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GOP states discover a tax hike they have to like: for roads

April 14, 2019

Washington Post

David Eggert

[…]

“It’s going to take $2.5 billion a year,” said Detroit Regional Chamber CEO Sandy Baruah of Michigan’s road-building needs. “Anyone who thinks you can cut even half of that out of other elements of the state budget without having significant ramifications to real people, you’re smoking something that’s not legal.”

Democratic Gov. Gretchen Whitmer won election last year after running on the slogan “Fix the Damn Roads.” Her plan would gradually add 45 cents to the cost of a gallon of gas by October 2020, which would be more than double the current 26-cents-per-gallon gas tax and make it the highest in the country. GOP legislative leaders have dismissed the proposed hike as way too much, but they are leaving open the prospect of passing a more modest increase in the face of intense pressure from the business community.

In some states, Republican-leaning interests have become the biggest backers of higher taxes for this purpose, which is seen as necessary for economic development.

While consumers are acutely conscious of prices at the pump, legislators are struggling to get around the difficult realities of the fuel surcharge that funds transportation projects. They are also facing the echoes of the tax cut promises they made in winning over many heartland states in the last decade — that getting tougher on spending wouldn’t mean worse services.

In most states, the excise tax rate per gallon is fixed and doesn’t rise with inflation. And the federal gas tax has remained unchanged since 1993. Meanwhile, consumers are driving more fuel-efficient vehicles or are driving less, depressing revenue. The real purchasing power of the federal gas tax has fallen by 40% over the past quarter-century, and repair costs rise significantly when roads decline to a rating of poor or worse.

This winter, Michigan’s Department of Transportation had to close 10 miles of Interstate 75 in suburban Detroit — one of the state’s most heavily trafficked stretches — because of vehicle damage from cracks and potholes.

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