Lawmakers debate possibility of gas tax increase

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The gas tax, which has been the traditional funding source for road and transit improvements, brings in approximately $35 billion per year. However, the last surface transportation bill that was passed by Congress spent $54 billion per year.
 
The chairman of the House Transportation Committee's highways and transit panel said on Tuesday that it was imperative that lawmakers address the problem before they have to craft another road and transit bill.

"MAP-21 is set to expire on September 30, 2014, and current projections show that the Trust Fund will once again become insolvent and unable to meet its obligations starting in fiscal year 2015," Rep. Tom Petri (R-Wis.) said in reference to the 2012 Moving Ahead for Progress in the 21st Century Act. 

"Without changes in spending levels or additional revenue, the trust fund will continue to be unable to meet its obligations over the 10-year budget window," Petri continued. "Many of our members were not in Congress when previous funding shortfalls were addressed, and it is important that members understand the fiscal reality we face and the measures the U.S. DOT would need to take."

Democrats offered a potential solution that has been a tough sale for an entire generation of politicians: raising the federal gas tax.

The gas tax was last raised during former President Bill Clinton's first year in office, but the ranking Democrat on the Transportation Committee said on Tuesday that states have been upping the ante on their own in the meantime.

"States are increasingly coming up with their own plans for raising additional transportation revenues," Rep. Nick Rahall (D-W.Va.) said, citing states like Maryland and Virginia, which both passed new transportation funding packages that included state gas tax changes earlier this year.

"Over the legislative years 2010 through 2013, seven states enacted significant transportation revenue-raising measures," Rahall continued. "This includes a diverse group of states taking steps to increase transportation infrastructure investment by generating additional revenues from a variety of sources."

The idea quickly ran into resistance from rank-and-file Republicans on the Transportation Committee.

"We're sitting here talking about a tax increase," Rep. Tom Rice (R-S.C.) said. "We just had a tax increase on January 1 and we're going to have another tax increase next year with ObamaCare."

Rice said he agreed that more funding was needed for transportation projects, but he said lawmakers should concentrate on lowering the price of gas before they talked about increasing the tax on fuel purchases.

"I don't think most Americans know what the fuel tax is," Rice said. "What they know is the price of gas. If we find a way to bring the price of fuel down, it might be easier to raise the gas tax a couple of pennies."

Rice said projects like the controversially Keystone XL oil pipeline could help bring the price of gas down enough to make a fuel tax increase more palatable.

"If you could employ some of these things and somehow bring the fuel price down, if you say you need a 9 cent increase in fuel tax, I don't think most people would even know," he said.

Department of Transportation Undersecretary for Policy Polly Trottenberg told lawmakers that either way they were going to have to do something.

Trottenberg said the use of diesel fuel has been increasing in recent years as businesses rebound from the 2008 economic recession, but she said there has not been a similar boost in passenger traffic.

"The growth of passengers is kind of flat, so what you see in terms of revenue when you look at the trust fund, it only goes up a little bit," Trottenberg said.

Congressional Budget Office (CBO) Natural and Physical Resources Cost Estimates Unit Chief Kim Cawley agreed, telling lawmakers that "the current trajectory of the Highway Trust Fund is unsustainable." 

"Starting in fiscal year 2015, the trust fund will have insufficient resources to meet all of its obligations, resulting in steadily accumulating shortfalls," Crawley said in testimony that was submitted to the panel.

Crawley said if lawmakers continue transferring money from other areas of the federal budget to make up the difference in transportation funding, as they did in the MAP-21 bill, they would have to transfer at least $15 billion in 2015 if road and transit spending remained at 2013 levels. 

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