20 DC VELOCITY FEBRUARY 2018 www.dcvelocity.com
newsworthy
U.S. Chamber proposes five-year, 25-cent-per-gallon hike
in federal fuels tax
The U.S. Chamber of Commerce proposed a five-year,
25-cent-a-gallon increase in the federal motor fuels tax, the
first such increase in 25 years, which would fund improvements to the country’s deteriorating roads. The chamber
also endorsed the concept of private-public sector partnerships to finance upgrades to U.S. ports, airports, and inland
waterways.
The hike in the federal excise tax on gasoline and diesel
fuel, which would be indexed for inflation and improvements in fuel economy, would raise $394 billion over 10
years, Thomas J. Donohue, president and chief executive
officer of the 3 million-member U.S. Chamber, said at an
infrastructure summit in Washington.
Donohue said the organization’s members,
who constitute the country’s largest business trade group, would not be opposed
to a one-time upfront hike of 25 cents
a gallon as an alternative to a phased-in
approach. The chamber is talking to the
White House and Congress about broad
infrastructure issues, and Donohue’s comments are designed to start a national conversation about
the issue, said a source inside the chamber. “We’re ready to
work with anyone to get this done,” the source said.
The federal motor fuels tax, 24. 4 cents a gallon for diesel
and 18. 4 cents a gallon for gasoline, has not been raised
since 1993. Proceeds from the levies are deposited in a trust
fund, which is the dominant revenue source for federal
road projects. For several reasons, not the least of which
has been that the steadily rising cost of road projects has
exceeded the money available to pay for them, Congress
has repeatedly been forced to inject funds from the general
treasury into the Highway Trust Fund to keep it solvent.
Sean McNally, a spokesman for the trade group American
Trucking Associations (ATA), said in an e-mail that “in
general, we are supportive of finding fair and efficient ways
of raising revenue for infrastructure investment.” ATA,
which has long supported an increase in the motor fuels
tax, has proposed a 20-cent-per-gallon fee that would be
collected at the wholesale level when the product is pumped
into the bellies of service station tanks.
POLITICAL HOT POTATO
For years, stakeholders across a broad spectrum have advo-
cated increasing the federal levy, provided the funds are
dedicated to road infrastructure improvements. However,
the administrations of presidents George W. Bush, Barack
Obama, and, for the first year at least, Donald J. Trump
have refused to push for an increase.
Congress, for its part, has also failed to act, worrying
about the political ramifications of such a move come
election time. However, Donohue noted that 39 states have
raised their fuel taxes since 1993—with some states doing
so several times during that period—and that no state lawmaker has lost an election because he or she advocated a
fuel tax increase.
The lack of political support for a federal fuel tax hike
stems from Congress’s desire to move away from the original user-fee model to one that funds a broad range
of transport projects that make the motoring
public feel their money is being wasted, said
Robert Poole, director of transportation
policy for the libertarian think tank The
Reason Foundation.
“The voting public has little confidence that paying more to the feds will
make any meaningful improvement in
their travels,” Poole said in an e-mail.
“By contrast, a majority of state DOTs
[departments of transportation] have been able to gain
political support for fuel tax increases by showing voters
a direct connection between what they will pay and what
more they will get if the increase is approved.”
PUBLIC-PRIVATE PARTNERSHIPS
The chamber’s proposal comes as the Trump administration is focusing attention on a supposed $1 trillion infrastructure measure, the broad strokes of which would leverage $200 billion in federal funding to generate an additional
$800 billion in federal, state, and private sector investment.
Donohue said private-public sector partnerships, while
not appropriate in some cases, should still be strongly considered if the circumstances warrant. He pointed to a $1.91
billion project under way in Orange County, Calif., to add a
general-purpose lane and a toll lane along a 16-mile stretch
of Interstate 405, which feeds into the ports of Los Angeles
and Long Beach, the country’s busiest seaport complex.
The county has received a $628 million loan from the U.S.
Department of Transportation and will finance most of the
remainder by issuing bonds backed by toll revenues. Most
of the work is set for completion in 2023.
“These are the kinds of things we should be doing all
across the country,” Donohue said. “Depending on the
design of the financing mechanism, just $1 of federal funds
today can, by some estimates, leverage up to $40 for new
infrastructure projects.”
