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ATA moves away from backing fuel tax in skittish political election year environment

By John D. Schulz, Contributing Editor
April 14, 2014

With no fuel tax increase likely ahead of this year’s mid-term elections, trucking interests in Washington are moving to Plan B in their attempt to shore up funding for badly needed infrastructure improvements.
 
Or, more accurately, it might be Plan B, Plan C, Plan D…
 
The American Trucking Associations, which has long quietly backed an increase in the federal tax on fuel, is facing the political realities that Congress is not going to back any sort of tax increase in the weeks prior to the election.
 
The current two-year highway reauthorization bill expires Oct. 1. As it stands now, the Highway Trust Fund could have as much as a $19 billion funding shortfall as early as July. Without a solution to long-term funding, it appears likely Congress will simply vote for a short-term (six months to one year) extension of the current highway bill at current funding levels.
 
It has done this before. In fact, before it wrote the current two-year highway bill, Congress kicked the can down the road nine times with short-term reauthorization bills.
 
To prepare for the political reality that Congress will not vote to increase the federal tax on fuels—currently 18.4 cents a gallon on gasoline, 23.4 cents on diesel, unchanged since 1993—the ATA has formed a blue ribbon committee of executives chaired by C.R. England chairman Dan England to explore best options for funding beyond increasing the fuel tax.
 
It is badly needed. With a $19 billion annual shortfall in the Highway Trust Fund, that shortage balloons to nearly $100 billion if a five-year highway reauthorization bill emerges without any new sources of funding.
 
The ATA, along with the U.S. Chamber of Commerce, Federal Express and other Washington heavyweights, have been backing graduated increases in the fuel tax to put infrastructure spending on firm financial footing. But Congress, specifically the Republican-led House of Representatives, shows no appetite for raising any sort of tax in an election year.
 
This has frustrated ATA leadership. “Here we are as an industry offering solutions,” ATA President and CEO Bill Graves recently told a gathering at the Truckload Carriers Association annual meeting outside Dallas. “Tell us what we can do to pay more to shore up this user-funded system, and they won’t take us up on that offer.”
 
So ATA is asking some of its leading carrier members what the best alternatives are to raising the fuel tax. Everything appears on the table—infrastructure banks, toll increases, more private-public partnerships, proceeds from corporate tax levies, sales tax hikes, or any combination of the above.
 
“There’s a lot of food on the table but we need to know what is steak and what is anchovies,” ATA spokesman Sean McNally told LM. “We need hierarchy. That’s what this task force is going to do.”
 
The ATA committee “meets when they meet,” McNally says, mostly through telephone conferences. They are next scheduled to meet in person during an ATA leadership meeting in mid-May.
 
“We always want direction sooner rather than later,” he said. “We would like some direction soon but committee will have to evaluate all options fully and do their due diligence.”
 
McNally said the group is in the “early stages” of sorting everything out. Complicating matters somewhat is the fact that ATA in the past has opposed some of these options currently on the table, including vociferous opposition to creating new tolls on existing Interstate highways. ATA also has what McNally called “serious concerns” about private-public partnerships.

“What we need from our members is some direction,” McNally explained. “In the past it has been fuel tax first, fuel tax forever.”
 
House Transportation and Infrastructure Committee Chairman Bill Shuster, R-Pa., recently rejected that idea. The Obama administration is expected to put forth a legislative proposal that would fund a four-year transportation reauthorization plan from existing gas tax revenue and $150 billion in tax revenue from business tax reform. But Congress has shown little appetite for tackling tax reform in any serious way.
   
The Illinois Chamber of Commerce is among 30 state chambers calling on Congress to address the nation’s transportation infrastructure needs. Illinois Chamber President and CEO Doug Whitley Congress needs to understand their constituents want them to “move beyond the partisan posturing” common on Capitol Hill. He says federal funding is needed to help fix and maintain good roads.
 
In a letter to Congress, Whitley is calling for a five-year authorization of federal funds to ensure the solvency of the Highway Trust Fund with flexibility for states to fund and invest in the transportation infrastructure they need.
 
Ray LaHood, immediate past Transportation Secretary and now senior policy advisor at the global law firm, DLA Piper, said recently that transportation simply is not a priority for Congress right now in this election year. He predicts a short-term extension of the existing transportation bill, nicknamed MAP-21.

LaHood favors a mechanism that would index the current fuel tax to inflation. Then, LaHood would supplement that funding with increased tolls, a vehicle miles traveled tax, public private partnerships, more federally guaranteed loan program for transportation facilities and infrastructure, and more TIGER Grants (those awarded to the projects with the highest returns on investment).
 
But those are longer-term projects. In the short term, look for Congress to do the safe thing and punt. A six-month short term extension at current funding levels would get Congress past the mid-term elections, and perhaps give it time to address highway funding in a serious manner before the 2016 presidential election season.

About the Author

image
John D. Schulz
Contributing Editor

John D. Schulz has been a transportation journalist for more than 20 years, specializing in the trucking industry. He is known to own the fattest Rolodex in the business, and is on a first-name basis with scores of top-level trucking executives who are able to give shippers their latest insights on the industry on a regular basis. This wise Washington owl has performed and produced at some of the highest levels of journalism in his 40-year career, mostly as a Washington newsman.


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