Opinion: Consider the math: Push for smaller cars may put crimp on state budget
I wanted a Dodge Durango the first time I saw one of those tough-looking SUVs.
That was at Sturgis, summer of 1998. A menacing black model was on display during the motorcycle rally, and some lucky person would win it before the week was over. Now, I never gamble, but that day, perhaps overcome by fumes from hundreds of thousands of Harley exhausts, I dropped my name in the box for the free drawing. For some crazy reason, I became convinced that I'd win.
When it became apparent that I didn't win (I never heard the results of the drawing, but I never saw a new vehicle in my driveway, either), I went to a dealer and ordered an SUV of my own. That was in the spring of 1999, and the vehicle has served the family well, although at 17 mpg on the highway and about 13 in town, it hasn't been the most fuelefficient rig on the road. We knew that going in, but gas was way less than $2 a gallon in those days.
Just the other day, we traded the SUV for a sedan, a hybrid job that claims 48 mpg on the road and 51 in town. It wasn't a Cash for Clunkers deal, just a couple of car owners going into a dealership and saying they wanted a different vehicle. We also have a full-sized pickup, and we didn't really need two V-8s in the family. The deal gave me a first-person understanding of what's going on with South Dakota's motor fuel tax and why some legislators are floating the notion of a 10-cent-a-gallon increase in the state tax.
The way it sounds, the tax increase is far from a done deal, but some legislators would like to find out what their constituents think of the notion of bumping the state tax from 22 cents to 32 cents a gallon. I suppose they'll discover what they already know: Nobody wants to pay more taxes, but a lot of us want good roads, and in South Dakota, we pay for our roads primarily with state and federal tax money.
The gas-tax account has been less dependable in recent years than it was for most of the six decades it's been in existence. My recent car deal will contribute a little bit to the lack of dependability of the tax.
Let's say the old vehicle averaged 16 mpg. We logged fewer than 10,000 miles a year with it, but if we use that number and the 16 mpg, about 625 gallons of gas went into the tank. If every gallon were taxed at 22 cents, we paid the state $137.50. (We actually burned an ethanol blend taxed at 20 cents a gallon, but let's stick with one set of numbers, even through the growing use of ethanol with its 2-cent tax break also contributes to the reduction in highway fund money.)
The car we just bought is supposed to average 50 mpg. Let's say it does that, and we drive that same 10,000 miles or so each year. That's 200 gallons of gas. At 22 cents a gallon, that's $44 we pay in state motor-fuel taxes in a year. Even if the tax were raised to 32 cents, we'd be paying $64 a year.
That's a far cry from the $137.50 with our old vehicle, and the difference is that much revenue the state highway fund is short just with my transaction. If a bunch of other folks are doing the same thing, the highway fund is a hurting motor scooter.
A related kicker? Suppose the $93.50 the highway fund won't be getting from me now ($137.50 minus $44) would have been used in a 90-10 federal-to-state match project. That means $841.50 in federal funds the state couldn't match because I'm being fuel efficient.
I'm not smart enough to know what public policy the state should adopt to compensate for that. I just know I'm like a lot of folks. I want cheap gas, energy conservation and great roads.
Terry Woster's column appears Wednesdays and Saturdays in The Daily Republic.