AED Plans to HIT Hard By Christian Klein
Article Date: 12-01-2008
Copyright(C) 2008 Associated Equipment Distributors. All Rights Reserved.
Next year's highway reauthorization will be the toughest one yet, but we're making sure Congress gets the big picture.
With the elections behind us, AED’s Washington team is looking ahead to the challenges and opportunities the equipment industry is going to face on Capitol Hill next year. All indications are that the level of activity will be unprecedented. But of all the issues we expect to deal with, none has as direct or substantial an impact on equipment markets as the reauthorization of the federal highway program.In an AED study released this summer, Dr. Stephen Fuller, a leading economist at George Mason University, determined that 6.4 percent of the average highway contractor’s annual budget is attributable to equipment acquisition and dealer-performed maintenance costs. From this Fuller estimated that 6.4 cents of every dollar spent on highway construction are spent at equipment dealerships and that the market impact of the $39.1 billion 2007 federal highway program was $2.5 billion. Every few years, Congress enacts a new multi-year blueprint for federal surface transportation spending. Among other things, the legislation authorizes spending for highway and bridge construction programs. The current authorization law – SAFETEA-LU – expires on Sept. 30, 2009, which means that reauthorizing the highway program will be a top priority for lawmakers next year. Unfortunately, next year’s reauthorization is likely to be the most difficult to date.The problem stems from the fact that the gas tax and other user fees flowing into the Highway Trust Fund will be insufficient to support even the current level of spending in the years ahead. That means Congress will have to find new funding sources just to keep highway investment constant. But AED thinks we need to do much more than just continue at current funding levels. Congestion costs the U.S. economy $78 billion per year in lost time and fuel, and the U.S. Chamber Foundation predicts a $1 trillion gap between what is anticipated to be spent on infrastructure at all levels of government over the next 10 years (based on current spending) and the level of investment necessary to improve road conditions. Fortunately, we’re not the only ones who see that failing to invest more in infrastructure will hurt America’s global competitiveness. An independent commission established by Congress to examine transportation funding recently recommended increasing the federal gas tax by 40 cents over the next several years to increase highway spending by about 150 percent.So what’s at stake for the equipment industry in next year’s highway debate? If you accept Dr. Fuller’s conclusion that 6.4 cents of each federal highway dollar make their way into our industry, a $100 billion annual highway program could mean $4 billion in new market opportunity for equipment distributors each year. However, at the same time, if Congress doesn’t act or fails in its task of identifying new sources of highway funding, there is a real risk that federal highway investment will drop and cause equipment markets to contract. Recognizing the massive stake our members have in this debate, AED initiated the Highway Infrastructure Taskforce (AED HIT) to serve as a vehicle for equipment distributors. The objective is for AED to have a greater impact than ever before on the outcome of the highway reauthorization. Through the HIT, leading AED members are contributing an additional $10,000 to $20,000 per year in support of the association’s reauthorization activities. The funding will allow us to hire additional AED Washington Office staff, pay for advertising and public relations, undertake economic research, and support industry coalitions.The HIT initiative has been well received by AED members. To date, nine companies have signed up and we’re actively recruiting more. We know that the task before us next year won’t be easy, but we’re confident that with the involvement and support of our members we’ll be able to “HIT hard” in the next Congress and have a major impact on the reauthorization process.
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