by Tom Kuennen
March, 2000 -- This spring the fight to keep the 4.3-cent-per-gallon
portion of the federal gas tax intensified, while efforts by Republicans
to pin the issue on Democratic presidential candidate Al Gore in an election
year promised to keep the issue from going away.
The 4.3 cents per gallon
is critical to our industry because it
fuels the higher surface transportation spending
levels of the Transportation Equity Act for the 21st Century (TEA-21),
the current funding legislation.
"If the 4.3 cent gas tax
repeal were to take effect on July 1 of
this year," reported the House Committee on Transportation and
Infrastructure March 14, "the highway program would be cut by $20.5
billion through FY 2003, the final year of TEA-21. $18.9 billion of that
cut would translate into automatic cuts to the state formula funds." The
Mass Transit Account of the Highway Trust Fund, the committee said, would
go broke in 2003.
Over the next three years
-- when the federal loss is combined with lost state and local matching
funds -- highway programs could lose an additional $4.7 billion, said American
Road & Transportation Builders Association president Pete Ruane
in testimony at a quickly called House hearing on the matter March 21.
"Over the next three years, our nation would end up investing $23.6 billion
less on our roads and highways than was envisioned under TEA-21," he warned.
Association of State Highway & Transportation Officials -- which
represents all 50 state DOTs -- was working hard to impact legislators.
In a letter to all members of the House and Senate March 15, AASHTO president
and Utah DOT executive director Tom Warne said, "We are concerned that
the recently introduced legislation ... will inadvertently jeopardize the
financial stability of the federal program that supports the very surface
infrastructure on which motorists, the trucking industry, and indeed, the
Big bucks at stake
Each penny of motor fuel
tax currently generates almost $1.7 billion per year in revenues to the
Highway Trust Fund's Highway and Mass Transit Accounts, with the funds
dedicated to highway and mass transportation improvements, AASHTO observed.
"The loss of revenue from a repeal of federal motor fuel excise taxes would
a devastating impact on the ability of states to deliver, as promised to
their citizens, critically needed surface transportation improvement projects,"
And in a time of rapidly
fluctuating gas tax prices, the tiny per-gallon tax cut might be meaningless.
"There is no guarantee that consumers would benefit from the tax cut,"
said Bill Fay, president and CEO, American
Highway Users Alliance, at that same hearing.
"With the root cause of
higher fuel prices being short supply,
continuing price increases could well overwhelm the relatively small
reduction in federal taxes before the lower-taxed fuel makes its way from
the terminal rack, where federal taxes are imposed, through the distribution
chain and into retail outlets across the nation," Fay said.
Politics makes strange bedfellows
The perplexing tableau gives
new proof to the aphorism "politics makes strange bedfellows", because
its fight to retain the gas tax puts the G.O.P.-leaning road lobby in the
same camp as vice president and environmental guru Gore, who would keep
the tax, but for different reasons.
The industry's archenemy
-- antisprawl, antihighway Gore -- would like to retain the tax as a disincentive
to drivers to use the automobile, as described in this book Earth in
the Balance, and as articulated by his environmentalist constituency.
The wholesale price of crude
oil leaped 1 percent in February, reputed to be the highest one-month surge
in nearly 10 years. For sheer political dynamite, fuel oil prices rose
30.6 percent and gasoline gained 12.9 percent respectively, raising overall
energy costs by 5.2 percent.
In March, highly photogenic,
horn-honking independent trucker caravans to the nation's capital skillfully
focused the political debate on fuel taxes.
Whether the nation's independent
truckers actually thought a free ride on the nation's highways was feasible
-- which is what they sought with their demands for a lifting of federal
diesel fuel taxes -- their display galvanized Republican legislators who
were looking for a scrap with Vice President Al Gore in his role as probable
Democratic presidential nominee.
Even AAA is opposed to the
gas tax roll back. Normally opposed to gas taxes, the American Automobile
Association testified at the March 21 hearing that its members will be
more hurt than helped by cutting the 4.3 cents.
"While attractive at first
glance, it will not address the root
cause of the problem, which is lack of supply," said Susan Pikrallidas,
AAA vice president of public and government relations. "The resulting loss
would be disastrous to the important work of fixing the nation's highways
and bridges and improving safety."
Tax began for General Fund use
The 4.3-cent tax was initiated
as a temporary general fund deficit reduction tax in 1993 by President
Clinton and the then-Democratic majority, without a single vote from Republicans
and against bitter opposition from the road lobby, which saw it as the
first step to extortionate European-style general taxes on fuel. But in
1997, to the highway community's delight, Congress transferred the 4.3
cents per gallon revenue from general use to the Highway Trust Fund.
