INSIDE ENERGY: Why Gas Taxes Won't Fix Our Infrastructure Problem

Mar 13, 2015

Tearing down and replacing the Interstate 70 viaduct (shown) ranks as Colorado's top road infrastructure priority. At $1.2 billion, it will also be the most expensive project in the history of the Colorado Department of Transportation.
Credit Dan Boyce

It’s no secret that America’s roads are in trouble.

Our highways, interstates and bridges are crumbling and there's an estimated $90 billion dollar annual shortfall in funding to make the fixes. So, now would be a good time to raise gas taxes, right? That’s the main funding source for road infrastructure, has been for decades. Wyoming, and Iowa have raised theirs in recent years, other states are considering it. But, as Dan Boyce with our Inside Energy team tells us, gas taxes are not a long-term solution.

In a colorful little Mexican restaurant called Casa de Sanchez in North Denver, Fareed Ali ate with some of his coworkers during a break from their job repairing home exteriors. They drive a lot and have been relishing recent low gas prices.

“I would say we cut back a good $600 to $1000 a week, maybe,” Ali said, adding they are not keen on handing that money back to the government through a higher gas tax.

“I mean of course not,” he said.

It’s no secret that America’s roads are in trouble. Highways, interstates and bridges are crumbling and nationwide there is an estimated $90 billion annual shortfall to make the fixes. Now, with gasoline prices so low, many lawmakers are saying this is the best time to raise state and federal gas taxes. Those taxes have been the main funding source for road infrastructure for decades.

It is not a politically popular move, but Wyoming and Iowa have raised their gas tax in recent years, and other states are seriously considering it. But, it may not be the right solution.

“As a form of revenue that goes long term into the future, the gas tax is a dying tax,” said Amy Ford, Communications Director for the Colorado Department of Transportation, or CDOT.

Colorado’s state gas tax is a consistent 22 cents per gallon, no matter what the price of gasoline. It hasn’t been raised since 1993. According to Inside Energy analysis, if you account for inflation, CDOT is taking in 30 percent less money from gas taxes now than it did in 2000. The trend is going ever downward, despite a statewide population increase of a million people since 2000. That’s more cars and trucks pounding out more miles on Colorado roads, shelling out less money in gas taxes. Increasing the gas tax would help, but the problem is not just inflation--it’s much bigger than that.

Amy Ford, CDOT Communications Director, stands with her Toyota Prius which has been converted to a full electric vehicle.
Credit Dan Boyce

“I am the epitome of the challenge we have here in Colorado and really through the country,” Amy Ford said from behind the wheel of her Toyota Prius, which her husband converted to a full electric vehicle. She barely ever buys gas and thus barely ever pays gas taxes at all. Across the country, fuel efficiency is set to only get better, and younger generations are driving fewer miles per person.

Lone Tree, Colorado Mayor Jim Gunning is part of MPACT 64, a collection of government leaders representing all 64 Colorado counties. They have been polling the public to gauge approval on raising the gas tax by 15 cents per gallon, as well as on other funding options which may be more sustainable. These range from a slight increase to the state sales tax to an idea being studied by 11 western states, where instead of paying a gas tax, the state would track drivers’ miles and charge based on that figure. Both Oregon and Colorado are starting pilot projects on that this year.

“When we polled that, it’s extremely unpopular,” Gunning said, noting a paltry 24-percent approval rating in Colorado for the so-called "road usage charge."

Casa de Sanchez basically sits in the shadow of Colorado’s top road infrastructure priority: a long, six-lane overpass called the Interstate 70 viaduct. Not only is it a top priority, but at $1.2 billion, its demolition and replacement will stand as the most expensive project CDOT has ever undertaken. The state plans to fund it with temporary money from the state legislature and through another strategy which will likely become a lot more common in the future: entering into a partnership with a private company to help pay. The company will get its money back over the long term by opening toll lanes on the bridge.

Still sitting inside Casa de Sanchez, Fareed Ali listened to some of the other infrastructure funding models being discussed by government leaders, and changed his mind.

“Um, I’d probably go for the gas tax, the higher one,” he said. “I’d rather just pay at the pump.”

Trouble is, that might not be a viable option much longer.