By: Robert E. Gallamore

May 7, 2004, Chicago Sun-Times

Imagine the uproar if Gov. Blagojevich were to propose raising gas taxes at the pump by 21 cents per gallon. There would be howls of complaint from almost every constituency. It would rightly be called inflationary for all and discriminatory to rural residents. A wide range of industries would lobby hard against it.

If such a law were passed, truckers and other businesses affected by the tax increase would insist that every penny of the tax receipts be dedicated exclusively to highway construction and maintenance because there is a ''sacred trust'' between those who pay motor fuel taxes and those who build roads. Fuel taxes are considered by most people to be fees for use of the highways -- not always on the basis of a dollar paid for a dollar of cost imposed, but in the broad respect that fuel taxes are a user fee for services received.

Now imagine Blagojevich's advisers telling him his 21-cent-per-gallon gas tax increase would cost him re-election. Better find someone else to tax. ''Forget the user fee argument,'' the advisers would say. ''We aren't building roads. We are balancing the state budget. Just impose the tax on non-highway vehicles or machinery and don't worry about the payer-benefit principle.'' As the saying goes: Don't tax you and don't tax me. Tax the fellow behind that tree.

Guess what? That's what Blagojevich has proposed with his 21.5 cents per gallon tax on off-road fuel use. It makes no economic sense. It will drive jobs out of Illinois. It will put more trucks on the highways as the railroads are forced to pass increased fuel costs to shippers. And because it violates the spirit of a public-private partnership venture called CREATE [the Chicago Regional Environmental and Transportation Efficiency project], it will delay or disrupt plans for the historic consolidation and improvement of railroad routes that is expected to reduce congestion for motorists, rail passengers and freight shippers throughout the Chicago area. That's a terrible precedent to set.

Blagojevich's proposal is particularly galling because he knows full well that railroads provide their own rights of way. And because they purchase about 200 million gallons of fuel annually from Illinois vendors, the new tax would cost them about $40 million each year. If railroads do not earn adequate returns on their investments, they cannot reinvest in new capacity for the future.

Many public interest groups have said that government entities need to subsidize safe, environmentally friendly, low-cost railroad service, but Blagojevich wants to penalize railroads. Why? Perhaps because he thinks this is a tax the voting public will never see and never have to pay. But that doesn't make it an equitable or efficient tax, just a sneaky one.

The fact that railroads are private enterprises providing their own rights of way has been both their blessing and their vulnerability. For more than a century, government has not had to fund essential rail freight infrastructure, except when Penn Central, Rock Island, Milwaukee Road and other railroads went bankrupt in the 1970s. For the most part, public agencies have been more concerned with regulating railroads than supporting them.

Since the Staggers Rail Act of 1980 deregulated the railroad industry, railroads have improved safety, lowered shipping costs and invested $108 billion in infrastructure and equipment -- all while providing an efficient alternative to trucking, which relies on publicly financed highways and roads. And railroads paid more than their fair share of taxes. In 2002 alone, Illinois railroads paid more than $75 million in state and local taxes.

Government policy ought to encourage an expansion of efficient rail service, not create unfair and counterproductive ways to penalize it. Let's all tell Blagojevich to look behind some other tree. Robert E. Gallamore is director of the Transportation Center at Northwestern University.