Back in 2002 Charlottesville was afflicted with a severe drought. Faced with a dangerous water shortage, the city government and community leaders launched a vigorous campaign to promote water conservation, and the good citizens of Charlottesville, devoted environmentalists that they all are, complied with a vengeance. And what was their reward for their self-sacrifice? Higher water rates!
On Monday [third week of November, 2002], Council approved an ordinance to raise water rates to $55.47 per 1,000 cubic feet (or 4,500 gallons), set to take effect on November 18. The rate had been $37.16….
…. As conservation measures kicked in during late summer and early fall, water consumption has dropped by about 40 percent since August. That means that with less water being sold, officials must charge more to keep up the revenue stream.
“It’s the ultimate Catch-22,” said City Manager Gary O’Connell. “The more water we conserve, the more it costs.”
The dwindling stream of revenue, in short, was as, or more, important than the dwindling stream of water.
I was reminded of Charlottesville’s liberal conservationists (the City Council at that time was made up of all liberal Democrats, except for one lone Republican subsequently replaced [actual debates being too troublesome to endure] with another liberal Democrat) by this excellent Debra Saunders column today in the San Francisco Chronicle. Her lede:
For lo these many years, the Democratic motorcade class has scolded American workers for driving gas-guzzling cars. Now that Americans have begun driving more fuel-efficient cars and driving less, how have the finger-waggers reacted? No, they are not planning a parade – they already are working on a new tax on miles driven to make up for lost gasoline-tax revenue.
With the help of a six-year, $2.1 million federal grant, Oregon Gov. Ted Kulongoski is moving forward with a proposal to tax Oregon drivers for the miles they drive. “As Oregonians drive less and demand more fuel-efficient vehicles, it is increasingly important that the state find a new way, other than the gas tax, to finance our transportation system,” Kulongoski told the Albany Democrat Herald.
“If the goal of the green brain trust is to reduce gas consumption,” Saunders continues, “then Oregon shouldn’t dump a tax that punishes guzzling and replace it with a tax that dings Hummers and hybrids alike.” And, one might add, that punishes rural drivers who have to drive longer distances to work and Walmart.
It’s hard to avoid the suspicion — and Ms. Saunders certainly doesn’t avoid it — that one of the attractions of the mileage tax is that it opens the door to all sorts of future attempts to reward and punish various kind of driver behavior:
… the transponders are supposed to track out-of-state driving. And down here [San Francisco], where I get a regular bill with the dates and times for when I paid to cross the Bay Bridge, it’s hard to imagine that after built-in transponders are standard in every new auto, nanny state governments won’t come up with a menu of behaviors beyond driving too much — as in, driving in cities, driving during rush hour — to enable states to levy extra taxes.
Follow the money and the red flag. The road-tax report gushes about how mileage transponders can be used to implement “congestion pricing” — by adding fees for driving in urban areas or during rush hour. Think the London program that charges motorists $15 per day to drive in the central city. Our Betters in Europe like it — so of course, Davos-happy solons from American cities (San Francisco, New York) want their subjects to support this pricey trend.
Dr. MacKinnon, my small home town’s esteemed community sage (who was a dentist in his day job) was fond of saying, of people as well as cars, “it’s not how old you are; it’s how many miles you’ve been.” According to the new “green brain trust” now ascendant in liberal bureaucracies, that, and not how much gas you use getting there, will also determine the amount of taxes you pay.
There are at least two good reasons for having a gasoline tax. Both have to do with the costs to society of using that gasoline, above and beyond the cost of using the limited resource of gasoline.
One reason is to make people pay for the pollution caused when using the gasoline (although what should be called pollution, and what the costs of the pollution are, can be debated). Of course, ideally one should charge directly for pollution, not for consumption of gasoline. But as long as we have pollution controls on cars, gasoline consumption is a very convenient proxy for individual pollution, which is very difficult to measure. If people start driving less or start using cars with better mileage, then by using less gasoline they are probably also polluting less and it is perfectly reasonable and desirable that gasoline tax revenue decrease.
But there are external costs other than pollution associated with driving! One big cost is the cost of building and maintaining the roads. Another cost is that when I drive my car on a road, I am using up the limited resource of road space. I think it is reasonable to charge for using this resource, and it is obvious that the resource is more valuable for certain roads at certain times than for other roads at other times. I would think that people with a libertarian frame of mind would support charging according to the amount and value of a resource used, if it is convenient to do so.
Is a gasoline tax a good way to charge for the building and maintenance of roads? Perhaps. Let us assume that roads don’t differ much in the costs of building and maintenance. (I don’t know if this is true.) Some amount of maintenance is necessary even if there is no traffic, and some amount is (roughly) proportional to the amount and weight of traffic. Note that if people start driving cars that are more fuel efficient but weigh the same, then gasoline consumption will go down even though building and maintenance costs do not, and it would be reasonable to increase gasoline taxes to take this into account.
Gasoline taxes seem a poor way to charge people for using popular roads at popular times, and I think it reasonable to look for other ways. The trick is to make these other ways convenient and not too invasive of privacy.
I suppose you could say that charging bridge tolls, or charging higher bridge tolls at rush hour, or charging more for a Broadway show than for a movie, are “attempts to reward and punish various kinds of [consumer] behavior”. I would say that it is part of the proper functioning of a market economy.
In Charlottesville, they could try pricing water usage in a way that reflects its costs. A fixed monthly fee for connection would cover fixed costs, no matter how little is used. To this they could add a fee of so much for each cubic foot used according to the water meter.