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Oregon House member proposes gradual fuel tax increase

By Jeff Berman, Group News Editor
December 05, 2013

With available funding resources to augment transportation infrastructure in the United States largely depleted or non-existent to a degree, one constant going back to 1994 has been the lack of an increase in the nation’s federal gasoline tax.

This tax has held steady at 23.4 cents for diesel and 18.4 cents for gasoline and represents roughly 90 percent of Highway Trust Fund net revenues, which are allocated for federal highway, transit, and highway safety programs. But the amount of money being collected through this tax is dwindling, with the Congressional Budget Office noting the HTF will have a $15 billion shortfall by 2015.

Earlier this week, Rep. Earl Blumenauer (D-OR) introduced legislation that would gradually increase the existing federal fuel tax levels by 15 cents over the next three years.

The bill, H.R. 3636, The Update, Promote, and Develop America’s Transportation Essentials (UPDATE) Act would take the recommendations of the Simpson-Bowles report, which was issued by President Obama’s bipartisan commission charged with reducing the national deficit in November 2010 and drafted by Alan K. Simpson, former Republican Senate leader, and Erskine B. Bowles, White House Chief of Staff under Bill Clinton.

Simpson and Bowles recommended raising the tax by 15 cents would “dedicate funds toward fully funding the transportation trust fund and therefore eliminate the need for further general fund bailouts” of the Highway Trust Fund, which has occurred in recent years to keep the HTF solvent by transferring more than $50 billion of General Fund revenue to the HTF. And Blumenauer is subsequently calling for a 15-cent increase in the federal fuel tax and indexing it to inflation so that it would remain intact as a viable and sustainable revenue source.

“Instituting a reasonable gas tax increase now provides the revenues Democrats say they want with a form of a user fee which historically has been acceptable to Republicans including Ronald Reagan, who increased the gas tax by a nickel a gallon in 1982,” said Blumenauer in a statement. “Addressing the infrastructure deficit, stabilizing transportation funding, and helping America’s all-too-slow economic recovery is critical if we want a livable and economically prosperous country in the years to come.”

Along with Simpson-Bowles, the UPDATE Act of 2013 also leverages recommendations from the National Surface Transportation Policy and Revenue Commission, which called for increasing the gasoline tax by 25-to-40 cents and the diesel tax by 15 cents and indexing both rates to inflation, and the National Surface Transportation Financing Commission, which called to increase the gasoline tax by ten cents and the federal diesel tax and commensurate taxes by 15 cents and index to inflation.

This bill was positively received by the American Trucking Associations (ATA). ATA President and CEO Bill Graves said that underinvestment in highways is an enormous burden on the trucking industry, raises the cost of moving freight, and undermines the reliability of a logistics system that is critical to the country’s competitiveness.

The UPDATE Act of 2013 was endorsed by C. Randal Mullett, vice president, government relations and public affairs, for transportation and logistics services provider Con-way Inc.

“This is a good thing,” said Mullett. “We have been supportive of increasing fuel taxes for a long time. The highways are our assembly line, and the only way to get improvements for them is for somebody other than us to make them. It is a very unusual situation for a business like ours to be in. Improvements in highway infrastructure help in many ways for the goods we sell as a country and helps the U.S. be more competitive globally. And a better highway network improves mobility in many ways and has many ancillary benefits.”

While this bill makes sense from a policy point of view, Mullett cautioned it may not make sense from a political point of view. 

The reason, he said, is that there is not an opportunity in the current Congress to pass a pure fuel tax bill, although there is a general agreement that a more sustainable way of paying for infrastructure is needed because concerns like the trucking industry, builders, and others agree that a fuel tax increase is the most direct and equitable way for business and consumers to address it. 

“The worst case scenario if this bill does not pass is it will spark a much broader conversation about funding in tine to be potentially included in some form of funding for highways in the overall reform deal and budget deal,” he said.

Mike Regan, Chief Relationship Officer at TranzAct Technologies, took a more blunt view, saying this bill has “no chance” of passing, because members of Congress in large, rural communities would not vote for anything that imposes a direct cost on regular people who use regular roads.

“The only viable alternative to increasing the federal fuel tax that will even get a modicum of support will be tolling existing interstate highways, as long as there is a provision that says the money must be used for the maintenance of the road being tolled,” said Regan.

Tom Nightingale, president, transportation logistics, for 3PL Genco said the important thing is that the nation is talking about our disgracefully underfunded highway system. 

“Transportation built this great economy to what it is today and the reality is that our current highway conditions have become yet another drag on truck productivity,” he said. “Anything that harms truck productivity has a financial impact on the consumer by driving up prices.  The more that we can do to keep our transportation systems flowing the way they were designed will translate to lower costs for consumers.”


About the Author

Jeff Berman headshot
Jeff Berman
Group News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. .(JavaScript must be enabled to view this email address).

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