SmartComment Lays Out The Nation’s Highway Funding Alternatives

Thomas Mullen
August 19, 2015

Imagine for a second that you have the coolest job in the world (besides working for SmartComment, of course). You’ve got responsibility, exciting travel, even a small touch of fame. And because we’re all adults here, let’s assume you also have dependents. But not just a few. We’re talking 250 million of them. Oh, and there’s one more catch: Instead of receiving a paycheck commensurate with your status and obligations, you make a lot less. Like, basically your old junior high allowance from 20-plus years ago.

Well, obviously you can’t provide for all those dependents on that. So you complain to your boss, who says he’d like to bring you up to a manageable salary but simply doesn’t have the money right now. Well, the truth is he has it. He just doesn’t have it for you. He claims to be working on a plan to get you on your feet and begs you to keep working, but he already knows you’re going to do that because he knows YOU’VE GOT 250 MILLION DEPENDENTS.

So you keep plugging away, warning all who will listen that this is a starkly untenable situation that’s going to cause you to snap eventually. Everyone hears you, of course, but you’ve been toughing it out for a while so they just kind of assume you’ll make do… somehow. And then finally — when you’re plumb out of cash and simply unable to go on — the old man tosses you a couple extra bills he claims to have found under the couch to keep your head above water for another few months. You know, until he figures something out.

Sounds crazy, right? Unfortunately that pretty much sums up the funding policy for our federal highway system, which serves 250 million American drivers but continues to rely on a 20-plus year-old funding level that has been wholly inadequate pretty much that entire time.

Washington — which has been famously gridlocked over how to fix all this — just passed a three-month highway funding patch, but a long-term solution remains elusive. This situation is important to us at SmartComment — and not just because we love transportation innovation, and our public comment software plays a key role in a number of important highway projects. It’s important because we’re Americans and the highway system is pretty much the backbone of the country. So allow us to take a short break from our comment management duties to lay out the possible long-term highway funding alternatives as they appear to be shaping up.

Solution #1: Raise the Federal Gas Tax

America’s highways are funded primarily by the gas tax, which — despite rising inflation and highway costs — has been stuck at 18.4 cents per gallon since it was last raised in 1993. Factor in today’s more fuel-efficient vehicles — which use far less gas — and it’s no surprise the Highway Trust Fund has spent years on life support, buoyed only by temporary infusions as Congress throws a little bit of cash at the problem as it considers what to do for the long-term. The latest funding patch — $8 billion from the general fund — was recently passed and expires in October, when the federal government will again have to wrestle with this bear. And while nearly everyone agrees the system needs fixing, there is little agreement on how to do it. Democrats have proposed a 15-cent gas tax raise that would provide about $170 billion for the highway fund over the next 10 years, but raising any kind of tax is verboten among many conservative Republicans. About as close as they’ve come is April’s proposed Bridge to Sustainable Infrastructure Act, a GOP proposal that would increase the gas tax by a half cent the first year then adjust it for inflation from there — which, opponents say isn’t nearly enough to sustain the highway fund. Despite the ongoing impasse, each frustrating temporary patch job builds momentum toward addressing the federal gas tax, with even Republican John Thune, chair of the Senate transportation committee, declaring it an option.

Solution #2: Raise State Gas Taxes

While Washington D.C. remains locked in a stalemate, a dozen or states have decided to stop waiting around and are actively taking up the issue themselves. And the surprising part? The vast majority are decidedly red states with a conservative Republican leadership that has somehow managed to open the gas tax debate while avoiding the wrath of their tax-averse constituent bases. Iowa raised its fuel and diesel tax by 10 cents in February, Idaho raised its 7 cents, and Utah added 5 cents to its state fuel tax. Meanwhile, Nebraska, South Carolina, Missouri and Louisiana are among other states looking to broach the issue as well. Even blue states are turning to the more conservative elements in their legislatures to spearhead their efforts. In California, Republicans have said they’re open to increased fees on motorists, but first want to take steps to increase efficiency and ensure that existing funds are directed toward transportation projects.

Solution #3: Institute a Pay-As-You-Go Mileage Fee

While the gas tax is the most obvious and widely debated source of highway funding, some are proposing a new funding model that charges highway users for every mile they drive. Proponents of the so-called VMT (vehicle miles traveled) tax say it’s a fairer method of road funding with a simple premise: use the roads more, pay more. Supporters say the gas tax is flawed since people with more fuel-efficient cars can exert more wear-and-tear on the roads and still pay less than someone who drives less but happens to sit behind the wheel of a gas-guzzler. While a slew of experts support this model, the question tends to focus on how individual miles are counted. Technology certainly supports a GPS-driven reporting model that shows when and where cars are driving, but many balk at the related privacy concerns. A simple odometer reading might suffice, but wouldn’t give policy-makers the rich data they would need for other funding-related purposes — to establish an adjusting rate system that charges people less for driving during off-peak hours, for example.

Solution #4: Start a National Infrastructure Bank

Still, some leaders say the time has come for a long-gestating idea that could be a feasible and permanent supplement for federal funding — or even replace it altogether. A National Infrastructure Bank, supporters say, could be formed to step in and finance large transportation projects that currently rely on the gas tax-fueled highway fund. It would act pretty much the way a bank does for consumers. State and local governments (customers) would apply for an infrastructure bank loan to fund their transportation project, the infrastructure bank would charge them a modest interest rate to cover its costs, and those using the loan would pay the loan back through tolls, taxes or some other funding vehicle. While the idea has garnered support from all corners of the political universe — from Bernie Sanders to Lindsey Graham to the U.S. Chamber of Commerce — the sticking point focuses on where to get the billions in seed money the bank would need to start functioning. So, in other words, we’re kind of right back where we are with the federal gas tax.

Solution #5: Keep Things As They Are

Admittedly, this one is not ideal. But until lawmakers break the road-funding stalemate, it might be what we’re stuck with for the time being. We’d call the current funding patch method a Band-Aid for a battle wound — except this Band-Aid is temporary, needs constant replacing and has to be stolen from who it was actually meant for. Republicans have proposed a longer-lasting Band-Aid that would include selling off the nation’s $9 billion Strategic Petroleum Reserve and fund highways through the 2016 election, but even the most hardened opponent to raising the gas tax would admit the temporary patch system is not an adequate solution to anything.