Rep. Lowenthal says bill would raise $8 billion for dedicated freight fund.
Rep. Alan Lowenthal of California said Thursday that a new freight infrastructure bill he is sponsoring has a good chance of being included in a surface transportation authorization package next year because money raised from truck and railroad users would go into a dedicated trust fund. That mechanism, he told American Shipper in a phone interview from his district, should alleviate conservatives’ concerns about government waste because it would ensure the revenue is used for its intended purpose.
“A lot of this [anti-tax] feeling has to do with a lack of trust. I don’t think anybody in their right mind thinks that there is no role for federal tax dollars,” the Democratic congressman said. “The money goes to what it’s supposed to do. [Small-government Republicans] want their goods on time and efficiently, too. And we can’t do that now because we’re not investing.”
Lowenthal, whose district includes the Port of Long Beach, introduced H.R. 5624, “Economy in Motion: The National Multimodal and Sustainable Freight Infrastructure Act,” just before Congress adjourned Sept. 19 so lawmakers could return home to campaign for the November elections.
The bill would fund freight-related infrastructure projects through a 1 percent fee on the waybill –— the transportation invoice — for goods moved more than 50 miles by ground transportation. The legislation estimates it would raise $8 billion per year for intermodal projects and other improvements to eliminate bottlenecks in the freight transportation system.
Cargo owners have complained for many years that aging infrastructure, inadequate capacity in critical areas, and a lack of connectors linking highways, ports and railheads have acted as a brake on business by making it difficult to provide timely deliveries to customers and keep costs down.
Many shippers and motor carriers have expressed willingness to pay more in gas and diesel fuel taxes to help stabilize the Highway Trust Fund, which only receives about 60 percent of the revenue today required to meet federal obligations to states for highway repairs and upgrades. Congress is borrowing the rest; this has put the program in jeopardy because of political pressure to reduce the budget deficit. On Aug. 8, President Obama signed legislation providing nearly $11 billion in temporary funding for highway and transit programs, and infrastructure funding. The measure keeps the Highway Trust Fund solvent through May and forestalls cutbacks in reimbursements to states for construction projects.
The temporary funding law is paid for by raising customs fees, taking money from another trust fund, and adjusting pension rules so companies pay more in taxes now than in the future.
It was the fifth time in seven years Congress used a temporary funding patch to avoid significant cuts to transportation programs.
The Congressional Budget Office projects Congress will need to identify an additional $7 billion to preserve highway and transit funding for the last four months of fiscal year 2015. Maintaining current program funding beyond 2015 will require an average of $16 billion in additional revenues each year, according to analysis by construction industry groups.
Identifying a long-term funding solution for surface transportation programs is necessary before Congress can advance a long-term reauthorization bill, but lawmakers are mostly opposed to increasing the gas tax and have not found consensus on alternative revenue sources to augment the Highway Trust Fund.
Meanwhile, little money is earmarked in the DOT’s budget to specifically address freight needs because states have discretion under the existing system on how to spend federal highway aid. State transportation departments have historically focused on highways that address commuter needs. The only chance for freight-specific projects to receive money is through the multimodal, competitive TIGER grant program, which is subject to annual appropriation decisions by Congress.
Lowenthal’s bill would create two freight-specific grant programs. A formula-based infrastructure trust fund would distribute funds to states based on the amount of existing freight infrastructure within each state. To be eligible, states must develop comprehensive state freight plans and have state freight advisory committees, as encouraged under the MAP-21 transportation act that was just extended. The state freight plans would need to include strategies to mitigate the environmental impact of freight transportation projects. Under the formula mechanism, states can also create partnerships to receive funding for multi-state plans.
A second funding mechanism is a competitive grant program that would be open to all local, regional and state governments. The competitive grant program includes a 5-percent set-aside for electric-powered demonstration projects. Eligible projects include intermodal, port, inland waterway and airport facilities; first-and-last mile connectors; and facilities related to international border crossings.
