Slipping gas tax puts 'potholes' in highway funds
Already jolted by rapidly rising gasoline prices, American motorists are finding the roads they travel more jarring as well. The two are related. Gasoline consumption is falling because of higher prices and more efficient automobiles; that, in turn, is having a negative effect on gas tax revenues needed to repair and maintain the nation's roads and highways.
State and federal highway funds come largely from gasoline taxes, levied for the most part as a fixed fee per gallon. The federal tax is 4 cents a gallon, and state taxes range from 5 cents to 12 cents a gallon.
So even as gasoline prices soar, lower fuel consumption has reduced tax revenues to the Federal Highway Trust Fund and held increase at the state level far below the inflation rate.
Meanwhile, highway maintenance and building costs are speeding ahead faster than in most other sectors of the economy, because many of the materials are petroleum based. The Federal Highway administration, which administers the Highway Trust Fund, estimates road construction costs are rising at a 19 percent annual rate.
"Roads are wearing out faster than they are being rebuilt," is the flat assessment of Lee Mertz, director of policy planning for the highway administration. He adds that, although it is less apparent to motorists, the nation's bridges are also deteriorating as the highway funds that pay for their maintenance and repair diminish.
State legislators and federal transportation officials are exploring ways to bolster highway revenues, but no one believes the job will be easy since it inevitably requires higher taxes in one from or another.
The National Governor's Association estimates that at least half the states will attempt to enact gasoline tax increases in 1980 by either "indexing" taxes so that they rise in tandem with inflation or making the fee a percent of the gasoline sales price rather than a fixed sum as it is now. A tax figured on a percentage basis would grow with gasoline prices. In the last two years, 12 states have enacted gasoline tax increases.
The highway administration is exploring solutions in the form of a percentage tax on gasoline sales at the federal level, or new sources of revenue from the "windfall profits" tax recently approved by a House-Senate conference committee. Separate legislation that would dedicate some of the $227.7 billion raised by the tax to highway renovation is one option being considered.
As it stands now, the windfall tax bill will further strain the Federal Highway Trust Fund, which alone contribute about one- third of highway construction and maintenance expenditures in the US, according to Mr. Mertz. It calls for the continuation of an exemption put into effect last year on gasohol sales through 1992.
Exempting gasohol -- a blend of alcohol and gasoline -- from the 4 cents a gallon federal tax will cost the trust fund at least $3 billion in lost income over the next decade, estimates the American Association of State Highway and Transportation Officials. The exemption is an effort to increase gasohol consumption.
The Federal Highway Trust Fund is already under financial pressure. Last month, for the first time since 1965, income to the fund fell below expenditures , a situation that is expected to continue through 1980.
Still, the states are looking for more federal money to help them repair the giant interstate highway system begun in the late 1950s and deteriorating now in many areas of the country.
"The life expectancy of those highways was 20 years, and that underestimated the amount of traffic on the roads today," notes William Higgins of the American Association of State Highway and Transportation Officials.
States, in general, are falling behind on scheduled repairs and maintenance of their existing road systems, Mr. Higgins says.
Mr. Mertz says he believes the disrepair of the nation's roads is so readily apparent to Americans that they will accept higher gasoline taxes eventually. "Grass-roots support for better roads will make itself felt," he is confident.