Higher gas tax

[kraig]

[Thursday, May 14, 2009
Mich. gas tax, vehicle fees would rise under plan

David Eggert / Associated Press

Lansing -- Michigan's gasoline tax and vehicle registration fees would rise over five years under a plan to generate more money for roads and bridges.
Supporters of a 13-bill package announced Thursday say motorists would pay an extra $13 a month if the plan is passed. Backers acknowledge it will be tough to get higher taxes and fees through the Legislature, but say there is no excuse not to fix crumbling roads.
The legislation would eliminate the 19-cents-a-gallon gasoline tax and instead tax the wholesale price of gas, because fuel consumption is declining. The proposal also would raise vehicle registration fees.
Efforts by road builders and business groups to boost transportation funding have stalled for the last four years.





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Everyone call your state reps and senators and say hell naw.

[Bearinabox]

So are you saying let the roads crumble? What costs more, a gas tax increase or having your car pounded to smithereens by potholes?

[Roq]

Everyone call your state reps and senators and say hell naw.

Agreed until they figure out how to make repairs LAST. I can drive into Ohio, Canada, Illinois, etc.. and their roads in no way equal the piss poor shape ours are in.

[East Detroit]

Well, now we know why the Freep had an article last week about the roads causing ~$300 of damage etc average for each person. Getting us ready to pay more.

[kraig]

So are you saying let the roads crumble? What costs more, a gas tax increase or having your car pounded to smithereens by potholes?

No, I'm not saying let the roads crumble. What I am saying is that MDOT has done a very poor job in managing the maintenance and construction of the roads, so why give them more to mismanage? What I am saying is that the State of Michigan has one of the highest gas taxes in the country and has little to show for it, so why let them increase what we're paying? What I am saying is that if we have the opportunity to fight legislation that's going to cost us more money we should do so. What I'm saying is over the course of a year we pay more than enough in gas taxes to pay for a brand new set of tires. And finally, what I'm saying is that even if we pay the higher costs, history has shown that we're not going to have better roads.

[Campfire Girl]

Agreed, Kraig - I saw that article this morning, directly underneath the story of hundreds of dealerships closing and thousands of people soon to be unemployed. We are definitely overtaxed and there is little if any oversight as to how these funds are used or how "lasting" these road repairs are, after a single year.

[Stosh]

Here's a thought. I can see places where there is little to no truck traffic as a normal rule, where the road damage is minimal to none. I can also see stretches on the same road, that are heavily traveled by trucks, that are pothole riddled messes. Why do we still insist on the absurdly heavy weight limits on trucks in Michigan? Why don't we adopt the standards of the states like Ohio and Indiana?

Seems to me that this would kill two birds with one stone. Save our roads from damage, and possibly create jobs as well for truck drivers.

[kraig]

Here's a thought. I can see places where there is little to no truck traffic as a normal rule, where the road damage is minimal to none. I can also see stretches on the same road, that are heavily traveled by trucks, that are pothole riddled messes. Why do we still insist on the absurdly heavy weight limits on trucks in Michigan? Why don't we adopt the standards of the states like Ohio and Indiana?

Seems to me that this would kill two birds with one stone. Save our roads from damage, and possibly create jobs as well for truck drivers.

Ohio and Indiana only border other states. The state of Michigan borders another country, as well as, other states. But, that doesn't mean it couldn't work. It's just that we would have to rely on MDOT, at its inept best, to come up with a viable plan. Which doesn't seem to be its forte.

[DetroitPlanner]

All other border states have consistently raised more transportation revenue through having a much higher gas tax. Michigan has always lagged in this respect. In addition, nearly ten percent of the state gas tax is siphoned off to pay for public transit and another one percent to pay for pedestrian and bicycle facilities per State law [[Act 51 of 1951 as amended).

The reality is that people are driving less, buying more fuel efficient cars, turning to transit or to walking more. These factors all have a negative impact on the numbers of gallons of fuel purchased, yet we still need to maintain roads and pay for expanding transit and pedestrian needs.

In reality what is needed is that those who use the system the most should pay the most for the system, this gets muddied by hybrid vehicles. For example, a Ford Escape Hybrid may drive more miles every year than a normal Ford Escape, but the Hybrid's driver could pay remarkably less tax into using the road system.

