Where Does All The Gas Tax Money Go?
By Barry Eberling
Richard Dinubilo fills up his tank at the Alliance Gas Station on West Texas Street. Gas prices have risen above $3 a gallon. (Gary Goldsmith/Daily Republic)
FAIRFIELD - During the 1960s, the federal and state governments built eight-lane Interstate 80 through Solano County without asking cities to put up extra, local money.
Things have changed. The trend since the 1980s has populous counties passing their own transportation sales taxes, then using the money to attract additional federal and state dollars to get interchanges built and freeways widened.
Some people call this "self help." Others call it "extortion."
The trend has arrived in Solano County. Voters on June 6 must decide whether to pass Measure H, a proposed half-cent county transportation sales tax.
Fairfield Mayor Harry Price recently went to Washington, D.C., to lobby for transportation projects. He was part of a Solano Transportation Authority contingent that wanted money to fix the Interstates 80 and 680 interchange, among other things.
"The message was very clear: The 'self-help' counties across the country are the ones who receive federal matching dollars," Price said.
Vern Van Buskirk of the Central Solano Citizens/Taxpayers Group is among those who call the practice "extortion." In his view, the county shouldn't have to pass a local tax to get back tax money sent off to Washington and Sacramento.
What's clear is that the transportation world has changed since the heady building days of the 1960s. The state and federal governments could construct an interstate then. Now they have trouble fixing an interchange.
The rise of the gas tax
Government at the dawn of the auto age first grappled with the challenge of building highways. It came up with money-raising philosophy: you use it, you pay for it.
California in the early 1920s looked at methods to enact a users fee. The state considered tolls the best way, but couldn't justify collecting the money on sparsely traveled roads. That would have entailed setting up a far-flung system of toll booths.
Instead, the Legislature enacted the gas tax as a "second best" measure, said Martin Wachs, director of transportation, space and technology for the RAND Corp.
By 1932, all states had a gas tax. The federal government passed its first gas tax that year to help with a budget deficit, a Congressional report said.
In 1956, the federal government established a highway trust fund for its gas tax. Money went to transportation. The goal: To construct the interstate highway system.
This launched the heyday of road building in California and elsewhere. During the late 1950s and in the 1960s, Solano County saw I-80 take shape.
Gas tax problems
But those heady days of highway construction have long since passed, along with the buying power of the gas taxes.
"We haven't raised the motor fuel tax nearly enough to keep even with inflation," Wachs said.
Meanwhile, cars can go farther on less gasoline and construction costs have risen. That's made less money available at the state and federal levels, Wachs said.
The state gas tax in 1963 was 7 cents a gallon. Adjusted for inflation, that would be 43 cents a gallon today. California last raised the tax in 1995 to 18 cents a gallon.
And the federal gasoline tax in 1963 was 4 cents a gallon, or almost 25 cents in today's dollars. The federal gas tax today is 18.4 cents a gallon - again, below the rate of inflation.
The federal gasoline tax today is also involved in various controversies. Among them is California's status as a "donor state." State residents pay more in federal gas taxes than come back to the state for transportation projects.
Since 1956, this shortfall totals $2.1 billion, according to the California Performance Review.
Also, tax groups complain that Congress increasingly earmarks money in the federal transportation bills for projects they consider "pork." Examples include pedestrian paths, parking garages and expensive bridges in sparsely populated areas.
California voters in 2002 passed Proposition 42, which says that state sales tax from gasoline purchases will go to transportation starting in 2008. The state has at times used sales taxes from gasoline purchases for its general fund. This could bring an extra $1.4 billion annually for transportation.
Still, the Metropolitan Transportation Commission says a transportation spending shortfall exists. The commission is a Bay Area transportation planning, coordinating and financing agency.
The Bay Area gets transportation money from such sources as gas taxes, tolls, transit fees and county transportation sales taxes. This is expected to bring in $118 billion over 25 years.
