AEM comes up with highway funding solution

Strategy calls for separate user-fee system for cars, trucks

Funding News AEM July 27, 2011
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The Association of Equipment Manufacturers (AEM) on July 27 released a revenue-neutral solution to rebuild and modernize America’s interstates without raising the gas tax. The proposal, advanced by AEM in an ongoing effort to reinvigorate the stalled debate on infrastructure investment financing, was developed by Jack Schenendorf, former vice chairman of the National Surface Transportation Policy and Revenue Study Commission, of Counsel, Covington & Burling LLP, and Elizabeth Bell, Associate, Covington & Burling LLP.

As the deadline looms to reauthorize U.S. surface transportation policy by Sept. 30, Schenendorf unveiled two alternative solutions to supplement current federal transportation revenues in a policy paper published by The Bureau of National Affairs.

The revenue-neutral transportation funding proposal offers two alternative solutions: a Federal Interstate User Fee (FIUF) and a Federal Motor Carrier User Fee (FMCUF).

How it works:

Federal Interstate User Fee

• All vehicles using the Interstate Highway System would pay a user fee. The fee would be collected through an “EZ Pass”-like system, which would be entirely electronic. There would be no tollbooths.

• All of the revenues generated by the fee would be deposited in a special account in the Highway Trust Fund. The revenues would be used exclusively to restore the Interstate Highway System to a state of good repair and to expand and modernize it to meet the challenges of the 21st century.

• The fee structure would be set annually, by an independent group of experts, at the level necessary to reimburse the states in accordance with policies established by Congress for the federal share of these improvements. No higher, no lower. The fees would not be designed to control the level of traffic or to “price out” drivers from using the interstate.

• This user fee would restore the Interstate Highway System to being the crown jewel of the U.S. surface transportation network and the envy of the world.

Federal Motor Carrier User Fee

• This fee would be imposed on commercial trucks' usage of all roads and would be collected through GPS-like systems currently being used by many trucking companies.

• Importantly, trucks would not be double-charged for miles traveled on the interstate; rather, those miles would be recorded through the Federal Interstate User Fee program.

• All of the revenues generated by this fee would be deposited in a special account in the Highway Trust Fund and would be used exclusively for freight-related improvements.

• The same independent entity discussed above would set the fee structure at the level necessary to reimburse the states in accordance with policies established by Congress for the federal share of these freight improvements. No higher, no lower.

• This user fee would play a critical role in improving the movement of freight, thereby helping to make U.S. businesses more competitive in today’s global marketplace.

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