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What’s Going On With Highway Funding?

The House Committee on Ways & Means recently held a hearing to discuss transportation and highway funding issues. First up to bat was the trucking industry, and they had some concrete ideas on what needs to be done to fix the highway funding problem.

American Trucking Associations (ATA) president and CEO Bill Graves outlined a dire picture for the committee. According to his statistics, highway congestion alone cost the trucking industry over $9 billion in 2013. This equates to more than 141 million working hours, or the equivalent of 51,000 drivers sitting idle for one year.

The point of showcasing this information was to make the committee members aware that the infrastructure debate goes far beyond the mere matter of commerce. His words were meant to convey there are serious economic consequences to inaction. But what does trucking propose?

Trucking’s Solution

As it has in the past, the ATA is advocating for an increase in the gas tax as a means for fixing the federal highway fund. Graves wound up telling the committee point-blank that whether they wanted to or not, they would have to eventually raise the gas tax.

Graves said that “Congress must find the courage to admit what I believe it already knows,” which is that raising the tax is the only option. Bear in mind this from an industry that paid more than $16 billion in gas taxes in 2013 alone.

While this plea may seem unlikely, Graves made it perfectly clear why he was in favor of raising the gas tax. “A staggering lack of investment in our nation’s highway system has produced a $740 billion backlog in funding required to address deteriorating highways and bridges,” he said.

Stark Numbers

The committee hearing was sobering one. A wealth of numbers were presented to paint a picture of America’s infrastructure in stark disrepair.

According to Graves, current highway capital investment comes in at around $88 billion per year, and that is for all government agencies combined. Compare that to a defense spending number of $656 billion. What the highways really need is anywhere from $120 billion to $144 billion.

The problem lies in uncertainty. Because the highway fund has only been propped up by brief short-term extensions, states’ efforts to carry out key infrastructure projects has been delayed. Prior to the 2014 extension, nine states rejected projects worth over $365 million due to federal investment uncertainty.

Funding Uncertainty

At the root of the ATA’s argument is the current federal gas tax of 18.4 cents a gallon and 24.4 cents for diesel. The last time the tax was raised was in 1993. Over time it has failed to keep up with inflation. This is why Congress has been forced to find improvisational methods for solving cash problems.

This funding uncertainty ultimately causes delays in vital construction projects and raises costs for projects that are currently in the works.

The hearing saw witnesses running through a number of ways to properly fund roads and bridges, including tolls, taxes on miles driven, oil taxes, and special public-private partnerships that figure out innovative ways to improve infrastructure without having to go through the general fund.

Even so, there are flaws with each. Tolls can be uneven and inefficient. Furthermore, it still isn’t practical to try and tax mileage on hundreds of millions of vehicles. While partnerships have some promise, taxing oil has several downsides.

What’s Next?

According to federal data, 19 states have presented concerns regarding the feasibility of future transportation projects. According to the Department of Transportation’s own numbers, up to $1.1 billion in projects are in danger if there is a disruption in federal funding.

Seven states have already reported delaying or canceling infrastructure projects valued at over $1.6 billion. Put in a more understandable perspective, this represents more than 45,000 lost jobs.

John Cox, director of the Wyoming Department of Transportation, noted that the Highway Trust Fund had “provided stable, reliable and substantial highway and transit funding” until 2008. Then, the flow turned to a trickle.

In the end, whether it be through fuel taxes or some other means, there needs to be a real, long-term solution to the impending highway fund crisis. Only time will tell how it will play out.

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