Why we need to look at new options for funding highway projects

A recent story in the Wall Street Journal shows why we need to look for new ways to finance highway transportation. 

According to the latest American Community Survey released by the Census Bureau, carpooling is declining at an alarming rate.  In 1980, carpooling was at an all time high of 20 percent; today it is 9.7 percent.  And we aren’t leaving our cars behind and taking public transit, either; that declined slightly from 6 percent to 5 percent in 2012.  We are telecommuting more, but again, only slightly.  That rose to 4 percent (from two percent in 1980.)

Result:  more of us are driving alone.  Older workers are working later in life; vehicle use is up among lower income Americans and 45 percent of U.S. households have no access to public transportation, says the WSJ.  Which means, more cars on the road, more wear and tear on our roads, and a greater need for new highways to alleviate congestion.

At the same time, the primary source of funding for highway projects in California – the gas tax – is a declining source of revenue. 

We know that cars are more fuel-efficient than they were thirty years ago, which means less overall consumption of gas.  More than this, the sale of hybrid and electric cars is accelerating faster than a Toyota Prius.  In 2012, sales of electrics and hybrids rose 73 percent from the prior year making these cars the fastest growing sector of the auto industry.  One research group predicts sales will increase another 12 percent this year, putting more than half a million electric/hybrid vehicles on the roads.

Perhaps an even deeper indicator of where auto trends are going is that sales of Tesla’s Model S (price:  $64,000) are through the roof in America’s wealthiest zip codes.   In California cities like Atherton, Los Altos Hills and Portola Valley (admittedly, all tony neighborhoods close to Tesla’s HQ) sales of the Model S are in double digits and outpacing far more expensive, gas-guzzling cars.  In fact, the Tesla is the most registered vehicle in 8 of the top 25 zip codes in the U.S.

As the company rolls out vehicles in other price points, more Californians are likely to take advantage and wean themselves off fossil fuels, at least in their cars.

All this means revenue from the existing gas tax is ultimately unsustainable, even with tax hikes.  The trend is clear in the Board of Equalization’s own consumption survey.  In 2005, California drivers purchased 15.9 billion gallons of gas.  By last year, following steady annual declines, consumption was down to 14.5 billion and this year is on pace to be closer to 14 billion.