The same bill that raised the gas tax will also raise the annual fuel decal fee that EV owners pay by 20 percent each year for five years. This means that the EV fee will rise from $75 to $150. Lawmakers are increasing this charge because EVs cause wear and tear on the state’s roads (just as gas-powered vehicles do), but EV drivers don’t pay into the state’s road-maintenance fund through gasoline taxes. Show-Me Institute researchers have estimated that the average driver of a gas-powered car in Missouri pays $250 per year in fuel taxes. A $150 fee would still have Missouri’s EV drivers paying only 60 percent of what other drivers (on average) pay. Nonetheless, it would be one the highest fees for EV drivers in the country.

The bill also establishes a new Electric Vehicle Task Force to study ways to ensure EV drivers pay fairly for road maintenance, such as through a per-kilowatt hour charge on electricity used to charge their EV. The Task Force will also attempt to ensure that non-EV drivers do not end up subsidizing EV drivers, as well as study what role actors typically not part of the transportation sector, like electric utilities and the Public Service Commission, play in the process.

The bill slates several government officials and industry representatives to be on the Task Force, and also stipulates that:

The task force may hold public meetings at which it may invite testimony from experts, or it may solicit information from any party it deems may have information relevant to its duties . . . .

I hope the Task force solicits input from ordinary citizens in addition to experts so that their voices are heard as well. The Task Force should also consider what other existing policies might be affecting drivers of both gas-powered vehicles and EVs (specifically, the federal ban on electric vehicle charging stations, gas stations, and nearly all other commercial activity at interstate rest stops).

Getting EV policy right is important. EV drivers should contribute their fair share for road maintenance just like drivers of gasoline-powered vehicles—with neither subsidizing the other. The transportation landscape in Missouri is changing, with more and more EVs hitting the road. Policymakers should remember that government’s role isn’t to promote or hinder the adoption of EVs, but rather to ensure a level playing field.

The post Electric Vehicle Policy Changes Coming Soon appeared first on Show-Me Institute.

These policies have been implemented successfully in many states, but in this post I’ll address some objections to these policies and see if they hold water.

Objection: We shouldn’t toll commercial trucks because the trucking companies will pass those costs along to the people buying their products.

Part of the price of a product is the cost it takes to transport the product somewhere. If trucks carrying products are causing more damage than they’re paying to repair, then underpaying for the products’ transport is in effect subsidizing it. Any tolling costs passed on to customers would be less overcharging for a product and more reflecting its true price.

Objection: Tolling is unfair to local communities near interstates that depend on highway traffic for their customers.

As my colleague Graham Renz has said before, this is another way of saying that communities near toll roads will not be subsidized. Not paying the true cost of driving means that some businesses benefit from more drivers due to an artificially low cost of driving.

Tolling may mean that traffic on these routes decreases, but adequately charging drivers for the damage they do to the roads can hardly be described as unfair. Moreover, the current situation of Missourians who do not live near interstates subsidizing the travel that benefits communities near interstates hardly seems like a fair proposition.

Ultimately, while these two objections may initially seem like they raise serious problems for tolling proposals, they only tell half the story. The benefits of tolling still outweigh the costs, so tolling should be on the table as an option for funding road maintenance needs.

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Over $700 billion of products travel over Missouri’s roads each year, and transportation and warehousing industries support over 83,000 Missouri jobs. These numbers are only expected to increase.

It is surprising, then, that the Greater St. Louis, Inc.’s report’s recommendations for improving our transportation infrastructure contain few details on funding mechanisms given that Missouri is currently coming up short on transportation funding.

Here are a few recommendations for the policymakers reading the report to consider.

People who use the roads in Missouri should, as much as possible, be the ones responsible for paying for the roads. This could mean policies such as adequate fuel taxes or location-specific tolling. If new lanes on interstates are planned—and the plan mentions rebuilding some sections of I-64 and I-70—tolling on new lanes would not require federal approval. Many states operate lane-based tolling, also known as high-occupancy toll lanes.

