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It is classified as a tax, but the cost added by the city to gasoline at the pump is a fee that reflects Mayor Peter Carlisle’s policy that people should pay for the cost of maintaining city resources that they use, in this case city roads.
The cost increases he proposes appear modest compared to the sharp spikes in gasoline prices beyond the city’s control. And as an alternative to the more costly option of borrowing to pay for basic road maintenance, they should be approved.
The cost of a gallon of regular gasoline has risen by $1.63 to $3.97 in the past two years and by nearly 60 cents in just the past four months. Before then, oil prices had skyrocketed from less than $90 to more than $140 a barrel, then fallen to less than $33 a barrel, all within a year as economies flourished and fell.
Some pundits call for $1-a-gallon federal gasoline tax, imitating European countries, where gas taxes are 10 times U.S. federal and state taxes combined so people will demand efficient cars. Most Americans are horrified by such a proposal but should brace themselves for sizable price increases in the years ahead.
Oil prices have soared recently because of political unrest in the Middle East, the source of about one-third of the world’s oil production. Uncertainty about the region could well continue for a lengthy period. Many analysts are predicting the price per gallon could reach $5 by the end of this year, as Japan is forced to depend on coal, natural gas and oil-fired power plants as a significant part of its nuclear energy machine
Carlisle proposes to increase the city’s gas tax by a penny, to 17.5 cents a gallon on July 1, by 2 cents a year later and by 3 cents in July 2013. Together with taxes of 15 percent by the state and 18.4 percent by the federal government, along with the state’s general excise tax, Hawaii motorists spend 60.1 cents in taxes per gallon, second highest only to New York.
"Fees should pay for the services that the city is providing in a fair and equitable manner," Carlisle said in his State of the City address. Those services include filling potholes. Cities and states in the past have relied on the feds to help pay for street and roadway maintenance, but that will no longer be available unless Congress approves a hike in the federal gasoline tax. That is highly unlikely.
Carlisle is turning to user fees, including the gas tax, as an alternative to relying on borrowed money. He points out that the city’s debt service has increased each of the last seven years. "Like your credit card," he said, "the more you have to pay in principal and interest, the less you have available to spend."
The City Council approved a resolution several years ago that user fees should cover 100 percent of the cost of services provided by the city. Carlisle strongly supports that policy.
Adding fees by one or a few cents a gallon of gasoline to maintain roads is an unpleasant option. But to maintain our roads in the most cost-efficient way possible, it’s the best option for now.
