Plan C, anyone?

April 13, 2009

When President Barack Obama’s press secretary announced that taxing drivers by the miles they travel instead of the gallons of fuel they consume “is not and will not be the policy of the Obama administration,” he cut a big leg out from under the recommendations of the National Surface Transportation Infrastructure Financing Commission.

When President Barack Obama’s press secretary announced that taxing drivers by the miles they travel instead of the gallons of fuel they consume “is not and will not be the policy of the Obama administration,” he cut a big leg out from under the recommendations of the National Surface Transportation Infrastructure Financing Commission.

There’s no certainty that a vehicle-miles-traveled (VMT) tax would ever make it into law even with the president’s support, but it is the industry’s consensus pick for a long-term successor to the gasoline tax. In the short term, the top pick is an increase in the gas tax.

The financing commission agreed. After reviewing many alternatives, the bipartisan, Congressionally created commission concluded that “the most viable approach to efficiently fund federal investment in surface transportation in the medium to long run will be a user charge system based more directly on miles driven . . . rather than indirectly on fuel consumed.”

In the short term, the financing commission recommended an immediate 10-cent increase in the federal gasoline tax and a 15-cent increase in the federal diesel tax and then indexing those rates to inflation. In the political reality of the worst recession in at least a generation, it is hard to see how that measure will become law.

So what if both prime choices are blocked?

“Plan C is basically that you then have to rely much more on tolling,” Robert Atkinson, chair of the financing commission, told Roads & Bridges. “Basically they would have to say to the states and locals, You can toll a lot more than what you’re doing today. Whether they do that is another question. If they don’t do that then you’ve basically got nothing left.”

Jeff Solsby, spokesman for the American Road & Transportation Builders Association, tried to be optimistic.

“I think just because they’ve said they’re opposed to it now doesn’t mean they won’t change,” he told Roads & Bridges. The federal government is still faced with three options, he said, for addressing the funding challenges that face the Highway Trust Fund: deficit spending; finding new revenue sources; or seeing a 50% drop in funding to the states.

The financing commission presented a long menu of what it called strong candidates as revenue options, many of which are expansions of existing programs and rely heavily on tolling:

Automobile tire tax;
Motor fuel tax;
Carbon tax/cap and trade;
Customs duties;
Heavy-vehicle use tax;
Truck/trailer sales tax;
Vehicle registration fee;
Container fee;
Tariff on imported oil;
Sales tax on motor fuels; and
Truck tire tax.

The financing commission recommended doubling the heavy-vehicle use tax, which has not been increased since 1983, and indexing it and the excise tax on truck tires to inflation.

The commission also recommended expanding the ability of states and localities to impose tolls on the interstate system both on net new capacity and on existing capacity in large metropolitan areas in need of congestion relief. Both measures expand existing programs.

Continuing and expanding the Interstate Highway Reconstruction and Rehabilitation Pilot Program also is a recommendation. The program allows tolling of existing interstate capacity for reconstruction and rehabilitation. To facilitate so much reliance on tolling, the commission’s recommendations include federal support for standardization of tolling and information systems by completing necessary rulemaking regarding electronic tolling and interoperability.

Atkinson and Solsby both said they thought the commission wanted all options to be on the table.

“The VMT needs to be on the table,” said Solsby, “as does a significant increase in the motor fuel excise.”

The VMT debate does not have to be settled this year, said Atkinson. There is still time. And Congress will have a big influence on what happens as well as the White House.

“I would hope that the reauthorization would include a lot of what we recommend with regard to moving forward with seeing whether a VMT would work and the test beds and the standards and the studies, etc.,” said Atkinson. “The real question is, What is Congress going to do?”

State Funding

La. highways need more money

Count Louisiana among the states having trouble paying for highway and bridge construction. The state’s Transportation Infrastructure Model for Economic Development (TIMED) program, for example, is out of money, according to Jim Brandt, president of the Public Affairs Research Council (PAR), based in Baton Rouge.

PAR recently released a 17-page report, “Highway Funding: Is There a Crisis?” The report finds that Louisiana will have to find a source of significant new funding to keep pace with increasing maintenance and capacity demands on the state’s highways, bridges and intermodal transportation system. Neither current revenue sources nor the federal stimulus funding can fill the budget gaps expected in coming years.

“Construction costs have outstripped general inflation in recent years. The hard truth is that every conceivable solution will require additional investment,” said Brandt. “Even if the state added $650 million a year in highway funding, it would still take about 22 years to clear the backlog in existing highway needs. And that’s assuming no cost increases. Adding inflation could double that time.”

The TIMED program is financed with 4 cents of the state’s 20-cents-a-gallon gas tax, with the other 16 cents going to the regular highway construction program, which has its own funding crisis. The TIMED program listed 16 projects worth $1.2 billion in 1990. Today, the program’s projects will cost $5.2 billion, the New Orleans Times-Picayune reported. The gas tax has been eaten away by inflation until it now has only one-third of the buying power it had when it was established in 1984.

The PAR report recommends that a special commission should be created and charged with assessing funding options and recommending legislation to head off the severe consequences of failing to act.


Construction spending down in Jan.

Construction spending during January was estimated by the U.S. Commerce Department at a seasonally adjusted annual rate of $986.2 billion, 3.3% below the revised December 2008 estimate.

Public construction spending slipped in January to $303.7 billion, 2.3% below the revised December estimate of $311 billion. Highway construction was at a seasonally adjusted annual rate of $79.2 billion, 1% below the revised December estimate.

State Funding

Idaho House kills gov’s road-building surcharge

The Idaho House Transportation Committee has killed a proposal supported by the governor to add a 6% surcharge to rental cars. Idaho Gov. C.L. “Butch” Otter wanted the extra money to help build roads and bridges, the Associated Press reported.

Mike Brassey, a lobbyist for the Idaho Rental Car Association, was among those who recommended rejecting the surcharge proposal to the House Transportation Committee. Brassey was appointed by Otter to an eight-member panel, which will make recommendations on how the state should use the economic stimulus funds it receives from the federal government. The state expects to receive up to $1 billion in stimulus money.

The Idaho Transportation Board recently approved $202 million worth of highway projects.

Equipment Theft

Study: Theft rate steady in 2008

Equipment theft continued at a steady pace in 2008, driven by organized crime, with loaders as the favorite type of equipment to steal, according to the eighth annual Construction Equipment Theft Study from LoJack Corp. For the calendar year 2008, LoJack recovered more than $15.5 million in stolen construction equipment.

“In today’s down economy, construction equipment owners need to take extra precautions to protect their valuable equipment from opportunistic professional thieves who see this as a high-reward, low-risk form of theft,” said Ronald V. Waters, LoJack’s president and chief executive officer.

Poor onsite security, easy access to open cabs, allowing one key to operate all equipment and lack of product identification records are all issues that make construction equipment easy targets for professional thieves.

The study revealed that newer equipment on the jobsite is the most common theft target because of higher resale value. The types of equipment most frequently stolen are (in order):

1. Backhoe loaders/skip loaders/wheel loaders/track loaders;
2. Light utility/work trucks and trailers;
3. Generators/air compressors/welders;
4. Skid steers; and
5. Forklifts/scissor lifts.

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