Hope in Freight as Infrastructure Reform Stagnates

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This past March, we addressed the current infrastructure reform issue and the Highway Trust Fund (HTF), set to run out this summer. Two months later and frighteningly close to the deadline–estimates range from May 31 to as late as August–there is still no plan in motion to restore infrastructure funding nor to fix antiquated and crumbling transportation systems.

A new bill, introduced in the House this past March, is focusing on our country’s robust freight transportation system as the key to infrastructure expansion, upgrade, and repair. The new bill, “Economy in Motion,” focuses on repairing and improving the nation’s freight transportation system through the creation of a self-sustaining designated revenue source, a national freight trust fund. Supporters of the new bill advocate that freight infrastructure reform will also address national multi-channel infrastructure needs.

Could freight be the key we need to finally turn over the legislative engine? This is what all we from auto transport company Montway are asking.

How It Stands (or Doesn’t) Today

Moving Ahead for Progress in the 21st Century (MAP-21),” our transportation law passed in 2012, will expire May 31, 2015. According to a White House report (July 2014), investment in U.S. infrastructure stands at 2 percent of GDP, the lowest level in over seventy years. The Highway Trust Fund is supported by revenue from a 18.4 cents/gallon gas tax that has not been adjusted since 1993. The gas tax brings in about $34 billion each year, but HTS on average funds $50 billion per year for transportation projects.

Short-term funding fixes over the years have fallen far short of the true overhaul need, leaving us with almost one-third of roads in poor condition, a quarter of our bridges functionally obsolete, congested roadways, and increasingly scarce and underfunded public transportation. In 2013 the American Society of Civil Engineers assigned America’s infrastructure a D+ rating. Secretary of Transportation Anthony Foxx recently stated he does not necessarily oppose another short-term fix from Congress to keep the Highway Trust Fund solvent, but only if the “patch” connects to a greater long-term plan.

The federal highway program has provided 52 cents of every dollar invested by state DOTs in highway and bridge improvements for the past decade. When the HTF runs out, payments to state and local governments from DOT will stop. Stakeholders fear this looming threat has already impacted the summer construction season.

Driving Dollars, Spinning Wheels

While the voice of the issue has risen in strength, no more than talk has surfaced and is only leading us in circles. Whether it’s taxing gas or overseas earnings, there’s an aggressively opposing argument to every proposal.

President Obama has called for a passage of a six-year transportation funding reauthorization plan as part of the 2016 FY budget. The Administration has put forth a bipartisan bill twice, GROW AMERICA (Generating Renewal, Opportunity, and Work with Accelerated Mobility, Efficiency, and Rebuilding of Infrastructure and Communities) Act. First presented to Congress in April 2014, it was revised and resubmitted in April this year. The plan designates billions in funding for the Department of Transportation (DOT), supplementing current funds from the Highway Trust Fund in combination with a one-time repatriation tax on (currently untaxed) U.S. corporate earnings accumulated overseas.

The bill has barely begun to move through Congress, however, hindered by debate over the proposed budget amount, funding source, and whether the plan will do enough to keep the HTF solvent in the long-term. In response, Foxx said that the hope is that visible infrastructure improvements will motivate lawmakers to secure a longer-term solution.

The American Road & Transportation Builders Association (ARTBA) wants to increase federal fuel taxes by 15 cents and offset the increase with a tax rebate for middle and lower-income Americans. Despite lawmakers reluctance to ask consumers to pay more at the pump, the group argues that costs from shoddy infrastructure are already being passed on to the consumer.

ARTBA argues that their six-year highway and mass transit capital investment program, “Getting Beyond Gridlock,” presented this past March, would raise enough funds to support the program for at least ten years with no net tax increase for middle- and lower-income Americans. American Truck Association Chief of Legislative Affairs Christopher Spears says they’re sticking to their message, despite recognizing that hiking fuel taxes is not an easy battle. “There must be a political appetite in the House and Senate to act on it,” he said. The truck lobby also doesn’t want to change the way highway infrastructure is funding, citing, “user fees” paid at point of purchase, i.e. a fuel tax, as the most simple and workable system for funding.

Transportation and Infrastructure Chairman Bill Shuster (R-PA) doesn’t believe passing a fuel-tax-hike will be possible, however, he has argued that repatriation is not a timely solution, either, on the eve of the hourglass running out.

Now a new bipartisan bill introduced in March by U.S. Representative Alan Lowenthal (D-CA) offers a unique solution to funding infrastructure reform. “Economy in Motion: The National Multimodal and Sustainable Freight Infrastructure Act (H.R. 1308),” calls for the creation of a Freight Infrastructure Trust Fund, funded by a one percent tax on freight goods. The bill would raise about $8 billion a year for freight-related infrastructure projects across the country. As innumerable, nationwide infrastructure systems related to freight transportation, the fund is being touted as the solution to supporting multi-modal infrastructure projects.

Fix it With Freight

“Economy in Motion” is a six-year plan advocates say will be self-sustaining for at least ten years from the one percent tax on freight goods. According to the DOT, in 2014 trucks transported for 54.5 percent of imports ($348.7 billion) and 66 percent of exports ($365.9 billion) across the country and into Mexico and Canada.

Our current interstates, designed in the 1950s, are unable to support today’s increased truck size. Under-sized ramps make merging difficult, causing congestion and safety concerns. Freight congestion also impacts public health, hindering public service response times and contributing to poor air quality, smog, and heat islands in cities. Freight-related reform projects in each state would be supported by the new Freight Infrastructure Trust Fund, designated annually based on the amount of freight infrastructure within the state and through a competitive infrastructure grant program with broad project and applicant eligibility open to all local, regional, and state governments. State investment plans will be required to include environmental goals and strategies to address and diminish the environmental and community impacts of freight movement.

National Multimodal Benefits Potential

Recognizing the significance and potential benefits to the country’s entire infrastructure of a freight-targeted reform plan, the bill has quickly gained attention and support from government agencies, municipalities, port authorities, trade groups, private industry, and a growing coalition of legislators, including Congressman Dana Rohrabacher (R-CA), Rep. Ann Kirkpatrick (D-AZ), and Representative Mark Takano (D-CA).

At a press conference on Capitol Hill last Tuesday, Lowenthal and Brenda Lawrence (D- MI) and major supporters of the Coalition for America’s Gateways and Trade Corridors, shined a spotlight on the new proposal and called for the country to take action.

“To remain competitive as a nation we must invest in our national freight infrastructure, repair it, and upgrade it,” said Lowenthall last Tuesday.

While everyone agrees something needs to be done and soon, the biggest issue is that no one can agree on how to pay for it. Although GROW AMERICA also supports robust investment in multimodal freight infrastructure and prioritizes it within version 2.0 of the Act, critics question the bill’s ability to ensure long-term solvency of the Highway Trust Fund. The self-sustaining freight-targeted reform plan could be the answer to funding much-needed infrastructure reform across all channels.

It remains to be seem if the freight-focused bill will gain enough momentum to pass before the summer deadline. With concerns of solvency taking precedence over safety, however, a industry-specific yet self-sustaining bill could offer a real opportunity to implement some action toward fixing the country’s infrastructure sooner rather than later.

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