fastlane
Government by default
BY NOW, IT’S PRETTY CLEAR TO EVERYONE IN THE COUNTRY
that we have a serious transportation infrastructure problem. Many
bridges and highways are in deplorable condition, and the amount of
time we spend stalled in traffic increases with each passing year. In
2011, the average commuter lost 34 hours due to traffic delays, compared with 14 hours in 1982. The cost of this congestion exceeds $100
billion annually, according to the Texas A&M Transportation Institute.
These delays, combined with the cost of fuel and restrictive driver
hours-of-service regulations, also contribute to the ever-increasing cost
of moving goods by truck.
Certainly, the federal government is aware of the issue. President
Obama mentioned it in his most recent State of the
Union address. Congress has passed several bills and
conducted hearings on the subject. The first hearing
of the new House Transportation Committee
focused on the topic and reinforced the president’s
concern. So what’s the problem? The problem is that
no one has developed a plan for improvement or a
mechanism for paying for the improvements. And
they won’t come cheap. The U.S. Chamber of
Commerce has urged Congress to increase the federal fuel tax, which has not been raised since 1993.
Obviously, that is a political football, but if nothing
is done, the Highway Trust Fund (the primary
source of funding for surface transportation projects) will be depleted
within two years.
In fact, it appears the effects of the funding squeeze are already being
felt. On Christmas Day in 2012, a headline on the front page of The
Memphis Commercial Appeal read “Memphis – Kentucky I- 69 Quietly
Shelved.” As the story explained, after 20 years of planning, design, and
spending, the state of Tennessee has decided to discontinue work on
the 156-mile segment of Interstate 69 stretching from southern
Kentucky to northern Mississippi. This is particularly disappointing in
that I- 69 has been designated the NAFTA Highway, since it would provide a direct connection with Canada and Mexico. Why has Tennessee
backed away from the project? The federal government has not provided the funding necessary to complete the work.
In the face of the federal government’s failure to act, states are
beginning to take matters into their own hands. Two months ago, the
Virginia General Assembly passed a transportation bill that among
other things, would eliminate the retail fuel tax and replace it with a
wholesale gas tax. The general sales tax would be increased by 0.3 percent. The total bill is expected to generate about $850 million annual-
ly for transportation projects. The increased
taxes will not be universally popular, but the
commonwealth appears to be on track to alleviate congestion. Virginia is also encouraging
investment by private entities and has been
doing so for some time. Last month,
Maryland passed legislation similar to
Virginia’s, and bills are also being considered
in New Hampshire and Massachusetts.
It’s not just the states that are attempting to
tackle the infrastructure problem. The powerful business advocacy
group The U.S. Chamber of
Commerce has joined in
the effort through its “Let’s
Rebuild America” initiative. One of the program’s
key goals is to encourage
public/private partnerships, and the chamber
points to several instances
in which such partnerships
have resolved significant
infrastructure issues.
While I have always been an advocate of the
federal government’s doing its job by developing a plan and providing the funds, I am finally convinced that this simply is not going to
happen. Still, the private/public partnership
route could prove a mixed blessing. To me, the
one big risk is that the states and corporations
will do what is best for them, but not necessarily best for the country. ;
Editor’s note: For a somewhat different perspective on the infrastructure debate, see the
“Outbound” column on page 80.
Clifford F. Lynch is principal of C.F. Lynch & Associates, a provider
of logistics management advisory services, and author of
Logistics Outsourcing – A Management Guide and co-author of The
Role of Transportation in the Supply Chain. He can be reached at
cliff@cflynch.com.
