Pain, Prozac and the Pump

Monday, October 12, 2009

ONLY A HANDFUL of states tax gasoline at the pump as lightly as Virginia does. The state's drivers may applaud this -- until they find themselves sitting in traffic, wondering why the road system is such an underfunded disaster.

The fuel tax comprises the largest single chunk of funding for road building and maintenance in Virginia. The last time it was increased, in 1987, Ronald Reagan was in the White House, the Washington Redskins were champions and Prozac was just coming on the market. Reagan has since died, and the Redskins -- well, never mind that. But unless the state gets serious about replenishing its road construction funds -- including by raising the gas tax -- Virginians may need a lot more Prozac to help them navigate some of the most crowded roads in the nation.

The current state gas tax of 17.5 cents per gallon went into effect in January 1987, having been enacted by the General Assembly at the urging of Gov. Gerald L. Baliles (D) the previous year. Some Virginia politicians say privately that they wish that Mr. Baliles had thought to index the tax to inflation, as a half-dozen other states now do; fewer politicians have the guts to say so publicly. Today, inflation has sapped the purchasing power of that 17.5 cents so that it buys only slightly more than half what it did in 1987. According to the Virginia Department of Transportation, construction of a mile-long segment of a secondary road in Northern Virginia cost about $5.7 million in 1987; building that same segment would cost about $12.8 million today -- and that doesn't take into account the stratospheric cost of land acquisition in the region.

There is undeniable logic to having drivers bear the cost of building, improving and maintaining roads, but Virginia politicians, particularly Republicans, tend to regard proposals to increase the gas tax as if they were crimes against humanity. (Never mind that Reagan himself raised the federal gas tax when he was president.) But let's say the state raised the gas tax by a dime, to about 27 cents per gallon; what would be the effect, both at the pump and in terms of funding to improve and maintain roads?

The new rate would put Virginia's gas tax slightly ahead of Maryland (23.5 cents) but on a par with North Carolina (26.6 cents). Drivers would be unlikely to bear the whole cost of the increase; wholesalers probably would absorb some of the hike. In North Carolina, for instance, the current average price at the pump is $2.36 per gallon of regular, just six cents more than in Virginia. For a Virginian who drove 12,000 miles in a car that averaged 20 miles per gallon, that six-cent increase at the pump would cost $36 a year. At the same time, a gas tax set at 27 cents a gallon would provide the state with a badly needed shot in the arm for transportation -- extra revenue of $450 million to $500 million annually.

That would not replace the $700 million or so currently being drained from the state's road-building fund to pay for maintenance (as required by law). It would not reverse the salutary trend of more fuel-efficient vehicles, which are eroding the gas tax's yield in revenue for the state. Nor would it meet the $100 billion -- minimum -- in road funding that's needed by the state over the next 20 years. But it would be a start.

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