Oct 192011

Better highways and bridges or yet another federal government agency?

Posted By: Tom Sanderson
Date Posted:  Wednesday, October 19, 2011  9:45 AM

The Obama administration push for a federal infrastructure bank is getting a lot of press these days as proponents argue that we will put people to work and improve our highways and bridges. What’s not to like? Well in fact, both the federal and many state governments already have infrastructure banks or programs that perform the same function. At the federal level we already have the Transportation Infrastructure Finance and Investment Act (TIFIA) which provides loans and loan guarantees for highway projects. At the state level,33 states already have infrastructure banks, one example being Oklahoma which started its bank in the 1990s but has yet to fund a project. 

So what would we get with the new federal infrastructure bank that would provide loans and loan guarantees to state and local governments for broadly defined “infrastructure” projects, not just highways and bridges? A new government entity supervised by a board of seven people selected by the president with an initial capitalization of $10 billion and an expected annual budget of $270 million, and it will take a year to set up. This is the Fannie Mae model applied to public works. How well has that model worked out in housing?

We need better highways and bridges. We also need a new highway financing bill to replace SAFETY-LU, which expired over two years ago and has now been extended eight times. We do not need yet another federal agency led by a politically appointed board deciding who gets the cookies from the federal cookie jar.


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Categories: Highway funding
Sep 262011

My speech at the 2011 Transportation & Infrastructure Summit

Posted By: Tom Sanderson
Date Posted:  Monday, September 26, 2011  6:05 PM

I had the opportunity to speak at the 2011 Transportation & Infrastructure Summit in Irving, TX  in August. My remarks and slides are available on You Tube. I feel it is only fair to warn you that the speech (and video) are 25 minutes long, but I do think you will find the history and facts about the federal fuel tax and highway spending very interesting.

The bottom line is that the current mechanisms for funding highway and bridge construction and repair are broken. The solution though, is not to implement an entirely new taxing mechanism in the form of a vehicle-miles tax. Our federal government officials have proven that we cannot trust them to manage the Highway Trust Fund. The HTF has morphed from a true user fee designed to build and maintain the interstate highway system into a slush fund for bike paths, public transit, and bridges to nowhere.

Senator Kay Bailey Hutchison and the Reason Foundation provide interesting alternatives that give more power and money back to the states and help restore trust in the Trust Fund.


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Categories: Highway funding
Sep 162011

President Obama signs extension to highway bill

Posted By: Tom Sanderson
Date Posted:  Friday, September 16, 2011  6:24 PM

On Friday, September 16, 2011, the President signed into law:

H.R. 2887, the “Surface and Air Transportation Programs Extension Act of 2011,” which extends through March 31, 2012, funding for programs funded from the Highway Trust Fund (HTF), authority to make expenditures from the HTF for HTF-financed programs, and authority to collect taxes that fund the HTF; and extends through January 31, 2012, authorities to collect taxes that fund the Airport and Airway Trust Fund, make expenditures from the Airport and Airway Trust Fund, and make grants to airports under the Airport Improvement Program.

The White House, Office of the Press Secretary, September 16, 2011


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Categories: Highway funding
Sep 152011

Highway bill extension nears the finish line, but there is a snag

Posted By: Tom Sanderson
Date Posted:  Thursday, September 15, 2011  3:30 PM

The eighth extension to the SAFETY-LU highway bill appears to be on-track but there is a somewhat welcome voice of sanity that is temporarily holding up the extension. On September 13, the House unanimously approved extending surface transportation programs until March 31, 2012 authorizing $23 billion to be spent from the Highway Trust Fund. The Senate has also agreed to the six-month extension and the price tag but has not passed the bill at this point.

The fly in the ointment is that Senator Tom Coburn (R-OK) is blocking attempts to pass the bill and wants an amendment to block the mandate that states use 10% of Highway Trust Fund dollars to fund so called “transportation enhancements”. Coburn noted some of the enhancement projects that had been funded with hundreds of thousands of dollars of federal fuel tax money. Among those cited were a museum in Pennsylvania, a Chinatown gateway in California and a squirrel sanctuary in Tennessee. He said states could choose to fund such projects but shouldn't be forced to do so in order to receive their federal road funding. Read more. John Hart, a spokesman for Coburn, said earlier this week that the senator "believes we need to prioritize bridge repair over bike paths and will use procedural tools at his disposal to strip the enhancement requirements from the bill."

