This post originally appeared on Orphan Road.

There’s a very frustrating piece of our state constitution*:  any tax you put on gasoline MUST go to building and maintaining roads.  This is frustrating because increased fuel taxes would be a great way to discourage driving and help prepare us for peak oil.  Plus, as real prices go up we can lower fuel taxes to ease the pain.  However, any amount we increase fuel taxes goes to building new roads – hardly an incentive not to drive.

Of course the only way out of this mess is to change our constitution  – not an easy job.  But I see a great opportunity to do just this.  Our state is undergoing an extreme budget crisis.  Services have been cut to the point of really affecting lives, yet taxes can’t be increased.  I see this as a great time to use legislators’ greed to help break the gas tax / road building link.  We could build support to allow the legislature to break into the gas tax piggy bank, though only during economic emergencies.  This would require the same constitutional change, but we’d get much more political support.

Road building isn’t a necessity – it’s a luxury.  And it’s very easy to defer most construction until budgetary times are better.  And if there’s one thing politicians love to do it’s defering spending.  This balances the budget short-term and leaves problems for future politicians.  The end result will be the need to increase fuel taxes to fix what the politicians will inevitably break – which gets us to our prefered solution, removes the constitutional roadblock, and sets up a system that future legislators can use to give us a good fuel tax balance.

* Section II, Article 40

6 Replies to “Break the Gas Tax”

  1. It’s an interesting idea, basically you’re saying we put gas taxes into the general fund to close the budget gap. I wonder how much money we’re actually talking about here. How much maintenance could you plausibly defer without violating basic safety standards?

    To your larger point, Goldy blogged about this a few years back. We probably don’t actually need to amend the state constitution to do what you suggest:

    The state constitution refers specifically to “excise taxes.” There’s no reason, theoretically, that we can’t raise the sales tax on gas and use it to pay for transit.

  2. It all depends where you draw the safety line. Putting off a floating 520 for a year or two would sure save us money short-term. So would closing the Viaduct without replacement. But even putting some of the many road repaving or widening projects that go on constantly on hold for a few years should free up quite a bit of cash.

    The Motor Vehicle Fund represented $5.7B in the 2009-2011 budget (PDF). The total state budget was $72B. That’s 8% of our total budget going to roads (I excluded another $0.8B in the “Transportation Bond Fund” and $0.6B “Multimodal Transportation Fund” in case they had to do with ferries).

    Wow, looking at both sides of the balance sheet, even though we spend $5.7B on roads we only take in $2.1B in gas taxes and $1.1B in motor vehicle and operator licensing and it actually costs us $0.5B for “Motor Vehicle Fuel Tax Distribution” (PDF). So much for cars paying for themselves.

    That’s great news about the gasoline sales tax.

  3. Yes, the sales tax on gas instead of excise is exactly what we need. One benefit, beside being able to spend the money on transit, is that revenue doesn’t fall with higher gas prices. And as for regressivity, just rebate it back to low-income people like Canada does. Transit should be funded not through sales taxes, but ideally through gas and parking taxes and car registration (how much revenue did I-695 cost us??). They’re fair and have a policy connection to [better] transportation. Portland is unique in funding transit with a payroll tax.

  4. Well, for starters, when you buy alcohol or tobacco, you pay an excise tax and a sales tax. No reason not to do the same thing with gasoline.

    In fact, the excise tax should be increased to pay medical bills for uninsured motorists, costs of the State Patrol, etc.

    But, in general, the shortfall in revenues results from the recession. A recession is not a good time to cut costs in government- you can, in fact, prolong or deepen the recession by doing so, and make your revenue shortfall worse.

    I’m guessing the best way to approach this problem will be a cap-and-trade approach to dealing with carbon and AGW, putting a stiff ‘tax’ on gasoline that can be rebated in various degrees to the people.

  5. I’m not sure it would be possible to take money out of the gas tax to the general fund, since almost all of the gas tax goes directly into paying off the bonds that were issued for the most recent wave of projects in the 2003 and 2005 funding packages.

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