Who is paying?

In March of 2011, the Congressional Budget Office (CBO) was asked by the Senate Budget Committee to investigate different methods of getting funding for highway maintenance and work. The result is the "Alternative Approaches to Funding Highways" report located here (http://www.cbo.gov/doc.cfm?index=12101).

I didn't make it very far into the report… in fact I was in the first paragraph of the Preface... when I came across a statement that took me back enough that I had to reread the statement to make sure I was seeing it correctly. Upon reflection, the statement makes perfect sense. The implications of the statement, however, are astounding.

"As scheduled increases in federal standards for average vehicle fuel efficiency take effect,

dedicated revenues may fall further below spending."

As people spend less money on gasoline and diesel, revenues from fuel taxes will decrease. Makes sense, right?

What do you suppose the primary motivation is for buying a more fuel efficient vehicle? I would think it is to save money on fuel costs. What do you suppose will happen if buying a fuel efficient car subjects a person to a another tax to compensate for lost revenue to the Highway Department? Will people still have the same motivation for buying that fuel efficient car? I don't think I would. The highly fuel efficient and electric cars are still very expensive but many people justify the cost by the reduced fuel requirements. If the fuel cost reduction is countered by a new fee or tax, there goes the justification!

As gas prices sore into the $4 and $5 range with no relief offered from the government (did everyone hear about the President's response to a blue-collar worker? To paraphrase "… sounds like you need to buy a new car"), are we really going to be asked to absorb further costs and fees for driving? I understand the desire of some people to reduce their carbon footprint, but for those people that live far from work, this becomes a problem.

A couple of examples come to mind:

I had a friend that moved to California (the Bay area) because that's where the work was. Coming from a town where housing costs were much lower, he did not have enough cash for a down payment on a house in CA near work. The only place he could afford to live was about 3.5 hours away (without traffic). He actually lived in a camper at a KOA during the week because he couldn't make the commute otherwise.

In another case, my sister worked in a "resort" town. She made decent money, but not enough to live there. As a result, her commute was extensive and expensive. Ask people that work in Aspen or Telluride how their commute looks.

The people that really need the breaks seem to be the ones that end up paying the most.

I plan on reading the rest of the report in order to write a more business related entry in another blog, but I felt like I had to share this first part, since it hit me right out of the gate.