With only two weeks remaining before the current extension of the highway bill expires, this is probably not the best time for one senator to draw a line in the sand, but his point is valid. We must restore trust in the Highway Trust Fund, and that means spending our federal fuel tax dollars on highway and bridge repairs and maintenance, and nothing else. For an excellent article on this subject, I refer you to The Reason Foundation.


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Categories: Highway funding
Aug 262011

Current highway bill extension expected in September

Posted By: Tom Sanderson
Date Posted:  Friday, August 26, 2011  8:31 AM

Indications from both the Senate and House are that we will have an extension to the current highway and transit program postponing a new 6-year bill as is ultimately expected. Senator Barbara Boxer, chair of the Environment and Public Works Committee,  will offer a four-month extension on September 8 continuing all programs at current levels with no policy changes. Meanwhile Representative John Mica chair of the House Transportation and Infrastructure Committee indicated that he will also support a temporary extension when Congress returns in September. Mica is still intending to complete a new 6-year reauthorization bill this fall.

There has been a lot of hand-wringing and hyperbole about the federal government being unable to collect gasoline (18.4 cents) and diesel (24.4 cents) taxes or to continue funding projects when the current extension expires on September 30. While technically true, the fact of the matter is we have already had seven extensions to SAFETY-LU which was originally set to expire September 30, 2009. There was never any chance that the federal government would walk away from $40 billion per year of tax revenues when all they have to do is pass an eighth extension.


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Categories: Highway funding
Oct 132010

Two new bills propose increasing diesel fuel taxes

Posted By: Tom Sanderson
Date Posted:  Wednesday, October 13, 2010  9:51 AM

The October 11 issue of Transport Topics reports on two bills introduced in the House proposing to raise the federal diesel tax to improve highways. Full Article A bill introduced by Rep. Laura Richardson (D-CA) would raise the tax by 12 cents per gallon with the money targeted for projects that are freight related. The second bill introduced by Rep Earl Blumenauer (D-OR) is revenue neutral and would replace the excise tax on new truck and trailer purchases with a 7.3 cent increase in the diesel fuel tax. The current federal excise tax is 12% on trucks, trailers and certain tractors.

Blumenauer's bill makes a lot of sense because truck and trailer purchases plummet in recessions and spike in expansions resulting in harmful volatility in the amount of money going into highway repair. Plus lowering the after tax cost of buying new equipment is a great idea at the present time. The ATA supports this bill as a means of stimulating the purchase of cleaner, safer and more efficient vehicles. This would not be "revenue neutral" to shippers who would see an immediate hike in fuel surcharges and only over time would see the offset from the lower cost of equipment purchases.

Richardson's bill is not a clear cut winner. In addition to the 12-cent increase in diesel taxes, the bill proposes to transfer $3 billion from the general fund to create a freight trust fund. That just takes money we have borrowed from China out of one U. S. government pocket and puts it into another. While the ATA also supports this bill, they are quick to point out that this bill is no substitute for a comprehensive new highway bill and will be insufficient on its own to address the infrastructure challenges we face today. The ATA suggests a similar increase in the gasoline tax to put additional resources towards highway and bridge construction and repair.

It is clear to anyone who drives that we need to boost highway infrastructure spending to make our industries more competitive and our commuting lives more sane. It is not as clear that with nearly 10% unemployment, fairly weak consumer spending, and abysmal housing starts and auto sales that we need to raise taxes and take money out of the tax payers' pocket and put it into the government's pocket. We need to pay more if we want more, but is now the right time?

Before we agree to any fuel tax increases we need two things in return. First, repeal the Davis-Bacon Act (prevailing wage law). This 1931 depression era legislation was designed to deprive blacks of good paying construction jobs. It has since become a sop to the unions that harms legal immigrants. Find your own favorite over-priced job and a window into mindless bureaucracy at Davis Bacon. Second, take highway spending prioritization out of congressional hands. For example, the Reason Foundation's Galvin Mobility Project scientifically studies congestion and proposes affordable and effective relief. Perhaps something modeled after the Defense Base Closure and Realignment Commission (BRAC) guided by scientific and mathematical models of congestion and disrepair is an option. We can't afford bridges to nowhere.


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Categories: Highway funding