Thursday, July 24, 2008

Tie the Gas Tax to Prices-Voters think It's Like That Already

Currently, every state's gas tax as well as the federal gas tax (a flat rate of 18.4 cents per gallon), is a flat rate, ranging from the low end of 7.5 cents per gallon in Georgia, 8 cents per gallon in Alaska and 10.5 cents per gallon in New Jersey to the high end of 32.2 cents per gallon in West Virginia, 32.90 cents per gallon in Wisconsin and 36 cents per gallon in Washington state (see the Energy Information Administration's data)

14 states allow additional flat-rate taxes at the local level (Alabama, California, Florida, Georgia, Hawaii, Illinois, Mississippi, Missouri, Montana, Nevada, New York, Oregon, South Carolina, Washington), with such taxes being notably implemented in Florida, Hawaii, and Nevada.

But only 8 states, California (full 7.25% sales tax), Connecticut (6.3% gross receipts tax), Georgia (4% combined motor fuel and sales and use tax), Illinois (full 6.25% sales tax), Indiana (full 6% sales tax), Michigan (full 6% sales tax), New York (local sales taxes), Virginia (2 percent sales tax in areas providing mass transit), actually subject gasoline to some sort of sales tax and thereby allow revenues to increase as gas prices rise. Iowa (1 cent per gallon), NJ (4 cents per gallon), New York (8 cents per gallon) have additional flat tax rates.

This has been killing transportation agencies at every level this year (although I assume less so in the above states, I know that New York's Metro Transit Association is proposing a 13% fare hike over the next 2 years (to $2.25 per ride)) because revenues per gallon of gas sold have not changed, and due to rising gas prices, total gallons sold has decreased. While ridership has increased enormously on transit, fares rarely pay more than 30% of operating costs (with the exception of a few larger, very heavily used agencies like the MTA), and thus the extra fares haven't been enough to offset higher diesel prices.

My point, though, is that I saw this in a letter to the editor, which it now seems I've misread; oh well.

In the Denver post, responding to an editorial that the Denver RTD might raise fares and parking fees.

You have to be kidding me - $4 gas and RTD still has falling revenues? As an avid RTD rider who quit riding the rails over the expense, inconvenience of parking, and longer commute times for riders, I will tell RTD how to increase revenue: Do you see all those people on the interstate? They are driving because it is still cheaper to drive your car than to ride the bus. For the average commuter, it costs about $5, takes an hour and a half, with three transfers, to get anywhere around town. Forget it if your hours are not 9-5.
How about lowering prices on RTD to increase ridership and thus increase revenue? Hey, it might get so popular that lines are added instead of decreased!

Theresa A. Anderson, Aurora

So this wasn't actually about gas taxes, but just about how high gas prices should be driving people to transit.

I think it would make far more sense to raise parking fees everywhere in the RTD except rail stations, but then the businesses will whine and whine.

However, on a closer look, their specific plans make sense; they only plan to charge those who don't reside in the Regional Transportation District (and thus aren't paying the sales tax locally to support it), or those who do reside there but leave their cars for long periods of time rather than just for the day.

On Tuesday, directors will consider a plan that would have pay-for-parking in place at six park-n-Rides beginning Feb. 1: Stapleton, Airport Boulevard/40th Avenue, Montbello, Wagon Road, Thornton, and 104th Avenue/Washington Street. It would be expanded to 32 more lots by May 1.

The paid parking program calls for residents of the eight-county RTD district to get the first 24 hours of parking free at these lots and then pay $2 a day for extended stays. This is aimed at capturing revenue from those who take RTD buses to Denver International Airport for multiple-day trips.

RTD's analysis shows that of its 17,000 parking spaces that are filled daily, about 1,500 are occupied by travelers who are gone an average of four days per trip.

Those who are not RTD district residents would pay $4 a day for parking beginning the first day they use a park-n-Ride. Agency officials estimate that 1,600 spaces are filled at RTD lots each weekday by nonresidents.

That seems like a fair (or fare, since it's transit and all) idea; take a taxi or get dropped off if you're staying long term. When I flew to Austin (via Atlanta, of course) last week, I was planning to walk the 0.8 miles to the NJ Transit bus stop at Nassau St. and Princeton Ave, take the 606 bus to the newly renovated Trenton Rail station, take the R7 SEPTA train to 30th Street, then take the R1 SEPTA train to the airport (yes, three transfers); but my mother was way overwhatever about me missing my flight, so she drove me to Trenton.

But more specifically, I want to answer Theresa's question.

Ridership has been increasing heavily on the RTD, especially on the light rail.

Full-year data shows a 52% increase in total RTD ridership from 2004-2007, with an 87% increase in light rail ridership (thanks largely to the approximately 66% gain in light rail ridership from completion and beginning operations of the E, F, G & H lines (mostly running together but on slightly different routes); note that bus ridership still managed to rise a bit that year, so it was clearly taking a bunch of riders off the road).

The most recent data, from the Jan-Feb-Mar '08 ridership, shows a 55% increase in ridership between the 1st quarter of 2005 and the 1st quarter of 2008, with light rail ridership having nearly doubled (increase of 97%), and one expects the increase to have continued through the 2nd quarter of this year.

The problem is that most revenue has come from subsidies and with the fares the way they are, the massive ridership increase hasn't been enough to cope with stagnant/declining sales tax revenues and massive diesel price increases.

Still, she's right that it should be higher given the infrastructure current existing (and it will, especially with Fastracks completed).

In 2007, the Denver RTD at 62,900 trips/day ranked 9th in average U.S. weekday light rail ridership, after, in order, Boston (257,500), San Francisco (132,500), Los Angeles (127,300), San Diego (118,400), Philadelphia (106,900), Portland (104,300), St. Louis (73,200) and just barely behind Dallas (63,400/day). While, with the exception of Portland (with its much revered and possibly St. Louis (which is disgraceful to be behind since they've got one line with a branch if I remember correctly), those metro areas are bigger, and it's moved ahead of Salt Lake City and Sacramento (in 2004 it was barely ahead of Houston), it could be higher. But then again, I expect it will be.


So, finally, I'll just note my solution to New Jersey's transportation funding crisis:

A) Eliminate the 10.5 cent per gallon gasoline tax in New Jersey
B) Remove the exemption from the 7% state sales tax from gasoline in New Jersey and earmark (I mean really lockbox earmark) all revenues from this tax to transportation funding.

While even today, the gas tax in most states is higher than what the equivalent would be of subjecting it to the sales tax (I'm finding about 14 other states which would have an increase in revenue per gallon by eliminating their gasoline tax per gallon and replacing it with the state-level sales tax rate), this is not the case in New Jersey. In fact, New Jersey would, at current gas prices, get an additional 15.8 cents in revenue per gallon of gasoline sold (Mississippi, with the next highest gain, would be only 7.5 cents more per gallon).

And it's technically not "raising taxes" (it's just limiting exemptions from the currently existing tax) and in addition, politicians being politicians, they can claim they eliminated the New Jersey gasoline tax; though NJ residents won't likely fall for that, they rightly don't trust politicians.

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