Without increasing Louisiana’s retail gasoline tax, roads and bridges will crumble! Traffic jams will form everywhere! Uh, never mind, we’ll take care of it with hiking the inflation tax instead.
Up until recently, all one heard from the Democrat Gov. John Bel Edwards Administration confronting a $15 billion assumed backlog in transportation was how the gas tax had to go up to address that. In the background, the Legislature turned away multiple attempts to do so, one as recent as earlier this year.
But then, lawmakers passed a measure adjusting the flow of most vehicle sales taxes away from the general fund and towards transportation spending that over three years eventually will boost commitments roughly $400 million more a year. And then came the Infrastructure and Investment Jobs Act from Democrat Pres. Joe Biden and his party that runs Congress (with an assist from select Republicans like Sen. Bill Cassidy), which at the very least will provide the state over the next five years $5.8 billion will towards roads and bridges.
As Transportation and Development Sec. Shawn Wilson notes, that’s only a billion more than the expired formula for distribution of highway funds would have netted the state over that time frame, so in that sense it doesn’t make a great dent in things. However, likely Congress will revisit the issue and revive at least some of the previous funding, given the existing revenue streams and the strong unlikelihood that Congress would surrender these over the long term.
Regardless, Wilson seems to think whatever comes is enough. As the IIJA moved to law, he declared a gas tax increase now moot. Additionally, the state is lined up to receive more dollars that it distributes to local governments, such as $470 million for public transport and $179 million for airports, meaning these can substitute for existing planned distributions and now free for spending on the backlog. And beyond the formulaic numbers, the state could see additional money through competitive grants for bridges that (assuming awards reflect population proportions) could net over the period nearly $200 million more and $75 million extra for airports.
Free money is great, except of course it isn’t free. It will require roughly $375 billion in additional debt and likely more given some rosy revenue source predictions. Worse, given the spending binge begun at the tail end of the Republican Donald Trump Administration to combat the Wuhan coronavirus pandemic but then vastly accelerated when Democrats came into power, this huge cash infusion into the economy has triggered price inflation not seen for decades.
Indeed, the latest projections have it approaching 7 percent annually, a 40-year high, and almost 5 points higher than under Trump. This difference is a much higher tax on Louisianans than any of the proposed gas tax hikes would have imposed. The infrastructure money doesn’t explain that increase – in the past 11 months, Democrats have shoved debt over $2 trillion higher and little of the debt from the new spending has started to be issued – but it will help to keep it at high levels.
And it’s not all debt that has pushed inflation significantly higher. Specifically dealing with transportation, Biden has taken actions discouraging energy production, prompting a remarkable rise in prices at the pump that far and away exceed what any gas tax increase would have produced.
So, Louisianans will get some more infrastructure completed more quickly without elevating gas taxes any time soon. It’s just that they will pay for it with a much higher inflation tax that likely won’t abate until the nation can run Democrats out of power.