Wednesday, May 23, 2007

Twenty cents on the dollar

A brown-haired man does a loose-jointed shamble down the sidewalk. He has a rather vacant stare, and he hum-whistles something tunelessly. It sounds vaguely like Onward, Christian Soldiers. The man is brought up short when he spies a dollar bill lying on the sidewalk. He looks at the dollar for a moment, blinks, apparently thinking, and then bends down to retrieve his treasure.

"Hold it," says a man sitting on a bench next to the sidewalk. "Before you can pick up that dollar, you have to put twenty cents in its place."

"You mean I have to spend twenty cents to make a dollar?" quizzes our pedestrian friend.

"That's right," comes the reply.

"No way, man! That's just stupid. Do I look like a rube to you?" asks the first man. He straightens up and strides off indignantly.

This man is our governor, Tim Pawlenty. This is what he did when he vetoed the gas tax increase passed by the legislature.

Only multiply the dollar by one hundred and sixty million. Annually.

The data in this post comes from someone knowledgeable about transportation finance in the state of Minnesota and the US.

Presently, 24.5% of Minnesota's 20-cent-a-gallon gasoline tax is used to get matching federal funds. Currently, this amounts to about 134 million dollars a year, for a match of four times that, or 536 million, approximately.

So, if we raised the gas tax by just a nickel, boys and girls, assuming the demand would remain steady (which regrettably it probably would), and we dedicated it all to projects for which federal matching funds were available, how much would that be?

Okay, Spotty, I'm going to say forty million dollars.

Show your work, grasshopper.

You start by working backward to see what one hundred percent of the gas tax collections equals, and then find 25% percent of that, since that's the amount of the gas tax increase.

That's a remarkably round number, grasshopper, but we'll use it. Using the 80/20 formula for matching funds, that's 160 million dollars annually that might be available in federal matching funds.

Why don't we use some of the rest of the existing gas tax revenue instead?

I suppose we could, grasshopper, but it would beggar state and county projects, and those roads need work, too.

How do you know the state would actually get the money from the feds?

Well, there's no guarantee, but remember that Minnesota's Jim Oberstar is now chairman of the cookie jar. In fact, Oberstar visited the Minnesota Legislature last January and laid out essentially the facts recited above. Spot guesses that the governor was out campaigning for John McCain that day.

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