The Great Highway Hold-Up - Policy
Construction Equipment Distribution magazine is published by the Associated Equipment Distributors, a nonprofit trade association founded in 1919, whose membership is primarily comprised of the leading equipment dealerships and rental companies in the U.S. and Canada. AED membership also includes equipment manufacturers and industry-service firms. CED magazine has been published continuously since 1920. Associated Equipment Distributors
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SECTION: Policy

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The Great Highway Hold-Up

By Christian A. Klein AND Daniel Fisher

Article Date: 09-01-2009
Copyright(C) 2009 Associated Equipment Distributors. All Rights Reserved.


The reauthorization of the federal highway program has enormous
public safety, economic, and environmental consequences.
So why is Congress dragging its feet?

It’s not pleasant to think about, but imagine that a commercial airliner loaded with passengers was crashing in the United States every week. Americans would be appalled by the carnage and demand government action. The president and members of Congress would probably be climbing over each other to appear the most responsive to the public outrage.

It may not be passenger jets falling out of the sky, but the consequences of our nation’s collective failure in the area of surface transportation infrastructure are just as dramatic. A recent study commissioned by the Transportation Construction Coalition (TCC) (of which AED is a leading member) found that poor road conditions were a factor in more than half (52.7 percent) of the 42,000 traffic fatalities in U.S. each year. In other words, more than 400 people – considerably more than the number of passengers on a Boeing 737 or Airbus A320 – die each week in this country because of poor road conditions.

Our failure to invest in highways also has significant economic consequences. In early July, the Texas Transportation Institute (TTI) reported that traffic congestion, resulting in large part from inadequate road capacity, costs the country $87.2 billion per year in wasted time and fuel. The total amount of wasted fuel topped 2.8 billion gallons, about three weeks’ worth of gas for every traveler; the amount of wasted time totaled 4.2 billion hours, almost one full work week for every traveler.

These numbers mean that goods are taking longer to reach their destinations and are more expensive to transport. Truck drivers are spending more time stuck in traffic, resulting in companies wasting billions of dollars on overtime pay and fuel costs. Of course, these additional costs are passed onto consumers, who are forced to pay higher prices for everyday products. Inadequate infrastructure has equally significant consequences in rural communities, where poor roads mean residents have diminished access to jobs and services, customers and businesses can’t easily access one another, goods and services cost more, and vehicle operating costs are higher.

Numerous studies suggest that the national transportation infrastructure crisis will only get worse if investment is not increased substantially. For example, the Surface Transportation and Revenue Commission, created by Congress to study America’s infrastructure needs, recently determined that we are only spending about 40 percent of what we should be at all levels of government on surface transportation infrastructure. The Commission recommended investing at least $225 billion from all sources over the next 50 years to upgrade our existing surface transportation system to a state of good repair and create a more modern system to sustain and ensure strong economic growth for our families.

With all the foregoing in mind, it’s unfortunate that Congress has been so slow to focus on highway issues. Although the Safe, Accountable, Flexible, Efficient Transportation Equity Act-Logistics Unlimited (SAFETEA-LU), the most recent highway authorization law, expires on Sept. 30, 2009, none of the House or Senate committees with jurisdiction over highways have reported a bill, and only one committee has released a reauthorization proposal. So what’s the hold-up, what’s the prognosis, and why does the highway bill matter so much to AED? Read on. 

Highway Investment and Equipment Distributors

We’ll tackle that last question first. A recent study conducted for AED by Dr. Stephen Fuller of George Mason University in Fairfax, Va., showed just how closely the fortunes of the equipment industry are tied to federal highway spending. Fuller determined that, on average, 6.4 cents of each dollar spent on highway construction are used to buy and lease new equipment and on major repair and maintenance outlays.

In other words, if federal highway funding were to double to $80 billion per year as many experts have suggested is necessary, the equipment industry market impact of the highway program would increase from around $2.5 billion per year to more than $5 billion.

Highway investment clearly has a big impact on equipment distributors and on the communities in which their employees live and work.

