Congress must act this year to “sustain” the federal-aid surface transportation program by enacting additional economic stimulus through transportation investment and reforming the taxes that support the nation's highway and transit programs, according to John Horsley, executive director of the American Assn. of State Highway and Transportation Officials (AASHTO).
Horsley, who presented his two-prong solution in keynoting the Transportation Research Board's annual Chairman's Luncheon yesterday, is retiring next month, after leading the influential association for 14 years.
The stimulus Horsley seeks would come in the form of legislation already introduced that would authorize a $50-billion Transportation Regional Infrastructure Project (TRIP) bond program. Under the bill, which is co-sponsored by Sen. Ron Wyden (D-OR) and Sen. John Hoeven (R-ND), every state would receive $1 billion over six years to be invested in transportation. Horsley said this U.S. Treasury investment would be paid through U.S. Customs fees and no debt would be incurred by the states.
"This program would create thousands of jobs, stimulate economic recovery, and improve mobility in every state," said Horsley.
His second prong is tax reform that he said was needed to restore solvency to the Highway Trust Fund as well as to reduce the federal deficit by $150 billion
Horsley recommended that Congress convert the "cents per gallon" federal excise tax on fuels to a sales tax on fuels. He said such a move could avert a “looming transportation fiscal cliff.” He explained that forecasts show that the federal Highway Trust Fund could become insolvent by October 2014—and that would cut annual federal highway investment from $41 billion to $6 billion and annual transit investment from $11 billion to $3 billion.
Under Horsley’s proposal, sales tax rates on fuels would be set at a level that restores solvency to the Highway Trust Fund. He said the fund is currently spending $15 billion more annually than the revenues it receives. But his proposed change would support spending on highways and transit over the next six years at $350 billion. If the program were limited to expected excise tax revenues, it would have to be cut to $236 billion, he added.
"Fully supporting the program through highway user fees, rather than through transfers from the U.S. Treasury, would reduce the federal deficit by $150 billion over 10 years," Horsley said. "The cost of the reform to taxpayers would be less than $1 per week, per vehicle."
Sen. Mark Warner (D-VA) has expressed interest in the tax-reform proposal, according to AASHTO, which is working with the Americans for Transportation Mobility Coalition led by the U.S. Chamber of Commerce to develop bipartisan Senate support for the measure.
Horsley, who has led AASHTO since 1999, officially retires February, 1. Frederick G. "Bud" Wright was named AASHTO's next executive director last November.