Infrastructure is an important part of economic development.
There are two broad classifications of infrastructure: Social and physical and both are extremely important in recruiting and maintaining our quality of life. Social infrastructure includes things that indirectly increases long-term productivity (such as housing, health care, education, sanitation, etc.). Physical infrastructure includes things that directly supports more immediate production needs (such as transportation, telecommunication, banking, technology, finance, energy, etc.). 1
Infrastructure can also be looked at as losses like the two trillion gallons of drinking water lost to water main leaks, 5.5 billion hours in traffic congestion, 56,000 crumbling bridges, 15,500 deficient dams, and more. Infrastructure is more than just potholes. 2
Even though infrastructure is critical, investments over the years and governmental entities are struggling to plug the holes in the dike, literally. Some report suggest that the U.S. needs to spend $3.3 trillion every year through 2030 just to keep up with expected growth rates. 2
There is no silver bullet solution. Nearly 100 years ago, a gas tax was created by Oregonians. The first one cent per gallon tax was passed in February 1919 and was used to build the Pacific and Columbia River Highways. Soon after, many States and some cities adopted similar taxes.
At one time, the gas taxes and other fees covered 70 percent of the building and maintenance costs for highways. 2 Not so much anymore, particularly since the Federal gas tax was not raised, or even adjusted for inflation, from 1993 until 2018. The Federal gas tax is not indexed to inflation which has increased by a total of 73 percent from 1993 to 2018. 3
Many states have raised the tax on gas, knowing that the raise is not enough to solve the problem. The U.S. Highway Trust Fund has operated in deficit since 2008 due to the lack of change and the significantly higher fuel efficiency of modern vehicles. Sometimes the gas tax monies get redirected to pay for non-transportation needs such as State police (Pennsylvania) which does not help the problem either. 2 At this point, a gallon of gasoline in Oregon is assessed a tax of $0.34, and a Federal tax of $0.184.
Did you know? Nearly 100 years ago, a gas tax was created by Oregonians? The first one cent per gallon tax was passed in February 1919 and was used to build the Pacific and Columbia River Highways. Soon after, many States and some cities adopted similar taxes. 5
Some cities, such as Coquille, have a local gas tax of 3 percent. 4 Earlier this year Coos Bay enacted a Transportation Utility Fee that created a new revenue source for street maintenance. This new fee will generate nearly a $1 million a year and make it possible to repair potholes in a more durable manner, resulting in fewer repeat repairs. As the City gets caught up on the pothole problem, these funds will be redirected to major street rehabilitation projects. Different fuels, such as aviation gasoline are taxed as well (at differing rates compared to other types of gas). 5
Why is all this important? Because our Gross Domestic Product (GDP) percentage is closely associated to infrastructure investments. Every 1 percent of infrastructure stock often relates to a 1 percent growth in the per capita GDP. 1 That is a great ‘bang for your buck!”
1 Economic Infrastructure – Intro, Types, Significance (https://www.toppr.com/bytes/economic-infrastructure/)
2 The Infrastructure Gap: Financing and Funding The Future (https://infrastructure.aecom.com/infrastructure-funding)
3 Fuel taxes in the United States. Wikipedia (https://en.wikipedia.org/wiki/Fuel_taxes_in_the_United_States)
4 Oregon Gasoline Tax Rate (by Jurisdiction) (https://www.oregon.gov/ODOT/FTG/Pages/Current%20Fuel%20Tax%20Rates.aspx)
5 Revenue For Road Maintenance Challenges, City of Coos Bay, electronic newsletter dated June 21, 2019
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