MS Infrastructure Package

Mississippi’s Recent Infrastructure Package

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The Mississippi Legislature applied a bandage to the state’s infrastructure funding woes with a recent infrastructure package that includes some bond issues and the redirection of use tax revenue to cities and counties. But to close a long-term wound, the Legislature might have some problems to solve that aren’t of its making.

The first is the method that has funded maintenance and construction on the state’s highways for decades. Right now, the state collects an 18.79 percent tax on gasoline, in addition to the federal tax of 18.4 cents, which hasn’t been increased for more than two decades. It’s the ultimate user fee paid by the motoring public who use the roads.

The federal Highway Trust Fund that pays for repairs and construction on the interstate system has been in the red for years and it’s forced Congress to dig into other revenue sources to make up the difference, as it did from 2008 to 2010.

One problem is that cars and trucks have become more fuel-efficient in the last two decades and thus gasoline tax revenues have lagged. To make the problem worse, costs on steel and concrete needed for maintenance and repairs have increased. In fiscal 2007, the state took in more than $452 million in gasoline tax revenue. In fiscal 2017, that declined slightly to $446 million.

That doesn’t even take into account all of the hybrid electric vehicles, which consume less gasoline, that are now on the road. There are also pure electrically-powered vehicles, which right now aren’t paying any gasoline tax at all and are now subsidized by the federal government with a tax credit.

The solutions aren’t appetizing to politicians seeking re-election. The Legislature could vote to increase the gasoline tax, which would not be popular. There is the idea of indexing the state’s tax to the rate of inflation, which is done by several states and would result in automatic increases in what citizens pay at the pump.

A vehicle miles traveled tax, as experimented with by Oregon, would be even less popular as it would add privacy concerns. Taxpayers would be required to either submit to monitoring devices or provide government with odometer readings. It would also require a large investment by government in infrastructure to receive and process the information needed to collect the tax.

Toll roads could be a solution, as license plate scanning technology has made the days of toll plazas manned by dozens of employees largely obsolete.

Whatever option the Legislature considers, something must be done to fix the long-term revenue problems with the state’s highway system. The solution likely won’t be an easy one and this is one time where a quick fix won’t get the job done.

 

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