There are other funding mechanisms for transportation that ought to be avoided. For instance, a new sales tax or earnings tax in the region receiving the transportation upgrades could raise a large amount of money. But these taxes are not connected to how much the roads are being used. Non-users end up subsidizing users.

The consequences of such a funding disconnect would mean that those using the roads are shielded from the true cost of doing so. Not being exposed to driving’s true cost leads to inefficient road usage. This, in turn, leads to higher maintenance costs as well as other hidden costs such as wasted fuel and time, air pollution, and congestion.

While the creators of this plan seem to understand that transportation is critical for Missouri, they don’t articulate how to fix what’s wrong with Missouri’s infrastructure.  What Missouri needs is a plan to address our infrastructure funding issues with real reforms, not just platitudes.

The post Greater St. Louis 2030 Plan Scant on Transportation Funding Mechanisms appeared first on Show-Me Institute.

Missouri’s road maintenance funding is on a road to nowhere.

Interstate 70, Missouri’s economic and transportation lifeline, is falling apart. Many other roads Missourians travel on each day also need to be fixed, and they too will continue to deteriorate because the Missouri Department of Transportation is running out of money.

While travel on Missouri’s roads continues to increase (up 12 percent since 2008), MoDOT’s budget has been headed in the opposite direction (down 15 percent in the same period), and that has resulted in a whopping $745 million in unfunded road transportation needs.

MoDOT remains heavily dependent on the state fuel tax (17.4 cents per gallon) for road maintenance, and that’s part of the problem. Because of the improved fuel economy of today’s gas and diesel-powered cars and trucks, fuel tax receipts have declined even though people drive more and put more wear and tear on the roads. Furthermore, drivers of electric vehicles are paying significantly less for road maintenance because they aren’t paying fuel tax.

It’s time to rethink transportation funding. The damage inflicted upon roads is determined by how much drivers drive on them and how much their vehicles weigh, not by how much fuel they consume. A better way to match the damage drivers do to the road with what they pay for its upkeep is to charge by the mile, instead of by the gallon.

Several states experimenting with road-usage charge programs demonstrate how such programs could be implemented. One method to record mileage is by a simple odometer reading. Drivers could self-report their odometer readings as part of the annual vehicle registration process or by plugging a recording device into the vehicle’s diagnostics port. While this method would pose no threat to driver privacy, it would be impractical for those who frequently drive out of state.

A more controversial method is to record precise in-state miles driven by using GPS technology. Current programs in Oregon and Utah use third-party providers to record in-state mileage either through a GPS-equipped plug-in device or a smartphone app. In both cases, the state receives the total miles driven for billing purposes with no location data.

While this poses more concerns for driver privacy, it should be noted that GPS satellites do not track locations. GPS responders, whether in plug-in devices or cell phones, track their location in relation to satellites, but do not necessarily share their location with those satellites. Protecting driver privacy is a serious concern, and the reporting of personal or location-specific data should only be allowed when explicitly agreed to by drivers.

With these first two methods, as drivers pay for their miles driven, they are reimbursed for the gas taxes they paid to travel those miles.

A third method is to use electronic tolling to raise maintenance funds specifically for heavily traveled highways, as many states already do. Drivers can use transponders that send a signal that is picked up at certain points along the road, and payments can automatically be deducted from that driver’s account. Those with concerns about the privacy implications wouldn’t have to opt for a transponder. Instead, cameras on the highway could record their license-plate number and a bill could be mailed based on their driver registration information.

No system is perfect, but in each of the examples listed above, drivers can choose their method of payment and are presented with several options depending on their privacy concerns.

In any case, our current system of taxing fuel usage is becoming less viable. Missouri policymakers should consider solutions already in use in other states to move Missouri’s transportation funding methods in the right direction.