Conversely, the best thing about how gasoline is currently taxed is that it rewards those who choose to drive more fuel efficient cars or those who choose to take transit. They pay much less into the system, but get the same or better benefits.

It should also be noted that commecial trucks get a discount on diesel purchases.

[kraig]

All other border states have consistently raised more transportation revenue through having a much higher gas tax. Michigan has always lagged in this respect. In addition, nearly ten percent of the state gas tax is siphoned off to pay for public transit and another one percent to pay for pedestrian and bicycle facilities per State law [[Act 51 of 1951 as amended).

The reality is that people are driving less, buying more fuel efficient cars, turning to transit or to walking more. These factors all have a negative impact on the numbers of gallons of fuel purchased, yet we still need to maintain roads and pay for expanding transit and pedestrian needs.

In reality what is needed is that those who use the system the most should pay the most for the system, this gets muddied by hybrid vehicles. For example, a Ford Escape Hybrid may drive more miles every year than a normal Ford Escape, but the Hybrid's driver could pay remarkably less tax into using the road system.

Conversely, the best thing about how gasoline is currently taxed is that it rewards those who choose to drive more fuel efficient cars or those who choose to take transit. They pay much less into the system, but get the same or better benefits.

It should also be noted that commecial trucks get a discount on diesel purchases.

Yeah, let's take away one of the benefits of driving more fuel efficient vehicles. That way we can consume more gas and go back to paying more per gallon, which will really kill us since the new tax is based on price and not gallon. Genius.

[mwilbert]

Road damage goes up roughly as the fourth power of the axle weight; the damage to the road from cars, even a lot of cars, is trivial compared to the damage from heavily loaded trucks. Michigan claims that although they allow heavier trucks, they require more axles per unit of weight, which should offset that somewhat. Nonetheless, if you compare a truck with 20000 pounds/axle, vs. a car with maybe 2000 pounds/axle, you find that the truck would do about 10000 times as much damage to the road [[10^4) per mile.

[Retroit]

If the tax is included in a bill that would lower truck weights and increase road construction quality, I would be okay with it.

But what I really think needs to be done is raise the federal gas tax. We need a source to pay for the wars that are being fought to maintain our supply lines to the Middle East.

[DetroitPlanner]

Yeah, let's take away one of the benefits of driving more fuel efficient vehicles. That way we can consume more gas and go back to paying more per gallon, which will really kill us since the new tax is based on price and not gallon. Genius.

Before you go off half cocked, I presented both sides of the arguement in a non-judgemental way. If you read what I had to say in the previous paragraph I mentioned that those who use the system the most [[drive the most miles) should pay more, but that sometimes does not happen due to changes in technology.

Regardless, revenues are decreasing. This is the major funding source for both SMART and DDOT operations. In addition, raw materials continue to increase in cost. Michigan has bad roads because we lag others in investing in them.

I don't disagree with you, but increases with fuel economy also lead to a more sprawled-out lifestyle, where people think they can live ten or more miles from work and don't really think about the impact of driving their car on road capacity, the environment, or on what is best for their pocketbook.

Transportation is not something we can be penniwise, pound foolish with. It is the TO in the getting the unemployed to work. It gets our products to market so we can have jobs and gets us to the jobs so we can be economically productive.

[mjs]

Detroitplanner, you point out that folks are driving less, taking more transit, and walking less, but we still have to pay for roads. Don't we pay less for roads when they're used less? Doesn't increased transit use make it easier to spend more money on road maintenance than road expansion which is what we should have done years ago?

Won't higher gas taxes also lower repair costs as companies transporting by heavy truck would move to more fuel efficient heavy rail? Wouldn't lowering truck weights also do a triple whammy to help our road budgets? Less destruction per ton shipped, more miles [[thus gallons taxed) per ton shipped, and more tons moved to heavy rail.

Kraig, why does MDOT need to be in on Stosh's plan to lower truck weights? We just need the Michigan legislature in on it. Sounds like everyone could agree on writing the Michigan legislature saying we support any bill that would raise taxes if it also lowered truck weights. We could even recommend that they add that MDOT management needs to be certified civil engineers.

