While President Obama and the lame duck 112th Congress appear determined to forge a bipartisan path to avert the so-called fiscal cliff threatening the economy, on both the federal and state levels there are other transportation-related concerns that truck fleet owners should also keep in focus.
To start with, keep an eye on the calendar to gauge how much is left on the clock for some crucial transportation-related issues. As noted by Politico.com’s Transportationpage, U.S. Dept. of Transportation funding runs out in 128 days while the 113th Congress convenes in 47 days. Surface-transportation policy has 683 days left on it and just 31 days after that come the midterm elections.
But right now what remains looming catastrophically through the windshield is the fiscal cliff. That term is “dramatic shorthand for the intensely negative impact that a package of federal tax hikes and spending cuts set to automatically take place this Dec. 31st will have on the economy--- if no action is taken to modify the enabling legislation.
Politico.com advised today that a new Fitch Ratings report warns that if the cliff is not steered clear of, the economy will wind up in recession. Per that report, noted Politico.com: “We're in store for a 2% decline in GDP, a boost in unemployment and flat growth if the [fiscal cliff] cuts kick in… The small upside: roads and bridges would probably suffer smaller declines than during the [great] recession.”
Regardless of how well or poorly infrastructure funding would fare if the fiscal cliff is not avoided, based on how things stand now in just two states it would be very wise to be on the lookout for fuel- tax hikes to be applied anywhere in the country next tear.
For example, Gov. Bob McDonnell (R) is presenting a comprehensive transportation-funding plan for Virginia as he enters his last year in office. His measures might well include indexing the state’s gas tax to inflation-- which has never been done at the federal level. According to a report posted today by the Fredericksburg Free Lance-Star,McDonnell mentioned gas-tax indexing to reporters because he told them that because State Sen. Sen. John Watkins, (R-Powhatan) had issued a transportation-funding proposal that would apply a sales tax to gasoline, eliminate several tax exemptions and lower some income tax brackets.
As for why he has put gas-tax indexing on the table, McDonnell said per the news report:“We have a transportation funding problem because gas prices aren’t indexed to inflation, because people are getting far more miles per gallon … and because we’re using alternative fuels,” McDonnell said, according to the news report. “People are buying less gas and therefore we have less revenues coming in. …We have a math problem. We’ve got dramatically less gas tax revenue coming in than we did five, 10, 15 years ago.”
Because the gas tax is a flat rate, it hasn’t changed over time, McDonnell noted, unlike percentage-based taxes. “I can tell you that every other major tax … all fluctuate with economic activity, because they’re a percentage of income or sales or corporate income, so they continue to grow with economic activity,” he explained. “We’re looking at whether or not it makes sense, even though it’s a declining revenue source anyway …. whether or not, if we’re going to keep it, whether or not it should fluctuate with economic activity, like every other tax in Virginia So that’s one of the things that we’re evaluating, along with several other alternatives.”
Meanwhile, Gov. Deval Patrick (D) is expected to ask the Massachusetts state legislature to increase the gas tax. According to a staff report posted by The Boston Globe, by Jan. 7, Patrick will deliver a proposal “calling for robust taxes and more precisely detailing the gap between what is currently spent and what is needed to bring the state’s roads, bridges, and transit systems into good condition and keep them there.” Massachusetts lawmakers actually called for such a plan last June as part of emergency funding legislation, the newspaper noted.
The general feeling among state officials is that a Transportation shortfall of nearly $1 billion in the Bay State could be cut by hiking the long-frozen gas tax as well as tolls and other taxes and fees. The “other” category may include taxing miles driven.
The Globe pointed out that “the gas tax has remained 21 cents a gallon since 1991, except for a 2.5-cent increase imposed to clean up underground contaminants. That means it has lost buying power against inflation and as cars have become more efficient, even as costs such as fuel, asphalt, and employee health insurance have soared.” In addition, the state sales tax—its largest funding source for transportation-- has fallen short of projections through multiple recessions and thanks to consumers avoiding it buy making purchases online.
In other transportation news relayed today by Politico.com,Los Angeles Mayor Antonio Villaraigosa (D) is apparently high on the list to replace Dept. of Transportation Secretary Ray LaHood should LaHood make good on the rumors that have him stepping down soon. "It's always nice to be talked about, but my only focus right now is finishing my job. And I want to finish it strong," he told Politico.com. Villaraigosa said the White House has not contacted him yet about the Cabinet post or any other position.
The posted report noted that right now “Villaraigosa is focusing on his ambitious plan to build 30 years’ worth of transportation infrastructure in Los Angeles in 10 years and improve air quality, public safety and education in his hometown of nearly 4-million people.”