“We don’t think we have a lot of time as a nation. We’ve got to fix the bottlenecks and have a national freight network, a website indicating where our national freight strategic projects are, and a way to pay for it. It has to be in a lock box and there has to be a nexus between those that pay and those that benefit from the system,” Lowenthal said.
His bill is more comprehensive than similar legislation reintroduced by Rep. Adam Smith, D-Wash., in January that calls for a 1-percent user fee charged on U.S. freight shipments and deposited in a special fund.
In July, Rep. Janice Hahn, a California Democrat who co-chairs the PORTS Caucus, submitted a bill to raise $1.9 billion and create a dedicated funding source for roads and rail lines that connect to ports. It would be paid for by transferring 5 percent of all import duties collected by U.S. Customs, requiring potentially controversial cuts elsewhere under Congress’s current pay-as-you-go approach.
Other transportation advocates have previously floated the idea of a container fee to fund infrastructure investment, but critics note such a mechanism is too narrow because it primarily focuses on cargo that is international and carried in steel boxes at the exclusion of domestic freight and shipments like grain and oil that move in bulk conveyances.
Meanwhile, President Obama’s surface transportation spending plan, the GROW America Act, includes $10 billion over four years for two multimodal freight funds, but there is no sustainable funding stream attached to them because it relies on a one-time infusion of money secured through hoped-for corporate tax reform.
Leslie Blakey, executive director of the Coalition for America’s Gateways and Trade Corridors, praised Lowenthal’s bill.
“We see this type of approach as equitable and realistic in terms of how the system is being used and who should be paying for additional capacity, efficiency, and relief of congestion, which will benefit the people paying the fee,” she said.
CAGTC’s top priority is creation of a dedicated funding source and a trust fund for freight projects. It has advocated for at least $2 billion for a competitive grant program.
“I think $8 billion is a good number relative to the backlog and unaddressed constraints on the freight system,” Blakey said. “This infrastructure serves a wide range of freight and a small user fee on that spectrum of freight will raise a substantial amount of money.”
The Lowenthal bill also provides a sustainable source of revenue that can grow over time because, as a percentage-based fee, it is tied to the growth in the cost of transportation services, she explained.
The only apparent equity issue associated with a waybill fee involves private fleets, which don’t generate an invoice because the shipper is not hiring an outside provider to haul its cargo.
H.R. 5624 includes a provision for an equivalent filing by companies that use their own trucks, but there are few details on how that would work.
“In the case of transportation of property by the taxpayer or a person related to the taxpayer, the fair market value of such transportation shall be the amount which would be paid for transporting such property if such property were transported by an unrelated person determined on an arms’ length basis,” the bill reads.
Lowenthal said he originally planned to introduce the bill in the next session of Congress — assuming victory in the November election — but Department of Transportation officials encouraged him to release it now so that it becomes part of the public debate on the need for infrastructure investment.
The bill will have to be reintroduced in the new Congress.
“This elevates freight to the same level that we have for the highway trust fund and transit,” the congressman said.
Lowenthal has had extensive involvement with freight issues going back to his days as a city council member in Long Beach, and in the California State Assembly and Senate.
He is known in the California port sector for passing anti-truck idling legislation at port terminals and for being the driving force behind PierPass, the program set up by marine terminal operators in Southern California to operate night gates. Lowenthal was prepared to drop legislation mandating that terminals extend their gate hours to alleviate peak-time congestion when terminal operators volunteered to coordinate and set up their own system.
He also pushed for enactment of a $30 fee on containers moving through the ports of Long Beach, Los Angeles and Oakland to pay for infrastructure and clean air projects. Then-Gov. Arnold Schwarzenegger vetoed the bill.
“The more the ports and the highway system works, my people are real happy. When there is congestion, I hear it all the time,” Lowenthal said.
“The ports have been investing in world-class infrastructure. They’ve made amazing strides by taking into account the environmental and congestion impacts. But what happens is that the goods get dumped into a Third World transportation system. It’s time to figure out how to pay for it,” he said.
Rep. Lowenthal says bill would raise $8 billion for dedicated freight fund.