Mwilbert makes me think of a good alternative plan to lowering weights. Lets tax the weight in proportion to the damage it causes. If the truck does 1000 times the damage, tax it 1000 times more. If its needed as badly as they claim, the user rather see that than a total ban.

[3WC]

Gas taxes will be the least of folk's problems.

Nancy Pelosi and some key Democrats have stated several times that gasoline should be $6-$8 a gallon as it is in Europe and several other countries, primarily as a result of taxation. The perceived "benefits" will be that those prices will force motorists to drive small fuel efficient vehicles [[built at govt controlled plants) and provide an impetus for voters to approve funding of alternative energy projects the majority of which will never work.)

The thinking is, however, that that goal can't be forced by raising gas taxes. So, here's the plan.

Background: Small independent oil and gas producers, such as I, produce more than 80% of all the oil and gas produced in the country, about 4-5.5 million bbls/day. I produced about 150,000 bbls last year and I'm a relatively small guy.

In April, the Democratic Congress published its proposed revisions to the tax code that govern oil and gas production. The revisions would remove the depletion allowance, intangible drilling cost write-offs, marginal well tax credits and several other historic tax treatments that are provided to all other extractive industries, industries that produce commodities that, once produced are never renewed. These historic tax treatments - benefits - are what provide the funds to continue drilling for new reserves - the lfeblood of the country.

The proposed changes raised a firestorm of criticism, much from Democrats from oil producing states.

Geithner appeared before a Congressional committee in early March and was grilled by Dems and Republicans, who pointed out that should they be adopted, the tax changes would put out of business the vast majority of independent producers in the country, put over 200,000 people out of work, and would result in the importation of up to 5 million bbls of oil per day from foreign producers, and that the price of gasoline would be right up at $7-8 per gallon, and our balance of payments deficit would break all records. His response: It is the Administration's and Congress' policy that under no circumstance would the government continue to "support" industries that contribute to global warming.

There was such an outcry over the idiocy of the proposals that they were taken off the table. For a few weeks. The 2010 Budget was submitted a week or two ago, with those tax changes included. It remains to be seen if they will pass both Houses.

If they do, I will shut down my leases within a year and will temporarily abandon them until [[if) a new regime tales over and goes back to rational policies. I won't ever miss any meals; I've sold many of my leases at the heigth of the "boom" last year. However, I'll have to terminate 19 people, and of course most suppliers and contractors will go out of business.

Do you suppose the govt is taking over the car companies to operationally mandate [[free of voter input) the building of only small cars with only enough p/up trucks to satisfy requirement of business. No news SUV's for sure.

I'm sure a lot of folks [[including many on this forum) think this is a great plan. However, whether, one believes that global warming is caused by man made pollutants or not, the rest of world will look at the U.S. as having extremist views and willing to wreck its entire economy in the process. In the meantime, China is building one new coal fired power plant per week and its main fear is that we will so disable ourselves financially that we will not be able to support the Chinese economy as we have been doing for decades.

It's apparent at this early date that the new Administration and the current Congress intend to continue taking over the means of production and reshaping the country's financial and lifestyle attitudes in its own image of a brave new world.

We have become a nation of sheep, or too ignorant to perceive what's going on; the govt is skilled in painting a very rosy picture to support its goals. Or, maybe nobody cares any more, and we're ready for the brave new world where it's no longer important that that we be a world power.

[Retroit]

^ Very informative. Thank you for taking the time to write that.

Would it be possible to put a tariff on imported oil? This would discourage importation, allow you to sell your oil for a higher price, and still raise gas prices and thus discourage the demand for gas. Tariff revenue would fund the military operations in the Middle East.

Your professional opinion?

[3WC]

Retroit, a tariff is not the answer in my opinion. The companies which import foreign oil would merely pass on the extra cost to consumers. Keep in mind when it comes to oil we are a beggar nation. I for example have no control at all over the price at which I can sell my oil. The price paid changes daily based on the NYMEX closing price. The NYMEX price is controlled by OPEC for the most part. We have no ability to screw around with any foreign oil exporting country.

