Gas-Tax Increase Not Likely in 2014

Midterm elections, economy weigh against Highway Trust Fund hike

Samantha Oller, Senior Editor/Fuels, CSP

gas pump nozzle

WASHINGTON -- While the Highway Trust Fund (HTF) may likely hit its shortfall as soon as this August, don’t expect Washington to touch the federal gas tax in 2014, according to an update of the issue by the Petroleum Marketers Association of America (PMAA).

The HTF supports road construction and repairs and is fed by the federal fuel tax, which has sat at 18.4 cents per gallon for gasoline and 24.4 cents per gallon for diesel since 1993. Because of factors such as greater vehicle fuel efficiency, flat or declining fuel consumption and the fact that the tax is not indexed to inflation, its purchasing power has fallen nearly 40% over the past two decades, according to the American Association of State Highway and Transportation Officials.

At a Bloomberg News event in early February, lead transportation chairs Sen. Barbara Boxer (D-CA) and Rep. Bill Shuster (R-PA) said there were not enough votes in Congress in support of an increase to the federal gas tax this year.

In fact, Shuster, chairman of the House Transportation and Infrastructure Committee, said regarding a proposed increase of the federal gas tax to help push the HTF out of the red, “economically, it’s not the time,” according to PMAA’s report.

“I just don’t believe there’s a will out there in the American people or in Congress,” he said, noting that even President Obama has ruled out an increase. “We’ve got to figure out different ways at this point in time.” Shuster supports the idea of a user fee or vehicle-miles tax (VMT), although this approach raises privacy concerns with some groups.

Boxer, chairman of the Senate Environment and Public Works Committee, has said she is open to an increase in the federal gas tax to keep the HTF from going bust; however, at this same event, she agreed it was likely unrealistic in the current political and economic environment. Boxer had in the past suggested getting rid of the federal gas tax and instead replace it with a wholesale tax collected at the refinery level, PMAA noted.

According to projections by the Congressional Budget Office, the Department of Transportation may have to delay payments from the highway account of the HTF in late fiscal 2014 because of the shortfall. Since 2008, Congress has transferred $54 billion into the HTF, usually from the General Fund, to maintain its solvency, PMAA noted.

In addition, former Transportation Secretary Ray LaHood has said he believes Congress will not pass a highway and transit reauthorization before the November midterm elections. Indexing a gas-tax increase to inflation is critical, he said, but only possible afterward. Like Shuster, he believes future highway funding may come from a VMT-type user fee.