[PRCo] Re: All travel modes are subsidized

[Schneider Fred]

Bill:
I wanted to share with some other what you wrote but not your  
address ... I've returned my comments to you by blind carbon.

Part of the problem here is that politicians have long been reluctant  
to index a gas tax to any means of calculating inflation.    For  
example, the 3 cents in 1958 should be around 30 cents today instead  
of 18 cents.    Of course there are those who will say that the  
consumer price index doesn't double in that time and it doesn't  
because we shift our buying habits.   But if we are maintaining  
roads, we have no choice but to continue to use asphalt or  
concrete ... we cannot shift to dirt because it is cheaper.   We  
cannot make bridges out of string instead of steel because string is  
cheaper.   Therefore we need to have the highway taxes based on a  
relevant commodities index.

Texas has one of the lower fossil fuel tax rates in the nation ...  
probably along the same lines as North Carolina used to support its  
tobacco industry.

http://en.wikipedia.org/wiki/Fuel_taxes_in_the_United_States

Of course we worry about it after a bridge collapses.

fws




On Sep 4, 2009, at 2:16 PM, Vigrass, Bill wrote:

> All, See below, TXDOT.  In my research for my MBA 1962 I found that  
> on the average, fuel tax and other taxes on vehicles, esp trucks  
> generated about 60% of costs for highways and roads.  This is  
> exactly the same as TXDOT reports.   It is historic.
> Truckers like it.  Businesses that use trucks, which is most of  
> them, like it since they pay less for carriage.
> The rest of us make up the 40%.   Nuthin’ new.
> Anytime a good is offered for less than its cost, more of it is  
> used, boosting the problem.  “It’s good for business”.
>
> BillVigrass, transportation economist and planner.
>
> From: Ken Prendergast
> Sent: Thursday, September 03, 2009 10:49 PM
> To: Ken Prendergast
> Subject: All travel modes are subsidized
>
> As the 3C "Quick Start" and other Ohio passenger rail projects come  
> to the fore, please keep this information in mind (especially the  
> bold text from the Texas Department of Transportation). It's why  
> state and federal gas taxes aren't able to fulfill highway budgets  
> that must be augmented with general revenue funds. Texas DOT knew  
> this a year ago, as did many others....
>
> http://www.cnu.org/node/2329
>
> Texas DOT fesses up about endless subsidies for highways — will  
> Wisconsin be next?
>
> Submitted by Filmanowicz on Mon, 08/04/2008 - 3:38pm.
> budget shortfalls
> gas tax
> highway funding
> Texas DOT
> toll roads
> transit funding
> Transportation
> Wisconsin DOT
> If you've ever been in an argument with a highway booster who  
> claims that highways "pay for themselves" through gas tax receipts  
> while transit requires dreaded "ongoing subsidies," you'll  
> appreciate the candor of the Texas DOT in this posting to its Keep  
> Texas Moving website. TxDOT answers the question "Do Roads Pay for  
> Themselves?" with a simple "no," using a very straightforward  
> calculus to demonstrate that the gas tax receipts generated by any  
> given stretch of highway fall far short of the combined  
> construction and maintenance costs of that highway. In other words,  
> highways require those dreaded ongoing subsidies, mile after mile,  
> year after year.
>
> The backstory here may be that the Lone Star state — in its quest  
> to keep its Texas crews moving, building and expanding highways —  
> has been more forward than most states in acknowledging the limits  
> of the gas tax and shifting towards toll roads. As a result, the  
> DOT and state government are coming under pressure to explain the  
> new tolls to populist critics. Since citizens were led to believe  
> that highways, uh, paid for themselves, a lot of them now want to  
> know why they have to pay for them again through tolls. It's a good  
> question that may now be leading to what formerly would have been  
> startling admissions like the following: a typical highway project  
> like State Highway 99 in Houston will generate only 16% of the $1  
> billion needed for construction and maintenance through gas tax  
> receipts. Maybe CNU board member and Texas House Transportation  
> Committee chair Mike Krusee -- who has supported transit projects,  
> better surface street designs and the DOT shift to tolled highways  
> -- had something to do with TxDOT coming clean and starting to put  
> transit and highways on something closer to equal rhetorical footing.
>
> <image001.jpg>
> Now it's time this type of "truth in transportation" comes to more  
> states -- like Wisconsin. As top Badger blogger Jim Rowen notes,  
> the Wisconsin DOT still has its head buried in asphalt. With gas  
> tax receipts failing to deliver the dough to pay for colossal (and  
> difficult to justify) highway expansions across Southeast  
> Wisconsin, they're quietly passing much of the bill for these  
> projects on to future taxpayers through expanded borrowing — a  
> fiscal bubble that may well burst as skyrocketing prices of  
> petroleum-based asphalt make highways more and more expensive to  
> pave and repave.
>
> Excerpt from TXDOT:
>
> Until recently, when TxDOT built or expanded a road, no methodology  
> existed to determine the extent to which this work would be paid  
> off through revenues.
>
> The Asset Value Index, was developed to compare the full 40-year  
> life-cycle costs to the revenues attributable to a given road  
> corridor or section.
>
> The shorthand version calculates how much gasoline is consumed on a  
> roadway and how much gas tax revenue that generates. The Asset  
> Value Index is the ratio of the total expected revenues divided by  
> the total expected costs.
>
> If the ratio is 0.60, the road will produce revenues to meet 60  
> percent of its costs; it would be “paid for” only if the ratio were  
> 1.00, when the revenues met 100 percent of costs.
>
> Another way of describing this is to do a “tax gap” analysis, which  
> shows how much the state fuel tax would have to be on that given  
> corridor for the ratio for revenues to match costs.
>
> Applying this methodology, revealed that no road pays for itself in  
> gas taxes and fees.
>
> For example, in Houston, the 15 miles of SH 99 from I-10 to US 290  
> will cost $1 billion to build and maintain over its lifetime, while  
> only generating $162 million in gas taxes.
>
> That gives a tax gap ratio of .16, which means that the real gas  
> tax rate people would need to pay on this segment of road to  
> completely pay for it would be $2.22 per gallon.
>
> This is just one example, but there is not one road in Texas that  
> pays for itself based on the tax system of today. Some roads pay  
> for about half their true cost, but most roads we have analyzed pay  
> for considerably less.
>
> Image of supersized intersection of Lyndon B. Johnson and Central  
> expressways in Dallas, TX via Jeremy Stump at Flickr.
>
> _________________________________________
>
>
>
> Kenneth Prendergast
> Executive Director
> All Aboard Ohio!
> 12029 Clifton Blvd., Suite 505
> Cleveland, OH 44107-2189
> (216) 288-4883 cell
> kenprendergast at allaboardohio.org
> www.allaboardohio.org
>