Using General Funds to Finance Transportation Infrastructure Not a Viable Solution

The Infrastructure Investment and Jobs Act that passed the Senate contains, in section 13002, authorization and funding for a national pilot program for a mileage-based road fee. I have written about, and advocated for, the mileage-based road fee many times during the past 17 years, in posts such as Tax Meets Technology on the Road, Mileage-Based Road Fees, Again, Mileage-Based Road Fees, Yet Again, Change, Tax, Mileage-Based Road Fees, and Secrecy, Pennsylvania State Gasoline Tax Increase: The Last Hurrah?, Making Progress with Mileage-Based Road Fees, Mileage-Based Road Fees Gain More Traction, Looking More Closely at Mileage-Based Road Fees, The Mileage-Based Road Fee Lives On, Is the Mileage-Based Road Fee So Terrible?, Defending the Mileage-Based Road Fee, Liquid Fuels Tax Increases on the Table, Searching For What Already Has Been Found, Tax Style, Highways Are Not Free, Mileage-Based Road Fees: Privatization and Privacy, Is the Mileage-Based Road Fee a Threat to Privacy?, So Who Should Pay for Roads?, Between Theory and Reality is the (Tax) Test, Mileage-Based Road Fee Inching Ahead, Rebutting Arguments Against Mileage-Based Road Fees, On the Mileage-Based Road Fee Highway: Young at (Tax) Heart?, To Test The Mileage-Based Road Fee, There Needs to Be a Test, What Sort of Tax or Fee Will Hawaii Use to Fix Its Highways?, And Now It’s California Facing the Road Funding Tax Issues, If Users Don’t Pay, Who Should?, Taking Responsibility for Funding Highways, Should Tax Increases Reflect Populist Sentiment?, When It Comes to the Mileage-Based Road Fee, Try It, You’ll Like It, Mileage-Based Road Fees: A Positive Trend?, Understanding the Mileage-Based Road Fee, Tax Opposition: A Costly Road to Follow, Progress on the Mileage-Based Road Fee Front?, Mileage-Based Road Fee Enters Illinois Gubernatorial Campaign, Is a User-Fee-Based System Incompatible With Progressive Income Taxation?. Will Private Ownership of Public Necessities Work?, Revenue Problems With A User Fee Solution Crying for Attention, Plans for Mileage-Based Road Fees Continue to Grow, Getting Technical With the Mileage-Based Road Fee, Once Again, Rebutting Arguments Against Mileage-Based Road Fees, Getting to the Mileage-Based Road Fee in Tiny Steps, Proposal for a Tyre Tax to Replace Fuel Taxes Needs to be Deflated, A Much Bigger Forward-Moving Step for the Mileage-Based Road Fee, Another Example of a Problem That the Mileage-Based Road Fee Can Solve, Some Observations on Recent Articles Addressing the Mileage-Based Road Fee, Mileage-Based Road Fee Meets Interstate Travel, If Not a Gasoline Tax, and Not a Mileage-Based Road Fee, Then What?>, Try It, You Might Like It (The Mileage-Based Road Fee, That Is) , The Mileage-Based Road Fee Is Superior to This Proposed “Commercial Activity Surcharge”, The Mileage-Based Road Fee Is Also Superior to This Proposed “Package Tax” or “Package Fee”, and Why Delay A Mileage-Based Road Fee Until Existing Fuel Tax Amounts Are Posted at Fuel Pumps?.

The proposed pilot, which relies on volunteers, is pretty much along the lines of the one in which I participated several years ago. The one in which I participated simply sent a pro forma “what if” invoice that I was not required to pay, whereas the federal pilot will collect and then return a user fee. It’s not clear why the pilot will go through those motions but it might have something to do with analyzing the data.

The inclusion of the pilot program in the legislation has sparked a variety of reactions. One, in a commentary brought to my attention by reader Morris, carries the headline “Might be time to start thinking of funding our roads with something other than user fees, like gasoline or mileage taxes.” Understanding what the author, John Tsitrian, means by “something other” requires reading the commentary and then guessing. He defines something other as “general funding” but doesn’t identify what taxes or fees should be implemented or increased to provide the necessary monies in the “general funding” account.

Tsitrian rests his theory on the claim that “all of us, no matter how much or how little we drive, are ‘users’ of our roadways.” That is almost completely true, in the sense that transportation infrastructure benefits not only drivers but also those who don’t drive but are driven or who receive items delivered by vehicles. Perhaps there are a few people who are so “off the grid” that they are unaffected by road use, but if they exist they are so small in number that their existence does not detract from Tsitrian’s point.

But though everyone, or almost everyone, uses or benefits from the use of transportation infrastructure, the degree of use varies. Fuel taxes and mileage-based user fees allocate the cost of building, maintaining, and repairing roads proportionate to the use. People who benefit from road use but who don’t drive pay a proportionate share of those fuel taxes because taxi, Uber, Lyft, and similar drivers pass the taxes along to their passengers in the cost of the ride. People receiving deliveries pay delivery charges that take into account the fuel taxes paid by the owners of the delivery vehicles. So, bottom line is that everyone benefitting from the use of roads is paying, directly or indirectly, the fuel taxes used to maintain and repair the roads. The problem, of course, is that the total taxes being collected falls far short of what is required. So when Tsitrian argues that, “It seems much more equitable for the cost of building and maintaining our highways to be spread out over the entire populace,” and that “Now’s the time to consider that concept,” he misses the point that the incidence of fuel taxes already is spread out over the entire populace. And when he claims that the mileage-based user fee “unfairly puts the burden on drivers who use a system that is an essential feature of life for all of us, whether we drive or not,” he ignores the reality that drivers whose driving benefits others would pass the fee along to passengers and customers in the same manner they currently pass the fuel tax along to their passengers and customers.

Tsitrian then claims that, “Eliminating taxes for drivers would put a substantial amount of money into circulation throughout our economies, which would probably have some noticeable impact on local, state and federal GDPs.” The reality is simple. Though people would stop paying fuel taxes they would face increases in whatever other taxes are used to fund the “general funding” that Tsitrian wants to use to fund highway repair and maintenance. The only way that the elimination of fuel taxes would put more money in the pockets of drivers is if no other taxes or fees are enacted or increased. That scenario requires either reduction or elimination of highway repair and maintenance, or reductions in spending for other services funded by general funds.

Another problem with Tsitrian’s proposal is that leaving highway funding without a dedicated funding source subjects the maintenance and repair of highways to the vagaries of legislative budget debates. One can imagine even more closed highways and bridges, and even longer periods of closure, because general funds are frozen while legislatures wallow in gridlock. There are enough problems with transportation infrastructure funding without needing to add yet another roadblock to the restoration of the nation’s bridges, tunnels, and highways.