User Fees, Fuel Taxes And Tolls… OH MY!
Little Rock, Arkansas – Every one agrees we have a problem. U.S. infrastructure is aging and underfunded, yet, consensus can’t be reached on the best way to fix it.
The American Transportation Research Institute (ATRI) released the findings of its annual infrastructure study, Cost of Congestion To The Trucking Industry, back in October of last year. It reported that congestion cost the trucking industry a total of $74.5 billion and 1.2 billion hours of productivity.
The study put this in perspective by pointing out this is equivalent to 425,533 trucks sitting idle for an entire year and cost each truck on the highway an average of $6,478 throughout the year in 2016.
Transportation Nation Network (TNN) examined the human cost of such congestion dysfunction back in December. You should read it if you haven’t already HERE. In fact, TNN views this as such a big issue, we ranked it #3 on our list of Top Troubling Trucking Trends Likely To Continue In 2019.
Now, say that three times fast!
Anyway, such economic and human costs should be intolerable, right? Then why can’t we agree on a pathway to fix it?
As the Highway Trust Fund (HTF) languishes, state leaders are increasingly looking for ways to address funding for state roads. Just this week Virginia State Senator Mark Obenshain ignited furor in the trucking community when he boasted that the burden of a new tolling measure (SB 1716) along the 325-mile stretch of I-81 that runs through the state, would fall “primarily on heavy trucks.”
You may also remember last year when Indiana Governor Eric Holcomb unleashed the ire of many in the trucking community when he approved a plan to raise truck-only tolls a hefty 35% along the 157-mile stretch on I-90.
OOIDA argues it is “discriminatory” to raise the tax on trucker’s passing through the state without imposing the higher tax on those who live in the state. “Thus, the new tolling scheme discriminates against interstate commerce,” the complaint states.
Another example is the controversial “RhodeWorks” truck-only tolling program enacted by Rhode Island legislators. Rhode Island Governor Gina Raimondo unveiled the $5 billion program setting off a firestorm of criticism by trucking industry stakeholders.
The American Trucking Associations and its Rhode Island chapter, along with Cumberland Farms, M&M Transport and New England Motor Freight, have challenged the new tolls in Federal Court in Providence. It’s a case destined to be decided by the highest court in the land and there is much riding on the outcome.
Additionally, the American Trucking Associations is warning Virginia Governor Ralph Northam and state lawmakers in a new letter sent this week to “think carefully about these issues before Virginia takes any further steps in the direction it appears to be heading, and to bear in mind that the auto-only annual pass option will be vulnerable to a legal challenge if it moves forward.”
Truckers aren’t thrilled with the tolling madness either. TNN’s Facebook page was flooded with comments after posting the details of State Senator Obenshain’s plan. Read a sampling HERE.
Stephanie Kane with the Alliance of Toll-Free Interstates (ATFI), which launched a new campaign, www.keeptollsoff81.com, vehemently opposing the new measure, pointed out just how inefficient tolling is. “It cost 8-11% of every dollar collected just for collections, just for collections, that’s things like credit card fees and processing and that doesn’t even take into account personnel benefits or equipment,” she said.
Fuel Tax Fallacy
The National Academies of Sciences, Engineering and Medicine released a report last month titled “Renewing the National Commitment to the Interstate Highway System.” The purpose of the report was to take a detailed look at the current state of U.S. infrastructure and what the future will look like if it does not become a funding priority.
The essential conclusion of the report was that without a significant increase in funding the future is dire. The report says current levels of state and federal spending for interstate projects will need to increase by 50%. Add to that an additional $30 billion per year just to keep up with maintenance and repairs.
The report recommends interstate project spending levels be increased from its current level of $25 billion/year to $70 billion/year for the next 20 years. Of course the experts who published the report are also kind enough to recommend the solution to the funding quandary.
Raise fuel taxes they say. That’s right. They believe Americans should pay more at the pump.
Okay, well the report must then indicate that all HTF monies are already being allocated to repairing roads, bridges and interstates. The report must also say that if only more fuel tax revenues, which make up approximately 90% of the HTF, were coming into the HTF then the U.S. could once again lead the world in infrastructure development, right? Right?
Wrong again. Now get this… in the same report these so-called government experts propose increasing fuel taxes to better fund the HTF, they also acknowledge that only about 30% of the monies in the HTF are actually spent on highway projects. You can’t make this stuff up!
Let’s see, so they are proposing Americans cough up more money every time they fill up. Then, give it to the people (Congress) who have proven to be irresponsible with it for decades. Yep. That’s the answer they say.
Don’t worry though. The report also calls for the enactment of a provision that would require Congress to appropriately spend the new monies. Doesn’t that make you feel better as a taxpayer? Yeah, us either.
User Fee Fight
The Competitive Enterprise Institute (CEI) sent a letter to Congress last Thursday asking lawmakers to get onboard with a plan to implement a voluntary nationwide user-pay pilot program, for both cars and heavy-duty trucks. CEI argues raising fuel taxes will simply not be enough to adequately fund needed infrastructure projects as vehicles become more fuel-efficient.
“As Congress begins considering the future of the Highway Trust Fund, its top priority should be restoring the longstanding users-pay/users-benefit principle,” the letter states. “Further increasing the reliance of the Highway Trust Fund on revenue streams untethered from use, as well as general fund bailouts, would not only fail to address the core fiscal challenges of the present, it would threaten the future health of America’s highways.”
CEI has signaled they believe leaders of the House Transportation and Infrastructure Committee, Chairman Peter DeFazio and Ranking Member Sam Graves, are both willing to considering a road usage charge system which could eventually phase out and replace fuel taxes.
However, quite a few challenges are ahead for such a plan. The biggest of which are the privacy concerns and possible legal challenges of such a system, not to mention the cost of enforcement and equipment.
According to a report by Freightwaves last week, CEI transportation policy expert Marc Scribner, acknowledged the disparity in cost burdens between independent trucking company owners and bigger fleets was going to be an issue.
“We’ve already seen the divide between large carriers and owner-operators over the electronic logging device mandate, with equipment cost burdens significantly higher for independent owners than for fleet owners,” Scribner said. “That’s obviously something to look at in the future.”
More Of The Same
One area of hope many had entering the Trump presidency was that a grand bargain on infrastructure between President Trump and Democrats could be struck. Much of that hope quickly dimmed though.
The President and the GOP favored a public/private partnership approach to funding infrastructure projects. The Democrats demanded an approach centered around creating new taxes and raising existing ones.
As a result of more gridlock, Republicans moved on to other priorities such as tax relief, health insurance reform and criminal justice reform. As Democrats have now regained the legislative majority in the U.S. House, it is unclear how aggressively Speaker Pelosi and her caucus will move on drafting an infrastructure plan that could pass the Republican-held Senate and be signed by Mr. Trump.
Where does that leave us? Most likely having to endure more of the same. Oh my!