Consumer Reports characterized this year’s North American International Auto show as “the rise of the mainstream plug-in hybrid,” foretelling a definite trend that’s emerging among automakers: fuel-efficiency is becoming the name of the game.
This is great news for the environment, and for consumers, but with the vehicle fleet becoming more efficient in the USA, a probable negative consequence may emerge along with it. Specifically, as cars become more efficient, there will be less funding for mass transit infrastructure – an unfortunate systemic outcome indeed.
So, how are the two linked?
At issue is the federal gasoline tax, which at 18.4 cents per gallon, is one of the world’s lowest rates. This tax goes into the Highway Trust Fund (HTF), which was created in 1956 to finance highway construction nationally. In 1982, Congress expanded its scope to fund mass-transit as well. In short, gas taxes help fund mass transit, and today, the fund is being stretched beyond its limits.
According to the Economist, HTF revenues were down by one seventh between 2007 and 2010 alone; a combination of fewer miles driven by Americans, and in more fuel efficient cars. If this trend continues, it will have a significant adverse impact on an already shaky infrastructure, as the HTF accounts for 22 percent of all highway funding and 17 percent of mass transit funding.
Things could get tighter, still, as more stringent Corporate Average Fuel Economy (CAFE) standards are introduced over time. Specifically, CAFE will require auto manufacturers meet rising fleet-average targets; from 35.5 mpg in 2016 to 54.5 mpg by 2025.
But, this isn’t just a future problem. States already take more from the HTF than they put in, and Congress already had to transfer $34.5 billion from general revenues into the HTF between 2008 and 2010 to keep pace with expenses. The Economist goes on to report that the Congressional Budget Office forecasts the HTF will be unable to fund highway maintenance by 2013. The fate of mass transit is likely to be no better.
More efficient vehicles are to be celebrated and should be complemented by a greater choice of mass transit options. This is surely the way to manage a sustainable transportation future. But to achieve it, the right incentive needs to exist. And it’s simply the wrong incentive for sustainable transportation to only be appropriately funded by using more oil.
So, what needs to be done? In this tax-adverse Congress, it seems unlikely that we’ll see a raise on the gas tax, but that’s not an unreasonable place to start since it hasn’t been increased since 1993. That might go some way towards offsetting today’s problem.
But what about the longer term? If, in the future, a reliance on oil moves in a downward trajectory, sooner or later some other tax basis (a per-mile charge perhaps?) might need to be introduced, or the source of future infrastructure funding will need to be changed altogether. What do you think?