Raise the gasoline tax?
Wed October 21, 2009 4:13 pm

In the comments to my earlier post, "Dewhurst hits bottom," referring to the light gov's op-ed piece in today's American Statesman, I wrote about what I would have done to close the budget deficit. One of my recommendations would be to raise the gasoline tax, index it to inflation, and issue bonds on the revenue.

This suggestion generated a response from the TxDOT camp. It is worth a discussion:

Paul, you really believe raising the gas tax and indexing to inflation will provide any additional funding?

It would need to be raised to about $1.50 per gallon immediately to fund current transportation projects and then raised very frequently. With the current TX population boom, projects will increase, and so will the need for funds. Eventually (soon), folks would stop paying $4 or $5 per gallon (carpool, public transit, etc.), and then the tax would be raised even more to account for lost revenue.

This is not to mention the additional dollars per gallon the gas tax would need to be raised to deal with more fuel-efficient vehicles that offset revenue (and they're getting more MPG all the time).

Relying on the gas tax is not an option. It would very quickly be raised so high that goods will stop moving across Texas, businesses will relocate to cheaper gas tax states, and our economy would quickly collapse.

I completely disagree that the gasoline tax has lost its viability as a source of revenue for building highways.

If we raised the tax by 50% (ten cents per gallon), and dedicated all the new revenue to roads (no diversions), it would raise about an extra $1.4 billion. That may not sound like a lot, but it would more than double the available baseline funding -- and if you index to inflation and add bonding ability, the ability to build roads grows accordingly.

I find it incredible that TxDOT and its supporters are still clinging to Ric Williamson's projection that the gasoline tax would have to be raised to $1.50 per gallon. Nonsense. TxDOT couldn't spend that kind of money if you drove up a Brinks truck and handed it to them. The $2.4B could clear up a lot of urban congestion: Loop 1604 in San Antonio, which needs a third lane going both directions; Highway 290 east out of Austin (probably tolled); U.S. 67 out of the Metroplex toward Cleburne; and these would be free roads. And that's this year. Next year there another $2.4B would be on the way.

It is true that fuel efficient cars have reduced the revenue raising capacity of the gasoline tax. But that doesn't mean that the tax is no longer viable, or that it has to be raised to $1.50 to get anything done, or that if you increase the gas tax our economy would collapse. Nobody believes that stuff any more. TxDOT has cried wolf too often.

I think that the prospects are decent for the Legislature to raise the gasoline tax next session. Dan Patrick, for example, has said that he would support a statewide increase (although he opposes a local-option gas tax). This is something that can get done, with a little leadership. Unfortunately, that's something we haven't had much of.

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