February 17, 2014 4:00 AM, EST

Failure to Fix Highway Fund Hurts Economy, Execs Warn

By Michele Fuetsch, Staff Reporter

This story appears in the Feb. 17 print edition of Transport Topics.

Business, labor and state transportation officials pleaded last week with Congress to find both immediate and long-term fixes for the Highway Trust Fund, which is expected to be insolvent by late summer.

If the projected shortfall is not addressed, more than 12,000 highway and bridge projects — on the routes most critical to the economy — could be lost, said Peter Ruane, president of the American Road and Transportation Builders Association.

“Trucks carry freight worth more than $11 trillion over the nation’s roads every year, and more than three-quarters of that truck travel occurs on the roads that comprise the federal aid system,” Ruane said at the Senate Environment and Public Works Committee hearing Feb. 12.

“Without the federal investment in these roads, we put trucking mobility and productivity and that $11 trillion in annual economic activity at risk,” he told the committee that will write a new highway bill this year.

EPW Chairwoman Barbara Boxer (D-Calif.) said she hopes the committee will produce a five- to six-year bill by April.

Thomas Donohue, president of the U.S. Chamber of Commerce, said there’s consensus on several fronts: that the transportation system is running out of money, that the federal government must, for the sake of the economy, invest in transportation and that both immediate and long-term funding solutions are needed.

“When you look at the big picture, the simplest, most straightforward and most effective way to generate enough revenue is by increasing federal gasoline and diesel taxes,” Donohue said.

A moderate increase in fuel taxes, which have not been raised since 1993, “would provide the necessary funding, preserve the important user-pays principle and provide needed stability,” Donohue said.

To get it done, he told the committee, “First, let’s start by having some courage and showing some leadership. For once, let’s do what’s right, not what politically expedient.”

Polls, he said, show that opposition to higher fuel taxes is “significantly overblown” and that voters support increases when confident they will pay for transportation projects.

At the state level, the impending trust fund shortfall is a looming catastrophe, said Mike Hancock, president of the American Association of State Highway and Transportation Officials and secretary of the Kentucky Transportation Cabinet.

States will put large highway projects on hold this year, and the federal government may have to start processing reimbursements weekly instead of daily. That means states won’t be able to pay contractors in a timely manner, and they in turn won’t be able to pay their workers, subcontractors and suppliers, he said.

“For some construction businesses and suppliers, which survived the recession but are still operating on the slimmest of margins, this could simply be the last straw,” Hancock said.

Failure to act on a long-term bill with adequate funding means the nation’s transportation system will “decay” further, AFL-CIO President Richard Trumka said.

“Congress must come together to enact a robust and a long-term authorization,” he said. “If business and labor can come before you united on this issue . . . despite our sharp disagreements on a variety of other matters, I think that should tell everybody something and tell them very loudly,” he said.

The National Association of Manufacturers surveyed its members last year and found that 67% said infrastructure matters so much that all options for funding it should be on the table, NAM President Jay Timmons told the committee.

“It matters during every step of the production process,” Timmons said, “from receiving inputs to shipping our products to market at home and to our customers abroad.”

Sen. Kristen Gillibrand (D-N.Y.), an EPW committee member, said that, with the trust fund tottering and the current funding law, MAP-21, set to expire Sept. 30, Congress runs the risk of “doing real damage to our economy” if it fails to act.

New York has 628 federal aid highway projects set to begin in 2015, she said.

“Forty percent of these projects are on bridges that are in need of construction or repair,” Gillibrand said. “Without the new funding from the Highway Trust Fund to start these projects next year, New York state would have to begin restricting the use of these roads and bridges.

“This would result in detours, delays, problems with getting things that need to be brought into our commerce,” she said.