RALEIGH – There’s a bipartisan move afoot to cap North Carolina’s tax on motor fuels at 37.5 cents a gallon this year, along with some political discussion about cutting the gas tax further in future years.

I understand why lawmakers find the idea of cutting the gas tax so appealing. North Carolinians have spent the past several years paying big money for gas and hearing about big money being wasted on roads to nowhere. Putting two and two together, many of them have concluded that the relief they would get from lower gas taxes wouldn’t come at the expense of truly valuable transportation projects.

I agree that North Carolina motorists deserve a bigger bang for the bucks they pay into the transportation system. But I doubt that eliminating wasteful projects alone will provide adequate resources to address our needs. Even if we do nothing, actual highway revenues per mile driven will continue to fall, as they have for decades, because of increases in fuel efficiency and the gradual introduction of vehicles powered by natural gas, electricity, or other sources not touched by the current tax.

In a sense, those who favor modest reductions in the gas tax aren’t thinking big enough. We ought to be discussing how best to replace the gas tax as a means of funding North Carolina’s major transportation needs.

Over the past decade, the only major category of state spending that has dropped significantly in real terms is highways. Overall government spending is North Carolina is still higher today than it was 10 years ago, even after recent General Fund budget cuts. Elementary and secondary education is about the same on a per-pupil, inflation-adjusted basis. Spending on health and human services is way up. Highway spending, however, has dropped by about 20 percent in per-capita, inflation-adjusted terms since 2002.

Some revenue from gas and car taxes has been siphoned off for other purposes, including transit projects with little practical value in moving people or freight. But the bigger problem is that taxing gallons of fuel to pay for transportation is a doomed practice. It has always been only a rough approximation of a user fee on motorists, and increases in fuel efficiency are rendering it increasingly obsolete. After adjusting for inflation, motorists pay only about a third of the gas tax per mile traveled that they did in the 1950s, when the interstate-highway system got its start.

As sometime JLF writer Randal O’Toole put it in a recent paper for the Cato Institute, there are other problems with the gas tax. It doesn’t link revenues from drivers with the roads and bridges they actually use, leading to inadequate maintenance of high-demand infrastructure. The gas tax also doesn’t allow for congestion pricing – charging drivers more during hours of peak demand – which is essential for making efficient use of road capacity.

Traffic congestion will be one of North Carolina’s great challenges in the coming years. It already costs us billions of dollars a year in lost time and output. Given that the gas tax will not and should not be raised to fund new capacity to address the problem, policymakers have three options available:

• No New Revenue. North Carolina could rely entirely on redirecting existing gas tax, car tax, and other revenues to high-priority needs. There is no question that the state has squandered tax money in the past. But I’m not convinced that, even if we corrected all these flaws, there would be enough resources to do the job. Remember that North Carolina has some of the nation’s most-congested interstates.

• Hike General Taxes. While federal and state road programs are mostly financed by motorists, local governments already spend property and sales taxes on local projects. North Carolina has been moving towards local-option sales taxes to finance road or transit projects. Many state and local officials want to move even faster. I don’t agree.

• Charge for Use. My preferred solution is to use tolls and other means to charge motorists directly for the miles they drive. In his new Cato Institute paper, O’Toole describes a plan to phase out the gas tax in favor of what amounts to electronic toll collection for all highways and streets – a GPS-based user charge that could be paid at the gas pump. His plan addresses issues of privacy, feasibility, and transition.

The gas tax was an effective way to finance the development of our road network – back in the early to mid-20th century. It’s not anymore. Time for a new approach.

Hood is president of the John Locke Foundation.