Senators' gas tax idea faces difficult road
Despite strong support from the industry and motorists, last week's proposal by Sens. Bob Corker, R-Tenn., and Chris Murphy, D-Conn., is not expected to gain much traction in a politically divided Congress where ideology over taxes and spending colors almost every decision.
The Highway Trust Fund is projected to go into the red in mid-to-late August, forcing the Department of Transportation to slow down and eventually reduce federal highway-aid reimbursements to states for ongoing or completed projects.
The senators advocated a 12-cent increase in the gas tax over two years to meet existing spending levels; after that time period, they would index the gas tax to inflation to ensure the HTF's long-term sustainability. The plan would generate more than $160 billion over 10 years, they say.
But Greg Valliere, chief political strategist for Potomac Research Group, said over the weekend that the gas tax proposal has little chance of succeeding.
Corker and Murphy aren't up for re-election until 2018, and almost everyone who has to face voters sooner is opposed to a hike in the gas tax, he said on CNN Money.
Plus, the recent rise in gasoline prices and the growing insurgency in Iraq, a major oil-producing nation, "makes a tax increase virtually impossible," Valliere said.
In an effort to assuage GOP opponents of tax increases, Corker and Murphy claim they offset the higher gas tax by making permanent some tax breaks in the current tax extenders bill. Currently, Congress has to regularly renew many types of tax breaks. The senators say those provisions would save taxpayers about $190 billion over 10 years.
Opposition to increasing the federal gas tax has been strong in Congress and the Obama administration for six years, but several state legislatures in the past year have approved raising state fuel taxes on motorists and truckers.
Many states have already scaled back plans for highway maintenance and improvements because of uncertainty about future federal payments. The situation has developed over several years because of a drop in user fee collections, primarily from fuel taxes, with the advent of more fuel-efficient cars. The gasoline and diesel taxes are assessed on a per gallon basis, but have not been raised since 1993. During that time, the Highway Trust Fund has lost 40 percent of its purchasing power. Congress has transferred more than $50 billion of general fund dollars into the HTF in recent years to make up for the shortfall. Spending from the HTF is now projected to outpace revenues by more than $160 billion in the next decade.
The current surface transportation bill expires Sept. 30, but analysts predict Congress will not reauthorize transport programs this session. In the meantime, lawmakers are struggling to develop a stop-gap measure to fill the HTF with enough money to meet obligations.
The Corker-Murphy plan, which was presented for consideration with the surface transportation legislation, drew praise from the American Highway Users Alliance, labor unions, the construction and trucking industries, the U.S. Chamber of Commerce and infrastructure advocates.