Gas Tax Restrictions Don’t Really Matter

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[UPDATE: Shutting down the comment thread here, which quickly degenerated into trolling and increasingly irrelevant responses to it.]

We’re often told that transit alternatives simply can’t be funded with the money used for projects like the Deep Bore Tunnel. Thanks to the 18th Amendment to Washington’s Constitution, the gas taxes that largely fund highways ostensibly can’t be used for non-highway purposes.

It turns out that may not be true, thanks to a recent Supreme Court decision. Last week transit advocates in Olympia were trying to figure out if the ruling rendered the traditional interpretation inoperative. But if the will to fund transit with gas taxes exists, I don’t see that the amendment matters.

To see why, look at this GAO report (via). In general, federal gas tax revenues can be used for transit or highways, but the proportion is allocated by Congress. However, 29% of the Federal Highway aid program — $53 billion between 2007 and 2011, excluding stimulus funds– are flexible*, meaning states and “metropolitan planning organizations” (MPOs, i.e. the PSRC)  can choose to spend Federal Highway Administration (FHWA) funds on transit projects. Much of this money can be used for operating costs, unlike most federal funding.

The report doesn’t have complete state-by-state figures. Washington transferred $104m in this fashion over that five-year period, but that was only between 10 and 25% of the total possible. In other words, another $60m to $200m per year could have been spent on transit given the organizational capacity and the political will.

And because money is fungible, this could easily have been in effect paid for with gas taxes by backfilling the lost highway funding with those taxes. The net effect would have been increased funding for transit with one of the greenest taxes the state has in its inventory.

Don’t ever let our leaders tell us they have no choice but to build highways. Because they do.

* Specifically, Surface Transportation Program (STP) and Congestion Mitigation and Air Quality Improvement Program (CMAQ) funds can be reallocated by local authorities.

Comments

  1. says

    Put some HOT lane detectors on every street in downtown Seattle. Charge by the block, say half of what a cab does per 1/7th of a mile.

    That will essentially drive it towards “carfree” while at the same time gaining revenue for the most densely and transit oriented part of town.

    • Stephen F says

      Seems like a lot of effort. Just implement a congestion charge and be done with it. But hey, let’s toll all of the bridges!

      • Stephen F says

        Because the bridges generate a lot of local suburban traffic. There’s few of them. They’re expensive. And they generally are unfriendly to other modes of travel necessitating vehicular traffic to cross them. That’s why. They should be total specially. Sure, region-wide highway tolls should also exist. But that’s for the State to implement, something the City can only lobby for. Not councilmanically do.

      • Stephen F says

        I’m down with that Lloyd. But, Alex that doesn’t cover the cost or reduce north of the Ship Canal traffic or West Seattle traffic.

  2. Norman says

    Anything so that transit riders don’t have to pay for their own transportation.

    Right?

    How can you tax someone else to pay for your trips? That is always the key question here.

    • Glenn says

      Norman has a good point. People who buy cars pay a huge sales tax and then they pay a gas tax. But transit riders and ride the greyhound in from anywhere and get subsidized about 70% on their transportation costs and yet they want a faster bus with wifi and a designated lane. And now you clamor for a tolls too. It just seems odd to me. But I’m a single family home owner with a car fo F* me.

      It be nice if everyone only rode the bus always…but, life is all about something else

      • CascadianBlue says

        “While it is true that transit requires subsidies – public transportation, after all, is by definition a not-for-profit enterprise and “loses” money just like police departments, fire departments, parks departments, libraries and other public services “lose” money – the idea that highways “pay for themselves” is simply not true. Highways are subsidized, just like any other form of transportation.

        In 2004, the Federal Highway Administration reported that, across all levels of government, “user fees” such as gas taxes, tolls, vehicle registration fees and other fees covered 56.3% of the total cost of building, operating and maintaining streets and highways in the United States. The rest of the money came from sales taxes, property taxes and other non-user-related taxes – in other words, subsidies – as well as from proceeds from bonds and interest and the like.

        The relative amount of subsidy given to transit, as opposed to roads, is a valid point of discussion. Maybe transit agencies should strive for higher farebox recovery ratios or find other ways to reduce taxpayer subsidies. On the other hand, maybe there needs to be more of a balance between Federal methods of subsidizing highways and transit.”

        Source: http://www.mindspring.com/~tbgray/dumbrail.htm

      • Mike Orr says

        The more people ride transit, the more everybody else benefits from lack of pollution, fewer cars on the road, fewer parking spaces taken up, less land taken for roads and parking lots, and less oil imports. That’s why transit is subsidized, to encourage people to use it. It’s like how City Light subsidizes CF light bulbs and refrigerator replacements. It costs less to subsidize the bulbs than to build another power plant. Likewise, it costs less to subsidize transit than to maintain the infrastructure for the same number of cars and mitigate their environmental impacts.

