As gas prices at the pump rise and we all feel the impact on our pocketbooks, it is a rather unknown fact that our state transportation revenues do not rise with gas prices.
Meanwhile, Washington’s transportation infrastructure is aging and current gas tax revenues are insufficient to fund growing maintenance and improvement needs. A majority of transportation revenues are derived from the flat gas tax, which supports 76 percent of all state transportation investments and helps to maintain local streets and roads.
To appreciate fully the transportation revenue problems our state is facing today, we first must understand the past. The state of Oregon enacted the nation’s first gas tax in 1919. Washington and other states adopted a per-gallon gas tax during the 1920s, and a one-cent federal gas tax took effect in June 1932.
Transportation funding from the 1930s to the 1970s was very different from today for three reasons:
o Cars used a lot more gas; therefore more gas-tax revenue was collected per mile driven.
o The road network was less complex and cheaper to build.
o A larger portion of the money people spent at the pump was collected to build the transportation system we all use today.
Furthermore, it is critical to understand how the gas tax is executed. The gas tax is flat — it does not go up with the price of gasoline. The gas tax is not like the state sales tax that is applied as a percentage to the price of a product, and thus increases as a product’s price does. The state gas tax is a fixed amount (37.5 cents in Washington State) that is applied on a per-gallon basis; thus the tax revenue only increases with greater consumption, not when the retail price increases.
The Federal Highway Administration estimates that the average driver pays $28 a month in state and federal gas taxes. The average Washington state driver pays an estimated $225 per year or $18.75 per month in state gas taxes.
To provide perspective, according to J.D. Power & Associates, the average person’s monthly cellphone bill was $71 in 2012. Individuals pay nearly four times more for the privilege to talk and text than they do to drive on the roads and bridges that connect our communities and serve as the foundation of our economy.
Less purchasing power
For nearly a century, Washington and other states have relied upon the gas tax to fund the construction of our roadway infrastructure. While the gas tax rate has been increased periodically over time, the increase in the flat tax rate has been outpaced by inflation, eroding its value over time. Combine that with the overall rise in costs of materials used to build transportation infrastructure and you will find that the purchasing power of gas-tax dollars has diminished each year. Adjusted for inflation, the Washington State gas tax rate peaked in the 1930s, at a rate equivalent to 90 cents a gallon in today’s dollars.
Additionally, it is interesting to note that the gas tax rate from the 1930s to the 1970s accounted for a much larger share of the price at the pump. Over time, the state gas tax as a percent of the retail price of gas has steadily declined from 25 percent to approximately 12 percent today.
The transportation funding problem gets worse when we factor in how the federal funding contribution has changed over time. Between the 1950s and 1970s, federal gas tax dollars built 90 percent of the interstate system. Today, federal transportation accounts are nearly insolvent because Congress has not increased the per-gallon federal gas tax since 1993.
To sum up, the future of transportation funding will be challenging. It will not be easy or inexpensive, but we all will need to pay more to rebuild and improve upon the transportation system our parents and grandparents built, to carry us, our children and grandchildren into the next century.
Philip A. Parker of Battle Ground is a member of the Washington State Transportation Commission.