Despite Low Gas Prices, Gas Tax Hike Appears Unlikely

A person gets fuel after gas prices dropped below $2 a gallon at the Quick Mart in High Point, N.C., Wednesday, Jan. 14, 2015. (AP Photo/Daily Free Press, Laura Greene)
A person gets fuel after gas prices dropped below $2 a gallon at the Quick Mart in High Point, N.C., Wednesday, Jan. 14, 2015. (AP Photo/Daily Free Press, Laura Greene)

JOAN LOWY, Associated Press

WASHINGTON (AP) — The new Republican-controlled Congress is facing an old problem: where to find the money for highway and transit programs.

With gasoline prices at their lowest in years when the new Congress convened, there had been talk that it might be time to raise federal gas and diesel taxes, which haven’t budged in more than 20 years.

But already, GOP leaders are tamping down expectations, leaving no clear solution to the funding problem.

“I don’t know of any support for a gas tax increase in Congress,” Sen. John Cornyn, R-Texas, the No. 2 Senate GOP leader, said flatly. Explained Sen. John McCain, R-Ariz.: “They don’t want to vote for a tax increase.”

House Speaker John Boehner, R-Ohio, while not closing the door entirely, said there aren’t enough votes in the House for a gas tax increase. Rep. Bill Shuster, R-Pa., the House Transportation and Infrastructure Committee chairman, was equally doubtful.

“The president has ruled out a gas tax. I don’t think there’s a will in Congress, and the American people don’t want it,” Shuster recently told The Associated Press.

The gas tax, now 18.4 cents a gallon, and the diesel fuel tax, now 24.4 cents a gallon, were last increased in 1993. In the meantime, Americans are driving less per capita, cars are more fuel efficient and construction costs have gone up. Fuel taxes bring in about $34 billion a year to the federal Highway Trust Fund, but the government spends about $50 billion a year. The trust fund has been the main source of federal transportation aid to states for more than 60 years.

In that environment, two key GOP senators — Finance Committee Chairman Orrin Hatch of Utah and Environment and Public Works Committee Chairman James Inhofe of Oklahoma — had raised the hopes of transportation advocates by saying raising fuel taxes should be considered along with other funding options, using the more politically palatable term “user fees.” But the idea appears to be a long shot at best.

Congress has kept transportation programs teetering on the edge of insolvency since 2008 by repeatedly transferring just enough funds from the general treasury — and making corresponding spending cuts elsewhere in the federal budget — to meet obligations for a few more months or, in one case, as long as two years. Finding acceptable spending cuts to offset the transfers gets more difficult each time.

The latest funding patch cleared Congress last August only about three hours before the Transportation Department said it would begin cutting back aid payments to states. That fix is only expected to last through May, when Congress will be back where it started unless lawmakers act sooner.

“The political support for increasing taxes to pay for transportation appears to be very limited,” said Joshua Schank, president of the Eno Center for Transportation, a think tank.

A majority of Americans think the economic benefits of good transportation outweigh the cost, but they can’t agree on how to pay for new highways or repairs of old ones. An Associated Press-GfK poll last summer, before the plunge in gas prices, showed 58 percent opposed raising federal gasoline taxes to pay for repair, replacement or expansion of roads and bridges. Only 14 percent supported an increase.

The lack of voter enthusiasm for raising gas taxes hasn’t deterred die-hard gas tax supporters who say it is preferable to a one-time fix because it would ensure continued funding. Rep. Earl Blumenauer, D-Ore., issued a statement Thursday saying he intends to reintroduce a bill to raise fuel taxes 15 cents a gallon. He introduced a similar bill last year, but it wasn’t considered by the GOP-controlled House. Blumenauer estimated the increase would raise an additional $210 billion over the next decade.

President Barack Obama has previously rejected a gas tax increase, instead proposing to close corporate tax loopholes and use the revenue to pay for infrastructure. His plan would boost highway spending 22 percent and transit spending 70 percent over four years.

Transportation Secretary Anthony Foxx told a transportation conference this week that’s still the administration’s preferred option, but he also expressed “openness to ideas that emerge from Congress.”

Sen. John Thune, R-S.D., the No. 3 Senate GOP leader, who helped raise speculation that a fuel tax increase might be possible when he said all possible funding options should be considered, including a gas tax increase, this week described such a possibility as “unlikely.”

“I can’t see a scenario for some sort of user fee increase that you’d have to offset with tax relief in some other area,” he told reporters. “Nobody is going to vote for a gas tax increase.”

Instead, Thune said, closing tax loopholes, especially those that encourage corporations to move overseas, and using the money to pay for infrastructure is his “preferred option.” But he also observed that “tax increases are always hard, and there’s a perception that we ought to be able to find savings in other areas to fund infrastructure.”


Follow Joan Lowy on Twitter at http://www.twitter.com/AP_Joan_Lowy

Copyright 2015 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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