    • asdf says

      Anything so that car drivers don’t have to pay for their own parking.

      Right?

      When you shop at a store, everyone has to pay for higher prices to fund the parking lot, which often consumes more land than the store itself. Including those who walk to the store and don’t even use the parking lot.

      How can you “tax” someone else, through higher prices, to pay for your parking. That, Norman, is the key question here.

      • says

        A lot of things are subsidized by something else. Your steak is subsidized by your fries etc.. It’s just economics that some things are too costly to support themselves. When I go to Five-Guys I just eat a cheeseburger for $4. I don’t spend the extra $6 to get fries and a drink because I don’t want them. However, if everyone did this the cost of the cheeseburger would double because the markup on fries and drinks are huge.

  3. Southeasterner says

    “How can you tax someone else to pay for your trips? That is always the key question here.”

    I think you are missing that the revenue the government receives from drivers (fuel taxes, registration fees and sales tax on vehicle purchases) not only doesn’t cover current road maintenance and repair it doesn’t touch the costs of externalities.

    Americans love to point the finger at Europe’s excessive fuel taxes but the reality is roads cost societies substantially more than just their upkeep costs. Taking into account the costs of accidents, fatalities and law enforcement alone would probably double the current fuel tax rates required.

    Who pays for that now? All tax payers.

    So to say that drivers are unfairly subsidizing public transit users is a bit misleading.

    • Norman says

      “I think you are missing that the revenue the government receives from drivers (fuel taxes, registration fees and sales tax on vehicle purchases) not only doesn’t cover current road maintenance and repair ”

      THat is an absolute lie in WA state. The taxes paid by motorists, including sales taxes, plus parking fees, fines and taxes, et. al. more than total all the money spent on highways and roads in WA state. In states with no sales tax and low state gas tax, you may be close to correct.

      However, there is no argument that motorists do, in fact, pay they full cost of their trips, including the vehicle, maintenance, gas, tires, et. al. Tranist riders in our area with their fares pay only about 25% to 30% of the operating cost of their trips and NONE of the capital cost of the transit systems they use.

      The cost of accidents, and fatalities is paid by insurance bought by motorists. Traffic enforcement is paid for with fees on motorists and fines, such as speeding tickets and red light tickets. Has a rider on a bus ever paid a speeding ticket or red light ticket?

      • Stephen F says

        William, just don’t bother. It’s better to leave his nonsense unchallenged and he’ll just have to chat with himself instead. It would be even more amusing than normal. Just let that happen once for the sake of humanity.

      • William says

        Actually, I really am curious. I’m somewhat libertarian myself, and I’ve always thought that roads are unfairly subsidized, but I’d love to see numbers. Of course, I could always look them up for myself – but since Norman insinuated he has the figures already, why not?

      • Bernie says

        1st approximation is that Interstate Highways and Washington State highways (and State Patrol) are paid for with the gas tax. Local roads in this state and local law enforcement are paid for mostly by property taxes. But don’t fall into the trap that says drivers are the only users of the road. Everyone relies on the road system for personal transportation and for delivery of goods and services. So it makes sense that everyone chip in for payment. Drivers perhaps get more benefit, especially from highways so I think it’s a pretty fair system that they pay a higher percentage.

      • Stephen F says

        Except there is a massive maintenance shortfall for State highways. Massive. Like 10s of billions over the next 30 years…

      • asdf says

        “The cost of accidents, and fatalities is paid by insurance bought by motorists.”

        Only the financial losses that result from accidents. No amount of insurance money can ever make up for the human loss of being killed or maimed.

      • Jim Cusick says

        “,sales tax on vehicle purchases”

        This is a non-starter, since the sales tax that is applied has nothing to do with what it is applied to.
        If a large amount is collected on a large purchase, such as an automobile, so what?

        When I purchas large items, such as a hot tub, or a big screen TV, or any other item, it’s all just sales tax.

        It seems only that backers of a roads-only transportation solution demand the segregation of taxes based on what was purchased.

      • Jim Cusick says

        William,
        You need to break down the transportation corridors into the “competeing modes” model to get a fix on what is meant by a subsidy.

        The problem with the gas tax is that the money is collected everywhere, from everyone, and is not distributed back to the specific roads the ‘payers’ drive on.

        Ask yourself this: Why didn’t the trucking/motor coach industry build and operate parallel paved highways to compete with the Interurbans, or the for interstate travel, heavy duty roadways to compete with the freight railroads?

        One doesn’t even need to get into the ‘exterality’ argument, if applied a ‘profit making business’ model to roadways.

        The statement Bernie makes: “Everyone relies on the road system for personal transportation and for delivery of goods and services.” essentially makes it an argument for government intervention into what would be a very different picture if it were truly ‘market driven’.

