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Memo to Washington:  Do the math, then do your job

By Steve Geary | 02/21/2018 | 7:33 AM

The federal government funds the nation’s transportation surface infrastructure in large part through federal gas taxes. Conceptually, that makes sense. If you drive a car, or a truck, you use the roads, so the 18.4 cents per gallon tax funds roads and bridges.

Except it doesn’t anymore, and projections show it getting worse. The gas tax is a fixed rate, not a percentage, and it hasn’t been revised since 1993. Because of inflation the purchasing power of the 18.4 cents per gallon has declined, meaning that the effective tax rate has declined to around 11 cents.

We can quibble over the math, look at the underlying variations in the cost of gasoline itself, but let’s just accept that the purchasing power of a dollar in 1993 has declined by about 40%, there isn’t enough government money to maintain the infrastructure.

And technology shifts will further erode the revenue base. The federal government understands this, and the GAO has been firing warning flares since 2009.

The tax base will likely continue to erode as demand for gasoline decreases with the introduction and adoption of more fuel-efficient and alternative fuel vehicles. To maintain spending levels of about $45-50 billion a year for highway and transit programs and to cover revenue shortfalls, Congress transferred a total of about $141 billion in general revenues to the Highway Trust Fund on eight occasions from 2008 through 2015. This funding approach has effectively ended the long-standing principle of "users pay" in highway finance, breaking the link between the taxes paid and the benefits received by highway users. 
Source: GAO.gov

We need infrastructure. In business, there is not a thing we bring into our warehouse or send out to our customers that doesn’t need transportation infrastructure. Washington needs to wake up and do its job.



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About Steve Geary

Steve Geary

Steve Geary is an adjunct faculty member at the University of Tennessee's College of Business Administration, and is on the faculty at The Gordon Institute at Tufts University, where he teaches supply chain management. He is the President of the Supply Chain Visions family of companies, and Chief Operating Officer at ROSE Solutions, consultancies that work across the government sector. Steve is a contributing editor at DC Velocity, and editor-at-large for CSCMP's Supply Chain Quarterly. He is listed in Who's Who in America, Who's Who in the World, Who's Who in Science and Engineering, and Who's Who in Executives and Professionals. In November of 2007, Steve was recognized for "Selfless Service to Our Nation and the People of Iraq" by the Deputy Secretary of Defense.


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