Higher gas tax

[DetroitPlanner]

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.

One of the main issues that muddies this discussion is the difference between what is legislative and what is MDOT, SEMCOG, SMART, RTCC, County or City policy.

Often times there is conflict between what legislation allows and what sound policy is. This manifests itself in frustration, not only in those who use the system, but those of us who implement the policy.

This could be en entirely separate thread.

[Todd_Scott]

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.)

That's an excellent point. It seems we build roads based on political pressure and congestion rather than based on a regional transportation and land use plan or good fiscal policy. From what I can see SEMCOG, our Metropolitan Planning Organization, sets the bar low when approving road projects and is ineffective with respect to smart and cost effective regional transportation planning.

[mjs]

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.

But Michigan collects less in motor vehicle and fuel taxes than they spend on transportation. While looking at the back of my 2008 tax instructions for something else, it said that in 2007, we collected $1.98 billion in taxes and spent $2.20 billion on transportation. Assuming 10% of that money went to public transportation, the $220 million was funded entirely from the general budget. If its only 10% or less of just the gas tax portion, public transportation was less than $200 million meaning the gas tax isn't even covering the costs of the roads so the pedestrians are carrying the drivers.

As a related fact, transportation was 7.9% of the state's budget.

[kraig]

But Michigan collects less in motor vehicle and fuel taxes than they spend on transportation. While looking at the back of my 2008 tax instructions for something else, it said that in 2007, we collected $1.98 billion in taxes and spent $2.20 billion on transportation. Assuming 10% of that money went to public transportation, the $220 million was funded entirely from the general budget. If its only 10% or less of just the gas tax portion, public transportation was less than $200 million meaning the gas tax isn't even covering the costs of the roads so the pedestrians are carrying the drivers.

As a related fact, transportation was 7.9% of the state's budget.

Maintaining the roads is a core function. The gas tax is not intended to pay for the whole thing. The state says that the proceeds from the gas tax are to go to state roads in order to get us to feel better about the tax when it's really just a tax to increase revenue. Think of it in the same sense that the state lottery is to go to the schools, you wouldn't expect the lottery to pay for all of the various school systems expenses.

[DetroitPlanner]

But Michigan collects less in motor vehicle and fuel taxes than they spend on transportation. While looking at the back of my 2008 tax instructions for something else, it said that in 2007, we collected $1.98 billion in taxes and spent $2.20 billion on transportation. Assuming 10% of that money went to public transportation, the $220 million was funded entirely from the general budget. If its only 10% or less of just the gas tax portion, public transportation was less than $200 million meaning the gas tax isn't even covering the costs of the roads so the pedestrians are carrying the drivers.

As a related fact, transportation was 7.9% of the state's budget.

Thanks to bonding. Bonding however require debt service and debt is paid first prior to any new projects being funded.

Local communities sometimes are able to augment the cost of transportation through millages for transit or roads. The reason why you can use SMART on Woodward in Pontiac or Ferndale, but not in Bloomfield Hills is a result of millages. The State only has gas and registration taxes to spend on projects unter its jurisdiction unless the legislature includes additional appropriations in its budget [[which is unlikely considering the massive shortfalls). Note that as we drive less we are also holding onto cars longer. Vehicle taxes are based on value of the car, since our fleet is getting older, that too is decreasing along with gas tax revenues. In addition those that used to only buy Hummers now think Malibus are good cars, so replacement vehicles for those buying new cars are also much less than prior cars. This has a negative impact on registration revenues as well. In addition, unlike the gas tax, vehicle registrations get a lot of money siphoned off of them to pay for other parts of State govt, again considering the State's massive shortfalls, this revenue source is becoming more attractive to non-transportation related expenditures.

[mjs]

Thanks for the insight. Though I could be wrong, it seems the $1.98 billion I cite includes gas taxes and registration fees since its termed "Motor Vehicle and Fuel Taxes". The other one that suprises me is the lottery that was passed to support schools. It brings in only $760 million of the $13.3 billion that is spent on education. I guess its better than nothing.

[mjs]

Maintaining the roads is a core function. The gas tax is not intended to pay for the whole thing.