  4. Stephen F says

    I saw that report last week (via The Atlantic Cities?) and was pretty shocked how underutitlised that provision is. It’s a shame that Patty Murray, Cantwell, and others of our delegation aren’t activity trying to funnel that our way and that WSDOT and other agencies aren’t pounding down the door. Hello!! Free $$, let’s take that back, please.

    On a separate note, it’s pretty clear that the 18th Amendment doesn’t prevent transit from being funded by the gas tax. “Highway purpose” is never defined. Anything is a highway that moves people and goods. I’ve argued that point for a long time. It’s nice to see the Supremes agree wholeheartedly. Now, let’s siphon that money ASAP.

    • Matt the Engineer says

      Also, the legislature is interpreting the decision in a way that opens the door for a carbon tax.

      “a more general tax that happens to fall on motor vehicle fuels and is not intended for highway purposes is … fairly clearly not subject to the 18th amendment.”

      • Stephen F says

        I’d rather implement a straight out carbon tax across the board rather than only on petroleum products. But, if we only did vechicle oils, I suppose I would still be onboard. Anything that internalises CO2 emissions costs and discourages the uses of such sources is step in the right direction.

      • Matt the Engineer says

        We’d have to tax carbon across the board. They’re saying they don’t think a tax on just gas for non-highway purposes would stand, but a tax on some category that includes gas should be fine.

  5. AlexKven says

    “The only way to solve our problems is to build more highways…” – Somebody

    Seriously?

  6. Norman says

    Where do transit users get their sense of entitlement?

    Are you guys on welfare?

    Are you on food stamps?

    Do you live in low-income housing?

    Are you on Medicare?

    Do taxpayers subsidize your food, housing and healthcare?

    Are you all low-income residents?

    If not. If taxpayers are not subsidizing your income, food, housing and healthcare, then why do you expect taxpayers to subsidize your transportation?

    Where does your sense of being entitled to huge tax subsidies for your transportation come from?

    • Glenn says

      Norman, there is nothing wrong with medicare. I’ve paid my SS for 52 years and and I expect to get repaid by SS and Medicare for years to come. BTW, I enjoy my Senior reduced fare buss and Light Rail Pass. Now if only I could get someone to pay for my cheese.

      • aw says

        Norman has certainly gotten someone else to pay for his whine. Namely, all of the other readers of the blog.

    • asdf says

      Don’t forget – transit riders pay sales tax like everyone else. Many transit riders even pay sales tax on car purchases. Simply saying that transit riders pay for 25% of the cost is not accurate – you must include the 1.8% that transit riders pay in sales taxes as well.

    • Noman says

      And the entitlements continue!

      Are you receiving veterans benefits?

      Are you receiving medical care from the VA?

      Do taxpayers subsidize your food, housing just because you came home from a foreign war and have no way now to make a living?

      Why should you expect taxpayers to also subsidize your public transportation to your mental health appointments too?

      Where does your sense of being entitled to huge tax subsidies come from? Just because you’re poor, risked your life for your country?!

      • says

        And do you have a house that can burn down? Why am I paying for the fire department when it’s not my house? Why am I paying for the Police to protect you when it’s my money?

        Ad nauseam… The people who complain the most about paying are the ones receiving the most without paying.

    • David L says

      It’s not a matter of whether I’m entitled to huge tax subsidies. It’s about what makes the city function the best. Transportation infrastructure exclusively oriented around driving makes for an unworkable, unlivable city.

      Norman, I honestly wonder why you don’t move to Houston. I have family there, and it seems much more like your kind of place.

    • Schuyler says

      Norman, in WA you have no argument. The subsidies via taxing are by and large approved by the voters. Unless you don’t like democracy.

  7. Matthew Johnson says

    Good stuff Martin. Hopefully all those reading will forward this to their electeds in Olympia making sure they are aware of these possibilities.

  8. RossB says

    Wow! I wasn’t even aware of this ruling. It doesn’t make sense to me, but I’ll take it.

    Generally speaking, adding a few cents to the gasoline tax and spending the money on transit is a pretty easy sell. I just thought it was impossible. Does this mean that Seattle, for example, can create a new tax on gas and then put the money towards public transit? Do they need special permission from the state to do so? Until we get an income tax, we are hamstrung by ridiculously regressive taxes. But a gasoline tax, while regressive, is at least a sin tax. By the way, I own two cars and use them quite liberally — in the words of Jimmy Swaggart “I have sinned…”.

  9. Rob F says

    I’m hoping you know that the state’s 18th amendment pertains only to gas taxes levied by the state, not to federal gas taxes distributed by the federal highway agency. Federal gas taxes can be used for different things than state gas taxes, so knowing that federal gas taxes can be spent flexibly doesn’t help understand what state gas taxes can be spent on.

