[ UPDATE The article below was first written in 2011. Be sure and see public-safety-fee-going-into-effect beginning late 2018. This is the first significant change in vehicle use taxes in Arizona in nearly three decades ]
[UPDATE: Yet another externality of fuel is the uncompensated release of toxic, carcinogenic compounds into the air we breath gas-stations-venting-ten-times-more-gas-vapor-than-once-believed , primarily benzene. Another positive for zero tailpipe emissions vehicles like BEVs (battery electric vehicle); which receive significant tax breaks by not paying any road tax as well as reduced VLT ]
From time to time, we will see a recurring theme to the effect of “bicyclists don’t pay gas tax so they don’t deserve to use the road”. (for a good roundup of this and other similar issues see bicycledriving.org) There are certain elements of truth to this — bicyclists don’t purchase gas, it’s true. And there’s also an implication that motorist are “paying their way”, but that’s just not true. Gas taxes (and other direct taxes on automobiles) nowhere near cover the costs of building, maintaining, and operating roads. And that’s not to mention the (much larger) costs associated with death/mayhem and pollution impacts on human health and the environment. And none of that is to mention other more intangible costs like defending sea lanes worldwide; and propping up unsavory regimes so that oil can continue to flow freely.
Funding for local roads (the roads that both cyclists and motorists use) are paid for heavily through state and local tax general funds — not user fess like gasoline taxes. Cyclists are paying their way, just like everybody else.
Most/much of the direct user fees that motorists pay do go to fund freeways (limited access highways). These roads are used exclusively (with minor exceptions) by motorists — and yet even then the fees are not high enough, and have to be supplemented from other sources, like general sales taxes.
Specifics vary depending on location but the general theme is similar throughout the US.
What follows are specifics as we do things here in Arizona, and specifically Maricopa County and the Phoenix Metro area.
Arizona levies two taxes directly upon motorists and the proceeds are termed the “HURF” (Highway User’s something Fund). The two souces are; motor fuel taxes, and VLT (Vehicle License Tax, a fee paid yearly based on the value of a motor vehicle).
Because the rate on gasoline is levied per gallon, 18.5 cents per gallon, and hasn’t changed since 199?, the amounts available to the HURF have been dwindling. Not only that, VMT per capita peaked in 2004 and has been headed down for years, and vehicles are ever becoming more and more fuel efficient (plus a tiny percentage of electric vehicles that pay no fuel tax). This all amounts to a triple-whammy of decreasing revenue to pay for new roads and maintain existing roads.
usgovernmentspending.com has some good charts of, e.g. ARizona state spending broken down in categories like education, police, transportation, etc.
Freeway Sales Tax / “Prop 400”
Maricopa county levies a 0.5% SALES tax to build freeways. First approved in 1985, it was set to expire in 2005 but extended for another 20 years by “Proposition 400”. The split was more favorable to public transit, but still heavily favors freeway spending. The most vociferous opposition came from those who specifically thought that not enough of the money would be used for freeways, and in particular hated that any monies would be spent on light-rail. See e.g. Prop. 400 foe wants to stop light rail., Arizona Republic, Sept 23, 2004. The Arizona Republic’s Prop400QampA mentions the funding breakdowns: 66% goes toward building roads;
Of the $15.8 billion dedicated to program funding, $9 billion, or 57 percent, would fund freeways; $2.7 billion, or 17 percent, would fund the regional bus system; $2.3 billion, or 15 percent, would fund light-rail expansion; and $1.5 billion, or 9 percent, would fund arterial streets. The remaining 2 percent would fund air-quality programs, bike and pedestrian routes and planning activities.
I note that bicyclists do not ride bikes on freeways (in fact, bicycles are banned from all freeways in the metro area). Here’s another reference that appears to be non-biased background material on Prop 400: Maricopa County Sales Tax Referendum Case Study. I’m not sure who or how these things get written, it’s through the TRB / NCHRP 20-24(62), associated with the National Academies.
So, the freeway sales tax is just another externality of automobility — drivers not paying their way.
Details of Transportation funding on ADOT’s website; in particular the Regional Area Road Fund (RARF) is the official name of where the Prop 400 money goes.
Apparently Pima County also has a (voter?) 0.5% sales tax for transportation. It was discussed in this news article where county Supervisor Ally Miller claimed Pima county was mis-spending the hurf money by paying transportation staff (it wasn’t clear how she though they should get paid).
City Transportation Taxes
Several cities have dedicated sales taxes for transportation, among them are Tempe and Phoenix. Tempe’s tax is 0.5% and was passed by voters in 1997. Phoenix city voters approved a large increase in their rate in 2015, Proposition 104. The rate was increased from 0.4% to 0.7% and now sunsets in 35 years (2051, or something). The city funds are more heavily tilted towards public transit with the largest single piece going towards light rail expansion. A modest fraction going to street “improvements” and police; As of late 2018 there is a new potential referendum led by Councilman Sal Diciccio to eliminate light rail. DiCiccio really hates the light rail, saying “Light rail brings nothing but crime and blight to our neighborhoods“.