The post Commentary: Funding Roads by the Mile, Not the Gallon appeared first on Show-Me Institute.

Modern tolling is electronic rather than using traditional stop-and-go toll booths. Drivers have transponders that send a signal that is picked up at certain checkpoints along the road. Payments can either be deducted from an online account with the tolling organization, or drivers can receive a bill in the mail. For drivers without a transponder, license plate photos direct the tolling organization—whether state-run or private—where to mail the bill.

Electronic tolling is widely employed in several states, and each new state that adopts the technology benefits from the years of experience gained by the others. Missouri would not have to reinvent the wheel should tolling be adopted here.

The main privacy concern with electronic tolling is whether transponders remain active outside of toll roads on which they are meant to be used—as could happen if the state transportation department wanted to use the transponders to collect traffic flow data (for example, to inform decisions about adding lanes in congested areas).

One method by which states have attempted to mitigate this concern is by allowing anonymous transponder accounts, where data is stripped of personal information and reported by an internal account number. Again, though, drivers who aren’t comfortable with having a transponder in their car could still have bills sent to them via mail based on their license plate.

Ultimately, the current fuel tax system of funding road maintenance is becoming less viable, as the increasing popularity of electronic vehicles renders fuel taxes less effective and more unfair. Policymakers can begin the transition to road-usage charges, but this will require balancing the efficiency and accuracy of various measurement options while also respecting the privacy of motorists.

The post Driver Privacy and Electronic Tolling appeared first on Show-Me Institute.

Road upkeep in Missouri is paid for primarily by federal and state fuel taxes, and to a lesser degree by vehicle registration fees. Here’s what the average Missouri ICE-car driver pays in taxes and fees:

• Between Missouri’s state gasoline tax (17.4 cents/gallon) and the federal gas tax (18.4 cents/gallon), drivers pay 35.8 cents in taxes per gallon.
• The average Missouri motorist drives roughly 17,400 miles per year, and (as of 2018) the average fuel economy of all cars on the road was about 25 miles per gallon.
• So: 17,400 / 25 = 696 gallons of gas used.
• 696 ×35 = $249.11. The average driver pays this amount each year in gas taxes to help maintain the roads they drive on.

EV drivers don’t buy gas, so they don’t pay a gas tax. However, EVs still cause wear and tear on the roads, so shouldn’t their owners pay their fair share to keep those roads maintained?

Missouri policymakers seem to have recognized the imbalance, which is why EV drivers pay $75 per year in registration fees, which are put toward maintaining the roads. This fee is between 1.5 and 4 times higher than registration fees for ICE vehicles (depending on taxable horsepower), but still not close to the average of nearly $250 per year in gas taxes that ICE vehicle drivers pay.

While it appears that a simple fix for this problem would be to raise the EV licensing fee to $250, that wouldn’t be fair either. EV drivers would then pay the same amount for road maintenance whether they drive 5,000 or 25,000 miles per year.

So Missouri’s two systems for collecting taxes to fund road maintenance are troubled: a per-gallon gas tax that doesn’t apply to EV drivers, and a flat annual registration fee that doesn’t connect road usage to the amount paid to maintain the roads. Neither system is fair, and the cost of sticking with them is only going to get higher as more people drive EVs.

Tomorrow I’ll explore ways that mileage-based fees could help Missouri fund its road and highway system in a way that is fairer to all drivers.

The post Electric Vehicles and the (Almost) Free-Rider Problem appeared first on Show-Me Institute.

The Tax Foundation study focuses on funding for America’s highways, and how road usage has been growing while the revenue to maintain them has been shrinking. This is true nationwide and for Missouri.

The bulk of Missouri’s highway funding (and that of many other states) comes from the federal Highway Trust Fund—which is funded by a federal fuel tax that has not changed since 1993. The tax is levied on vehicles that are increasingly fuel efficient. State fuel taxes supplement the federal funding; each state approaches its fuel tax differently. Some index the tax to inflation, some periodically raise it, and still others keep it constant, as Missouri has since 1996, with inflation eating away at its purchasing power.

