Until transparency and truth in taxation are restored, it’s going to be a hard sell to get Americans to agree to any gas tax hike, especially if it gets siphoned off for toll projects, hike & bike trails, transit and rail boondoggles or some other non-road purpose. Hopefully, Cavuto’s legitimate concerns will start a national discussion on the state of highway funding in this country and hold politicians’ feet to the fire.
By Terri Hall | January 7, 2014
Neil Cavuto interviews Congressman Earl Blumenauer of Oregon/Fox News Insider
Tired of your road taxes disappearing? So is Neil Cavuto, with the Fox Business Network who hosts his own daily show where he recently unleashed his frustration on U.S. Representative Earl Blumenauer (D-Oregon) over the congressman’s proposal to hike the federal gas tax by 15 cents. The current federal gas tax is 18.4 per gallon, which has remained unchanged since 1993.
Cavuto asked what many Americans want to know – where are our road taxes going? Where is the toll money going? Our roads and bridges are crumbling or in perpetual states of construction or reconstruction, yet we’re still stuck in traffic. Now Congress wants us to pay more and Cavuto asks a legitimate question. Why should we?
Road funding has not been very transparent nor has it been used to fund true priorities. With local and state governments also having their hands in the till with the power to direct federal gas tax revenues to local projects, your gas taxes could be funding light rail, greenbelts along highways, $18 million rest stops with free WI-FI as the Texas Department of Transportation did, or for far flung things like restoring historic courthouses.
Remember the bridge to nowhere in Alaska? Let’s take a walk down memory lane on that 2005 federal highway bill known as SAFETEA-LU. Not only did it include $320 million (in three separate earmarks) to build the Gravina Island Bridge in Alaska with a population of 50 residents (which had no relevance to the federal taxpayer), the bill contained over 6,000 earmarks for congressional pet projects. One even funded a parking lot for a PRIVATE university in San Antonio, Texas.
Gas taxes have long served as congressional slush funds for projects having no federal relevance and which often don’t relate to highways. Indeed, state highway departments became departments of transportation as a means to cloak the diversion of road taxes to non-road purposes, chiefly to mass transit projects.
Hike & bike trails
Blumenauer chairs the Congressional Bicycle Caucus and is a huge advocate of Agenda 21-style ‘Complete Streets’ policies designed to restrict auto mobility and elevate other more politically correct modes of travel – biking and walking. Many Americans have had their streets ripped up and reconfigured to make way for dedicated bike lanes with five foot buffers, shrinking auto capacity and using scarce road dollars for exclusive bike lanes, are seldom used. Other methods include taking out already limited street parking to make way for bicycle lanes and/or expanded sidewalks.
One of the chief tenants of Agenda 21 is to restrict mobility. Complete Streets policy is a big step in restricting mobility as are toll roads. Not only do toll taxes limit the number of travelers who can use toll roads thereby restricting mobility, but in some cases, like in Texas, gas taxes are used to actually build, subsidize, or provide loan guarantees for toll projects. This misuse of gas tax double taxes motorists and makes all taxpayers foot the bill for roads they may never use or afford to drive. It’s also not truth in taxation. When people take a toll road, there’s an expectation the toll pays for the road they’re driving on; that’s no longer the case.
In Virginia, residents have challenged in court the use of toll revenues from the Dulles Tollway being used to finance the extension of a METRO rail project. So, toll drivers are being forced to pay for a rail project they won’t be using. In states all across the country, including Pennsylvania, officials wanted to slap tolls on I-80 in part to pay for transit improvements in Philadelphia that doesn’t even touch that stretch of roadway. In Illinois, politicians sold off the Chicago Skyway to private operators for 99 years and used the money to pay-off some city debt.
In New Jersey, drivers are experiencing toll hikes every year for five years to pay for improvements in New York. Trucks now have to pay $102 to cross bridges into New York.
Then there’s the toll roads that aren’t paying for themselves. The HOT (High Occupancy Toll) lane projects I-95 in Virginia, I-75 in Georgia, I-635, I-820, and I-10 in Texas, have all used tax money to build those toll projects that can’t pay for themselves with the toll users alone. The list goes on and on of the abuse of motorists to pay for things they don’t even use. Toll roads are no longer a user fee, they’re a tax, and road funds (whether gas tax or toll taxes) have become an unaccountable slush fund used by politicians to finance projects that can’t pay for themselves.