    • Martin H. Duke says

      Rob, you didn’t read the whole post. If the state shifted federal money to transit, they could then fund the highway project with new gas taxes. That’s a de facto gas tax increase for transit.

  10. Paulish says

    I’ve always wondered if there isn’t a simple workaround to the “gas tax can only be used for highway purposes” meme. I mean why do we equate highways with single occupancy vehicles?

    I’m no lawyer, but couldn’t the legislature do a legislative fix by redefining or expanding the definition of a “highway purposes”?

    Something like:

    Whereas the goal of the freeway system is to efficiently move people and goods to foster mobility and economic development.

    Whereas the transit can more efficiently move people than single occupancy vehicles,

    Whereas dedicated transit ways on freeways can more efficiently move people than general purpose lanes,

    Whereas transit systems not running connecting major destinations alleviate demand from our freeway system, freeing up capacity for freight, emergency vehicles and motorists,

    Be it therefore proclaimed that the sustenance and expansion of Washington State’s transit systems be declared recognized as a highway purpose.

    Or something like that. Ok transit systems running off freeways is a bit of a stretch, but at least this could work for the I-90 bridge link route or the MAX Colombia River Crossing.

    Am I missing something? Can someone lawyerly explain why this wouldn’t work?

  11. mic says

    Norman makes a valid point, in too narrow of an argument. It’s not about cars versus transit, and who can gobble up the biggest slices of pie at the end of the day. It’s more about how our society currently functions and where limited tax dollars should be allocated. Like it or not, transit provides fewer than 10% of all the trips taken in the Puget Sound. You want a bigger piece of the gas tax, then earn it, don’t beg for it.
    http://www.psrc.org/assets/3474/trend-t16.pdf
    Cars, HOV, and Vanpools are far more utilized than transit.
    Another sobering fact is that transit has been providing fewer trips, not more in recent years.
    http://www.psrc.org/assets/2122/trend-t6.pdf
    Not only are trips down, but so are service hours.
    Here’s the point Norman should be making. If transit wants more than it’s current 50% of all tax revenue for transportation, they should get their collective shit together and start providing more trips to more people, rather than just begging for larger slices of everyone else’s pie. We talk about this agency and that sub area as if they were all sovereign nations. IT’S ALL TRANSIT folks.
    Transit cannot continue to cry ‘poor me’ and expect voters to keep saying yes to more taxes when they start to figure out things aren’t getting any better – just more expensive.

    • Jim Cusick says

      That means we should lower the gas tax, then?

      At least with the ‘shortfall’ in funding with lower gas tax revenue for mega-projects means that capacity increases are being put on hold.

      I’d rather not be forced into paying a tax for infrastructure that is used by those not paying their fair share.

      • mic says

        I’m not sure I get your point Jim.
        I’m all for transit, but the reality is that 80% of the trips are in vehicles with 4 wheels on roads, not buses and trains. I don’t see how starving all modes makes things any better.
        Robbing Peter to pay Paul might be a good thing if Paul was making wise choices and the Peters of the world would flock to the new way of doing things.
        Robbing the funding that keeps the 80 percenters moving along to just bump transits mode share a few points is … a horrible waste of resources.
        In theory, HCT trains are more efficient and greener than SOV’s so we should do much much more.
        In practice around here, we lose market share and run up the bills like drunken sailors on leave. The vote to build HCT was 25 years ago, and funding started 20 years ago with state assisted planning for the JRPC/RTP. I would expect to see some significant gains by now, but only see our bus service being cannibalized, while billion dollar tunnels are being dug daily.
        WHERE’S THE BEEF?

  12. mic says

    No, but you might want to know if they charged to for a Big Mac and stuck a leftover dollar burger in the sack, saying “BuBi, have a nice day”
    How the hell can Metro tell what they are serving when it takes literally years to report performance of services?
    http://metro.kingcounty.gov/am/accountability/performance.html
    Metro made a big deal about having a new stratic plan when sub area equity went by the wayside. Routes had to justify themselves.
    The last report was from 2010, so the data being collected for a report that hasn’t been released started in Jan’11, or just shy of two years ago. Once it’s discovered a route needs tweaking or eliminated all together, it’s another year to make the change. Three years from cause to effect is an eternity.
    Is it any wonder that transit’ mode share of all trips remains below 10%, while tax revenues continue to soar. (since Sound Move was adopted, total transit trips in our region have increased 60% and and tax revenues to our transit agencies have increased 350%. That doesn’t sound like a good deal for the motorists you wish to ‘share’ more of their gas tax with.

    • Zed says

      “How the hell can Metro tell what they are serving when it takes literally years to report performance of services?”

      Just because the reports aren’t available online doesn’t mean Metro doesn’t have the information for their own planning purposes.

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