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Gas tax battle averted?

By Kay Bell · Bankrate.com
Thursday, August 18, 2011
Posted: 2 pm ET

We watched last month as Congress brought America to the brink of default in its fighting over the federal debt ceiling extension.

We saw the Federal Aviation Administration temporarily hamstrung and federal airline taxes halted, messing up not only Uncle Sam's budget but causing tax confusion for the IRS and individual fliers, too.

Is the next Congressional tax battle going to be about the country's roads? Maybe.

But developments in Washington, D.C., this week, as well as public disapproval of Congressional infighting, may help keep our federal highways' funding system running.

The federal Highway Trust Fund gets 18.4 cents on each gallon of gas we put into our vehicles. The fund pays for road and bridge construction projects with the money parceled out to every state. Each state also collects its own fuel excise taxes.

The gas tax, however, is set to expire on Sept. 30. And that deadline has caused concern that we could see a repeat of the FAA debacle. Word is that some on Capitol Hill want to hold up the gas tax as leverage in revamping the formula the federal government uses to determine how much each state gets from the trust fund.

Western states, for example, don't like seeing Eastern cities get larger sums for mass transit as compared to the road-specific money the more wide-open areas depend upon.

A major proponent of changing the highway money distribution process is Grover Norquist, president of the enthusiastically anti-tax group Americans for Tax Reform. You might be familiar with the Washington, D.C.-based organization in connection with the no-tax pledge Norquist got most Republican lawmakers to sign earlier this year.

As for the highway fund, Norquist told Bloomberg News, "We're interested in the broader issue that states should keep their own fuel taxes. We don't want it run through Washington. Why should Connecticut pay for what’s going on in Wyoming and Wyoming pay for the New York City subway system?"

Norquist and his allies still plan to wage war against the current highway funding mechanism, but he has relented on the immediate battle. He's let it be known that he's not opposed to the extension of the gas tax.

How magnanimous of him! All us drivers who already are navigating around potholes should send him a thank-you note for getting the word out to his lemmings like-minded members of Congress that they can stand down on this issue for now.

We will likely see a Highway Trust Fund fight down the road. That's fine. It never hurts to re-evaluate programs, but it should be done judiciously and not with a threat hanging over everyone's heads.

The other thing, though, that I would like to see examined is just how come Norquist holds such sway over officials we in our various states and Congressional districts elected. Do you think we could get a super committee for that?

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