AED’s Advocacy for Increased Investment

It was with all the foregoing in mind that AED began two years ago to position itself to play a more influential role in the highway reauthorization debate than it ever had before. In 2007, AED established the Highway Infrastructure Taskforce (HIT), which is comprised of leading equipment distributors from around the country whose companies are directly affected by federal and state highway investment. Each HIT member has made a multiyear commitment of as much as $20,000 per year to support AED’s reauthorization activities. (For more about the HIT, see sidebar on page 23.)

These additional resources support economic research (like the Fuller report described above), public relations activities (including the Highway Infrastructure Forum at the 2009 AED Annual Meeting), and AED’s leadership position in the U.S. Chamber of Commerce-led Americans for Transportation Mobility (ATM) coalition. The ATM is significant because it brings together the major players in the transportation construction industry and the business community. ATM has been working to bring the nation’s dire infrastructure needs to the public’s attention and to move the discussion outside of Washington to the people and businesses that are affected most by congestion and underinvestment. HIT contributions are also used to pay for AED’s membership in the Transportation Construction Coalition (TCC), a group of national associations and labor unions with a direct market interest in federal transportation programs.

But perhaps most important, the additional resources contributed by our HIT members have helped AED add another full-time lobbyist to the Washington team, thus ensuring more consistent engagement with congressional staff and coalition partners. Our new “feet on the street” mean that members of Congress and, just as important, the congressional staffers who shape their bosses’ thinking on the issues, are constantly being educated about the equipment industry and importance of the highway reauthorization.

The Highway Train-Wreck on Capitol Hill

Unfortunately, despite intense lobbying by AED and its allies, and the myriad studies and reports documenting needs and proposing solutions, Congress has failed to focus on highway reauthorization. Even the economic collapse in the construction industry, where unemployment rates are above 18 percent, hasn’t gotten much attention on the Hill. Indeed, instead of working on highway reauthorization, health care and climate change legislation have taken center stage this year, despite the fact that neither bill is expected to create jobs or stimulate growth.

Another reason for the congressional inaction has been lawmakers’ reluctance to face facts and tackle the difficult question of how to pay for a bigger highway bill. Current revenue streams to the Highway Trust Fund (HTF) are inadequate to support even current funding levels (Congress had to pass emergency legislation this summer to prevent the HTF from running out of money in FY 2009). Congress has three choices of how to deal with problem: (1.) Do nothing, and let highway investment fall, (2.) use general fund money to make up the difference between what comes into the HTF and annual appropriations, or (3.) put new revenue streams in place to provide long-term, fiscally responsible resources for infrastructure investment.

AED is firmly committed to the latter option. In the near term, Congress should raise the gas tax; in the longer term, as fuel efficiency increases and alternative fueled vehicles come on line, Congress needs to implement some sort of vehicle miles traveled (VMT) tax that more closely ties the user fee to actual road usage.
Most of the representatives and senators on Capitol Hill seem reluctant to make the tough choices you sent them to Washington to make. Perceived public hostility to tax increases has thus far stymied our efforts on the gas tax front, despite the fact that a five cent gas tax increase would cost the average driver less than $50 a year.

Fortunately, there are some in Congress who are trying to tackle these issues head on. One of them is House Transportation & Infrastructure Committee (T&I) Chairman James Oberstar (D-MN), who has made it his personal crusade to pass a multiyear surface transportation bill this year.

On June 18, Rep. Oberstar and other T&I Committee leaders released an outline of their planned Surface Transportation Authorization Act (STAA). The $450 billion STAA bill includes $337.4 billion for highways, $98.8 billion for mass transit, and $12.6 billion for highway and motor carrier safety programs over six years. One hundred billion dollars of the highway funding is expected to be used for Capital Asset Investment to begin to restore the National Highway System (including the Interstate System) and to improve bridges.