Penny Tax for Tank Leak Cleanup Insurance
One penny of the state’s 18 cents has been directed not to road building but to insure/fund cleanup when underground storage tanks leak [I believe that’s incorrect, the total tax is 19 cents inclusive of the penny]. I can’t unwind all this but there seems to be some cost-shifting and classic cases of socialized costs (the monies to clean up leaks) versus privatized profits (from selling the product). In any event, it’s money not available to build or maintain roads. The Arizona Republic did a long and deep history of the program Gasoline tax debate: Corporate welfare or necessary evil? on the occasion of the legislature possibly extending the program again. Fuel leaks cause devastating health and environmental problems and are very expensive to clean up.
HURF Sweeping / “Stolen” money
So there’s this urban legend going around that the AZ state legislature is “stealing” money from the HURF and spending it as general funds, rather than the dedicated purpose it’s intended for. This is TRUE; what’s not mentioned is it amounts to perhaps 10% of the HURF money. (I don’t have a handy way to look up the actual percentage. in round numbers: HURF is about $1B/year, and “since 2001, over $1.9B” has been stolen. So much crying and gnashing of teeth.
I get it, everybody wants more, not less, but people, let’s get a grip. The gas tax is drastically too low for “pay as you go”, 10% one way or another isn’t making a huge difference.
Here’s a letter, signed onto by dozens of local politicians, bureaucrats plus various crony capitalists:
Since 2001, over $1.9 billion of dedicated funding has been transferred from Highway User Revenue Funds (HURF) to pay for other government programs. In fact, this annual practice of diverting gas tax and other supposedly dedicated revenues for transportation increased this year as $141 million was diverted from much needed infrastructure investment. We urge you to stop these funding transfers.
Another point of reference, I found this nugget in Tempe’s transp. funding report March 2016, p. 14. Their HURF is like 8 to 10 million$ / year so over 11 years they got like $100 million and they felt they should have gotten $106.8M. Again, boo hoo:
The Transportation Fund receives the large majority of its funding from State-shared Highway User Revenue Funds (HURF). The City uses the money to fund street improvements. After sweeping over $6.8 million from the City’s distribution from 2004 through 2014…
Background on Federal Tax
The federal levy on fuel is much the same story — it is based solely on a per-gallon charge of 18.4 cents per gallon gasoline THAT HASN’T GONE UP SINCE !993! Of course, the price level has gone up a lot since then, so the amount of real dollars keeps falling. If 18.4 was the “right” amount in 1993, the rate should be raised to ~ 28 cents/gal (2011 dollars). These missing dollars of course still get spent, replace from other sources like general funds; funds that everybody pays, not just drivers.
A minority of the fuel tax funds (about 15%) is spent on mass transit, and 0.1 cents of it is spent on cleanup for leaking underground fuel storage tanks.
Historical gasoline fuel tax rates from Table 1 CRS report:
|Rate of Tax in cents per gallon||Period to Which Applicable|
|1.0||June 21, 1932, to June 16, 1933|
|1.5||June 17, 1933, to December 31, 1933|
|1.0||January 1, 1934, to June 30, 1940|
|1.5||July 1, 1940, to October 31, 1951|
|2.0||November 1, 1951, to June 30, 1956|
|3.0||July 1, 1956, to September 30, 1959|
|4.0||October 1, 1959, to March 31, 1983|
|9.0||April 1, 1983, to December 31, 1986|
|9.1||January 1, 1987, to August 31, 1990 (a)|
|9.0||September 1, 1990, to November 30, 1990|
|14.1||December 1, 1990 , to September 30, 1993|
|18.4||October 1, 1993, to December 31, 1995 (b)|
|18.3||January 1, 1996 (c), to September 30, 1997|
|18.4||October 1, 1997 (d), to March 31, 2005|
There are also some excise taxes aimed at heavy trucks — based on the obvious theory that heavier vehicles cause more wear and tear on roads and bridges.
National / International reports
The USPIRG has a white paper / report: Do Roads Pay for Themselves?
“Fees” are not connected to “use” – The amount of money a particular driver pays in gasoline taxes bears little relationship to his or her use of roads funded by gas taxes—unlike other true user fees such as admission fees for state parks or turnpike tolls.
Drivers on local streets and roads, for example, pay gasoline taxes for the miles they drive on those roads, even though those taxes are typically used to pay for state and federal highways.
The Atlantic Cities / Citylab had a recent blurb linking to some 2013 academic research Debunking the Myth That Only Drivers Pay for Roads. And more recently the Atlantic Magazine did a longer piece highlighting an updated Spring 2015 USPIRG paper Who Pays for Roads? How the “Users Pay” Myth Gets in the Way
of Solving America’s Transportation Problems.