Memorial Day Spike in Revenue?

Memorial Day marks the start of summer and an increase in driving. With that comes the inevitable spike in gasoline prices. It is easy to assume that these higher gas prices would generate significant extra revenue to the Highway Trust Fund and extend the drop dead date for when the Trust Fund runs out of money.

It won’t.

The current gasoline tax is fixed at 18.4 cents per gallon and not indexed to the price. That means that it doesn’t rise or fall based on the price of gas at the pump. Consumers pay the same amount of tax whether the base price is high or low. Additionally, an increase in the percentage of fuel efficient cars that comprise the total number of cars on the road, coupled with the non-indexed gas tax, means that there will not be a Trust Fund windfall. The looming transportation financing crisis will not take a summer vacation.

States are grappling with the problem of diminishing transportation funding from the federal government balanced against a crumbling infrastructure. This precarious position has forced many states to explore innovative solutions. This is what states do best—incubate new policies. Need an example? The gas tax currently in place today was born in the states and wasn’t adopted by the federal government until it was working and accepted in the majority of states.

In the new transportation bill, Congress needs to support testing and exploration of different financing options to identify what works, what doesn’t, and provide policy options for the future.