This funding formula disparity will only get worse as fuel economy improves and no change is made to fuel taxes. In fact, the Highway Trust Fund, which sends money to states for road maintenance, is on the verge of insolvency by the end of next year unless the current funding formula is changed.

The study’s author promotes a charge on highway vehicle miles traveled as a potential solution. This charge would vary based on how much the vehicle weighs to account for the damage it does to the road. As the study notes, this highway formula “gets closer to capturing the externalities and approximating the road maintenance cost of each vehicle.”

In other words, toll roads.

The highway funding situation in Missouri will need to be addressed soon. Travel on Missouri’s interstates has increased 17 percent since 2008, and travel on other Missouri freeways and expressways has increased 20 percent since 2010 (the most recent year for which data for the latter category is available). Conversely, since 2008, the Missouri Department of Transportation’s (MoDOT) overall revenue has decreased by 15 percent, with state fuel tax revenue—the largest state-contributed source of funding—falling 0.5 percent.

Making MoDOT do more with less led to an average of $745 million in unfunded road and bridge priorities between 2014 and 2018. And some of the most traveled roads in Missouri—Interstates 44, 55, and 70—will need to be reconstructed soon.

With these pressing problems, shouldn’t Missouri lawmakers heed the advice of the Tax Foundation report and consider tolling?

The post New Research Highlights Need to Modernize Transportation Funding appeared first on Show-Me Institute.

Heading south on the West Virginia Turnpike, I hit all three mainline toll plazas. Each occurrence involved coming to a complete stop as I handed a toll booth worker $4.00 to drive through. No credit cards were accepted, but I was fortunate to have enough cash. Drivers who had an E-ZPass transponder were able to avoid a complete stop, although they still had to slow down to 5 miles per hour.

In North Carolina, the I-77 express lane was quite a contrast. The express lane was the smoothest-paved part of the road, set apart by a light barrier to easily identify which lanes are tolled and which are not. There was no stopping, as most drivers paid via a NC Quick Pass transponder. If you didn’t have a transponder, you would get a bill in the mail based on your license plate registration. Rates were per mile and variable depending on traffic conditions, and if you had three or more people in the car you could travel in the express lane for free.

Most new toll roads have a similar structure to North Carolina’s. The hassles of always needing adequate cash and the stop-and-start nature of old turnpike plazas are avoided. Further, research has shown that toll roads with no stopping are significantly safer than traditional toll plazas regarding fatalities, crashes, and property damage. Even collection costs are between two to four times lower (page 59) for electronic tolling than for traditional (page 12) toll plazas.

Electronic tolling is an innovative way to fund road maintenance in a driver-friendly manner. Missouri also has heavily traveled highways that need rebuilding (page 18), and the president wants to lift the federal prohibition on tolling interstates. Missourians have opposed toll roads in the past, but if they knew how easy modern toll roads are, they might be inclined to change their minds.

The post Toll Roads, Past and Future appeared first on Show-Me Institute.

• Saint Louis stadium folly
• Winston Churchill on taxation
• Homeschooling
• Transparency in public sector collective bargaining
• Tolling and I-70's future
• Medicaid: Reform instead of expansion

Read it here:

Newsletter March 2015.pdf

The post March 2015 Newsletter appeared first on Show-Me Institute.

For a thorough analysis of the current state of Missouri's highway system and the challenges it faces in the near future, check out Joseph Miller's new Policy Study, Funding the Missouri Department of Transportation and the State Highway System. 

The post Should Missouri Use Tolling to Pay for the I-70 Rebuild? appeared first on Show-Me Institute.

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The post Transportation Funding: I-70, Tolling, and the Road to Tomorrow appeared first on Show-Me Institute.

