Last week Sens. Bob Corker (R-Tenn.) and Chris Murphy (D-Conn.) announced a plan calling for an increase in federal gasoline and diesel taxes to shore up the Highway Trust Fund (HTF) and prevent a potential nation-wide road construction work stoppage. According to initial reports, the taxes will generate $164 billion increase in HTF revenues.
An analysis by the Portland Cement Association (PCA), however, reports that the Corker-Murphy proposal would result in nearly $210 billion additional dollars for investment in the nation’s roads and infrastructure. PCA considered the growth in total vehicle miles travelled (VMT), the composition of travel between diesel users and gasoline users, and fuel efficiency and inflation assumptions.
PCA projects that during a 10-year period, the Corker-Murphy proposal would generate $209,840,000 for the HTF. It calculated the impact of the gas tax increase, projecting a 2.5 percent growth in VMT 2014-2017 and 0.9 percent thereafter, and fuel efficiency gains at 1.2 percent annually. The association expected inflation to grow 2 percent annually throughout the forecast horizon.
“PCA’s estimates tend to agree with estimates from the Joint Committee on Taxation (JCT),” said Ed Sullivan, PCA chief economist and group vice president. “JCT estimates that a one-cent increase in taxes on motor fuels would raise about $1.5 billion each year for the trust fund. A 12-cent increase equates to $18 billion and compares to PCA’s 2016 estimate of $18.7 billion.”
According to Sullivan, the difference between JCT estimates and PCA projections is due to assumed increases in VMT between 2014 and 2016.
The Corker-Murphy proposal adheres to funding principles that PCA, through its involvement in the Highway Materials Group, has circulated to lawmakers, including maintaining the integrity of the user-fee based funding mechanism and ensuring long-term stability and solvency of the Highway Trust Fund.