This commentary originally appeared in Forbes on October 23, 2015.
Ohio Governor and presidential candidate John Kasichcalled for the elimination of the federal gas tax yesterday at a New Hampshire town hall event. This is exactly the sort of serious policy discussion that ought to occur during a presidential campaign.
In criticizing long-standing D.C. practices that enhance federal power at the expense of the states, Kasich said, “Here’s how it works in Washington: You take your gas money, you send it to Washington, the politicians divide it up, come up with a bunch of pork and then they send less back to us. What do we need them to send it for? Let’s just keep (in the states) and we can tax ourselves and pay for our roads.”
The federal government taxes $0.184 on a gallon of gasoline and $0.244 for diesel with about 40 percent of the $50 billion spent annually going to programs earmarked by Congress, such as urban rail systems. But the fuel taxes only generate 68 percent of the Highway Trust Fund’s expenditures, with the remainder coming from general federal revenue, much of it borrowed.
Groups interested in the billions of dollars it takes to pour more concrete for roads and bridges or build mass transit systems don’t like the idea of the federal government stepping out of the transportation funding business for a few reasons. First, they benefit from having a centralized power center to lobby for funds and rules and restrictions that benefit their industry. Second, they benefit from the general revenue subsidy of about $16 billion per year on top of fuel tax revenue of $34 billion—money that states with more limited borrowing authority would be hard-pressed to make up.
Gov. Kasich, an 18-year veteran of the House of Representatives, aimed his comments at Congress as it works against next Thursday’s deadline to reauthorize the federal Highway Trust Fund.
In suggesting returning transportation policy and funding to the states, Kasich noted that federal involvement in a road’s financing and maintenance prevents states from tolling. Other federal restrictions mandate one-size-fits-all rules on things such as bike lanes, designs and materials, limiting flexibility and innovation.
The Congressional wrangling over reauthorizing the six more years of federal transportation funding comes at a time of shifting habits for American drivers who are driving fewer miles (see graph). Through 2006, the overall number of miles Americans put in on the roads steadily increased, only showing downturns during WWII when gasoline was rationed, and again during the oil embargo shocks of the 1970s. Many analysts believe that we may be seeing a sustained downward trend in driving habits as younger Americans use the Internet more and their cars less.
Americans are driving less, likely due to increasing Internet use
Adding to the pressure of federal and state lawmakers to find ways to pay for transportation, improved fuel efficiency and growing use of vehicles that aren’t powered by traditional fuels are reducing the amount of gas tax revenue compared to miles driven. Further, the sharing economy, with Uber, Lyft and innovations such as Ford’s program to help its truck owners generate some cash by renting out their vehicles, may result in a lower share of vehicle ownership, further cutting into vehicle-related taxes that many states use to fund transportation. Lastly, automated vehicles promise to revolutionize transportation, potentially making roads safer and far more efficient.
Disruptive and beneficial change is coming to the transportation sector. Federal involvement serves to resist change with vested interests redoubling their efforts in Washington to preserve the status quo. Devolving transportation authority to the states will allow 50 laboratories of democracy a chance to experiment in providing the best mix of transportation options to their constituents.
Chuck DeVore is Vice President of National Initiatives at the Texas Public Policy Foundation. He was a California Assemblyman and is a Lt. Colonel in the U.S. Army Retired Reserve.