Tolling would be an effective way of raising funds to rebuild the aging I-70, with only those using the new highway paying for its reconstruction and maintenance. Tolls can be set higher for vehicles that do more damage to the roads, like interstate trucks, which on many parts of I-70 make up more than a quarter of total traffic, as the chart below demonstrates:

Furthermore, if the state would lease I-70 to a private entity, it potentially would generate billions for MoDOT. To get an idea of just how much a toll road can be worth, a 66-year lease of the Indiana Toll Road (with similar traffic levels to I-70) is in the process of being sold for $5.7 billion. If Missouri can raise even a small fraction of that amount, MoDOT could retire Amendment 3 debt and ensure sufficient matching funds for federal dollars. A bill in the Missouri Senate, SB 534, sets up the framework to make this kind of lease possible.

Using a public private partnership to rebuild I-70 is not without pitfalls. If the state does not ensure competitive bidding or make sufficiently stringent lease requirements, the project could come out poorly for highway users. Furthermore, using large upfront lease payments on I-70 to bail out the rest of the state highway system will require higher tolls so that the private company can recoup its costs. In essence, I-70 drivers would pay for both I-70 and other state roads. That being said, given many examples of successful privatization in Missouri, as well as numerous privately operated highways worldwide, Missouri can and should navigate these obstacles.

Using a public private partnership to toll I-70 would be a big step forward for Missouri, and lease payments could be used to plug short-term gaps in MoDOT funding. However, without more extensive use of tolling (not currently allowed under federal law), it would be best for the state to combine a small gas tax increase now with plans to increase use of tolling in the future.

The post Tolling Coming to I-70? appeared first on Show-Me Institute.

In terms of sheer importance to the state economy, there is no contest between the Missouri state highway system and transit. The state highway system carries virtually all cross-state traffic, most commuters, and $711 billion of freight annually. Transit carries a tiny sliver of commuters in the state’s largest cities. Even in Saint Louis City and County, where the state’s transit network is most dense, less than 5 percent of commuters use transit.

What of subsidies? In 2013, the largest source of non-user funding the Missouri highways received was from the now chronically underfunded federal highway trust fund. In that year, Missourians sent the federal government about $877 million in road user funds and got back about $938 million to spend on highways. That’s a $66 million subsidy. Add in local spending and other small sources of non-user fees, and Missouri’s subsidies for all highways is around 10 percent.

How, then, can CAP claim that 46 percent of major highways do not pay for themselves? First, the study CAP issued broke highways and arterial roads into sections, which may not be an appropriate way of measuring the cost-effectiveness of highways. One should note that, on this measure, 54 percent of the system either broke even or was in the black (36 percent). Second, CAP’s study does not look at all forms of indirect user fees, including permit fees and other non-fuel taxes. Using incomplete data from the FHWA (which counts bonds and reserves that may be based on user fees as non-user revenue), At most, 24 percent of Missouri’s highway spending is not derived from user fees. That means, even with no tolling and the fifth lowest gasoline tax in the nation, user fees manage to pay for at least 76 percent of highway costs.

With transit in Missouri, taking 2013 as an example, fares only covered 16 percent of total costs. In years with major construction, this number falls below 10 percent. And while CAP claims 46 percent of highway segments are in the red, every segment of Metro, including MetroLink, is deep in the red. The best bus routes (counting only weekdays in Metro’s highest ridership months) recover 82 percent of its operating costs from fares. Most routes perform much worse, with a third of all routes receiving subsidies in excess of 80 percent of their operating costs. The numbers are no better in Kansas City.

Comparing the systems, it is clear that highways could be paid for entirely with user fees, especially if rigorous cost-benefit analysis is used to evaluate new highway projects. We argue for this all the time. Transit is a different story. It would be essentially impossible for Metro to break even using fares, which would have to quintuple in order to cover just its operating costs. As that would make a reduced monthly pass $195 and a regular pass $390, it is safe to say people would stop riding Metro altogether before it broke even.

