There’s an interesting debate in Sacramento right now about how to pay for needed highway repairs. It’s universally agreed upon that our roads are not in great shape. Anyone who has driven to Reno from Sacramento knows when they cross into The Silver State, not by the “Welcome to Nevada” sign, but rather the condition of the highway.

Sure, there are some high-profile projects–widening of the 405 in LA and the addition of carpool lanes to I-80 in Sacramento. However, the regular maintenance and projects on lower-profile roadways has declined. 

There are two taxes applied to gasoline in California. One is the state excise tax of $0.30 per gallon. That relates obviously to the quantity of gallons sold in the state. The second is the state/local sales tax, which ranges roughly from 2.25%-10%, depending on the locality. That tax revenue correlates with both the volume of gallons and the price of gasoline.

Two major factors are affecting this. First, cars have become far more fuel efficient, particularly with hybrids and all-electric vehicles. My car is a Nissan Leaf, so I haven’t paid any gas taxes. (I also rarely drive.) That means that far less in gasoline excise tax is being collected than in the era where everybody was driving Hummers (side note: where did all those Hummers go?).

Secondly, the price of gas in California has nearly been cut in half over the last three years. What that means is the sales taxes on gas have dropped significantly–a drop of nearly 18 cents per gallon. Now, that money wasn’t earmarked (unlike the excise tax) for road repairs, but has strained state and local government.

Thus, there needs to be a rethinking of how we pay for road maintenance in this era of increasing efficiency and lower gas prices to tackle a big infrastructure challenge. Some argue for switching to a “pay per mile” tax to capture the actual use of the roads. Of course, that’s hard to administer. Either you make drivers check in annually to a state-administered facility, or you take them for their word. Either is a headache for either drivers or the state. Others would like a large bond that would be repaid by the state General Fund for up to 30 years, and others argue that the state has a surplus and is creating a large rainy day fund and could be used for road repairs without creating future obligations on taxpayers of the state.

Governor Jerry Brown has called for a $65 tax on all vehicles, as well as an increase in the excise tax, trying to address both the issue of increased efficiency and lower price of gas. This would require a two-thirds vote as an increase in taxes, something that appears to be unanimously opposed by Republicans.

It’ll be an interesting debate to watch this year.