The president and CEO of the U.S. Chamber of Commerce today reaffirmed his group's support for raising excise taxes on motor fuels to fund the nation's highway and transit infrastructure improvements. In his uniquely animated way, Thomas J. Donohue said that "some of the people in this room may not have even been alive" the last time federal fuel taxes were increased 20 years ago.
Donohue, whose group has three million members, told attendees at the first-ever U.S. Chamber-sponsored transportation and infrastructure summit in Washington, D.C., that shippers and truckers favor an increase, and that "the Chamber is for it" as well. Donohue headed the American Trucking Associations for 13 years before being named to run the U.S. Chamber in 1997.
In his remarks, Donohue didn't outline a specific plan but said a "modest tax increase, indexed for inflation" over a number of years would be the best approach to take. Donohue expressed incredulity that fuel taxes haven't been hiked since the newly elected Bill Clinton pushed a 4.3-cents-a-gallon increase through Congress in 1993 as a deficit-reduction measure. The decision to effectively lock in that level for so many years proved to be a "mistake," said Donohue, as the nation's infrastructure needs have expanded, but the primary funding mechanism to finance improvements has remained static.
The current federal excise tax on diesel fuel is 24.4 cents a gallon, and on gasoline, it is 18.4 cents a gallon. Those levels will remain unchanged through October 2016, under the bill funding the nation's road and transit programs signed into law by President Obama last July. The law, known as "Moving Ahead for Progress in the 21st Century," or MAP-21, is set to expire in October 2014.
The fuels tax is considered the most cost-effective way of managing the nation's infrastructure funding programs. The cost of administering the fuels tax runs at about 3 percent of total receipts, Mike Kelley, chief sustainability officer of less-than-truckload carrier YRC Worldwide Inc., told a transport and logistics conference in Atlanta last month. "That's pretty cheap for the federal government," he said.
However, as motor vehicles of all types become more fuel-efficient and can go farther between fill-ups, the revenue stream from fuel taxes is expected to dwindle over the years. That may be exacerbated by the push to natural gas-powered trucks. Additionally more companies are moving away from long-haul trucking as they use more intermodal rail for long-distance shipments and/or shift to regional distribution networks with shorter lengths of haul.
Even those like Donohue who support an increase in the fuels tax recognize that it represents a stopgap measure that buys the nation time until it can develop more sustainable sources of user fees to fund improvements.
SHUSTER: REVENUE WITHOUT DEFICIT SPENDING
Rep. Bill Shuster, R-Pa., the newly named chairman of the House Transportation & Infrastructure Committee, said that all ideas and proposals to raise revenue would be "on the table." Keynoting the conference, Shuster said, "we have to make sure we have the money" to fund programs and that it must be done "without deficit spending."
Shuster does not have control over transport appropriations. However, his comments and positions are believed to carry much influence because of the prominence of his position.
Shuster criticized President Obama for paying lip service to infrastructure needs in last night's State of the Union address. He said the president's call for a "Fix It First" initiative, which would quickly put Americans to work fixing the nation's most pressing infrastructure problems, was little more than recycled rhetoric. "There really wasn't much there," he said in response to a question from the audience.
Both Donohue and Shuster called for an increase in the number of private-public sector infrastructure partnerships, saying private-sector investment would be the best way to bring in billions of dollars of front-end money that would allow projects to get started without getting hung up in bureaucratic red tape.
The one-day conference came amid persistent worries about the condition of the nation's transportation infrastructure. The American Society of Civil Engineers said last month that unless the U.S. invests an additional $1.57 billion a year in infrastructure improvements between now and 2020, the nation will lose $3.1 trillion in gross domestic product, $1.1 trillion in trade, $3,100 per year in personal disposable income, and more than 3.1 million jobs. If nothing is done by 2020, the cost of infrastructure modernization will hit $7.75 trillion, the report said.
The group's full 2013 "report card" on U.S. infrastructure, which encompasses surface transportation, ports, inland waterways, airports, electricity, water, and wastewater, will be released March 19.