What is the solution?
When all the mistrust and feelings of betrayal are pushed aside, there is a legitimate structural road funding shortfall. We can’t continue to expect to build today’s roads with a 20-year-old revenue stream. The simple, most affordable solution is to index the gas tax to inflation (with a cap to protect taxpayers from Jimmy Carter level inflation bumps).
Some states have other special-interest-driven questionable methods like using its sales tax on vehicles to fund roads versus getting lost in the abyss of a state’s general fund. Virginia and Maryland have repealed their state gas taxes. Virginia replaced it with a percentage-based sales tax on gasoline and a litany of other tax hikes that went well beyond an attempt to keep pace with inflation and exploded into the largest tax hike package in state history.
One of the most invasive and politically unpopular solutions is the idea of levying a tax paid for every mile you drive called the vehicle miles traveled (VMT) tax. Blumenauer is an advocate of such a tax, and Oregon is one of the states with a pilot program testing a VMT tax. Sen. Barbara Boxer who chairs the Senate Environment and Public Works Committee recently tried to preempt attacks by privacy advocates suggesting that rather than government tracking every citizen’s vehicle, the program could be based on the ‘honor system,’ where people self-report their annual VMT. That won’t work. Imagine federal income tax being voluntary. Boxer also signaled she’d look at Virginia’s recent tax package as a model for what to do on the federal level.
Leverage: The coming road funding debt bomb
None of these options even scratch the surface of the debt bomb we’re facing. The federal TIFIA loan program is 100% borrowed money from the Federal Reserve, and it’s being loaned out at record rates to subsidize and essentially bail out a litany of failed toll projects that can’t pay for themselves. The South Bay Expressway in San Diego went belly up in less than three years and taxpayers lost nearly $80 million on the toll road that was off its traffic projections by nearly 40,000 cars a day. Rather than scrap the TIFIA program, Congress bolstered it by a factor of ten from $100 million a year to $1 billion a year. Boxer is a huge fan of TIFIA and Congress is now contemplating expanding this bad idea to water projects calling it the WIFIA program.
U.S. Rep. John Delaney, (D-Maryland), has proposed an American Infrastructure Fund (AIF). It would be a $50 billion, 50-year revolving fund financed by the private sector to serve as a bond guarantor and to make loans for infrastructure. Delaney claims there are no taxpayer guarantees or any increase in the national debt, but the fund merely shifts the debt off the federal books.
The $50 billion would be leveraged to magically secure $750 billion in infrastructure financing that revolves over 50 years, ultimately funding $1 trillion in infrastructure projects over time. The money would be loaned to companies with earnings parked overseas and the incentive for companies to invest in the fund is that for every dollar they buy in AIF bonds they can bring $4 in overseas earnings back to the United States tax-free. So when you hear the term ‘leverage,’ think debt. Lots of it and in most cases, taxpayers will be on the hook for it.
Texas leads the nation in road debt
States aren’t faring any better. Texas, which brags about its fiscal conservatism and pro-business tax environment, leads the nation in road debt at $31 billion in principal and interest. All of this debt is going to come home to roost and it’s going to get ugly. Americans had better wake-up to the road funding debt bomb AND coming tax tidal wave and make this an issue in political races at all levels of government. America deserves a fiscally sound, affordable highway system.
But until transparency and truth in taxation are restored, it’s going to be a hard sell to get Americans to agree to any gas tax hike, especially if it gets siphoned off for toll projects, hike & bike trails, transit and rail boondoggles or some other non-road purpose. Hopefully, Cavuto’s legitimate concerns will start a national discussion on the state of highway funding in this country, and hold politicians’ feet to the fire, institute accountability measures, and shore up our highway funding implementing the most affordable, most transparent option with the support of the American motorist.
Terri Hall is the founder of Texans Uniting for Reform and Freedom (TURF), which defends against eminent domain abuse and promotes non-toll transportation solutions. She’s a home school mother of nine turned citizen activist. Ms. Hall is also a contributor to SFPPR News & Analysis.