Transportation infrustration

Transportation infrustration Shipping industry says U.S. can't afford to wait for infrastructure investment.

By Eric Kulisch

      The Obama administration's attempt to defer for 18 months a comprehensive bill to guide surface transportation spending for the next six years met with strong resistance from prominent House lawmakers and is not favored by shippers and freight transportation providers that place priority on modernizing a transport system that increasingly jeopardizes the speed and reliability they depend on to move goods.

LaHood

      Transportation Secretary Ray LaHood asked Congress to extend the existing SAFETEA-LU spending plan until March 2011 and cover the shortfall in the Highway Trust Fund with a $20 billion transfer from the general fund to allow more time to develop long-term policies for financing and reforming highway, transit and rail programs.
      The Highway Trust Fund, a victim of sharply reduced gas and diesel tax receipts during the recession and greater use of fuel-efficient vehicles, is expected to go into the red by the end of August. Obama administration officials have previously estimated the trust fund will experience up to a $17 billion shortfall through the end of fiscal year 2010, including a $5 billion to $7 billion deficit this year. Without the infusion of money from the Treasury the Transportation Department will not have the money to meet its grant commitment to states for the remainder of the fiscal year.
      Administration officials remain firm in their opposition to raising the gas tax to pay for highway and transit upgrades, because they say it would add to the burden of Americans already trying to cope with loss of income during the recession.

Oberstar

      Rep. James Oberstar, chairman of the House Transportation and Infrastructure Committee, is intent on writing a final bill and voting on it by early fall. He had hoped to use the expiration of SAFETEA-LU on Sept. 30 to prod fellow congressmen to make tough decisions about funding a system that is straining from congestion and deferred maintenance and upgrades in many areas of the country. A temporary extension of transportation programs at 2008 levels is 'unacceptable,' he said.
      Oberstar, who is strongly backed by Highways and Transit Subcommittee Chairman Peter DeFazio and key Republicans on the committee, argues that the uncertainty of long-term funding streams will lead transportation officials at the state level to slow down construction awards for big projects, costing thousands of jobs.
      His $500 billion bill, including $50 billion in first-time funding for high-speed rail, would also consolidate transportation programs and give federal and state transport officials more flexibility to allocate money based on project performance and outcomes.
      Even without the administration's request to postpone a large transportation bill, prospects for reauthorization this year were dim because the Senate does not share Oberstar's zeal for infrastructure investment and is focused on legislation dealing with health care, curbing greenhouse gases, and banking reform.

DeFazio

      Failure to raise gas and diesel taxes and address infrastructure problems would hurt businesses and U.S. competitiveness, industry leaders say.
      'The highways are our assembly line,' Randall Mullett, vice president of government relations for Con-way Inc., said during a discussion on freight transport hosted by the RAND Corp. 'We have no way to invest in our assembly line ourselves. We're dependent on the government and government entities at the state, local and federal levels. There's no other way to foot that than through the fuel taxes right now.'
      Con-way is a $5 billion trucking and logistics company headquartered in San Mateo, Calif.
      Earlier this year, the National Surface Transportation Infrastructure Financing Commission chartered by Congress released a report calling for a switch to a vehicle-miles traveled fee and raising the gasoline and diesel tax by 10 cents and 15 cents, respectively, until a VMT fee system can be implemented nationwide. Other experts and industry groups have said increasing the fuel tax is necessary and that they are willing to pay if the money is dedicated to national transportation priorities that benefit users.
   An increase in the fuel tax is essential in the near term because the dedicated revenue stream from users allows highway and transit agencies that receive federal money to have contract authority and carry out multiyear planning, said Janet Kavinoky, director of transportation infrastructure for the U.S. Chamber of Commerce.

Kavinoky

   She compared switching from the gas tax to converting the United States to alternative energy sources.
      'In the United States we can't replace base-load power produced by fossil fuels with solar, wind and wave power,' because those sources don't produce enough power to meet demand. 'The base-load power of highway and transit programs is gas and diesel taxes. In congressional offices, they don't want to hear that answer. We don't have two more years for Congress to arrive at the same conclusion as the rest of the universe,' Kavinoky said.
      She also questioned whether White House concerns about raising taxes during a recession square with its efforts to push through expensive health care reform and climate change bills.
      'If you don't think those things aren't going to impose additional costs on people then I suggest everybody go back and take Econ 101 again,' Kavinoky said.
      Money raised through a dedicated gas tax gets driven back into the economy through the purchase of materials and the creation of jobs, she said, while creating the physical platform that the rest of the economy runs on.
      Kavinoky and Mullet encouraged the government to set aside some revenues as seed money to help attract other public and private partners to invest in nationally significant projects. It could also leverage its funds by using money to underwrite risk that allows others to invest a larger amount of money in projects that aren't economically viable on their own.
      A National Infrastructure Bank, which is endorsed by Oberstar and the DOT among others, is expected to play such a guarantor role to attract private capital.
      Oberstar's bill would also create a freight fund to pay for improvements to key national highway corridors and other intermodal capacity needs.
      Con-way favors infrastructure investment across the board, not just for highways that directly benefit motor carriers, Mullett said. An example of the interconnected freight system is that the company's Menlo Worldwide Logistics subsidiary buys hundreds of millions of dollars of freight rail transportation each year.
      'We want rail to grow. Just to keep up with GDP we've got to grow capacity in all modes, not just one,' he said.