Business groups urge Congress to pass gas tax

Congress should pass a multiyear bill that reauthorizes collection of the federal gas tax and maintains or increases funding to pay for highway projects and mass-transit programs, business groups told Congress this week.

Lawmakers need to keep funding at current levels or higher to prevent job losses in the hundreds of thousands, and project and contract delays worth billions, the groups, including the U.S. Chamber of Commerce, wrote in a letter to Congress Wednesday.

The current funding is set to expire March 31, but the absence of a bill complicates future projects as land, labor and materials get more expensive, the coalition, under the banner Americans for Transportation Mobility, wrote in the letter.

The federal government spends roughly $50 billion a year on transportation projects through the Highway Trust Fund, paid for mostly through a 18.4-cent-per-gallon federal tax on gasoline sales. The Congressional Budget Office projects the trust fund could run dry by the summer or fall of 2012, because it has spent more money than it has taken in. Higher prices at the pump and a weak economy have caused gasoline sales to drop, resulting in less revenue from the tax.

The fund was projected to bring in $37 billion in 2011, according to the CBO. An estimated $100 billion is needed over the next six years to maintain highway and mass-transit project funding at current levels. Congress has reached a standstill over passing a multiyear bill in large part because of differences over how to close the gap — by cutting spending or offsetting the gap with other federal dollars.

Texas ranks last in the nation on how much it gets back on federal taxes on gasoline sales, at 83.5 cents per dollar, according to the Heritage Foundation, a free-market advocacy group. Sen. Kay Bailey Hutchison, R-Texas, has long criticized federal funding as unfair. Earlier this year, she proposed allowing states to opt out of the federal highway program and instead get a rebate on federal gas taxes from in-state sales.

A House Republican proposal fronted by Rep. John Mica, R-Fla., chairman of the House transportation committee, would limit transportation funding to what the trust fund brings in over the next six years — representing a roughly one-third reduction from current spending. Mica’s bill is limited by a House resolution earlier this year that holds spending from the Highway Trust Fund to what it brings in.

Sen. Barbara Boxer, D-Calif., chairwoman of the Senate public works committee, wants a two-year bill with spending at current levels. Since the Highway Trust Fund could go dry, her bill would have a $12 billion hole.

Reuters reported that House Republican leaders were open to finding other sources of funding to keep monies for federal highway and transit programs at current levels.

The Obama administration has called on Congress to pass a clean extension of highway and transit programs. Republicans and President Obama have also said they oppose raising the gas tax to meet that end. The gas tax, which doesn’t rise with inflation, has remained unchanged since 1993. The Chamber has suggested that Congress raise it to fund more infrastructure projects.

The business group coalition “acknowledges that there are significant challenges in finding the revenue that Congress has identified would be needed to maintain current levels of service,” the coalition’s letter said without specifying how to find the money.

1 Comment

  1. Sterling Minor

    The federal (and state) taxes per gallon of gasoline and diesel ought to go up. These taxes should increase due to principles of fairness and practicality. Delaying required infrastructure improvements is a bad principle to build a country’s future around – it has not been the policy of America during any but short periods of time which unfortunately includes the past decade; this time has been the very opposite of the 1860s-1890s and 1950s and 1960s when we built railroads like crazy (private-national government partnership) and the Interstate Highways (state-national government partnership).

    #1