High stakes

March 10, 2014
Tempted to ignore all the talk about highway funding?

Highway funding isn’t a topic that’ll make you the life of the party. Even though your livelihood is directly tied to functioning roads and bridges, it takes a conscious effort to dig into anything addressing the topic of maintaining a healthy transportation infrastructure.  That term alone is enough to bring your head crashing down on your desk. 

Yet not a day has gone by these last few months without studies, white papers, blogs, proposals or other carefully crafted position documents clambering for attention.  And then, of course, there are the meetings, conferences, symposia and other public forums filled with experts and their solutions to what looks like a chronic shortage of money when it comes to building, repairing and maintaining our highways.

What’s generating all that intense interest and discussion?  In a word, money.  Lots of it.  When Congress finally gets around to passing our next transportation reauthorization bill, federal spending tied to the Highway Trust Fund will probably continue at the current level of $54 billion a year.  And as many are quick to point out to anyone who will listen, even that sum falls far short of what’s needed to address years of deferred maintenance and growing congestion.

The central issue heating up these discussions is that reauthorization bill.  Known as MAP-21, the current legislation spelling out federal appropriations for transit spending expires in about seven months.  Historically, these reauthorization bills, which provide the authority to collect and spend federal fuel taxes for transit infrastructure purposes, have proved difficult to negotiate and often relied on numerous extensions before an acceptable new one could be passed.

This time it’s going to be even more contentious.  Even without the political maneuvering around upcoming Senate elections, the money collected by the federal fuel tax, which hasn’t been raised in 20 years, is projected to fall far short of what’s required just to maintain current spending levels. Depending on who you talk to, that shortfall could be as much as $100 billion over the next six years, and that’s before addressing any increase in highway and transit spending.

Given those high stakes, there are many interested parties who have some strong ideas on how that money should be raised and spent.  And as they jockey for position, the volume is only going to increase.

The simplest solution is to just increase the federal tax on gasoline and diesel.  A bill to hike the tax by $0.15/gal. and then index it to inflation was already introduced in the House last December.  It quickly attracted support from heavy-hitters, including the U.S. Chamber of Commerce, the AFL-CIO and the American Trucking Assns.; however, the chairman of the House committee charged with creating the next reauthorization bill has labeled that increase a non-starter.  Instead, he’s come out in favor of replacing fuel taxes with a vehicle-miles tax augmented by higher taxes on energy exploration and a tax scheme to bring back corporate profits earned overseas.

Other revenue ideas being floated by various interest groups include new tolling authority, which is favored by the association representing bridge and turnpike agencies, and new funding mechanisms that would make it easier for government entities to raise bond money for transportation projects.  Groups representing state highway authorities and the construction trades are less specific about how the funds should be raised, but quite vocal that they should be.  And many states have decided not to wait for slow-moving federal action, instead moving ahead with their own highway funding plans.

So I suggest you get a strong cup of coffee and start digging into all that highway funding material coming your way.  In the end, it’s your money­—and your business—they’re talking about.

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