My whole point is why not. If we drive farther, more often, and in more comfort, shouldn't we be expected to pay for all the costs associated with it? Besides the road costs, there's increased health costs, oil subsidies, military and diplomacy resources dedicated to keeping costs down, etc.

http://www.commutesolutions.org/calc.htm

[DetroitPlanner]

My whole point is why not. If we drive farther, more often, and in more comfort, shouldn't we be expected to pay for all the costs associated with it? Besides the road costs, there's increased health costs, oil subsidies, military and diplomacy resources dedicated to keeping costs down, etc.

http://www.commutesolutions.org/calc.htm

Ironic that the interstate highway system was developed for military use and civil defense, no? I would agree that those that use the transportation system the most should pay the cost proportionally. This would do a lot to incentivize better land use, conservation, and reduce the footprints needed for development [[some people call this sprawl, but I look at it holistically in that it would open up more of the built area for redevelopment and reduce the incentive for development to expand outward).

[kraig]

My whole point is why not. If we drive farther, more often, and in more comfort, shouldn't we be expected to pay for all the costs associated with it? Besides the road costs, there's increased health costs, oil subsidies, military and diplomacy resources dedicated to keeping costs down, etc.

http://www.commutesolutions.org/calc.htm

You sound as though you're proposing an enjoying life tax. We already pay sales taxes, income taxes, property taxes, fees up the butt along with a host of other additional taxes and fees. There's a reasonable expectation that services should be provided for what we already pay. There shouldn't be an additional fee everytime a service is actually being provided. If the state wants to charge us per use for the services it provides, then what is our tax money being used for?

Have you ever seen a situation where the taxes were raised and you noticed an improvement inservices that justified the tax increase? I know I haven't.

[detmsp]

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.

Huh? How does raising the gas tax take away the benefit of driving more efficient vehicles? Are you seriously suggesting that by making people pay more for gas they will end up using more of it? WHAT?

[kraig]

Huh? How does raising the gas tax take away the benefit of driving more efficient vehicles? Are you seriously suggesting that by making people pay more for gas they will end up using more of it? WHAT?

That was my sarcastic response to another post. You should go back and read the post I was responding to. It should make sense to you then.

[mjs]

You sound as though you're proposing an enjoying life tax. . . There's a reasonable expectation that services should be provided for what we already pay. . . Have you ever seen a situation where the taxes were raised and you noticed an improvement inservices that justified the tax increase?

I'm proposing an enjoying the benefits charge. If you believe the price is worth it, you try to get more of the benefits. If you think it isn't, you try to get less. Its a free market principle. Its not reasonable to expect to get something for what you've paid in the past especially if its always been subsidized; its reasonable to expect to pay what it costs. That unreasonableness is why we keep getting such out of control deficits. Yes, I've noticed a great many times that taxes were raised and I got an increased benefit. They're called millages.

[kraig]

I'm proposing an enjoying the benefits tax. If you believe the price is worth it, you try to get more of the benefits. If you think it isn't, you try to get less. Its a free market principle. Its not reasonable to expect to get something for what you've paid in the past especially if its always been subsidized; its reasonable to expect to pay what it costs. That unreasonableness is why we keep getting such out of control deficits. Yes, I've noticed a great many times that taxes were raised and I got an increased benefit. They're called millages.

Stop right there. The City of Detroit has more millages than any other city in the State of Michigan. Are you arguing that there is an increased benefit in the amount of services the City of Detroit and DPS has been delivering with the raising of their millages?

[detmsp]

That was my sarcastic response to another post. You should go back and read the post I was responding to. It should make sense to you then.

Yeah I got the sarcasm, and I read the other post.

You and the other poster both seem to be under the impression that this proposal removes the incentive for driving more fuel efficient cars since it involves taxing gasoline based on price instead of gallon. That is ridiculous. The incentive that exists today will still be there, completely unchanged.

[DetroitPlanner]

Huh? How does raising the gas tax take away the benefit of driving more efficient vehicles? Are you seriously suggesting that by making people pay more for gas they will end up using more of it? WHAT?

Kraig is looking at the curious dictomy of how to incentivize the use of fuel efficient vehicles when faced that if all you do is incentivize fuel efficiencies that you create an environment that promotes sprawl. I assume he is responding to me, and there are no easy answers to his question. His issue, is with policy vs implementation. I share many of his concerns, but am willing to arue this both pro and con because there are two sides to this coin that need to be understood. Depending upon what you drive a buck of tax amortized over time gives you x number of miles. Supersport has mentioned either in this thread or others that he does not need to drive much so his buck might last him a week even though he has what some folks may consider a gas hog. Someone who choses to live far from work however, that dollar may only last a day even if they drive the most fuel efficent car they can find. To reduce the need to widen roads, we must make all trips as short as possible, and augment those trips though making alternatives more viable [[transit, pedestrian, bike, even shipping). I am wondering how to do this without increasing the nanny-state.

