Senators Float 25-Cent Hike in Gas Tax Over Three Years

MIAMI — Two senators on the Environment and Public Works Committee, including the panel’s outgoing ranking Republican, are calling for a gradual increase of the gasoline tax by 25 cents over three years.

Sens. Thomas Carper, D-Del., and George Voinovich, R-Ohio, who is retiring in January, sent a letter Monday to the chairmen of the National Commission on Fiscal Responsibility and Reform saying that a gas tax increase is necessary. They recommended raising the tax by one cent per month, over 25 months, for a total increase of 25 cents per gallon over the next three years.

The senators said their idea should be included in the commission’s report to President Obama, due Dec. 1, which will include recommendations to balance the budget and improve the country’s fiscal situation.

Under the senators’ proposal, 10 cents of the 25-cent increase would be dedicated temporarily to deficit reduction, providing about $83 billion over five years, according to the letter. The other 15 cents, which would be used for transportation projects, would amount to about $117 billion of new funds over five years. Additionally, the fuel tax would be indexed to inflation after the 25-month period.

The senators said that new revenues from the tax increase would be put in a Treasury escrow account, where it would stay until Congress can approve a new multi-year surface transportation bill to replace the current law that expired Sept. 30, 2009, and which was followed by a series of temporary extensions.

“This proposal will fix the transportation program’s major fiscal challenges,” they wrote. “It will remove the approaching need for further general fund transfers to the highway trust fund, will provide additional deficit reduction, will supply essential investment for transportation infrastructure, and will create more than 750,000 jobs.”

The gasoline and diesel fuel tax rates were last increased in the mid-1990s, when the gas tax was raised by 4.3 cents to 18.4 cents per gallon. Many ­infrastructure advocates and lobbying groups have pushed for the gas tax to be raised again, if only as a temporary measure to rescue the highway trust fund from repeated brushes with insolvency. The trust fund’s highway account provides a large share of the federal funds that states receive to build and maintain roads and highways, but its revenues, which come mostly from fuel taxes, have fallen short of the amount needed for outlays. As a result, lawmakers have authorized about $35 billion of general funds to be transferred from the Treasury into the highway trust fund to keep it afloat.

Many transportation industry members have said a small gas tax hike would be the simplest way to alleviate those shortfalls in the near term — longer-term proposed solutions include a tax based on mileage — but that political willpower to raise the tax is scant. The Obama administration has firmly said it will not support a gas tax increase. The Republican leader of the House Transportation Committee, John L. Mica of Florida, has echoed this statement.

But the senators argued that a gas tax increase is the only solution to an impending dilemma, as the highway trust fund continues to fall short of revenues. Another general-fund transfer would add to the federal deficit. But without a general-fund transfer, outlays to states and localities would have to be reduced, which would damage the overall economy by increasing unemployment as infrastructure projects are delayed or stopped, they argued.

A separate letter signed by transportation, construction, and labor groups also urged the commission to support a gas tax increase.

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