Stern: Toll Roads NOT needed, what is? An Adequate Gasoline Tax

Link to TX Monthly blog here.

Toll Roads are NOT needed
The Alternative to Toll Roads: An Adequate Gasoline Tax
By Peter Stern
Texas Monthly blog
Monday, August 20, 2007

A fuel tax, a.k.a. gasoline tax, is a sales tax imposed on the sale of fuel. The fuel tax in Texas is currently set at 20 cents/gal since being raised to that amount in 1991.

As in most instances throughout the U.S. the fuel tax collected in Texas is dedicated to the building and maintenance of roadways; however, often it is 60-percent of the tax revenue that goes toward this effort while 40-percent of the collection is used for more general purposes, e.g., public and/or higher education. Consequently, much of the revenue is diverted to other interests.

We are told by Governor Rick Perry and the Texas Department of Transportation (TxDOT) that there is a vast shortage in the revenue for building and maintaining roadways and that the only method to improve that shortage is to generate toll roads.

Another reason for the lack of sufficient revenue from the collection of gasoline taxes is that the tax rate has been frozen in Texas since 1991. The reason for the freeze is unknown, at least publicly. Perry has been instrumental during his 2 terms as governor in continuing the freeze, frequently stating that increasing the gas tax is NOT an option. Furthermore, the Texas GOP has kept a platform of “No new taxes” and has supported the governor in maintaining the freeze on gasoline taxes.

So, apparently what we have in Texas is a self-imposed shortage of available financing to build and maintain roadways throughout the state. Six years ago Gov. Perry authorized TxDOT to “use whatever creative means available” to compensate for the shortage of financing and to generate more revenue for roadways. In reality, the meaning of that statement was for TxDOT and the legislature to develop the ways and means to build toll roads. The push for toll roads also was sparked by Perry’s wealthy pro-toll campaign contributors, which already had been determined and initiated when George Bush had been governor.

In conclusion, the shortage of revenue from the gasoline tax is self-imposed because of two reasons:

o The gasoline tax rate has been frozen since 1991
o Approximately 40-percent of gasoline tax revenue is being diverted to other interests.

Toll roads are NOT a cost-effective method of financing roadways. Generally, 80-percent of the toll revenue collected goes to the management, building and operations of the toll roads. It is not unusual for the state to contract the toll road to a private concern, e.g., on some toll projects the state has a 70-year contract with international toll maven CINTRA and its American partner Zachry Construction.

Because of the relatively inelastic nature of demand for fuel, in the short run the tax will be an effective source of revenue. In the long run, however, theory predicts that people adjust their consumption of petrol; that is, over a period of years, people will consume less as the price increases (by buying more fuel-efficient cars, for instance). Thus, some environmentalists have advocated a fuel tax as a way to reduce reliance on fossil fuels.

Still, the more intelligent alternative to toll roads is to permit the gasoline tax rate to increase naturally along with the inflationary index and cost-of-living factors and to ensure that 100-percent of the revenue collected from the tax goes to the building and maintenance of our roadways.

Gov. Perry has vehemently stated that he will NOT support increasing the gasoline tax.

However, if the state legislature agrees with and authorizes this effort, the revenue collected from adequate gasoline taxes will generate sufficient financing needed for building and maintaining our roads. Toll roads are NOT needed.