Highway Funding

The head seat at the table has always been ours, and it’s time to take it.

12/18/2018

Executive Director Chance McNeely,

Thirty years ago, politicians in Louisiana led us to believe that transportation funding had been solved. They were wrong and, motives aside, the state has been paying the price ever since. In 1989, the voters dedicated the existing 16-cent fuel tax to transportation and levied a new 4-cent tax to build 16 projects. We still have that 20-cent fuel tax today.

The fuel tax is an excise tax: that means it’s a set amount per gallon with no tie to the cost of fuel. Excise taxes are cheap for government to collect and great for steady funding, but they fall short when it comes to keeping up with inflation and, with respect to the fuel tax, also fail to account for enhanced fuel economy over time.

To keep its purchasing power, the fuel tax rate has to be increased periodically. In Louisiana, we haven’t done that, and we are all paying for it. Louisiana ranks among the top 10 states in the country for fuel burned by trucks that are stuck in traffic. It’s $250k per mile, per year, according the think-tank arm of the American Trucking Associations.

The primary reason Louisiana hasn’t raised its fuel tax is because there is little trust in government. Our government has earned that in many ways, but starving the beast hasn’t gotten us anywhere.

While a third party studied state DOT efficiency across all fifty states and found Louisiana to be the 14th most efficient, if nothing changes, DOTD’s operating expenses will continue to grow to the point where it consumes the entire state fuel tax. All states struggle with this issue and are pursuing solutions. Setting up a structure that controls these expenses is an important precursor to raising the fuel tax.

To get specific, did you know that 5 cents of the existing fuel tax goes specifically to DOTD employee health care and retirement costs? As a group of business executives, we know that those costs are skyrocketing for everyone, and we have to act to stop the cannibalization of the fuel tax. I think we need to give taxpayers their five cents back, and we can do this by permanently transferring this expense to the general fund.

Similarly, we can cap DOTD’s operating expenses to permanently preserve the existing tax. These moves alone don’t solve the revenue problem — but they would stop the bleeding so that we can focus on solving the problem.

In addition to not addressing these rising costs, past efforts to increase highway funding have been unrealistic. A 17-cent increase in one year with no reform? That hasn’t been done anywhere in the country, and the trucking industry will never stand for that approach. Phasing in an increase over time with smart reform is a proven method that many state trucking associations across the country have come to support in recent years.

As primary highway users, the industry has an important voice and perspective in this debate. We are in a place now to not just be heard, but to steer the conversation. As the only consumer organization in this decades-long debate, the head seat at the table belongs to LMTA. If we don’t take it, someone else will.