Business, labor groups push for gas tax hike

Business and labor groups do not typically agree on much, but they came together on Wednesday to push Congress to increase the tax that is paid by drivers on each gallon of gasoline they purchase.

The 18.4 cents-per-gallon federal gas tax has not been increased since 1993, but transportation advocates said during a Senate hearing Wednesday that it was well past time for another increase.

U.S. Chamber of Commerce President Tom Donohue told the Senate Environment and Public Works Committee that increasing the gas tax would be "the simplest, most straight-forward, and most effective way to generate enough revenue" to cover an estimated $20 billion per year shortfall in transportation funding.

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"The gas tax hasn’t been increased since 1993," Donohue told lawmakers. "Cars are more fuel efficient, people are driving less, and inflation has eaten into purchasing power. As a result, the Highway Trust Fund is going bankrupt. We are already borrowing billions of dollars from the general fund. Next year there will be a $13 billion cash shortfall. By 2020, it will be $100 billion."

The last transportation bill that was passed by Congress in 2012, which maintained the 1993 gas tax status quo, included only enough funding to cover two years of road and transit projects. The 2012 bill contained approximately $54 billion a year worth of infrastructure spending, but the gas tax only brings about $34 billion per year.

The measure was shorter than most prior transportation bills, which usually lasted five or six years, because Congress had to use money from other areas of the federal budget to make up the difference.

Transportation advocates have pushed lawmakers to return to an at least five year bill to give states and local governments more funding stability as they are planning long-term transportation projects.

The Congressional Budget Office (CB0) has projected that Congress would need to find an additional $100 billion beyond the $34 billion is that typically brought in by the federal gas tax to pay for six-year transportation bill.
 
Donohue called Wednesday for lawmakers to include "a moderate increase in the gas tax, phased in over time" in any potential reauthorization to provide the necessary funding increase.

A gas tax increase beginning in 2015 "would provide the necessary funding, preserve the important 'user pays' principle, and provide needed stability," the Chamber president said.

Donohue pointed to recent decisions by states to increase their local gas taxes, saying "the sky didn't fall" when the pump fees went up.

He said federal lawmakers may not have a choice but to follow suit.

"If we give up on the Highway Trust Fund and just rely on general funds, we'll never complete capital projects," he said.

The Chamber leader received back up from an unlikely source on Wednesday from AFL-CIO President Richard Trumka, who told lawmakers that putting off finding more money for transportation would not save the federal government in the long run if infrastructure problems worsen during the interim.

"Not fixing your roof won't save you any money," Trumka said.

Trumka said he agreed with Donohue that a gas tax increase was the most viable solution for increasing transportation funding.

"The gas tax was last raised in 1993 when it represented 17 percent of the price of fuel; it now represents about five percent of the cost of fuel," he said. "Inflation has reduced the purchasing power of the revenue we collect. Further, the decline of vehicle miles travelled since 2009, coupled with more fuel- efficient vehicles, has seriously eroded the revenue coming into the trust fund."

Trumka said lawmakers have had two years since the funding for the 2012 transportation bill was cobbled together to consider alternative mechanisms for paying for road and transit projects.

But none have emerged as fully viable, he said.

"Despite the time we’ve had over the past few years to consider funding sources, no source has emerged that is significant enough to replace the user fee-based system and provide robust and long- term dedicated funding for our surface transportation system," he said. "Given that there are only seven months before the current authorization expires and that the trust fund may become insolvent before then, it’s time for elected leaders from both sides of the aisle to come together and find a solution."

Lawmakers on the Senate committee seemed receptive to the message that was coming from the business and labor leaders.

The panel's chairwoman, Sen. Barbara Boxer (D-Calif.), said she thinks "we should keep the user fee concept, because it does provide that type of certainty.

"I'm hoping we can get a five or six year bill out here," Boxer said. "It is our intent to have that bill before April."

Boxer said the decisions about the source for the money to pay for the reauthorization of transportation funding will be decided by members of the Senate's Finance Committee.

She said it would be helpful that there is some overlap between the upper chamber's Finance and Public Works committees, however.

"A few of our members sit on Finance, which is going to be extremely helpful," Boxer said.