Lawmakers on both sides of the aisle say raising the gasoline tax for the first time in more than 20 years to shore up the insolvent federal Highway Trust Fund is possible this year.
The reasons for the interest in raising the gas tax are twofold: The Highway Trust Fund, which pays for fixing the nation’s roads and bridges, is in dire shape — it took a $9.7 billion transfer from the general Treasury to keep it operating through fiscal 2014 — and plummeting oil prices have lowered pump prices to an average of $2.17 per gallon nationwide, according to the AAA motor club.
Republicans, while not explicitly endorsing an increase in the gas tax, for the first time in years have said that it’s a legitimate option. The current highway funding bill expires at the end of May, and congressional leaders say they’re determined to avoid another short-term patch.
“I don’t think we take anything off the table at this point,” Sen. John Thune, R-S.D., said last week on “Fox News Sunday,” noting the fund faces a severe shortfall. The Congressional Budget Office projected the fund would be $120 billion in the hole in 2024.
Sen. Jim Inhofe, who has jurisdiction over the highway fund as Senate Environment and Public Works Committee chairman, said he agreed with Thune’s sentiment. But the Oklahoma Republican said he doubted the Senate GOP caucus would back an increase without some massaging.
“If we were to go to them today and say we want to have a user fee increase and we’re going to do all of our funding out of that, I’d say no. But we’re going to wait and see what we can put together,” Inhofe told reporters this week.
President Obama in the past has resisted a gas tax increase and put forward his own plan for addressing the nation’s highway infrastructure. But that was when prices were high, and the White House appears willing to consider raising the fee now, even if it’s not the administration’s preferred path.
“There are some in Congress that have different ideas, including raising the gas tax. That’s certainly something that we’ll take a look at it, but it’s not something that we have considered from here,” White House spokesman Josh Earnest told reporters this week.
Several states have already acted rather than wait for Congress to figure out a long-term fix. States such as Connecticut, California, Maryland, Kentucky, Nebraska, Georgia, North Carolina and Wyoming have raised gasoline taxes in recent years to help pay for road and highway repairs.
The federal highway fund’s financial problems are structural. Cars are becoming more fuel efficient, people are buying more electric vehicles and a shift toward urban living have reduced the need for driving. All of that has reduced revenue for the fund.
Inhofe noted that it was conservatives’ responsibility to fund the highway system, pointing out that the Commerce Clause in the U.S. Constitution calls for maintaining interstate highways. He said the conservative approach would be to find any solution necessary for a five- or six-year bill rather than continually plugging the gap through the general Treasury.
“This is what we’re supposed to be doing — defending America and infrastructure,” Inhofe said.
Democrats, who have advocated for an increase in the gas tax, still have concerns about how an increase would affect low- and middle-income families whose disposable incomes would take a larger hit with a higher tax. Senate Minority Whip Dick Durbin said an increase should be coupled with some sort of incentive, such as the Earned Income Tax Credit for employed low-income Americans.
“I think now is the time to do it. But we ought to do it in a thoughtful way,” the Illinois Democrat told reporters in the Capitol.
GOP allies off Capitol Hill have endorsed raising the 18.4 cent-per-gallon tax for the first time since 1993. The U.S. Chamber of Commerce has been a leading advocate, as it is worried crumbling infrastructure will constrain economic activity.
Inhofe characterized the gas tax as a “user fee,” since only people who fill up vehicles pay the tax. It’s a distinction that could help some conservatives wriggle out of the Americans for Tax Reform pledge to vote against tax increases, though the group hasn’t ruled on whether it would consider such action a violation of the pledge.
But that will be a tough sell in the House, where nearly all Republicans have signed the Americans for Tax Reform pledge.
Rep. Tom Reed, R-N.Y., said it didn’t matter what anyone called the gas tax. He preferred other options, such as using revenues from companies that repatriate their profits to the U.S. in an hopeful overhaul of the federal tax code.
Still, he didn’t rule out increasing the gas tax.
“I think we can do better. I think there’s alternative models out there,” Reed told the Washington Examiner. “I think there’s a way to be more creative to solve this problem. I’m very interested in that before we look at supporting any type of gas tax increase.”
