REP. PETER DEFAZIO (D-Ore.) has a long record of clever legislative proposals for financing infrastructure. His latest, announced Wednesday, is to increase the federal gas tax by up to 1.5 cents per year, with proceeds going to pay interest on an annual surface transportation bond issue of $17 billion through 2030. It would be the first hike in the gas tax, currently 18.4 cents per gallon, since 1993. The resulting dollars would pay for a 30 percent increase in spending from the Highway Trust Fund, above what’s currently planned.
A penny-and-a-half per gallon is almost laughably modest, given that the failure to raise the tax for the last quarter-century amounts to a 40 percent cut in real terms. However, Mr. DeFazio set the figure that low in deference to the long-established political wisdom that says a major gas-tax increase would be political death — even as he notes that the political realities may be changing. While Congress has cowered at the prospect of a federal gas-tax increase, state governments have been raising theirs. Since 2013, 19 states and the District of Columbia have enacted gas-tax increases or measures to prevent their erosion through inflation, according to the National Conference of State Legislatures. The most recent action was a 23-cent-per-gallon increase last year in New Jersey. This is not a strictly blue-state phenomenon. More than half of the increases came in states that voted for Donald Trump in 2016, including such heavily rural red states as Georgia and Idaho. Alaska’s legislature is currently debating a tripling of its gas tax; Tennessee’s Republican governor, Bill Haslam, is pushing a 7-cent increase.
What such states have in common is a backlog of highway maintenance and construction needs, and a willingness to ask drivers to share in the multibillion-dollar cost of meeting them. To be sure, this demonstrates a strength of federalism; difficult trade-offs are more likely to be made by people who directly experience not only the costs but the benefits. By its nature, the federal gas tax funds projects that may be remote from motorists who pay it, which is one reason increases are harder, politically.
Nevertheless, to the extent federal fuel taxes fund the Interstate Highway System, they help pay for truly national infrastructure that every American depends on to at least some extent. The fuel-tax increase needed to cover current Trust Fund spending plans would be small, roughly 10 cents per gallon, according to a 2015 Congressional Budget Office report — which is what we’d prefer. Many experts believe current low interest rates argue for borrowing to fund infrastructure, a proposal of which Mr. DeFazio’s, with its dedicated revenue stream, is a relatively fiscally responsible version. Debt-financing may indeed be appropriate for airports, harbors or national parks. Regarding highway construction and maintenance, however, paying as you go through the gas tax has a crucial advantage: It discourages the very activity — driving — that wears out highways in the first place.
In that sense, motor-fuel taxes are roughly equivalent to user fees; their additional good side effects include reducing greenhouse-gas emissions. So, Mr. DeFazio, we’ll see your penny — and raise you a dime.