"Although a vast sum of money, the $118 billion budget is not enough," the Metropolitan Transportation Commission's 30-year plan says. "The Bay Area is faced with tremendous shortfalls just to maintain the existing transportation network."
The MTC plan explores ways to raise another $14.8 billion through such potential sources as a 5-cent-per-gallon regional gas tax, an additional $20 vehicle registration fee for the Bay Area, a statewide high-speed rail bond - and transportation sales taxes in Solano and Napa counties.
Filling in the gap
Counties in the 1980s noticed many desired transportation projects were no longer getting built. They started looking for ways to change the situation.
Santa Clara County passed the first California transportation sales tax in 1985. In the nine-county Bay Area today, only Napa and Solano counties are without transportation sales taxes. They both have tax measures on the June ballot.
"What I find interesting is the politics of these motor fuel taxes," Wachs said. "There seems to be less willingness among elected officials to support increases in gas taxes or tolls or whatever. The consequence is, more counties have to pass their own measures and raise taxes themselves."
Perhaps one reason the local sales tax increases are seen as more acceptable is they spread the increase over a wider base, Wachs said.
For example, a poll in Santa Clara County asked people whether they'd like to see the sales tax raised by 1 percent or the gas tax by 17 cents. Respondents preferred the sales tax increase.
Transportation sales tax advocates argue the tax is necessary to get projects built.
"Federal and state funding is insufficient to fully fund local transportation projects," an STA memorandum said.
Wachs sees some drawbacks to local taxes. For example, having every community selecting its own transportation projects de-emphasizes regional planning for regional transportation systems, he said.
Counties get the two-thirds votes to pass sales taxes by funding popular projects within their boundaries. Some, such as Solano County, use telephone polls to find out what projects will get the votes.
"I'm old-fashioned and I don't believe the way to do a regional, integrated, thoughtful transportation plan is by polls," Wachs said.
Still, Wachs agreed funding shortfalls exist at the state and federal levels. Very often, money from a local transportation sales tax is critical to getting projects built, he said. The local money fills the funding gap, he said.
"That's the name of the game now," he said.
Solano County resident Clif Poole wants to change the game. He doesn't buy the argument Solano County must pass a tax, like it or not, because the only other option is sitting in a traffic jam.
"Why just bow down to a situation?" Poole said.
Don't elect representatives such as Rep. George Miller and Rep. Ellen Tauscher if they urge the county to pass a sales tax, Poole said. Rather, he'd like to see people elected who will work to change the transportation funding system.
"That's what the ballot box is all about," Poole said.
Wachs sees the local transportation sales taxes as an interim measure. In five, 10 or 15 years, he sees a return to the original idea of a user's fee.
"You pay for food when you go to the store, you pay for movies when you buy the ticket," Wachs said. "You should pay for roads when you make use of them."
When the Legislature in the 1920s reluctantly passed a gas tax instead of tolls, it expressed a desire to return to the tolls idea, if a practical method of collecting the money could be found, Wachs said.
"That's sort of been forgotten," Wachs said.
Eighty years later, the technology is here. Drivers on privately owned Southern California toll roads have devices called transponders in their cars that measure the miles traveled. The drivers get billed for their use of the roads. A similar device is available to motorists crossing Bay Area bridges to collect bridge tolls.
Wachs can envision something similar being done on a wider scale. Experiments are already under way in such places as Oregon.
An electronic device in a car could record the miles driven. When the driver goes to get gas, the device would send a signal to the pump. The driver would then pay the per-mile fee instead of the gas tax.
Ultimately, as time goes on, the per-mile fee could replace the gas tax. Then the Legislature's original idea could become reality: People pay for the roads when they use them.
The question is whether government will set the per-mile fee high enough to cover transportation costs, Wachs said.
But such ideas are for the future. The trend for the early 21st century remains county transportation sales taxes. On June 6, Solano County will decide whether to climb on board the bandwagon.
Reach Barry Eberling at 425-4646 Ext. 232 or at firstname.lastname@example.org.
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