The Biden White House has reversed course on two major policies in the first week of August. During an August 3 press conference, President Joe Biden conceded that when it comes to extending the Centers for Disease Control’s temporary eviction moratorium, “the bulk of the constitutional scholars say it’s not likely to pass constitutional muster.” The President said that one day after Gene Sperling, the White House’s federal coronavirus response coordinator, told reporters that they couldn’t find legal justification for the moratorium.
“On this particular issue, the president has not only kicked the tires; he has double, triple, quadruple checked,” Sperling said at an August 2 press conference. “He has asked the CDC to look at whether you could even do targeted eviction moratorium…and they, as well, have been unable to find the legal authority for even new, targeted eviction moratoriums.”
Three days later, President Biden announced that he was going to order the CDC to extend the moratorium anyway, never mind the June Supreme Court ruling making clear that such action requires congressional authorization. Congressional Democrats didn’t even bring the moratorium up for a vote before leaving town for August recess. Speaker Nancy Pelosi conceded that she didn’t have the votes to pass it through the Democratic-run House.
The second policy about face for Democrats was revealed with the August 1 release of the 2,702 page infrastructure bill. First let’s go back to March 26, when Department of Transportation Secretary Pete Buttigieg told CNBC that a federal vehicle miles traveled tax (VMT) “shows a lot of promise.” Yet Secretary Buttigieg walked that statement back only three days later, telling CNN’s Jake Tapper that a national VMT is “not part of the conversation about this infrastructure bill,” adding that he wanted “to make sure that’s really clear.”
It apparently wasn’t clear. The $1.2 trillion infrastructure bill released on August 1 includes a provision that seeks to pave the way for a national miles-driven tax by funding the launch of VMT pilot programs around the country. Contrary to previous assurances from the Biden administration, the infrastructure bill includes $125 million to fund the creation of VMT pilot programs.
The infrastructure bill sets aside $75 million for grants to state, local, and regional transportation departments to be used on VMT pilot programs. $50 million will go toward a national VMT pilot program. Section 13001 of the bill authorizes $15,000,000 in grants to be disbursed by the Secretary of Transportation every fiscal year from 2022 through 2026 for the purpose of establishing pilot projects at the state, local, and regional levels that “test the feasibility of a road usage fee.”
Setting aside the arguments for or against a VMT, VMT proponents still haven’t decided whether the VMT should replace or be assessed in addition to existing federal and state gas taxes. This confusion is on display in Oregon, the first state to launch a VMT pilot program.
Participants in Oregon’s voluntary VMT pilot program, established in 2015, pay the state 1.8 cents for every mile driven. The state awards program participants a credit to reimburse them for the amount they paid in traditional state gas tax. While such a pilot program was initially structured to test out a VMT as a replacement for the gas tax, it has strayed from that goal in ensuing years to the extent that it seems many VMT proponents now envision the levy as an add-on and not a replacement to the gas tax.
In 2019, Oregon lawmakers expanded their VMT program and prohibited cars that get fewer than 20 miles per gallon from participating in the program moving forward. 206 of the 611 vehicles in Oregon’s pilot program that year got 22 miles per gallon, 221 got somewhere between 17 to 22 mpg, and 184 of them get fewer than 17 miles per gallon. Legislation was introduced in the 2021 Oregon legislative session that would make the VMT mandatory. If vehicles that get fewer than 20 mpg are eventually forced to pay a VMT but also have to pay a state gas tax that is not credited against VMT paid, we can see how a national VMT program could lead to many Americans, depending on what car they drive, having to pay a VMT, federal gas tax, and state gas tax.
A Congressional Budget Office report on VMTs released in October 2019 underscores what a difference it makes, in terms of economic impact, whether a VMT is a replacement for a gas tax or is imposed in addition to it. “If it [a VMT] increased total taxes assessed on truckers (rather than substituting for existing taxes), it would cause a shift of some freight shipments to rail and would increase the prices households paid for shipped goods,” the CBO concluded.
Having the VMT be a replacement for the gas tax could run into resistance from environmental organizations, who are among the most influential constituencies for the Biden administration and congressional Democrats.
“Instituting a VMT tax and eliminating the gas tax would lower the incentive to buy a fuel-efficient hybrid or electric vehicle,” explained WBUR-Boston contributor Frederick Hewett. “At a time when the state is working hard to reduce carbon emissions, it doesn’t make sense to treat a Nissan Leaf the same as a Chevy Suburban.”
Many VMT proponents have already made it clear they view the tax not as a replacement for existing fuel taxes, but as a supplemental levy. “In New York State,” noted a 2019 report by the Citizens Budget Commission, a New York City-based non-profit that supports the imposition of a VMT, “ideally VMT fee revenues would be used as a supplement to existing dedicated transportation revenues.”
The federal government has already awarded grants worth tens of millions of dollars to establish VMT pilot programs, which, in addition to Oregon, have also been launched in Utah and several other states. Speaker Pelosi got a bill through the House last year that would set up a national VMT pilot program, only to see that bill die in the Senate.
The aforementioned House bill designed the pilot program to have a VMT replace federal gas tax revenue, but it’s far from clear that most VMT backers view it as a substitute and not an additional tax. Even for VMT supporters who see it as a replacement for the gas tax, many are proposing a VMT as a way to collect more revenue than the gas tax is bringing in, which will be a problem for members of Congress who do not want to vote for a net tax hike.
Aside from addressing privacy concerns and environmentalist opposition to VMTs, proponents of this new tax need to decide whether they’re trying to replace the gas tax or complement it. While it’s unclear whether the majority of VMT proponents view it as a replacement or an additional tax, what is certain is that Secretary Buttigieg was not telling the truth when he said that a VMT is “not part of the conversation about this infrastructure bill.”