Tolling, whether a public or privately-run project, is prohibitively expensive and a growing number of Americans are pushing back against this new form of taxation on their morning commute. It’s also seen as punishing people for driving to work.
Terri Hall | December 2, 2013
Senator Barbara Boxer
Transportation industry professionals gathered in Washington D.C. on November 21 at a summit called Infrastructure of the Future—Sustainable Pathways to Meet America’s Transportation Challenges sponsored by two big-money lobbyists, the American Highway Users Alliance and the Volvo Group. As they see it, the perpetual problem is the structural road funding shortfall and bankrupt federal highway trust fund. The solution to their ever-expanding wish list of transportation and sustainable green infrastructure is simple – more taxes ranging from raising the federal gas tax to repealing the gas tax and replacing it with a huge revenue generator – a sales tax on gasoline to make driving more expensive and discourage the use of fossil fuel vehicles.
Perennial options like a tax paid for every mile you drive called the ‘vehicle miles traveled’ (VMT) tax were also floated. Sen. Barbara Boxer (D-CA), who chairs the Senate Environment and Public Works Committee tried to preempt attacks by privacy advocates suggesting that rather than government tracking every citizen’s vehicle, the program could be based on the ‘honor system,’ where people self-report their annual VMT. Really?
There was consensus among the speakers and the organizations they represent (which run the gamut of logistics and supply chain companies) on keeping all ‘tools in the toolbox’ save one: tolling existing freeways. All agreed it’s not appropriate to slap tolls on existing free lanes, but none opposed adding brand new toll lanes to existing freeways (to which there is no real difference). This is an initiative at odds with Sen. Tom Carper’s (D-DE), proposal to allow tolls to be imposed on all interstates.
Delaney’s innovative financing scheme
Other solutions discussed were the continuation of current so-called innovative financing techniques such as public-private partnerships (P3s) and the taxpayer-backed TIFIA loan program for toll projects. Rep. John Delaney (D-MD), laid out a completely new innovative finance proposal he’s dubbed the American Infrastructure Fund (AIF) as laid out in his bill HR 2084 that he plans to formally introduce after Thanksgiving.
Touting his bill as bipartisan and having early support from 25 Republican and 25 Democrats, it would be a $50 billion 50-year revolving fund financed by the private sector to serve as a bond guarantor and to make loans for infrastructure. Delaney claims there are no taxpayer guarantees or any increase in the national debt, but the fund merely shifts the debt off the federal books. It’s money that still must be repaid by taxpayers through tolls or other taxes. The $50 billion would be leveraged 15:1 to secure $750 billion in infrastructure financing capability that revolves over 50 years so it could ultimately fund $1 trillion in infrastructure projects over time.
The money would be loaned to companies with earnings parked overseas and the incentive for companies to invest in the fund is this: for every dollar they buy in AIF bonds they get to bring $4 in overseas earnings back to the United States tax-free, a key concern for Republicans who seek to get those earnings back into the American economy. Experts estimate nearly 40% of corporate earnings are parked overseas to avoid burdensome U.S. regulation and/or taxes.
Repatriation of corporate dollars is of great concern to Republicans and Delaney believes both parties could claim victory over passage of such a measure that he characterizes as a jobs bill as much as an infrastructure bill.
“It’s a large scale transformative way to finance infrastructure,” contends Delaney who recognized financing infrastructure is not the same as funding it. He still believes in a strong federal role in the nation’s highway system and that Congress needs to also work to properly fund it with appropriations.
Finding the political will to spend less
The traditional source of funding highways has been the pay-as-you-go system of user fees or gas tax revenues allocated to the highway trust fund. The federal gas tax currently sits at 18.4 cents a gallon and hasn’t been raised since 1993. So, thanks to the spineless politicians in Washington we’re been trying to build today’s roads with a 20-year-old user fee. There’s been no appetite in Congress to raise the gas tax – the least expensive solution – or even sensibly index it to inflation with a cap, so it’s turned to more driver-costly tolling and even handing control (and the taxation) of public highways to private corporations through P3s. Tolling, whether a public or privately-run project, is prohibitively expensive and a growing number of Americans are pushing back against this new form of taxation on their morning commute. It’s also seen as punishing people for driving to work. Most can’t control what hours they work and thereby have to be on the road during peak hours.