[mjs]

Stop right there. The City of Detroit has more millages than any other city in the State of Michigan. Are you arguing that there is an increased benefit in the amount of services the City of Detroit and DPS has been delivering with the raising of their millages?

I'm speaking about getting what you pay for in gas taxes and you're talking about DPS and Detroit property taxes. This is a thread about gas taxes.

But, I'll go down that path for a moment. Living in an area with lower property values doesn't lower the per capita needs of the students. Does Detroit have the highest taxes on a per capita basis? Doubling the tax rate on something worth 1/4 as much means you collect half as much in taxes. DP has explained all of this when he talked of how total gas tax revenue declines as folks stay closer and get more fuel efficient vehicles.

DP, best answer I can come up to provide incentive for folks with fuel efficient vehicles to live closer to work is toll roads. People that live far from work can avoid them, but how many lights will a guy be willing to stop at on the way into work?

[kraig]

I'm speaking about getting what you pay for in gas taxes and you're talking about DPS and Detroit property taxes. This is a thread about gas taxes.

But, I'll go down that path for a moment. Living in an area with lower property values doesn't lower the per capita needs of the students. Does Detroit have the highest taxes on a per capita basis? Doubling the tax rate on something worth 1/4 as much means you collect half as much in taxes. DP has explained all of this when he talked of how total gas tax revenue declines as folks stay closer and get more fuel efficient vehicles.

DP, best answer I can come up to provide incentive for folks with fuel efficient vehicles to live closer to work is toll roads. People that live far from work can avoid them, but how many lights will a guy be willing to stop at on the way into work?

Apparently, you're one of those people that have been "blown away" by what Granholm and the state have delivered in the past 5+ years. Myself, I don't think that the state does a good job of manging the money it already receives. Therefore, I don't feel that I should support anything that is going to take more money out of my pocket and put in the state coffers to be mismanaged.

[mjs]

I hear you, but you're confusing whether the expenditures have been efficient with how the costs should be distributed. We can support improved efficency and support ensuring that the folks that use the roads the most pay the most for them. One way or another, transportation costs have to be paid by someone.

Most of the McNamara crew is already gone: McNamara retired, Duggan moved to private industry, Kilpatrick went to jail. Jenny will be gone soon enough.

[DetroitPlanner]

DP, best answer I can come up to provide incentive for folks with fuel efficient vehicles to live closer to work is toll roads. People that live far from work can avoid them, but how many lights will a guy be willing to stop at on the way into work?

Theres the rub any tolling done today is best done through the nanny-state, where the govt tracks your car via GPS. This is the lowest cost, easiest to implement process. Since we don't have tolls now, there is no sense building an archaic system where we have to stop every few miles to throw a buck in a hopper. However, I for one don't think the state should know where I go to buy a loaf of bread, I like autonomy in transportation.

Kraig, there have been huge advances in how the state spends transportation dollars lately and we are still showing the roads getting worse. Keep in mind that with taxes based upon cents per gallon, decreased revenues though less vehicle miles travelled and more efficient car purchases, increased demands for transit and increases in costs of materials there has been substantial erosion to the gas tax increase that was passed ten years ago. Even that tax increase did not bring us to pairity with surrounding states and provinces. The more we don't invest in transportation, the worse off we are going to be economically. Its sort of like ignoring your leaking roof and being surprised that the water damaged has ruined your house. Roads will get worse and we have over 120,000 miles of roads to maintain and we need to maintain and expand our thousands of buses in order to meed demands. To ignore transportation will put Michigan and Detroit even further behind when the economy starts humming again.

[mjs]

I don't even like the tracking on my phone and I really don't like the black boxes they're adding to cars, but when alternative vehicles get here, how do we tax their road use? Odometer checks like how utilities do with meters?

It seems you're right on Michigan funding compared to other states, but I often wonder how much weight limits, poor materials, and poor building decisions factor in. Do you know of any sources that compare vehicle revenue per capita or vehicle revenue per mile maintained? I have no problem buying a book or going to a depository if need be.

[DetroitPlanner]

Check with [[Institute of Transportation Engineers) ITE or TRB [[Transportation Research Board).

