Infrastructure Policy Forum
Texas CEC Commentary
March 22, 2010
With the constant repetition of the mantra of “no new taxes,” it’s time for some straight talk about transportation user fees.
- Highway and infrastructure user fees are not taxes.
There is a difference between taxes and user fees. Property taxes and income taxes are wealth transfers. They fund social security, schools, parks and other services whether or not a taxpayer uses them. Highway user fees are different. The more you drive, the more you pay; the less you use the system, the less you pay. Sure there are some differences between driving a Prius and driving a Suburban. And, over time, electric cars may mean an end to the gas tax. But right now, highway user fees assessed on a per-gallon basis are a relatively efficient mechanism for users to pay their fair share. Users pay. Non-users don’t. This isn’t the same thing as a “tax.”
- Highway users don’t pay very much for using the state’s roadways, especially compared to many of life’s non-essentials.
An average driver who drives a 20 mpg car and drives it 15,000 miles a year uses 750 gallons of gas annually. Each gallon has an 18.4 cent per gallon federal user fee and a 20 cent per gallon state user fee. Add in a $50 registration fee and the average user pays less than $350 per year to use the state’s highways. And once you take away the part of the federal use fee that goes to transit, and the part of the state use fee that is constitutionally dedicated to schools, the real highway user fee part is less than $275 per year for the average driver. That’s less than ten percent of just the cost of fuel for operating your vehicle, much less all the other costs. In fact, most drivers probably pay more for three months of cable TV or cell phone service than they pay to use the state’s highways for a full year.
A ten cent per gallon increase in the state’s highway user fee would cost the average driver less than $7 per month, but would build billions in overpasses, new lanes, and other improvements – paid for by the people who use the system. Let’s get real about what things really cost and how little – in proportion to other things – people really pay.
- User fee financed infrastructure projects have had a hugely beneficial effect on mobility and quality of life.
Remember when most of Interstate 35 was two lanes each way? That wasn’t that long ago. If you’ve driven from Austin to Dallas recently, it’s pretty easy to tell the difference between the sections that are two lanes and the sections that have three or more. That investment was funded by user fees and led to improvements in time, safety, and bottlenecks. Other projects like the improvements to the Katy Freeway in Houston or the High Five in Dallas or the loop around Lubbock or improvements to US 183 in Austin – these and many, many more – are the result of user fee funded infrastructure investment.
Would anyone who drives these areas regularly go back to the system of ten years ago to get back $100 of user fees that built them? Not likely. User fee funded investments in infrastructure build projects and save time.
- Highway users are going to pay more in the future. It’s just a question of how we are going to pay.
Going forward, highway users will pay more to use highways. We will pay in one or more of three ways. We will either pay more user fees. Or we will pay more tolls. Or we will pay more in time sitting in traffic. We have more tolls in urban and suburban areas because user fees have not kept pace with growth and inflation. When congestion gets bad enough, and user fee investments aren’t available, there will be a toll solution. Our transportation future will include toll roads, and it will include congestion, but it will include less of each if there is user fee funded investment. If “no new taxes” really means “no more user fees,” they purveyors of this notion are purveyors of congestion.
- Previous generations left us a legacy of infrastructure capacity. We, on the other hand, are in danger of short-changing our children.
Previous generations in our country built our interstate and highway system (mostly funded with user fees), our port system (mostly funded with user fees), our airport system (mostly funded with user fees), and more. However, the last ten years of transportation in Texas has been marked by toll projects that our grandchildren will be paying for and mountains of debt, borrowed against future gas tax revenues and general tax revenue. We’ve charged on our credit card, for others to pay off later. We can thank our children. Or we can build what we need ourselves and let them thank us.
The last time the state user fee was increased (1991), Dallas was still on TV, Britney Spears
appeared on Star Search, and the Dow closed the year at 3168.
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