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Saturday, August 2, 2003

Unfair gas taxes, aging interstates


Fix the formulas

Ohio's hopes to rebuild its 50-year-old Interstates and finance other major road projects are riding on whether Congress changes critical funding formulas in coming months. Ohio Department of Transportation Director Gordon Proctor estimates fixing those formulas would return an extra $250 million to ODOT for projects, including replacing I-75's Brent Spence Bridge. He credits Rep. Rob Portman, Sens. George Voinovich and Mike DeWine with taking the lead to change federal funding formulas. The entire Tristate delegation needs to push the reforms.

Ohio is disadvantaged as a gas tax "donor state," a big ethanol user and a top freight state, with all the road wear that implies. Ohio gets back only 88 cents on the dollar from gas taxes paid into the Highway Trust Fund. Donor state lawmakers argue their guaranteed rate of return should be raised to 95 percent. That's what's proposed in S.B. 1090 or HR 2880.

Ohio also incurs an "ethanol penalty" for using lots of corn-based gasohol, although it's a renewable, Midwest fuel. Nationally, states average only about 5 percent ethanol use. Ohio uses 45 percent, Proctor says. The federal government taxes ethanol at only 13.2 cents a gallon instead of 18.4 cents a gallon for gasoline. So Ohio contributes 5.4 cents less to the Highway Trust Fund, and its contribution determines how much it gets back in federal transportation dollars. To make matters worse, 2.5 cents of ethanol taxes are diverted from the Trust Fund to the U.S. treasury. The ethanol exceptions cost Ohio about $160 million a year.

A Senate energy bill passed Thursday would double ethanol use and return the 2.5 cents to the Highway Trust Fund. The bill next goes conference committee. Portman authored a House bill also to re-route the 2.5 cents to the trust fund.

More ethanol use should make ending the 5.4 cent "ethanol penalty" more urgent. Ohio gets about $950 million a year in federal transportation dollars. If the ethanol penalty were fixed and states assured a 95 percent rate of return on gas taxes, ODOT could reap $250 million more a year. Ohio's 2-cent-a-year gas tax increase will add another $250 million. That $500 million a year extra would allow Ohio to rebuild Interstates and finance other big road projects.



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Unfair gas taxes, aging interstates
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