Now is the Time for a Gas Tax Increase in Tennessee

Nothing can get people hotter under the collar faster than talking about tax increases. Most people feel their budget getting stretched every pay day. Myself included.

So why would I dare to talk about such a taboo idea? Because it is that important.

From my observations, the real reason behind most people’s frustration  with taxes or tax increases is because they feel that their money will be wasted. Wasted on programs or policies that they don’t support or agree with. Usually these are things that they can’t see or that happen far away from them.

Investing in roads, bridges, and transportation infrastructure is different. Everyone in this Country has a stake in the transportation system. It doesn’t matter if you drive, or use public transportation or not. Our economy is totally connected through our transportation system. The food you buy in the grocery store, to just about any job or employer is somehow linked through our transportation system. If you don’t think that companies (or people) select new locations based on the local transportation networks, you are sorely mistaken.

Here is the deal. Due to a whole range of factors, which include improved vehicle fuel economy, and changing driving habits, gas tax revenue has been flat or falling. This is the main source of revenue on both the State and Federal sides of the funding equation.

Hint: The price of roads, bridges, airports and other transportation projects has not been flat or falling. Construction costs have been rising at about 12%-15% per year.

So the cost of repairing, let alone building new roads or bridges has been rising, and the funding coming in has been flat or falling. TDOT and County Highway Departments have been trimming and cutting their operations for years. The are fast approaching the breaking point where they won’t be able to maintain the stuff they have. Many County Highway Departments are already there.

As you may have noticed this winter, the price of gasoline at the pump has fallen quite a bit (Thank You Saudi Arabia!). You don’t have to be a genius commodities trader to know that won’t last forever. This gives State legislatures a unique opportunity to do the right thing and raise the gas tax. Here are a couple of reasons why I think that now is the time:

  1. Everyone agrees that a new, fully funded, 4 year transportation bill that addresses  all of these needs and has a way to increase (not just keep the same levels as 4 years ago) revenue is the real answer to the problem. Everyone also agrees that Congress and Washington are in general gridlock and that there is no chance of this happening anytime soon. This is why I think the States (especially my state, Tennessee) need to take the lead now.
  2. Increasing the gas tax when the price of gasoline is at it’s lowest in years is the best time to do it. People won’t like it, but you can sell them on the benefits of better roads and bridges. It doesn’t sting as much.
  3. You can pay, or you can pay. I learned a long time ago that I could either pay for maintenance on my car, or I could wait until the engine blew. Either way you have to pay for work on your car. Oil changes are much cheaper than blown engines. Transportation infrastructure is much the same. It is a lot cheaper to plan for a bridge replacement than to wait until if falls into the creek.
  4. More spending on transportation infrastructure would help to improve the economy. Where do you think that this spending would go to? It goes to engineering firms (like mine), construction firms, contractors, surveyors, ect. You could get a lot of people to work in a relatively short period of time.
    Improved roads help the economy in other ways. There are some heavy equipment manufacturers that have to send their products far distances out of the way because the roads and bridges between “point A and point B” can’t handle the load. This ends up costing everyone. Examples like this are endless.

Just raising the gas tax alone may not be the best solution. With electric vehicles and improved economy we may have to look at new revenue models such as mileage use taxes. I won’t even get into long term improvements in rail and public transportation. Those are whole other subjects unto themselves.

Raising the gas tax won’t solve all of our problems overnight. In Tennessee it would allow TDOT to get several important projects that have been pulled from construction back and going again. It would possibly allow County governments to resurface 5 miles (most Counties are responsible for 300-500 miles of road) instead of only 3 miles of roadway.

It would be a good start in the right direction.

 

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About arran375

I work for Askew, Hargraves, Harcourt and Associates, Inc. here in Nashville, Tennessee. The short version of what I do is that we help local governments spend the Federal funds they get from TDOT on road, and bridge projects.
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