CAP essentially would have Missouri take user revenue from the system virtually all Missourians use and depend on in order to give more money to a system that very few use despite incredible subsidies. CAP’s plan is fiscally irresponsible and endangers the future of transportation in Missouri.

The post Do User Taxes Pay for Highways? appeared first on Show-Me Institute.

Those who directly benefit from I-70 are drivers, especially from companies that own commercial vehicles (interstate trucks). According to MoDOT, at least 25 percent of the traffic on I-70 is attributable to commercial vehicles (more than two axles). These vehicles also make up much of I-70’s cross-state traffic, with 70 percent of commercial vehicles passing straight through Missouri. If the state would toll I-70, both passenger and commercial vehicles would pay to use the interstate based on their size and distance traveled. In other states, commercial vehicles typically pay four to five times more than passenger vehicles. They pay extra to compensate for the extra damage they cause to the roadway. In fact, toll roads in other states generate much, if not most, of their revenue from commercial vehicles.

If Missourians decide to rebuild I-70 using toll revenue, it is likely that much, or even most, of that revenue would come from commercial vehicles. That’s a fair solution, because commercial trucking entities cause the most wear on highways and benefit the most from good roads. In fact, a well-maintained highway saves trucking companies money, because it reduces delays and vehicle damage. The failure of Amendment 7 doesn’t mean that Missourians want bad roads; it means they want good roads paid for in a sensible way. A sound tolling solution would allow drivers and interstate truckers alike to invest in the highway from which they so benefit.

The post Tolling I-70: A Semi-Solution to MoDOT’s Funding Problems appeared first on Show-Me Institute.

This argument is doubly flawed. First, in a user-pay system, the individual who doesn’t drive still pays for the road through the cost of the products he or she buys. This is factored in as companies have to take into account the cost of gas used to ship their goods; that cost varies based on the amount of highway required to move that good. Paying for the highway through user fees places a large direct cost on shipping companies and frequent drivers (who benefit greatly) and a tiny cost on those who do not drive but purchase shipped goods. Additionally, by paying for the shipped good based on its actual transport costs, user fees promote long-term economic prosperity because they encourage local products and efficient supply chains.

Second, all goods, services, and factors of production have indirect benefits. Take the example of a sandwich shop. Sure, those who eat the sandwiches benefit the most from the shop, but we all benefit from the new employment, the productivity of well-fed customers, and neighborhoods with vibrant businesses. So why make shop customers pay? Missouri could open sandwich shops, give the food away, and support the stores with general taxes.

The logical conclusion here is a planned economy, which Helling and others making this argument would not support. But placing aside the polemics, there are good economic reasons that disconnecting the user of a good from the cost of that good is bad policy. Governments will have no way of ascertaining the economically efficient supply of highways for drivers (much less indirect benefits), likely resulting in a highway system that is simultaneously wasteful and inefficient. The lack of user fees on driving will subsidize the activity, leading to more waste and negative externalities such as congestion, more urban sprawl, and ultimately higher costs for the Missouri Department of Transportation (MoDOT).

Some goods and services (police, public parks) that the government provides may require general taxes for support. However, where possible, it is both fair and economically efficient for users to pay. That is the basis for Missouri’s state road spending right now. To change this model away from user fees will unfairly subsidize heavy road users and damage Missouri’s economy in the long run.

The post User Fees Are A Better Way To Fund State Roads appeared first on Show-Me Institute.

The Broadway Bridge is one of four major bridges that span the Missouri River in Kansas City. Built in 1954 and operated as a toll road until 1991, the bridge is heavily traveled. The Missouri Department of Transportation (MoDOT) had considered rebuilding the aging bridge and replacing its interchange at 6th street, but the $200 million price forced a cash-strapped MoDOT to defer the project.

With the proposed 0.75-cent statewide sales tax, the funding might be made available for the bridge. However, some in the media have pointed out (correctly) that the project will consume much of the new sales tax money set aside for the Kansas City area, leaving less for transit.

