Next Steps Toward a Robust Highway ProgramBy Toby Mack
Article Date: 09-01-2012
Copyright(C) 2012 Associated Equipment Distributors. All Rights Reserved.
Developing alternative solutions to the funding shortage is the challenge we are confronting now.
Whew - what a trip! Getting a two-year highway bill through a deeply divided and fractious Congress late in an election year was an outcome few thought possible right up to the end, including some of its most ardent supporters.
But not AED. With an absolute deadline looming, your advocacy team pressed on with rallies, letters, visits, grassroots pressure - and literally everything we have in our quiver - to convince the House Republican leadership to bring the Senate bill to the floor. In the end, they courageously did this, knowing it would pass only with significant support from across the aisle, and just as significant opposition from their own caucus. And pass it did, in a lopsided bipartisan vote.
It is not just a program renewal. It is a reauthorization of the federal highway program with significant improvements. These include enhancements of the project delivery process such as streamlining of the permitting process, lowering of environmental roadblocks, and elimination of some of the nonhighway- related diversions of Trust Fund money, all long sought by AED. This should speed up the process and give us more bang for the buck out of our nation's highway money.
Two other major successes were (1.) extending the program to the end of 2014, when all most people had initially hoped for was a program ending Sept. 30, 2013; and (2.) keeping funding very close to current levels set back at the outset of the prior five-year program. This was one of the real hang-ups in getting a bill: Gas tax revenues flowing into the Highway Trust Fund currently are falling $13-$15 billion per year short of the roughly $40 billion needed annually for the present program's funding level. Thus the challenge was to "find" money through "offsets" from other parts of the federal budget to make up the shortfall. The Senate essentially did this work, with strong leadership from Senate Environment & Public Works Committee Chairman Barbara Boxer (D-Calif.) and Ranking Member Jim Inhofe (R-Okla.); and Senate Finance Committee Chairman Max Baucus (D-Mont.) and Ranking Member Orrin Hatch (R-Utah). Getting the House to approve the Senate funding formula was the challenge.
So where does that leave us? A two-year program is still way too short for state DOTs to plan bigger projects, and not a long enough time horizon for some contractors to make major capital investments in equipment. But we do think it will unlock some of the equipment demand that has been on hold pending more clarity on highway program direction. But significantly, the bill sets a new baseline for program policy - specifically the enhancements mentioned above - that should be less difficult to get carried over into the next program that will be needed for fiscal 2015 and beyond.
The real challenge, which we at least now have some breathing room to resolve, is a new sustainable funding formula that provides the revenues on a continuing basis into the future to fund a more robust program - one that adds and upgrades highway capacity to support a growing domestic economy. Everybody in Washington loves to hate the gas tax and won't even have a conversation with you about increasing it (particularly in an election year!). That may indeed be part of the solution - especially in the context of the coming and much larger debate on all federal taxes. But with increasing fuel economy, alternative fuels and new propulsion systems, that looks to be a declining revenue stream over the long haul.
So what AED is now busily at work doing is coming up with some new alternative funding formulas, be they a Vehicle Miles Traveled tax, a tax on fuel sources further upstream such as drilling and production royalties on federal lands and offshore leases, or some other logical formula where the users of the highway system pay for its maintenance and improvement.
That is one of today's many challenges for AED's Washington operations, and we are on it, now, with the same intensity and sense of urgency that resulted in success with program renewal a short time ago. As always, we will be calling on you for help!
Toby Mack is president and CEO of Associated Equipment Distributors. He can be reached at email@example.com.
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