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What the future holds for infrastructure

July 30, 2008
Yesterday’s announcement by U.S. Transportation Secretary Mary Peters that the Bush Administration would reform the nation’s transportation programs included promises to address congestion, reward innovation and consolidate federal programs

Yesterday’s announcement by U.S. Transportation Secretary Mary Peters that the Bush Administration would reform the nation’s transportation programs included promises to address congestion, reward innovation and consolidate federal programs.

However, Peters also indicated the government will look to “take advantage of the over $400 billion available worldwide for infrastructure investments from the private sector,” a highly contested and controversial issue throughout the transportation industry. She also said that the administration hopes to remove restrictions on congestion pricing too.

"Without a doubt, our federal approach to transportation is broken,” Peters said. “And no amount of tweaking, adjusting or adding new layers on top will make things better. It is time for a new, a different and a better approach."

The proposal stresses increased flexibility for state and local leaders to more efficiently invest in their communities in accordance with their needs. This will partly be accomplished through the “Metropolitan Innovation Fund,” which will reward cities that mix “dynamic pricing of highways, effective transit investments, and new traffic technologies,” according to Peters.

Peters also called for a streamlining of the federal review process for new highway and transit projects, noting that it currently takes an average of 13 years for such initiatives to move from the drawing board to reality.

“Under our new approach, planners will no longer have to slice and dice every federal dollar into niche programs that do little to improve commutes,” Peters said. “Instead, state and local officials will be able to make investments based on what works and what gets people where they need to go as quickly and as reliably as possible.”

However, while there is little debate that U.S. infrastructure could use additional funding, some of the methods Peters called for to raise capital are highly controversial, including a reduction in fuel taxes and an increase in raising capital through other means.

The plan proposes allowing communities to finance transportation projects through private means—known as public-private partnerships (PPP)--on top of federal or state tax revenue, or by implementing congestion pricing that would charge vehicles more for entering selected areas at times when there is heavier traffic.

A study conducted earlier this year by the Government Accountability Office (GAO) stated that PPPs may help state and local governments obtain new facilities and improve current facilities while sharing the risk with the private sector. However, it said it is likely tolls will increase to a greater extent and the public sector will lose a measure of control if it teams up with private companies.

While the Bush Administration has been a proponent of PPPs, the Owner-Operator Independent Drivers Association (OOIDA) and the American Trucking Assns. (ATA) have opposed them. ATA president & CEO Bill Graves has stated that privatization will result in Americans paying more while receiving less. “The Administration is on its way out and is simply hanging a ‘for sale’ sign on our highways as a last ditch effort to reward their friends on Wall Street,” said Todd Spencer, executive vp of OOIDA.

“We are hopeful the next Administration and Congress will have a more reasoned, positive view of transportation and infrastructure and do more with their roles as leaders in making sure needed transportation improvements are made and highway users and taxpayers are treated fairly,” Spencer added.

Most Congressional Democrats also oppose the initiative. James Oberstar (D-MN), Chairman of the House Committee on Transportation and Infrastructure, said the proposal contains “the same uninspired and uninspiring policies that this Administration has offered over the past five years: toll it, privatize it, lease it, sell it, or congestion-price it.

“The Administration’s plan, presented during its waning months, calls to mind the concept of Mortmain, the dead hand, reaching out from the past to affect the future,” Oberstar added. “It is obvious that the Administration remains blinded by ideology and a lack of a cohesive vision. It offers nothing to ensure a sustainable, long-term, intermodal, national transportation system.”

Related story: Fed Transport Plan Calls for Tolls, Private Funding (Outsourced Logistics)

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