Foreign oil producing countries have the power to bankrupt the U.S. whenever it suits their own interests. Oil is paid for in U.S. dollars worldwide. There have been rumors for years, based on the deteriorating financial condition of the country, that oil should be priced worldwide in Euros. When [[not if) that occurs, the price of oil in the U.S. will go up about 30%. [[Of course U.S. producers will be paid in dollars, but a number of dollars equivalent to the number of Euros per bbl. That will be great for small producers such as I who hang on long enough.)

The U.S. has not had a sane energy policy for years [[which has greatly benefitted guys like me) and the likelihood of the country adopting a sane policy is now almost nonexistent.

[DetroitPlanner]

Detroitplanner, you point out that folks are driving less, taking more transit, and walking less, but we still have to pay for roads. Don't we pay less for roads when they're used less? Doesn't increased transit use make it easier to spend more money on road maintenance than road expansion which is what we should have done years ago?

Simple. The gas tax pays for TRANSIT. The more demand we have for transit, the more need we have to fund it and the less people there are putting in to fund transportation in general through the gas tax. The $1.50 [[or less if they buy a bus pass) people pay when they ride transit does not cover the full cost of the service. A bus starts at $250,000; a driver makes $15 an hour; a bus needs gas, insurance, maintenance. It all adds up. If we ever get light rail or trains the costs are even higher.

Lets assume everyone gets rid of their car. Buses still use the road system, so the roads must be maintained for the buses. Trucks use the road system too, and Metropolitan Detroit would wither away without trucks. We need to get our goods to market, and stock our store shelves with goods from elsewhere. If the majority of transit and road funding comes from the gas tax, how will you fund anything related to maintaining the current system and expanding transit options?

The cost of busses, fuel, and the raw marerials needed for roads bridges and sidewalks continue to increase at about 4-5 percent each year, but the tax is levied at a straight 19 cents a gallon, and purchasing power has eroded over the last 12 years. Even at 19 cents Michigan was underfunding its transportation needs when compared to places like Ohio and Illinois that had higher taxes 12 years ago and toll roads.

In case you have not noticed, we have not had any new major roads built around here in the last 20 years. We are adding more miles of bicycle paths every year than we are of widened lane miles. Most of the road money is going toward maintaining the roads/bridges and making them safer through adding round abouts or other features that are actually saving lives and reducing the number and severity of automobile accidents.

Currently we have a hidden tax that comes to the motorist through cars getting beat up on rough roads and not lasting as long as they would if they had better pavements. Bent rims, blown tires or new shocks ain't cheap.

What I favor is a more equitable way of funding transportation in general, with those who use the system the most paying for it. If you decide to drive 60 miles round trip by yourself everyday for work, you should be able to do so, but it should come as a personal cost, not a societal one. In addition this may not be a popular approach, but those who take transit should also pay more for longer trips as opposed to those taking shorter ones. This way people will think about the impact of transportation when they decide to live in Milford and work in Southgate. Folks will make more rational decisions on where they live and work and what mode they will use to get to their destination.

I agree with 3WC a tariff is still a tax, but it goes into a general fund and does nothing to solve this problem. In fact it makes it worse by reducing the overall miles driven, and leads to less revenues to pay for maintaining the roads and transit. General fund taxes are the giant sucking sound of govt.

[mjs]

Good points, DP. I think I've replaced at least three rims and four tires likely in part because I have a blown shock. I bike when I can and I keep trying to find a way to take the bus to work, but even if it could get me there at six am, I'm not willing to ride the bus three hours a day when I can drive it in an hour. I love the job, but maybe I need a closer one.

Have any idea on how much higher rider fees would have to go to cover themselves? If I could be chauffered somewhere, I'd be willing to pay up to the driving costs I currently pay. How did Europe get public transportation to take?

[DetroitPlanner]

Have any idea on how much higher rider fees would have to go to cover themselves? If I could be chauffered somewhere, I'd be willing to pay up to the driving costs I currently pay. How did Europe get public transportation to take?

The rider fees would have to fluctuate in order to cover the true costs, I don't think that it is possible to get the revenue through a rider fee. Last summer diesel was going for close to $4.50 a gallon at the same time there was a huge demand to put even more buses on the road. Now it is less than $2 a gallon. It might be better to have transit based on property taxes, with those living the farthest from linehaul service paying the least and gradually increasing so those that can walk to a bus stop paying more. Remember, that as our country increases in percentage of those who are seniors less folks are able to drive, meaning that paratransit [[those large vans that pick up seniors) will have a higher demand, so any community that cuts this service will be less desirable to seniors, and seniors are generally the kind of people that communities want to attract because they do not fill the schools with kids or have wild parties.

