NM Should Avoid Higher Gasoline Tax

 

Some New Mexicans have convinced themselves that the challenges facing the state’s highways require a higher gasoline tax. They’re wrong, and here’s why.

First, the true condition of New Mexico’s roads contrasts with the oft-heard claims that they are “crumbling” and “in disrepair.” In the Reason Foundation’s latest national analysis, the overall performance and cost-effectiveness of New Mexico’s highways ranked seventh. States graded worse included our neighbors Texas (11th), Arizona (19th), Oklahoma (22nd), Utah (29th), and Colorado (33rd).

New Mexico scored its best marks in maintenance disbursements per mile (1st), capital-bridge disbursements per mile (6th) and rural arterial pavement condition (6th).

Still there’s no denying that the revenue needed to build and maintain highways is stagnant. Autos are becoming more efficient, and Millennials do not drive as much as previous generations. Between the 2009 and 2014 fiscal years, New Mexico’s road fund rose from $371.1 million to $380.6 million. Adjusted for inflation, the increase became a small decline.

That’s why pressure is mounting for action. Lawmakers and the governor, the argument goes, must hike the gasoline tax. “They are going to have to do something to raise revenue,” Greg Rowangould, a University of New Mexico professor of civil engineering told theAlbuquerque Journal in a May 2 article. “They don’t have an option of doing nothing.”

Really? Isn’t spending existing revenue more efficiently an option? In the 2015 session, Sen. Carroll H. Leavell, R-Jal, drafted a bill to gradually transfer 100 percent of the receipts from the motor-vehicle excise tax — currently applied to general expenditures — to the road fund. Legislative analysts predicted that by the 2019 fiscal year, the switch would yield an additional $156 million for highways.

Another boost could come from halting the siphoning off of gasoline-tax revenue. Currently, a portion is devoted to the state’s aviation and general funds, as well as the coffers of counties and municipalities.

And putting the expensive and underused Rail Runner out of its misery would free up tens of millions of dollars annually.

Also on the spending side, the purchasing power of transportation projects would be enhanced by the repeal of New Mexico’s prevailing-wage law. The mandate is anti-competition, and thus, profoundly anti-taxpayer.

According to Roxanne Rivera-Wiest, the president of Associated Builders and Contractors of New Mexico, prevailing-wage rates are “determined by the director of the Labor Relations Division of the Department of Workforce Solutions, at the same wage rates and fringe benefit rates used in collective bargaining agreements as supported by the unions.”

But the vast majority of the construction industry in the Land of Enchantment is not unionized. Thus, highway projects in the state are unnecessarily expensive.

A report by Ohio’s Legislative Service Commission found “overall savings of 10.7 percent” when the Buckeye State exempted school construction from its prevailing-wage requirement. The New York Times recently reported that limited rollbacks have been enacted in West Virginia and Nevada, and campaigns for full repeals “have been offered in more than a dozen states, including Michigan and Missouri, as well as Wisconsin.”

A final way to avoid a gasoline-tax hike is to invite the private sector to contribute.

R. Richard Geddes, of Cornell University, noted that for-profit entities “were widely used in the 19th century to build and operate toll bridges and roads, and the vast majority of U.S. railroads were constructed with private money.”

Peter Samuel, the publisher of the newsletter Toll Roads, believes that by “allowing takeovers, consolidations, and spin-offs of highway assets, the markets would ensure that highways are managed for the best return on capital — the dynamic that gives us our food, our fuels, our housing, our electric power, and all the rest of what goes into our standard of living.”

Imposing higher taxes on a state where employment, incomes, and home values have yet to recover from the Great Recession isn’t sound policy. There are indeed innovative, proven, and cost-free options to upgrade and expand New Mexico’s roads.