[Funaho]

Weight limits factor in a great deal here. It's all the trucks that are tearing up the roads; you can observe this directly by noting that the left lanes are usually in much better shape than the center or right lanes.

Bad materials? It happens sometimes but I don't think it's the major factor. Certainly MDOT isn't going to deliberately pick bad materials and I'm not sure there's any thing to suggest that vendor corruption is any worse here than anywhere else.

[mjs]

I came across this when I was trying to find yearly gas price increases. Kelly Blue Book's 9.8% per year sounds high.

Looking at this state by state tax per gallon comparison, our gas tax of 19 cents on gas, 15 cents on diesel, and 12 cents on ethanol and biodiesel seems to be in line with all the other states including Indiana and Illinois. And Michigan already seems to be on the high side of Sales Tax and Motor Vehicle fees. The Federal Highway Administration even knows how each state divies up its revenue. My favorite is the country comparison of gas tax per gallon.

COUNTRY. . GAS . DIESEL

Belgium . . . . 419 . . . 270

France . . . . .. 426 . . . 328

Germany . . .. 451 . . . 350
Italy . . . . . . .. 408 . . . 332
Japan . . . . . .. 263 . . . 167
Netherlands . . 480 . . . 317
UK . . . . . . . . 441 . . . 453
US . . . . . . . .. 39 . . . . 45

http://www.fhwa.dot.gov/ohim/mmfr/nov08/trmfuel.cfm
http://www.fhwa.dot.gov/ohim/hwytaxes/2008/mv103pt1.cfm
http://www.fhwa.dot.gov/ohim/hwytaxes/2008/mf106.cfm
http://www.fhwa.dot.gov/ohim/mmfr/nov08/mftrates.cfm

[mjs]

You would think Michigan wouldn't deliberately pick a #160,000 truck weight when everyone else maxes out at #80,000, but they do.

[kraig]

Thursday, June 4, 2009
MDOT: Drivers can afford gas tax

Official says falling revenue threatens many road projects

David Eggert / Associated Press

Lansing -- Drivers can afford to pay higher gasoline taxes to improve their roads, Michigan's top transportation official said this week while warning more than 125 projects will be delayed if funding is not increased.
State Department of Transportation Director Kirk Steudle estimated motorists would pay an extra 16 cents per week -- "a stick of gum" -- for every penny increase in the 19-cents-a-gallon gas tax. He urged lawmakers to support a proposal to convert the gas tax to a percentage tax on the wholesale price of gas, which would rise at capped amounts as prices at the pump increase.
The gas tax could be as high as 34 cents a gallon in five to seven years under the plan that has been announced but not yet officially introduced. The tax would drop slightly this year, reach 24 cents in 2010 and rise no higher than 3 additional cents annually in subsequent years.
Steudle said people do not think twice about buying a $2 or $4 cup of coffee once a week or even every day.
"This will break everybody's back? Really? A half-pack of gum is going to break everybody's back? Let's put this in perspective," Steudle told the House and Senate Transportation committees.
Yet legislators who sit on the panels said it is politically difficult to ask motorists to pay more, though they agreed more money is needed for roads, bridges and other transportation programs. The gas tax was last raised in 1997 when Republican John Engler was governor.
"We're going to need the top leaders in our state to step up," said Rep. Marty Knollenberg, R-Troy. "They're AWOL. ... That's frustrating to me."
Democratic Gov. Jennifer Granholm, however, is for the funding plan -- under which most vehicle registration fees also would nearly double over five years. So the ball is in the Legislature's court. Hearings are expected to continue, and no action -- if any -- is expected until the House and Senate first approve a state budget for the fiscal year that starts Oct. 1.
To illustrate the urgency of the problem, Steudle distributed a list of more than 125 road and bridge projects around Michigan that recently were scrapped from the state's five-year construction and resurfacing plan. The projects will be restored if funding is boosted, he said.
The state's gas tax is paid per gallon, so when the price of gas goes up there is not more money for roads. In fact, gas tax revenue is down as people buy more fuel-efficient cars, drive less and move to other states in the recession.
The 6 percent sales tax on gas rises as pump prices go up, but that revenue mostly is designated for K-12 public schools.
Starting in the fall of 2010, Michigan could lose $763 million a year in federal transportation funding because it will not have enough matching funds -- costing the state jobs, according to the state.
David Eggert can be reached at deggert@ap.org



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