Congress Debates Fuel-Tax Increase

Light & Medium Truck, Jun 2008 by McNally, Sean, Reiskin, Jonathan S

Trucking and railroad executives joined other members of the national transportation commission in pressing Congress for more infrastructure funding focused on freight movement, but a key Senate Republican opposed the commission's recommendation for a dramatic fuel-tax increase.

The National Surface Transportation Policy and Revenue Study Commission last year called for an increase of more than 60% in transportation spending, financed largely by a 25-cent to 40-cent increase in the federal fuel tax and indexing it to adjust for inflation.

"While there may be merit to indexing the federal gas tax," Sen. Kay Bailey Hutchison (R-Texas) said, "a 25-cent-a-gallon or more per gallon increase is unacceptable."

Hutchison, who is chairwoman of the Senate Republican Policy Committee, said the increase was especially unacceptable because Texas usually sends more fuel-tax revenue to the federal government than it receives in federal highway funds. She said the proposal would make a fuel tax increase "doubly abusive."

"I hope that it is dead on arrival here, and I will do everything I can to make sure that it is," Hutchison said.

In an April hearing of the Senate Commerce, Science and Transportation Committee, Patrick Quinn, co-chairman of U.S. Xpress Enterprises, and other commission members, pressed for a national emphasis on freight.

"The public is far ahead of policymakers in understanding that our ability to move goods efficiently, safely and in a timely matter needs to be a national priority," said Quinn, immediate past chairman of American Trucking Associations.

He told the committee that the commission had agreed to recommend higher fuel taxes as the primary transportation funding source because of its "low administrative and compliance costs ... its relative stability and predictability."

However, Quinn said, putting a national emphasis on freight movement was one of several changes that needed to be made to justify increasing fuel taxes.

"Simply raising the federal fuel tax and putting more money into the same programs will not be acceptable," Quinn said. "The nation's surface transportation programs must be fundamentally reformed."

Another commission member, Matthew Rose, chief executive officer of Burlington Northern Santa Fe Railway, said freight transportation in the future "really is a significantly different business proposition versus the past 25 years," because projected growth of freight volumes will put more pressure on the nation's transportation system.

"Congestion costs start to multiply by the year 2020... .There will be about $200 billion worth of congestion costs," Rose said, adding that improvements are needed to maintain the nation's competitive edge.

Rose agreed with Quinn that "the public will not accept higher fuel taxes or other fees if the system is not overhauled."

Quinn also called on Congress to place "strict regulations" on privatization of highways and to avoid the "allure of privatization" and tolls generally.

Hutchison, while opposing higher fuel taxes, said she also opposed tolling on existing interstates.

"I support tolling if it is going to create an additional lane," Hutchison said. "I just can't support the proposal to toll existing lanes. The federal government and the states built these roads using federal funding with the commitment that they would remain freeways."

Truckers Push Higher Fuel Levies

At about the same time as the April Senate hearing, a pair of prominent trucking executives told shipping customers that the U.S. freight transportation infrastructure is so threatened by congestion and age that it needs huge investments financed by higher fuel taxes, not road privatization or tolls.

"I can't say this in a softer way. We're in favor of [a fuel tax] increase," said Dan England, chairman of refrigerated carrier CR. England Inc.

"We need more highways," and road users must pay for them through higher taxes on gasoline and diesel fuel, England said at the Transplace Inc. Shipper Symposium in Rogers, Ark.

"The global supply chain facilitates an exciting world, but our infrastructure is not supporting growth," England said.

John Labrie, president of Con-way Freight, the country's thirdlargest less-than-truckload carrier, said the nation has been "chronically underinvesting in infrastructure, and gridlock is taking its toll on efficiency."

Asked about the timing of fuel-tax increases, with retail diesel solidly above $4 a gallon, Labrie said the action is necessary, even if painful.

"There's no such thing as a free lunch. What we need to be asking is, 'What is the cost to the economy if we don't make these investments?' We can't compete as a nation if we don't make investments in transportation.

"This is a sound capital allocation," he said.

- Sean McNally, Jonathan S. Reiskin