Budget blues

The budget President Bush sent to Congress for federal spending in fiscal 2003, which begins next October, is a mixed bag for trucking.

The number that has drawn the most attention is a stunning $8.6-billion drop in highway spending. Because it is such a drastic change-more than 25% below the fiscal 2002 figure-Congress seems sure to revise it. Indeed, within two days the highway construction lobby had rallied around a bill introduced by infrastructure advocates in both houses of Congress that would restore about half the spending cut.

Still, even a $4-billion cut would be costly to trucking in two ways. First, some road and bridge projects beneficial to truck traffic would be delayed or canceled. (It's too early to say which projects would get iced.) Second, fleets that deliver concrete, asphalt, steel and road-building equipment would experience a noticeable downturn.

The amount of money collected from tax on fuel, as well as sales and use tax, now dictates the level of highway spending much more than in the past. The truck-buying binge of the late 1990s helped propel unexpectedly large highway tax receipts and, consequently, spending. But the recent dive in vehicle sales and slackening of diesel use has driven down receipts and spending.

Even if truck sales revive, another trend will slow highway spending: the increasing use of gasohol instead of gasoline. Unfortunately, the highway account of the Highway Trust Fund receives barely half as much revenue from a gallon of gasohol as from a gallon of gasoline (in contrast to the mass transit account, which receives the same revenue per gallon from both fuels). The budget proposes to extend the generous subsidies for the ethanol used to make gasohol from 2007 until 2010. That would perpetuate the slower growth of highway receipts unless Congress decides to make the highway account whole.

Few other tax proposals in the budget would affect trucking.

Aside from the plunge in highway spending, the budget contains scattered spending cuts and increases that have implications for trucking. Proposed higher staffing levels for the Customs Service and Immigration and Naturalization Service could translate into speedier border crossings. However, both agencies are facing stiff competition for trained personnel from the new Transportation Security Agency, which is luring thousands of law-enforcement officers into airport and aircraft security jobs. Conversely, proposed spending cuts for several regulatory agencies may mean few inspections and new regulations.

But the budget proposes a 5% increase for the biggest regulator of all, the Internal Revenue Service. Part of that funding would be used to beef up enforcement, including research into how to target audits more efficiently. This research could produce very intensive audits for a limited number of taxpayers, but should also mean that fewer compliant taxpayers are hassled unnecessarily.

The bottom line: Some people dismiss presidential budgets as campaign documents that are routinely pronounced “dead on arrival” by congressional leaders of the opposite party. In reality, many initiatives contained in the budget wind up being adopted by the time Congress finishes the 13 appropriations bills that turn a budget into law late in the year. Therefore, trucking executives whose freight comes from government spending decisions or who care about taxes, regulation or transit times can benefit from the glimpse into the future that the document provides.