INFRASTRUCTURE CONFUSION CONTINUES

Prior to President Trump’s speech to Congress, many of us were looking forward to hearing more about his plans for improving the infrastructure. Unfortunately, he simply restated what he had said before, “I will be asking Congress to approve legislation that produces a $1 trillion investment in the infrastructure of the United States – financed through public and private capital – creating millions of new jobs. Crumbling infrastructure will be replaced with new roads, bridges, tunnels, airports and railways gleaming across our beautiful land.” – 139 words out of a 5006-word address.

Okay. By now, most of us are aware of our deteriorating infrastructure and the billions of dollars it would take to bring highways and bridges up to acceptable standards. But still, we have not seen a firm plan for generating the necessary funds. Many industry organizations and experts, including the U.S. Chamber of Commerce, feel that the federal fuel tax should be increased. The fuel tax is the primary source of revenue for the Highway Trust Fund, but the $.184 per gallon tax on gasoline and the $.244 on diesel fuel have not been increased since 1993. Whenever an increase has been considered it has sparked a political firestorm that Congress was reluctant to walk into.

Both Trump and former president Obama have spoken several times about “public/private” partnerships (referred to as P3s) which most feel can be translated into “tolling our interstates”. Congress banned tolls on all interstates when the 46,000 mile system was created in 1956, although a few exceptions have been made in the last few years. Generally speaking however, only those highways that already had tolls were allowed to keep them. These comments from the administration have been a major cause of concern for many, and already the “fors” and “againsts” have solidified their positions.

A number of influential firms and organizations, such as the membership of the Alliance for Toll Free Interstates (AFTI) which includes FedEx, ATA, UPS, and others are opposed to tolling. The ATA in particular, has long held the position that the fuel tax should be the primary source of funds for the highways. AFTI cites the failure of several attempts at tolling interstates, as well as a number of other perceived inefficiencies. According to the Transportation Research Board of the National Academy of Sciences, a typical toll facility spends 33.5% of its revenue on administration, collection, and enforcement. The administrative cost of collecting a fuel tax is about 1% of revenue. Another I believe, legitimate concern is that we would be exposed to double taxation in that drivers would pay tolls, state taxes, and some federal taxes on fuel. Already, several states have increased their own fuel taxes to fund improvements that the federal government has not made.

On the other side, we have the International Bridge, Tunnel, and Turnpike Association (IBTTA).

IBTTA cites the ability of toll ways to generate revenues to support their operations and investment needs. The country’s 5000 miles of tolled highways, tunnels, and bridges generate over $12 billion in annual revenues. In 2012, in testimony before the House Committee on Transportation and Infrastructure, the organization took a clear and strong position, stating, “While MAP-21 allows for tolling of new Interstate capacity, IBTTA strongly encourages the committee to consider allowing the expansion of this funding tool to include existing mileage on the Interstate System.” I am sure their position has not changed.

Personally, I cast my lot with ATA, the U.S. Chamber, and the other proponents of an increased fuel tax, and believe that some reasonable increase would be a much more fair and equitable solution. Admittedly, the resulting revenue would not be enough to completely solve the problem, but it would be a good start. Whatever the result, the issue is surely to generate a contentious debate within the Congressional and state legislature walls when it comes up for discussion.

Written By: Clifford F. Lynch