Conservatives have a healthy aversion to all tax hikes, and that is a good thing. Higher taxes generally mean bigger government and less freedom.

But sometimes tax hikes can be good, especially when they shift power from the federal to state governments and allow voters to hold their leaders more accountable.

"It doesn't matter whether you're Republican, Democrat, or Tea Party," Texas state Sen. Robert Nichols recently told the Wall Street Journal. "Everybody recognizes the need for transportation funding."

Nichols and his fellow Texas Republicans have not raised the Lone Star state's gas tax yet, but if they do, Texas would join a slew of other Republican-controlled states that have raised their gas taxes, including Florida, Indiana, Michigan and Kentucky.

Why are normally tax-phobic Republican governors signing off on gas tax hikes? Two reasons: 1) dwindling federal gas tax revenues; and 2) Americans can't agree on how to spend their transportation dollars. The two are related.

Created in 1932, the federal gas tax rose steadily until 1993, when it reached 18.4 cents a gallon. But while the price of a gallon of gas has more than tripled since then, the gas tax has stayed the same.

This means that, after inflation is factored in, states are seeing fewer federal transportation dollars than they did 20 years ago. This is one of the main reasons the Highway Trust Fund, which is supported by the gas tax, will soon be bankrupt.

Another reason the HTF is out of cash is that almost a fifth of its funds now go to nonhighway projects such as mass transit. And while liberals in blue states including California and New York love transit spending, rural red-state drivers see no reason why their gas tax dollars should be spent building subways in Los Angeles. As a result, the votes just aren't there to raise gas taxes in Congress.

Conservatives should seize this opportunity by pushing for a full repeal of the federal gas tax and an end to federal transportation grants to states. Such a move would not only cut taxes by $36 billion a year, it would also cut the deficit by $14 billion a year because the HTF will go bankrupt in 2014. States would then be free to raise and spend their own transportation funds as they saw fit.

Ending federal grants to states, such as the HTF, would restore exactly the type of "constitutional federalism" that the Founders originally intended, argues George Mason University Law School professor Michael Greve in his book "The Upside-Down Constitution."

Federal programs that deliver services through grants to states create two distinct problems that have led to a "cartel federalism," Greve explains.

First, when the federal government forms "partnerships" with states to deliver services (such as building highways or delivering health care through Medicaid), states often end up gaming the system in an effort to get other states to pay for their services.

Second, when federal and state governments jointly run a program, voters don't know who to blame when that program fails. "Problems should be regulated by one or the other level of government but not by both," Greve writes.

The Constitution, according to Greve, envisions a different kind of federalism: a "competitive federalism" that allows state to compete for citizens by each offering their own mix of taxes and government services.

This is exactly what President Reagan tried to accomplish in his 1982 State of the Union address when he proposed a deal for Democrats: Let the federal government take over Medicaid, cutting the states out of the program entirely, but eliminate all federal K-12 programs in return.

While states would have lost some control over health care, they would have become completely free of federal K-12 regulatory burdens. And voters would then know who to blame if health care or education services came up short.

Democrats ultimately rejected Reagan's offer, but Reagan is also the only president ever to decrease the size of federal grants to states during his presidency.

It is time conservatives got back to the Reagan game plan.

Conn Carroll ( is a senior editorial writer for The Washington Examiner. Follow him on Twitter at @conncarroll.