The road community's big
guns were blazing on the issue. House Transportation and Infrastructure
Committee Chairman Bud Shuster (R-Pa.) said in a "Dear
Colleague" letter that repeal of 4.3 could have devastating effects
upon the transportation improvements called for by Congress in the passage
of the TEA-21. In the letter Shuster said "We agree on the need to address
the problem of rising fuel prices. But the repeal of the fuel tax is
the wrong way to go."
While in late March Shuster
and the road and construction lobby had beaten down a House amendment to
repeal the 4.3 cent per gallon gas tax, on March 22 Senate Majority Leader
Trent Lott (R-Miss.) introduced two bills that would provide a "Federal
Fuels Tax Holiday" from April 15 through Jan. 1, 2000.
And even if the lobby --
which includes governments, associations, contractors, and manufacturers
-- succeeds in quashing the Lott bills, the issue probably will not go
away in 2000, because the Republican establishment sees Gore as particularly
vulnerable to voters on the gas tax issue. Here's why.
Why are Republicans attacking on gas tax?
The G.O.P sees Gore as vulnerable
on the issue for three reasons.
o The "Gore Gas Tax".
vice president in 1993, Gore cast the tie-breaking vote in the Senate to
raise the federal excise tax on gasoline from 14.1 cents to 18.4 cents
per gallon. As a result the Republicans have dubbed 4.3 as the "Gore Gas
Tax" and are going to the mat to paste Gore with it.
o Gore Vulnerable on
Energy Policy. In March Congressional Republicans used the tax issue
to attack Clinton/Gore administration energy policy, which they say has
discouraged domestic oil production while coddling oil-producing countries.
o Gore Vulnerable on
Climate Change. As president, Gore certainly would campaign actively
for ratification of the Kyoto Climate Change treaty -- signed by Clinton
but never ratified by the Senate -- which would compel the United States
to reduce its greenhouse gas emissions by 7 percent of 1990 levels by the
year 2010, while underdeveloped countries would have to make no cuts at
Because the U.S. relies
on low-cost fossil fuels to energize its economy and society, reduction
of greenhouse gas emissions necessarily means a reduction in fossil fuel
use. And there is no way that such a wrenching roll back in energy consumption
can be done except through near-punitive taxes on carbon fuels, such as
gasoline, diesel and coal.
Government economic studies suggest
that such a tax could amount to $348 per ton of carbon emitted, equivalent
to a 66-cent tax on gasoline, a 109 percent increase in natural gas prices,
and a whopping $199 tax per ton on coal, resulting in an 82 percent increase
in household electric rates.
Gore already is on record
in supporting these taxes. In his 1992 environmental treatise, Earth
in the Balance, then-Sen. Gore wrote "[H]igher taxes on fossil fuels
... [are] one of the logical first steps in changing our policies in a
manner consistent with a more responsible approach to the environment."
And on March 23, 1999, Gore
was quoted by Gannett as saying "There is not a single passage in that
book [Earth in the Balance] that I disagree with, or would change." Little
wonder that the G.O.P. is so eager to "glom" onto the issue. Expect Gore
to be hammered with this as the election approaches.
Publicity focuses need for tax
As the gas tax issue boiled
in mid-March, TRIP, The Road Information Program, issued a study, Road
Conditions in Metropolitan Areas and The Impact on Motorists, which
focused national attention on the "hidden tax" that drivers pay in vehicle
damage as the result of substandard roads.
Using the most recent Federal
Highway Administration data, TRIP found that the nation's busiest metropolitan
area roads have suffered badly, and that motorists are paying a hidden
tax in increased motor fuel consumption and vehicle maintenance costs as
a result of driving on substandard roads.
High current prices notwithstanding,
the current average retail
price of gasoline of $1.59 per gallon is approximately two-thirds the
level during its peak in 1980, when adjusted for inflation. Today's motorists
are paying less than half in fuel costs to travel the same distance than
they did in 1980, when factored for inflation, paying $7.42 to drive 100
miles, compared to $16.21 in 1980.
TRIP's report delivered
a reality check to the media on the danger of underfunding road construction
via the 4.3 cent gas tax roll back. The story played in headlines across
the country and got extensive network broadcast coverage as well.
In addition, it had the
unintended effect of spiking an antihighway report which came out the next
day. The Surface Transportation Policy Project (STPP) released a report
Transportation Spending Tilts Toward New Roads. But it received
little attention as it immediately followed the TRIP report, and against
the backdrop of the gas tax fight.
In the meantime, state houses
from coast to coast -- with treasuries flush with cash after years of economic
boom -- were contemplating roll backs in state gas taxes as well. Fortunately,
some of these cuts were general fund-type sales taxes, instead of road
fund taxes. Alabama, California, Florida, Illinois, Connecticut, and New
York State were among states considering state gas tax cuts.
Portions of this article originally appeared in Pavement Magazine.