Gas tax hike idea fuels Michigan resistance

David Shepardson
Detroit News Washington Bureau

Washington — A proposal to raise the federal gas tax to fix and build America's roads and bridges is proving unpopular with members of Michigan's congressional delegation.

Sen. Bob Corker, R-Tennessee, and Chris Murphy, D-Connecticut, have reintroduced legislation to raise the gas tax by 12 cents a gallon over two years, and then index it to inflation.

While Corker is open to other ideas, he and others have said they want a long-term fix to reverse the revenue slide in the federal highway trust fund.

But opponents in Michigan's congressional delegation sees a rise in the 18.4-cents-per-gallon tax for the failing highway trust fund as hitting middle-class and lower-income drivers too hard.

Even Gov. Rick Snyder, who unsuccessfully backed a hike in Michigan's gas tax but settled for a proposed increase in the sales tax, is leery of changing the federal gas tax.

Combined with Michigan's 19-cents-per-gallon tax, state drivers pay 37.4 cents a gallon in state and federal fuel taxes at the pump.

They would pay at least 12 cents a gallon more under the federal proposal, but it's difficult to say by how much the overall state fuel tax will increase because of the large fluctuations in gas prices, said Glenn Steffens, an analyst at the Michigan Senate Fiscal Agency.

Rep. Candice Miller, R-Harrison Township, said Congress needs to find a long-term funding solution that doesn't involve a fuel tax hike.

"The federal gas tax is an antiquated, regressive tax, and increasing it is not a viable solution," said Miller, a 12-year representative who is the second most senior member among Michigan's House Republicans. "We all recognize that there needs to be an alternative revenue source."

Sen. Debbie Stabenow, D-Lansing, says Congress needs to consider all options to fix the roads — including, perhaps, a tax on a barrel of oil. But she's unsure a gas tax increase makes sense.

The country "needs something that really fits for the future, and I'm not sure a tax at the pump addresses that," said Stabenow, who added she wants to ensure any plan doesn't hurt middle-class families.

Rep. Brenda Lawrence, D-Southfield, isn't so ready to dismiss raising the federal gas tax.

"It's time for leadership on this issue," said Lawrence, a first-term member of Congress and former Southfield mayor. "I believe that we need to take a hard look at raising the federal gas tax."

Congress faces a May deadline to extend the highway trust fund, which will again run short of money unless a new source of funding is found.

On Wednesday, Transportation Secretary Anthony Foxx and the governors of Alabama, Connecticut, South Dakota and Vermont will testify before a Senate committee on the need to reauthorize highway spending.

Tax falls behind inflation

From 1956 until 1993, Congress regularly increased gas taxes — from an initial 3 cents a gallon to the current 18.4 cents. Had the gas tax been adjusted for inflation, it would be 30 cents a gallon today.

But raising the gas tax has been one of the most unpopular ideas on Capitol Hill in the past two decades.

Because Americans are driving less while driving more fuel-efficient cars, trucks and sport utility vehicles, less revenue is being raised to fix the roads.

During the past six years, Congress has transferred nearly $70 billion from the general fund into the highway trust fund to keep the road repairs going.

Michigan's federal funding for highways has stagnated at a little more than $1 billion annually since 2010.

"While Washington wrestles with how to keep the Highway Trust Fund afloat, state and local agencies face increasing costs and declining revenues," Michigan Department of Transportation spokesman Jeff Cranson said Tuesday.

In 2011, the Congressional Budget Office estimated that meeting future highway needs between 2012 and 2022 would require another $110 billion for the trust fund.

The Government Accountability Office says Congress could hike gas taxes to 31.6 cents to 46.6 cents a gallon to fix the roads, or impose a tax of 0.9 cent to 2.2 cents per mile on all travel.

House Speaker John Boehner, R-Ohio, told "60 Minutes" that he didn't favor a gas tax, but said using tax reform and other funding options could help fix finances for the roads.

"The highway trust fund, which is funded by gasoline taxes, continues to shrink as cars get ... better mileage. ... And so the money in the highway trust fund isn't sufficient to meet the infrastructure needs of the country," Boehner said. "When the Democrats controlled the House, the Senate and the White House, they couldn't increase the gas tax."

President Barack Obama has repeatedly ruled out higher gas taxes, while prodding Americans to buy fuel-efficient cars. The Obama administration has backed the idea of dedicating highway repair money with revenue gained by rewriting the U.S. tax code.

Some senators — including Republican Sens. John Thune of South Dakota, the new chairman of the Senate Commerce Committee, and Orrin Hatch of Utah, chairman of the Finance Committee — said this month they aren't ruling out a gas tax increase.

At least eight states have hiked gas taxes since 2013. Voters in Michigan on May 5 will decide whether to hike the sales tax that would help increase funding for roads by $1.2 billion annually and public education $300 million.

The plan includes the repeal of the 6 percent sales tax on fuel and an increase in tax relief for low-income families. The new wholesale gasoline tax of 14.9 percent would be entirely dedicated to maintaining and repairing roads and bridges. Currently, the 6 percent sales tax on gasoline does not go to roads, while the 19 cents per gallon gas tax does.

Snyder: Feds ought to act

In a recent Detroit News interview, Snyder declined to endorse a federal gas tax increase but said policymakers in Washington need to get something done.

"The federal government needs to fix their transportation issue too," he said. "They need to come together and get an answer."

A big problem is that contractors won't agree to longer-term road contracts as future funding remains uncertain. Senators say the states end up paying more for road repairs.

"They hedge their bets and their contract bids to account for the fact that the funding may not be there," said Sen. Susan Collins, R-Maine.

Last year, the Congressional Budget Office estimated that to meet future highway needs between 2012 and 2022, the trust fund would need another $110 billion in funding.

Some Republicans are quick to note that the gas tax is one of the most regressive taxes. The poorest Americans are most harmed by higher gas taxes, while wealthier individuals proportionately don't feel much impact.

Rep. Trott is looking forward to reviewing proposals on how best to address our infrastructure needs, but he does not believe that raising fuel taxes on hard-working Michigan families is the solution," said Kyle Bonini, a spokesman for Rep. Dave Trott, R-Birmingham.

Rep. Tim Walberg agrees. "Addressing America's infrastructure needs should be an important priority of the new Congress, but raising the federal gas tax is not the right answer," said Walberg, R-Tipton.

GOP Reps. Mike Bishop of Rochester and Bill Huizenga of Zeeland also oppose a federal tax increase.

"I don't believe that Washington has efficiently or effectively used the tax dollars it has received from the gas tax at its current level, and I oppose raising the federal gas tax," Huizenga said.

But advocates say higher gas taxes — or a "floor" on gasoline prices through taxes — would help prod Americans to buy more fuel efficient vehicles and reduce U.S. reliance on foreign oil, while reducing U.S. greenhouse gas emissions.

"The federal gas tax, which is currently 18.4 cents per gallon, hasn't been raised since 1993," Lawrence said. "We simply can't continue to kick the can down the road."

Detroit News Staff Writer Chad Livengood contributed.