A political development of actual importance is occurring in Iowa this month: Democrats and Republicans are proposing to increase the state’s gas tax. Not only is this a rational way to raise revenue to repair bridges and roads, it’s also a sensible response to the federal government’s abdication of the task.
A bill advancing through the Iowa legislature would add 10 cents to the state’s 22-cents-a-gallon gas tax. Members of both parties have good reason to support it: More than 1 in 4 of the state’s major roads are in poor condition, and an equal proportion of its bridges is structurally deficient or functionally obsolete. If the bill passes, Gov. Terry Branstad, a Republican, has indicated that he will sign it.
Given the low price of oil and the declining real value of the federal gas tax, which has stood at 18.4 cents a gallon since 1993, it’s a good time for states to act. Road conditions in Iowa are, unfortunately, typical of the rest of the country.
In the long run, however, the strategy of using a gas tax to pay for transportation improvements is doomed. As vehicles become more fuel efficient, states may find a more suitable way to pay for transportation infrastructure — and the closer it is to a user fee, the better: Oregon, for instance, is experimenting with a program that charges drivers by the mile.
A gas tax, especially as it declines in value, is an imperfect and unreliable proxy for a user fee.