The average Joe thinks they’re already paying enough since they pay gas tax, vehicle registration fees, taxes on auto parts, etc. and many states also levy a state sales tax on vehicle purchases. Adding tolls on top of all that is seen as double or even triple taxation, especially when tolls are imposed on or within existing freeways.
Let the states do it alone?
Many conservative lawmakers believe the federal highway program needs to close shop, devolving the responsibility to the states. However, there was unanimous agreement among policymakers and the industry that there is still a relevant and crucial federal role to play to ensure the nation’s highway system doesn’t become a patchwork quilt with differing standards and quality of roads from one state to the next. This is particularly troubling for long-haul trucks moving freight which need a reliable, safe, and efficient road network to transport the nation’s goods in a timely manner as consumers expect and deserve.
With the federal government persistently kicking the can down the road with regard to shoring up the bankrupt highway trust fund, passing one short-term highway reauthorization bill after another like the two-and-a-half year MAP-21 expiring September 30, 2014, states have taken it upon themselves to do what they can to keep the highway system afloat. Four states have raised the gas tax and Boxer said that the Senate is looking to Virginia and Maryland’s transportation funding bills as a possible model for the federal program.
Attendees heard from the Virginia Secretary of Transportation that in order to get the largest tax increase (it involved at least 5 different tax increases) in the state’s history passed, it treated the legislation as a political campaign, which in states like Texas is actually against the law. Governmental entities using taxpayer money to lobby for tax hikes is an obvious conflict of interest and abuse of taxpayer money.
While there may be advantages to building projects without a cent of federal money in order to avoid cumbersome federal regulations that can sometimes dramatically reduce cost, the risk of having states go it alone is that the National Environmental Policy Act (NEPA) is one of the only laws that requires public input at every stage of decision-making and is the law that triggers the public hearing process.
Public feedback is critical when highway projects have the power to fundamentally transform communities both for the better – when done right and involving the maximum number of stakeholders – or for worse, causing irreparable harm by destroying neighborhoods or damaging the environment when done hastily or wrong. It’s not the public involvement process creating delays, it’s the regulatory agencies like EPA, Army Corps of Engineers, and/or Parks and Wildlife that can impose costly delays lasting years or even decades.
Globalism & economic integration
The Chief Operations Officer of UPS, David Abney, even invoked the need to pass the Trans- Pacific Partnership (TPP), the controversial mother of all free trade agreements. He spoke of the need to ‘harmonize’ security procedures and remove barriers to the free flow of goods across international borders. It’s no surprise then that UPS is one of the corporate players involved in closed-door negotiations of the TPP. National security ought not to be determined by for-profit companies’ self-interest.
UPS also called for more P3s, increasing the gas tax, imposing a VMT tax, and tolling. It’s hard to fathom why any company with 20,000 trucks on America’s highways daily would actually lobby for increasing its own taxes to such a degree, except for the fact we know it will be passed on to consumers. While its cost for even a 5 minute delay in delivering packages on time exceeds $100 million, the cost of tolls alone would trump that figure given the fact a gas tax funded road costs 1-2 cents a mile versus 12 cents up to a $1/mile in tolls. Usually much more than that for trucks.
This paradox is addressed in books like Timothy Carney’s The Big Rip-Off: How Big Business and Big Government Steal Your Money. Carney documents how big corporations routinely lobby for higher taxes and more regulation to make the cost of compliance or doing business too costly for small businesses forcing their competitors out of business.
The ‘T’ word
Joe Cowan CEO of Cowan Systems demonstrated just how the tax burden in some states is already so high, it’s crippling his business.
“I’m not throwing stones at Maryland, I’m throwing boulders,” Cowan quipped.
When you add up all the taxes and fees imposed on trucks – vehicle registration fees, gas taxes, tolls, etc. – to drive through Maryland, it leaped from an annual cost per truck of $8,050 in 2001 to a staggering $19,350 in 2013.
All pointed to the need to educate the public about the coming fiscal cliff with road funding in 2015. They believe once the public realizes the crisis we’re facing and the cost of either tolling everything or doing nothing pales in comparison to adjusting the gas tax for inflation or other modest tax increases, that they’ll support boosting highway funding and get people moving again.
Terri Hall is the founder of Texans Uniting for Reform and Freedom (TURF), which defends against eminent domain abuse and promotes non-toll transportation solutions. She’s a home school mother of nine turned citizen activist. Ms. Hall is also a contributor to SFPPR News & Analysis.