THE FIGHT FOR 4.3:

GAS TAX CAT FIGHT

WON'T GO AWAY,

CLOUDS FUTURE

OF TEA-21 FUNDING

 
 
 

In Bizarre Twist, G.O.P.-Aligned Road Lobby

Finds Itself on Same Side as Archenemy Al Gore

as Republicans in Congress

Target Gore on Energy Taxes

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.
        The American 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 economy depend."
 

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 have a devastating impact on the ability of states to deliver, as promised to their citizens, critically needed surface transportation improvement projects," Warne said.
        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". As 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 all.
        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 headlined Record 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.

END

Portions of this article originally appeared in Pavement Magazine.
 

Copyright 2004 by The Expressways Publishing Project