Europe does not sprawl as much as the United States does. This means much more parking is at a premium price. This is the land-use part of the equation.

As stated elsewhere on this thread, most european countries tax the heck out of gasoline to pay for transit.

[Todd_Scott]

In case you have not noticed, we have not had any new major roads built around here in the last 20 years. We are adding more miles of bicycle paths every year than we are of widened lane miles. Most of the road money is going toward maintaining the roads/bridges and making them safer through adding round abouts or other features that are actually saving lives and reducing the number and severity of automobile accidents.

The M-5 extension is a major new road built in the last 20 years. Then there's Martin Road in Commerce. Lyon Township is completing a ring road. Novi has plans or is adding on to their ring road. There are new roads in the Rochester/Rochester Hills area as well, e.g. Lettica. Squirrel Road went from a 2-lane dirt road to a 4-6 lane boulevard -- making it a new major road. There are new major segments of Hamlin Road too.

Road agencies and SEMCOG love to downplay capacity expansions, but tax dollars are still being dumped into them despite the fact that we can't maintain what we already have. [[They also label many widening projects as safety improvements.)

And while I doubt we have added more miles of bicycle paths than widened lane miles, it's misleading in this context.

Far more money is spent on widening vehicle lanes than bicycle facilities. For instance, the M-59 widening from Crooks to Ryan will cost $60 million. By my rough estimates, that widening alone costs more than 5 years of MDOT spending on non-motorized facilities for the entire state.

The price tag on the proposed I-75 widening in Oakland County is about a half-billion.

The proposed I-94 widening price tag is over a billion.

And don't forget the DRIC, which is basically a new major road to Canada...

[kraig]

All of you keep it going. I'm learning a lot here.

[professorscott]

This is a good discussion. I'll weigh in.

Michigan differs from other midwestern states in three ways that are relevant to a discussion about crumbling roads and gas taxes.

1. We allow much heavier trucks than all other states.
2. Other states have one or more toll expressways, which pay their own way, so what money the state does have for highway maintenance [[of the free roads) is not spread so thinly.
3. In the other states, metro regions which are not growing in population are not building roads. We built the M-53 expressway, the bizarrely wide M-59, and the M-5 extension, not because the regional population was growing [[it was not), but to further subsidize disinvestment of the core city and expansion of the metro populated region farther into the exurbs. [[The M-53 expressway, for example, ends near THIRTY-FOUR Mile Road.)

These are all choices we have made as a state, and we could unmake them, but I bet anybody on this forum five dollars that we don't.

[Retroit]

Thanks for the response, 3WC. I think I may have misunderstood you when you said you were a oil and gas producer. For some reason, I assumed you meant natural gas and not gasoline. So, if you are a refiner importing tariffed oil, a tariff would be detrimental to you. Or am I completely confused?

If you were only a oil [[& natural gas) producer, such as an oil driller, I fail to see how a tariff wouldn't benefit you. I realize that the system is set up for OPEC to make the rules, but I say "F*ck them, this is our country, we decide what we want to import and at what price. It is our sovereign right." If imported oil is subject to a 10% tariff, then that gives you the ability to raise your oil price by something less than 10% to underbid the tariffed imports [[or you could keep your price the same and sell it to a retail gas station who would continue to sell gasoline at a pre-tariff price). The tariff would superficially make the foreign producers pay the same price that you would have to pay if the tax changes were repealed [["depletion allowance, intangible drilling cost write-offs, marginal well tax credits and several other historic tax treatments ").

Or, is it just that you are against anything that will raise the price of gasoline because that will reduce the demand for gasoline?

And, Detroitplanner, I absolutely don't think that tariff revenues should be put into the general fund. I would be in favor of splitting tariff revenue between road/transit funding and supply line "ensurance".

[kraig]

I remember MDOT giving Accelerated Bridge Construction a try last summer. Does anyone remember how that worked out? Are they doing it again this year?