That should not surprise anyone. After all, it was MoDOT’s growing highway funding needs and dwindling revenues that prompted the call for the statewide sales tax in the first place. And in terms of mobility in Kansas City, it is clear that the Broadway Bridge has a greater impact than any conceivable transit project. The bridge carries more cars per day (approximately 41,000) than the entire Kansas City Area Transportation Authority (KCATA) bus system’s number of passengers each day, plus significant freight. It is far more cost effective than the half billion dollar streetcar expansion plan, which is likely to carry only 13,000 passengers per day.

While we might disagree with Kansas City’s transit supporters about priorities, they are right to think that using a sales tax to subsidize highway and bridge projects is unfair. After all, the thousands of drivers and truckers using the Broadway Bridge stand to benefit from a new bridge far more than the Kansas City residents who bike or walk to work, but they will pay for it equally.

And there is a better way. From 1956 to 1991, the Broadway Bridge operated as a toll bridge. That toll should be brought back (without the booths) to finance the construction and maintenance of the new bridge. If the toll were variably priced, the new bridge could guarantee congestion-free travel across the Missouri River.

Whether it is the Broadway Bridge or any other highway project, people should pay for them based on how much they actually use the route, which means gas taxes or tolls. Implementing a statewide sales tax is an unfair and economically unsound policy. The most likely result will be a highly political allocation of sales tax dollars and disappointment for transit supporters.

The post Shock: Transit Supporters Discover Sales Tax Will Go To Roads appeared first on Show-Me Institute.

As you can see the value of the gas tax has been eroded by inflation while Metro fares have out-paced it. Of course this isn’t the whole picture. Property and local sales taxes and the Federal gas tax (hasn’t increased since 1993) and general revenues also fund streets, roads, and highways, and local sales taxes, Federal, and a minute amount of state money goes into Metro. But this puts into perspective just who is paying their “fare” share.

My position on the gas tax is pretty clear. I have written testimony arguing that Missouri should raise its gas tax, not general taxes, to pay for highways in Missouri. But the fact remains, indirect taxes on drivers mostly pay for roads while only a tiny sliver of the cost of transit in Saint Louis comes from fares.

First for the roads. In 2013, the Missouri Department of Transportation (MoDOT), which maintains federal and state highways in Missouri, took in $2.1 billion in revenue. Only 23 percent of that came from the state gas tax. But that’s not the end of the story. Forty-four percent of MoDOT funding came from the federal government, the vast majority of which the federal gas tax funds. MoDOT gets an additional 27 percent of funds from vehicle sales taxes and various forms of licensing fees. All told, approximately 80 percent of MoDOT’s revenue comes from taxes and fees on drivers. That’s too low, but adjusting the state and federal gas tax for inflation and controlling road spending would go a long way to making that number close to 100 percent. In addition, one should remember that the Missouri gas tax is split, with 4.5 cents of the 17.6 cents going to local governments, where it is a significant source for local road repairs.

The story is very different for transit. Taking the example of St. Louis Metro, from 1991 to 2012, fares covered only 14 percent of the costs of building and maintaining Metro. Just looking at 2012, fares covered only 16 percent of the system’s total costs. And while fare revenue has increased faster than inflation, the costs of operating Metro have increased even faster, as the chart below shows:

Essentially, fare revenue has covered less and less of Metro’s cost over time. The rest of the funding comes primarily from general local taxes and the federal government (much of which comes from the part of the federal gas tax that is designated to mass transit funding).

Has the government been irresponsible with the gas tax? Many would say yes. But that does not mean that people who use transit are paying more for transit than drivers pay for highways, because they are not.

The post Gas Taxes vs. Transit Fares appeared first on Show-Me Institute.

