasse over the next long-term national transportation bill, lawmakers are going to have to debate an increase in the federal gas tax, Transportation Secretary Ray LaHood said today.

Trans_Secretary_Ray_LaHood_Discusses_Cash_Jx_HxR08cPwl.jpgTransportation Secretary Ray LaHood (Photo: Getty Images)

In his remarks at a Fort Worth transportation meeting, first reported by the local Star-Telegram, LaHood stopped far short of reversing the White House’s stated opposition to raising the federal gas tax, which has remained at 18.3 cents per gallon since 1993.

But LaHood appeared to edge the door open to a solution to the nation’s transportation funding crisis — provided that lawmakers swallow their re-election concerns and acknowledge that the current gas tax is no longer raising enough money to run an effective system.

Here’s what LaHood said today (emphasis mine):

To index the federal fuel tax [to inflation], that’s something Congress is going to
have to decide. As we get into the reauthorization bill, the debate
will be how we fund all the things we want to do. You can raise a lot
of money with tolling. Another means of funding can be the
infrastructural bank. You can sell bonds and set aside money for big
projects, multi-billion-dollar projects. Another way is [charging motorists for] vehicle miles traveled. The idea of indexing the
taxes that are collected at the gas pump is something I believe
Congress will debate.
When the gas tax was raised in 1992 or 1993, in
the Clinton administration, there was a big debate whether it should be
indexed. At that time, they thought there’d be a sufficient amount of
money collected. Now we know that isn’t the case. That is one way to
keep up with the decline in driving, and more fuel-efficient cars.

Another fact not mentioned by LaHood: Transportation construction inflation has increased at a rate twice as high [PDF] as the Consumer Price Index, the Labor Department’s traditional method of measuring price hikes for household goods. That means that raising the federal gas tax to appropriately reflect the cost of infrastructure improvements would be even more challenging than many in Washington now admit.

  • Give me smart VMT already. With congestion pricing and higher tax for heavier and less fuel efficient vehicles. Don’t like the high tax, then get a hybrid or just plain drive less. Let’s get on with it, our transportation system is broken due to insufficient funding. The VMT would be the fairest way to pay for it. Light car, less of an impact on infrastructure, less tax. Heavy car, greater impact on the roads and bridges, higher tax. Drive a lot, then pay more in taxes. Why should others subsidize the high mileage drivers? I’m tired of it. Let’s fix this problem once and for all with some 21st century technology. Concerned about privacy, you gave that up when you signed up for Internet access, so get over it.

    Keep on biking,

  • Larry Littlefield

    (Transportation construction inflation has increased at a rate twice as high [PDF] as the Consumer Price Index.)

    Yet another group with effective lobbying power raping the rest of us. What this means is that those who do transportation construction are charging those who produce other goods and services twice as much. So they have become twice as well off. And like many sectors with similar pattern, there is a tie to what used to be the public sector.

    When I calculated that the cost of NYCT signal projects had more than doubled, I thought that particular conditions in that industry were somehow responsible. I ran into someone who still works there who asked if I had any idea what they could do about it. In reality, perhaps not.

  • ME

    The link to the report comparing CPI to transportation construction costs doesn’t seem to be working. Could you please correct? That report sounds very interesting and I’d love to see it. Thanks!

  • Link is fixed!

  • clever-title

    I’m not surprised by the high price inflation rate in road & bridge building. Unlike consumer goods, there isn’t a lot of pressure to reduce the amount of material in roads. Raw materials have been increasing in price until recently, as the Federal Reserve has been devaluing the dollar. Labor costs have been rising lately, since there are a limited number of people with the skills and equipment to do this kind of work. The billions of stimulus directed towards infrastructure in the past year or two raises the demand for their services, and contractors have been able to raise their rates.

  • You assert, “Transportation construction inflation has increased at a rate twice as high as the Consumer Price Index.” The graph in your supporting pdf ends in 2007, however. While anything’s possible, I would be surprised if the assertion holds today.

  • Charles, I suggest you check out the Bureau of Labor Statistics’ databases, which allow you to see current construction inflation data. While the numbers dipped and rose rapidly at around the time the stimulus was being debated, the sector still experiences much higher inflation than average consumer prices. And given that federal transportation spending is authorized on a six-year basis, builders have lost purchasing power while dealing with a bill that was last changed in 2005.

  • Elena — Thanks for your suggestion. I’m abashed to admit that I came up empty in my search of BLS databases. Can you send me a link to the index you have in mind? Thanks. — Charles


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