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Action Urgently Needed on Highway Program, Says ATA's Graves

March 3, 2011

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As Congress passed a seven-month extension of the federal highway program, American Trucking Associations President and CEO Bill Graves called for a robust, multi-year program - and acknowledged that something less than that might have to do.

"Our failure to get our arms around transportation infrastructure needs of this country will be a significant drain on our collective quality of life and our nation's economic competitiveness," Graves said in remarks Wednesday
to the American Association of State Highway and Transportation Officials.

But the country probably is in a hold-tight pattern on spending for the next couple of years, he added. "We're just not going to see the massive expansion of investment, whatever the source of funding might be, that we'd like to see. But we are teetering on the brink of some serious consequences if we don't start … conveying to public policy makers that it's time to make our concern into a national priority."

The day Graves was speaking, the House passed and sent to the Senate a measure that would extend the current highway program until the end of the fiscal year, Sept. 30. The Senate cleared the measure yesterday and sent it to President Obama, who is expected to sign it.

This is the seventh short-term extension of the program since it officially expired in September, 2009.

Graves's message resonated with the state transportation officials, who need long-term funding stability in order to plan and execute complex infrastructure projects.

"The uncertainty created by the lack of a multi-year federal commitment to improving America's highway and public transportation facilities will contribute to a slowdown in transportation development activity in many states," said AASHTO Executive Director John Horsley in a letter to Congress this week.

How to pay

The call for more resources is a message that congressional and administration leaders hear but are unable to act upon. Neither Rep. John Mica, R-Fla., chairman of the Transportation and Infrastructure Committee, nor Transportation Secretary Ray LaHood supports an increase in fuel taxes.

"An increase in the gas tax not on the table," LaHood told AASHTO, repeating a point he has been making for two years. "With unemployment at 9 percent, the president has said he will not increase the gas tax."

The Obama administration has offered what LaHood described as a "bold" six-year reauthorization plan that envisions increased spending on infrastructure and passenger rail, consolidation of federal transportation programs and creation of a $30 billion National Infrastructure Bank.

The administration has not yet said, however, how it plans to pay the $556 billion tab - a 60 percent increase over the last reauthorization. Absent a fuel tax increase or some other funding source, the Highway Trust Fund will not cover it.

What the administration says is, "The president will work with the Congress to ensure that this funding boost is offset and does not increase the deficit."

Mica told AASHTO officials that his plan is to spend only what is available in the Highway Trust Fund, plus money that has been authorized but not yet spent. He said this unspent money could amount to $40 billion or more, maybe even as much as $100 billion, although close observers of the issue note that these types of funds may not be easily available.

Mica's fundamental message is that the highway program will have to make do. "We're broke in Washington," he said. "It's not like you can print the money. The days of just picking the money off the manna tree are over."

Reauthorization progress

Mica's committee is working on its version of the reauthorization bill. He has held hearings across the country, some of them in venues that highlight the interests of the minority members of the committee, such as Democratic Rep. Nick Rahall's home town in West Virginia. He also held a joint hearing in Los Angeles with Democratic Sen. Barbara Boxer, who chairs the Senate Environment and Public Works Committee, which is working on its version of the bill.

There is considerable pressure to get a bill done quickly, since presidential politics will likely overwhelm the process starting next fall.

"This is the year," LaHood said. "If we don't get something significant done this year it will be difficult to get it done next because it's an election year." He said he wants to have a six-year bill on President Obama's desk by the August recess.

Mica has said wants to first pass reauthorization of the Federal Aviation Administration program, which is currently on its 17th extension, and then move on to the transportation bill.

Pushing for a Fuel Tax

The troubled state of highway finances provokes a whirlwind of questions, some having to do with alternative forms of fund-raising, and some with alternatives to the traditional six-year measure.

ATA's Graves made the point that trucking interests support fuel taxes as the best and cheapest way to raise money. "We know (the fuel tax system) works," he said.

Tolling and public-private partnerships, on the other hand, are less efficient. The administrative costs are higher, and if there's a private party involved in building or maintaining the project, there's the additional cost of his return on investment, he said.

"It feels to me like, as a (toll) user, that I am being asked to pay more than I otherwise would have needed to pay in order to accommodate our public officials' unwillingness to show some political courage," he said.

On the other hand, he believes that the half-loaf of tolling and partnerships may be better than no loaf at all. "But I think it's fair to make clear that the most efficient and conservative funding method for infrastructure is the fuel tax," he said. "That's a message that we intend to deliver."

ATA strongly wants a long-term program, but given the political climate in Congress that may not be possible, Graves acknowledged. One alternative might be a short-term arrangement that puts programmatic reforms in place at the Department of Transportation before seeking a longer-term bill that includes a tax increase, he suggested.

"Given that they don't have any money maybe they can do a short-term deal that reforms the program and then try to sell the tax increase," he said.

"We're kidding ourselves if we don't get on with this. It takes real money to build stuff and we've got to start finding some of it."

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