Under the STAA plan, the average annual investment level for the federal highway program over six years would be $56 billion. That’s considerably more than the roughly $41 billion the program currently receives (not counting the additional money in this year’s stimulus bill), but significantly less than the amount AED and others have said is necessary to improve our nation’s transportation system. Additionally, STAA does not currently provide a long-term solution to address the HTF’s insolvency. Instead, Rep. Oberstar left the revenue situation to be solved by the House Ways & Means Committee. On June 24, the House Highways and Transit Subcommittee approved a draft of the STAA without exact funding levels and revenue sources.

Unfortunately, that subcommittee vote was the last major action on a highway reauthorization bill. Since then, most of the debate hasn’t been over how to beef up federal infrastructure investment, but rather how  long to put off doing so. As details of STAA were being released in June, the Obama administration proposed an 18-month extension of SAFETEA-LU, purportedly to give Congress additional time to do what everyone knows has to be done. The Senate Environment & Public Works (EPW) Committee passed an 18-month extension proposal in July.

Unperturbed, at Rep. Oberstar’s urging, on July 29 the House passed a bill to transfer $7 billion from the general fund to the HTF to keep it solvent through the end of the current fiscal year. With the House adjourned for the August recess, the Senate was left with no choice but to pass the House bill. Rep. Oberstar’s move keeps Congress’ feet to the fire and will ensure that highways are on the agenda in some way before the end of September. 

So What’s Next?

This article went to press just as the August recess was beginning, the Sept. 30 expiration of SAFETEA-LU was looming large, and what will happen next is uncertain. That said, if the final chapter of the story was ours alone to write, here’s how things would play out: 
Members of Congress get an earful from construction industry leaders back home during the August recess. Lawmakers return to Washington in the fall with a better understanding of dismal construction industry economic conditions and how the uncertainty surrounding the federal highway program is making a bad economy worse. Recognizing the massive economic stimulus and job creation potential, the House and Senate pass multiyear highway bills by the end of October, a conference committee hashes out the differences by Christmas, and Congress enacts a final bill by the end of January. The new legislation doubles annual funding for road construction by 2015. Recognizing the road program’s national security and long-term economic implications, but not wanting to increase taxes during a recession, Congress decides to fund the increase with a general fund transfer to the HTF for 2010 and 2011. However, the legislation increases the gas and diesel tax highway user fees by five cents per year starting on June 1, 2011, by which time the economic recovery should be well in hand, the 2010 congressional elections will be behind us, and 2012 presidential campaign cycle won’t yet be fully underway. The bill also dedicates more resources to identifying a VMT tax collection method that’s mindful of civil liberties concerns and creates demonstration projects to allow states to experiment with alternative methods of user fee collection.

As noted above, based on everything we’ve seen to-date, that’s the best case scenario. The worst case scenario is that the Obama administration gets its way, Congress kicks the ball down the field 18 months, the construction industry continues to struggle through its depression, more companies close and more workers lose their jobs, and America’s infrastructure gets worse. What happens on the highway bill in 18 months is anyone’s guess. A new Congress will just have been seated and it’s hard to imagine lawmakers being organized enough to get a bill done in the first six months of the year. And with the looming specter of a presidential election less, which at that point will be two years away, the 112th Congress will be far more politically charged than the 111th (if that’s even possible) and Obama will be even more sensitive about issues that raise voter ire. When and if the highway bill gets done and what it looks like is anybody’s guess.

What Are You Going To Do About It?

Whether we wind up with the first scenario, the second, or something in between isn’t a matter of chance. It’s a matter of getting lawmakers focused on the hard, cold facts: The nation’s infrastructure is crumbling. Our long-term economic competitiveness and public safety are being jeopardized. The construction industry is mired in a depression with 18 percent unemployment. And the only way Congress can make things better is by passing a long-term highway bill.

Rest assured that AED is continuing and ramping up its advocacy efforts here in Washington, but your representatives and senators also have to hear from you.

If you haven’t already done so, visit AED’s online Highway Reauthorization Action Center – go to www.aednet.org, click on Government at the top, and click the link at left.  The site is loaded with materials to help you understand the issues and how to weigh in on the debate – we’ve included several draft letters for your use.

They say the squeaky wheel gets the grease. Let’s make the equipment industry squeak so loud that Congress can’t ignore the highway bill any longer!
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