A ballot initiative proposes to implement a general sales tax to raise money for critical infrastructure projects in the state. However, the lack of funding for highways is the result of a falling real gas tax and increasing vehicle fuel efficiency. Along with the lack of tolling, this has meant funding for highways is decreasing as the cost of repairs escalates. As a chart created from our new website Show-Me Data illustrates, it has been many years since Missouri raised its gasoline tax:

However, a sales tax unfairly burdens those who drive less and subsidizes the actions of those who drive more. This encourages overuse of the roads and more congestion in Missouri. If the Missouri Department of Transportation (MoDOT) needs more funds to maintain and expand highway infrastructure, raising the gas tax or implementing tolls is superior to sales tax in terms of both fairness and economic efficiency.

For more about transportation funding, read our writings about a “HOT” route for a proposed South Saint Louis County Connector, opposition to past road funding sales taxes, and changing the transportation paradigm in Missouri.

The post Ballot Initiative Lets Motorists Off Hook appeared first on Show-Me Institute.

Imagine ordering the usual for dinner at your favorite restaurant. When the check arrives, you are surprised to find a $2 surcharge for “movie tickets.”

When you demand an explanation, the waiter says the local theaters were losing money. Moviegoers did not want to pay higher ticket prices, so to save the theaters, they decided to make restaurant patrons pay for their tickets.

If the waiter’s explanation seems outrageous, it might interest you to know a new ballot initiative uses the same logic to pay for transportation. The initiative, which the private group “Missourians for Safe Transportation and New Jobs” supports, proposes a 1 percent sales tax on all businesses for 10 years. Its purpose is to raise $8 billion for the cash-strapped Missouri Department of Transportation, or MoDOT, to use on transportation — mainly road — projects. MoDOT needs the cash because during the last decade its road construction costs have rapidly risen while gas tax revenues fell. In 2012, MoDOT’s expenditures outstripped its funding by more than $300 million. If something is not done, MoDOT might not have the funds to maintain, much less improve, more than 33,000 miles of state roads.

MoDOT might need money, but implementing a state sales tax is the wrong policy. The fundamental problem with MoDOT funding, which a sales tax would only exacerbate, is that people who use the roads are paying less than their fair share. With a sales tax, those who use public transportation, ride their bike to work or simply drive less end up subsidizing those who use roads more often. Aside from being fundamentally unfair, the policy incentivizes individuals to drive more and shop less, because road use is artificially cheap and shopping is artificially expensive. That behavior results in increased congestion and pollution.

The real solution to MoDOT’s funding problems is simple: Make drivers pay for the roads. Aside from the fairness issue, charging users for the amount of road used will discourage overuse of highways and create a sustainable funding structure for MoDOT. Faced with higher gas prices and tolls, people will drive less or opt for fuel-efficient vehicles. This reduces congestion, road degradation and pollution.

At 17 cents a gallon, Missouri has one of the lowest gas taxes in the country. This is not automatically a bad thing, but it is an issue when state road maintenance is underfunded. If Missouri simply raised its rate to adjust for the inflation since the tax was set in 1996, MoDOT calculated it would get additional revenues of more than $150 million per year.

Another option is to toll new or improved roads. Other states, such as Texas and Oklahoma, have low gas taxes, but they finance roads with toll revenue. Tolling Interstates 70 and 44, along with new bridges such as the proposed Washington, Mo., bridge over the Missouri River, could greatly defray project costs. Missouri could find financing for roads and bridges in the private sector by auctioning the right to build or operate those tollways.

Implementing a 1 percent sales tax would encourage congestion, incentivize pollution and unfairly burden those who drive less. MoDOT might need more funds, but a sales tax does more harm than good. Missouri should alter its constitution to create a sustainable transportation tax structure that makes economic sense and enshrines the concept of fairness.

Missouri makes the restaurant patron pay for his meal and the moviegoer pay for his theater ticket; it is time to make drivers pay for their roads.

Joseph Miller is a policy researcher at the Show-Me Institute, which promotes market solutions for Missouri public policy.

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