Low Gas Tax Could Cost Drivers More

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Amid budget cutbacks, the deterioration of America’s roads, bridges and highways has accelerated to an alarming degree. The kicker, however, is that by forsaking the notion of raising the gas tax, car owners may end up costing themselves more money in the long run.

Earlier this month, retiring U.S. Sen. George Voinovich (R-Ohio) sent a letter to President Barack Obama’s debt commission, beseeching it to recommend increasing the gas tax to shore up the Highway Trust Fund, which is now insolvent. Although it may be counterintuitive to think that raising taxes can save drivers money, numerous studies have shown that poorly maintained roads end up costing car owners a good deal of money in increased maintenance and repairs.

An April 2010 study by the U.S. Public Interest Research Group highlights the dire situation facing our highway system and, in turn, car owners. Poor road conditions cost U.S. drivers $67 billion annually, an average of $335 per motorist, the study says.

“This comes in the form of tire damage — having to replace tires — damage to suspensions, exhaust systems that can hit the ground and vibration that can jostle connections loose,” said Karl Sieg, vice president of the American Society of Civil Engineers’ Pittsburgh section.

“Now this obviously varies depending on where you live and the conditions of roads. For example, it would be much higher if you’re in the Boston-to-Washington megalopolis,” Sieg said. “But people underestimate what all these failing roads cost them — and we’re only talking repairs here, not safety or benefits to the environment or when a bridge falls down like in Minnesota.”

In some places, that repair cost alone is staggering. New York City’s lagging infrastructure costs $638 per driver per year, according to the Future Mobility in New York study. Terrible roads in North Carolina cost drivers $1,350 a year, according to the transportation group TRIP. Even tax-averse red states like Oklahoma are not immune: The state’s poor roads cost its drivers an average of $630 a year, according to TRIP.

Back to Gravel

The New York Times and the Wall Street Journal have recently run sobering pieces on states’ efforts to squeeze services to save money. “We’ve been in the bottom 20 percent of funding for 40 years,” said Bill Shreck, director of communications for the Michigan Department of Transportation. “Our folks have gotten pretty clever trying to stretch dollars.”

One way to stretch dollars is to return roads to gravel. Thirty-eight of Michigan’s 83 counties have broken-down paved roads. Alabama and Pennsylvania have started similar downgrading processes. South Dakota has returned more than 100 miles to gravel. And my home state of Ohio is simply letting some rural roads erode.

This increasingly popular policy can be a double-edged sword, according to John Habermann of Purdue University, organizer of the seminar “Back to the Stone Age.”

“We have to ask if some of these roads should ever have been paved,” Habermann said. “Is having 100% of roads paved a realistic goal?”

On the other hand, he notes that gravel roads do have drawbacks. They kick up an enormous amount of dust. They can chip paint, crack windshields and, if driven on enough, deal your vehicle a troublesome amount of road vibration.

“If volume is low enough, it makes sense to have a stone road. It’s definitely a viable way to carry traffic, depending on community needs,” Habermann said. “Basically, it’s about the understanding of decision-makers.”

Underfunded Infrastructure

Perhaps it’s also about the will of those decision-makers, particularly in higher office. America’s infrastructure has gone chronically underfunded for some time now at local, state and federal levels. In his letter, Voinovich pointed out that Congress has had to transfer billions of dollars from the General Fund to prop up the Highway Trust Fund. Why? The federal gas tax has been stuck at 18.4 cents since 1993. Meanwhile, inflation and the rising cost of construction materials have eroded that revenue’s buying power by 67%. The rise in gas prices in the past few years has also affected gas tax revenue at the state level, according to Shreck.

“People are driving less and buying more fuel-efficient cars,” he said. “It’s accelerated the issue because we thought we wouldn’t be facing this for another 10 or 15 years.”

The American Recovery and Reinvestment Act of 2009 helped some, allotting $48 billion to the Department of Transportation to dole out to states, but that’s hardly enough to make up for the continued deficit between what motorists pay to use roads and what it takes to maintain them.

Sieg cites his own state of Pennsylvania as the perfect example. Because both state and federal gas taxes are not indexed to inflation, elected officials will have to play a massive game of catch-up. Sieg estimates it will take a 48-cent increase in the gas tax to bring the Keystone state’s D-minus roads up to snuff. That equates to about $300 per year for each driver (based on a 25 mpg car traveling 15,000 miles). That’s still below the estimated $335 repair cost estimate from the PIRG study.

“It’s a User Fee”

“The gas tax really isn’t a tax,” Sieg said. “It’s a user fee. I call it the MFUF: motor fuel user fee. For instance, when you pay a sales tax to fund education, you pay that tax whether you have kids in school or not. But paying a motor fuel fee, you’re paying based on the stress you put on the highway system — how much you drive, how heavy your vehicle is. It’s probably the fairest thing that exists.”

Shreck points out that by delaying road maintenance, states and taxpayers are basically shooting themselves in the foot. “It costs seven times as much to make a poor road good than maintain a good road, so it’s costing us more in the long run,” he said.

As hard times lead to thriftier spending on infrastructure, the cost to car owners from dilapidated roads will only increase. If raising the gas tax isn’t politically palatable, elected officials will have to get creative — perhaps by creating the long-discussed infrastructure bank, embarking on a vast increase in the number of toll roads or creating a steadily increasing gasoline price floor (a price at which gas prices never fall below with the revenue heading to the Highway Trust Fund).

The bottom line is that if drivers don’t want to pay for their highways and bridges, they’re going to end up paying a much larger hidden tax to keep up their vehicles. Infrastructure specialists like Sieg have a dire warning for those who balk at increasing the gas tax:

“Our country built the greatest transportation system the world has ever known, and now we’re just pissing it away.”