Some politicians from all political parties are shifting infrastructure and transportation costs from taxpayers to the people who need them. This problem will be made worse by the $1.2 trillion infrastructure bill that President Joe Biden signed last week.
Florida Republican Gov. is an example conservative of this phenomenon. Ron DeSantis’ announcement on Monday that he would be asking the state legislature to “zero out” the 26.5 cents in per-gallon taxes the state currently levies gas—a measure he pitched as a necessary relief from the inflationary effects of President Joe Biden’s policies.
“We are in great financial health, we have surpluses. “We have the infrastructure to make what we need.” saidAt a Daytona Beach Press Conference, the governor responded to a question about whether this gas tax holiday would affect funding for road projects.
Michelle Wu, a newly elected progressive mayor of Boston, announced that she was asking for $8 million to fund the expansion of the fare-free pilot bus program.
Wu said last Wednesday that the expansion of fare-free buses is an example of how local leadership can improve Bostonians’ lives and set them on a course to create a better transit system for future generations.
While the amounts and beneficiaries of both announcements may differ, their fundamentals could not be further from each other.
Wu and DeSantis want to charge bus drivers and passengers for using the transport infrastructure, but not directly.
Wu’s $8 million request from the city council is for the fare that current riders of the bus will pay. Wu plans to express her gratitude by saying “no”
DeSantis’ gas tax holiday is designed to give relief from taxation as well as inflation. A lot of conservatives and/or marketers might believe it is a better government idea than free bus rides. Hardly.
If the governor doesn’t change his pledge not to reduce infrastructure spending, then the governor will need to source new revenue to make up the $1 billion shortfall. That means shifting the burden from gas tax-paying motorists and onto everyone—whether or not they drive.
Both politicians find it easier to plan with federal assistance.
Wu requested that the city council make available $8 million from federal funds for Wu’s free bus route planning. DeSantis was less specific in his plans for funding his gas tax holiday. However, it is clear that his plan benefits from federal spending.
In June’s budget, the governor directed $1.75 Billion of federal COVID-19 relief for the state’s highway funds. This gives the governor more flexibility to give tax subsidies to motorists than if Florida roads relied solely on state revenue.
It is not a good idea to move from user fees to general taxes and spending when it comes infrastructure.
First, this is unfair for taxpayers, who are now required to spend more on transportation services that they do not use. This is made worse by the federal funding that Wu and DeSantis received to support their plans. All taxpayers across the country are asked to subsidise transit in Florida, Boston and other states.
Transit that is free of fare has the additional problem of reducing any incentive for transit agencies to offer decent and effective service. There is no benefit to riders being happy if the agency gets exactly the same income regardless of the number of people who ride the bus. To be honest, adding users is just another inconvenience and cost for the agency, while those who make funding decisions are the customers.
Transport officials have at most some information about the road costs that motorists will pay by using gas tax revenues. Tolls and mileage-based users fees are a better, more efficient way to provide this information.
DeSantis’ proposed gas tax exemption, though temporarily, breaks the connection between road funding, and road use. The Department of Transportation in the state has no information to help them build roads they don’t want to pay and neglect maintenance of those lanes.
Recent $1.2 trillion infrastructure law incentivizes states and localities in moving away from the “user pays, users benefits” model of transportation spending. It will also help to prevent future problems.
New spending totals $550 billion, with $110 billion going to roads and bridges. Transit funding is also increased by $39 billion.
It does not increase gas taxes or ease tolling. The bill also contains only a pilot mileage-based fee program. This means that the additional funding for roads included in the bill amounts to a subsidy for highways, which will be covered by taxes in general. Transit systems with significantly reduced ridership and farebox revenue will see an additional $39 billion of transit funding.
We’ll both see increased infrastructure for transportation and less user fees.