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How Might The New Infrastructure Plan Impact Trucking?

During his recent State of the Union address, President Trump outlined his administration’s plan for a new infrastructure push. The reaction by trucking companies and interest groups has been in favor of the plan, if for no other reason than that it closely aligns with a plan that was leaked to the media in January.

The contents of that leaked document showed that some of the wishes of both the American Trucking Associations and the United States Chamber of Commerce – which included a request to raise the gas tax, ironically – were not in the draft plan. What was in the plan included wish-list items, though they did not outline specific methods for paying for these items.

The draft outlined:

  • 50% to specific infrastructure initiatives;
  • 10% for transformative projects;
  • 25% for rural infrastructure projects;
  • 7% for federal credit programs, and;
  • 5% for federal capital financing funds.

When the document first leaked, other interest groups took issue with some specific measures, including the suggestion that states should be given the right to put tolls on interstate highways and use those tolls to fund infrastructure improvements in the state. Even more troubling to trucking industry groups was the idea that states should also be allowed to “commercialize” interstate rest areas, essentially forcing truck drivers – or the motor carriers they work for – to pay for truckers to use state-run rest areas.

Trucking industry groups also took issue with the idea of placing new tolls on highways, calling them “new taxes” go more towards corporate profits and administrative costs rather than new construction. So, with the new plan now out in the public, does it match up with the leaked document, or are trucking stakeholders still up in arms about the plans potential proposals?

A Look at the New Plan

First, this is a big infrastructure plan. The final total could wind up coming north of a trillion dollars. Of course, the plan is for $200 billion of direct federal investment, but there is also a mention of another $1.3 trillion in state, local, and private funds to help complete the improvements. While the American Trucking Associations (ATA) President and CEO Chris Spear states the group was pleased that the new plan at least kick-started a new debate, but that was about as far as his pleasure went.

In a public statement, Spears stated that the plan, as it stands, “falls short of the President’s campaign promise to go big and bold, because it lacks the required federal investment. A proposal that relies on fake funding schemes like highway tolls and privatizing rest areas will not generate the revenue necessary to make significant infrastructure improvements.”

They also took issue with regarding commercialization of rest stops the government would essentially be allowed to hand-pick a company that would be allowed to operate with unfettered access to the market to operate state rest areas exclusively. Some on the other side contend that there may be a way for them to open up the market for true competition.

With the Highway Trust Fund (HTF) in danger of insolvency, many think addressing that first would help solve the problem a lot faster than the interstate tolls and rest stop privatization. The HTF is designed to finance federal spending on these types of improvements through fuel taxes and other relates excise taxes.

Other Groups Bring Up Highway Trust Fund

In another statement, the American Association of State Highway and Transportation Officials came out in defense of supporting the HTF. While they were less openly critical of the plan, this interest group did not hide its desire to focus more on fixing the funding issue with the HTF than they did with allowing interstate tolls or rest stop commercialization.

The Coalition for America’s Gateways and Trade Corridors took issue with the president funding model as well. They mentioned that freight network improvements should not happen on a piecemeal basis considering more than three-fourths of the nation’s freight movements travel between states. As a result, they advise direct investment from the federal government, as opposed to relying on states to apply tolls and privatization efforts at their leisure. Even more then investment, coordination is required to ensure improvements happen uniformly, rather than piecemeal.

The group went on to explain how the Commerce Clause of the Constitution comes into play. It specifically states that the government must support interstate commerce, and it must do so through investments in the movement of goods. They worry that without specific federal coordination, it will be hard to identify which investments will be put towards the most important freight projects. By treating all freight projects, the same, critical improvements might be overlooked for less critical projects.

A Closer Look at Tolls

So, what’s the big deal about tolls anyway? UPS Freight President Rich McArdle referred to toll collection through the lens of inefficiency. They contend there is no real way to track where the money is going once it goes into the hands of the investors.

UPS specifically worries about having access to an unrestrained flow of goods. Moving freight around the country while contending with various tolls. They admit that the rise in potential movement costs may be passed on to the customer, resulting in greater costs spread around over an undetermined amount of time.

The National Association of Truck Stop Operators (NATSO) pointed out that the administration of toll stations and associated upkeep and administration costs the government a lot more than administration of an increase in the fuel tax. They also contend that the toll road itself may represent sort of backhand tax by themselves, as costs are moved on.

Another Look at TIGER Grants

TIGER grants, though included within the administrations fiscal year 2019 budget request, did not appear to be included within the new infrastructure plan. Specifically called the Transportation Investments Generating Economic Recovery (TIGER) program, many trucking and highways advocacy organizations consider the TIGER program to be an excellent tool for managing the movement of goods and potential infrastructure improvements.

Another aspect of taxing interstate highways lies in the additional freight costs that shippers and others trying to move goods around the country will incur. Shipping and manufacturing companies will raise their rates to account for the new tolls. Once that happens, expenses will be passed on to those shipping the goods.

Issue was also taken with potential congestion and public safety concerns as traffic is pushed to secondary roads to avoid the potential tolls. With accidents involving heavy-duty commercial motor vehicles already a hot topic, some wonder whether pushing more trucks and cars onto side roads is a really good idea.

Will It Come to Pass?

No matter what your position on the plan itself, the question is: Will it actually come to pass? If it gets through Congress with the President’s party in charge, it won’t matter who has what opinion of the plan.

The plan itself is a 55-page document that refers to a “prime-the-pump” concept. It also aims to cut red tape and any other bureaucratic measures that continually bog down important projects. Many are saying that the proposal doesn’t stand very good chances in Congress.

With a federal budget set to go into deficit with big tax cuts and spending increases, many lawmakers are having trouble digesting the cost of the proposal. While Republicans may have some issues with the price tag, on the other side of the aisle are more in favor of using actual federal dollars, as opposed to a mixture approach.

Congress and trucking interest groups have long-supported raising the federal gas tax and tying it to inflation to keep the Highway Trust Fund, the actual plan released by the administration does not consider this specific funding measures.

The White House explains the project as promoting state and local interests. They go on to state that there is a belief of a maximization effect on the value of the taxpayer dollar. If the government throws in around $100 of the $200 billion proposed, they believe this will act as a spur states, municipalities, and private partners to increase their share and get the infrastructure jobs done.

In the end, with so many interest groups arrayed against the proposal, and the federal government looking at a deficit that could wind up raising long term interest rates in a big way, many don’t believe there is much chance of the plan coming to reality, but perhaps a scaled down version of it could be re-written and sent to Congress for approval.

Whatever happens, get ready for a big battle, both on and off Capitol Hill, at the White House, and inside the halls of trucking companies and advocacy groups. Sides are being taken and it is still anyone’s guess as to whether trucking companies will wind up paying more tolls down the road, a higher gas bill, or nothing at all. Here at the QuickTSI blog, we don’t take a side, we just report the news.

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