Pumping up gas taxes promises fiscal gain, political pain

The struggle in the states to find the money to cover mounting transportation infrastructure costs is ramping up political pressure. In Pennsylvania, for example, Democratic frustration with Republican Gov. Tom Corbett's inaction on the issue boiled over, with House Minority Leader Frank Dermody (D-Allegheny) suggesting that the Pennsylvania Department of Transportation should be renamed the Department of Deferred Maintenance. Gov. Corbett blasted the move as "ballsy" and heaped blame back on the Democrats for not doing enough to fix the infrastructure funding crunch when they were in charge of state government.

Expect the rhetoric to heat up in other places, too, as federal lawmakers continue to skate around the transportation fiscal crisis by refusing to raise the 18.4 cents-per-gallon federal fee on gasoline purchases. That leaves states in the lurch to figure out for themselves how to fix and improve their roads, bridges and mass transit sytems.

In my neck of the woods, there are two divergent approaches to tackling the problem of paying for transportation. The D.C. region, of course, is at the top of the list of the most congested cities in America. Our extensive network of roads, bridges and rails is tapped out in terms of capacity and condition. So when it comes to massive infrastructure repair needs, Maryland and Virginia both rank very high.

In Maryland, where I live, Gov. Martin O'Malley has boldly proposed legislation to increase the state's gas tax (phased in annually over three years), which would add about 21 cents a gallon by 2015. Currently, the state collects $738 million annually from its gas tax but the infrastructure needs of the state exceed a billion dollars every year. Gov. O'Malley's gas tax increase would raise nearly $625 million additional revenues each year to spend on infrastructure. That extra money would come in handy for a state where almost half of all bridges and roads are in poor or mediocre condition and over 50% of urban highways are clogged with traffic.

In an opinion piece by Douglas Duncan over the weekend, published in the Washington Post, the chairman of the Suburban Maryland Transportation Alliance warned that the failure to invest in transportation has cost the state tens of thousands of jobs, "and the price tag will only go up if we don't reverse course." Duncan noted that Maryland's gas tax has not been raised since 1992 and, because it is not indexed to inflation, it has lost roughly 60% of its value.  

"Without a major increase in funds," added Duncan, "we simply will not be able to keep pace with basic maintenance needs, let alone anything left to deal with one of our biggest threats to future prosperity and quality of life."

As noted by Duncan, Gov. O'Malley's proposal would cost the average Maryland driver about $90 a year when fully implemented. Right now, drivers spend almost $2300 a year in wasted gas and extra wear and tear, according to the Road Information Project. Duncan calls the governor's proposed tax increase "the right medicine" because, from a job-creation perspective, "we are not just on life support, we are about to flat-line." 

Cut to Virginia, where I was born and raised, and where Republicans control both chambers of the state legislature and the governorship. Gov. Bob McDonnell's piecemeal approach to raising revenues -- diverting money from education and public safety to transportation and selling the naming rights to roads and bridges -- is unpopular with Democrats, who don't like the idea of divering money to transportation from general funds for education and healthcare. But many Republican lawmakers also find fault with the governor's tepid approach to bolstering infrastructure funding. 

“There’s not enough money to pay for all the needs we have,” Sen. John C. Watkins (R-Chesterfield) said, as reported by the Washington Post. “We are not going to wish our way out of this problem.”

That is why the Virginia Senate is pushing a proposal that would raise the gasoline tax at the rate of inflation. But Gov. McDonnell has riled senators for muting his support of the proposal to raise the gas tax in the face of opposition from the more conservative House delegates.

The Washington Post story noted that the Virginia General Assembly signed off on Gov. McDonnell’s plan to borrow nearly $3 billion for construction over three years — the largest infusion of funds into the cash-strapped transportation coffers in more than two decades. But now, some legislators in both parties apparently have serious reservations about whether McDonnell’s plan, which is estimated to bring in at least $115 million, provides enough money for maintenance and whether it amounts only to a short-term solution to a perpetual problem.

Once again, for politicians who reject the notion of raising the gas tax it is hard to view that as anything but an abdication of responsibility. Punting the problem down the road may be politically expedient, but it leads down the path of fiscal insolvency.