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March 23, 2007 5:00 AM, EDT

Trucking Would Consider Higher Taxes, Graves Says

Support Tied to Benefit to Highways

WASHINGTON — The trucking industry is willing to pay higher fuel taxes as long as the money generated is spent to improve the nation’s highway infrastructure, Bill Graves, president of American Trucking Associations, said.

Graves, who testified March 19 on Capitol Hill before the National Surface Transportation Policy and Revenue Study Commission, urged members to back a national freight program that is “segregated from the existing federal surface transportation program, and that its source of funding should be walled off from the Highway Trust Fund.”

“We are prepared to pay,” Graves said. “We do favor fuel tax as a method of payment . . . and we believe in a program that is tied to system use. The sense now is that given the right plan, there could be some great things accomplished.”

The 12-member commission, led by Transportation Secretary Mary Peters, was created by Congress to help shape future transportation policy. Graves reaffirmed ATA’s opposition to adding tolls to existing interstate highways, and told Transport Topics that while there is a place for other financing options, “all of them pale in comparison to the fuel tax to meet national [transportation] needs.”

DOT in recent months has been encouraging privatization and public-private partnerships as a way to generate funds for highway improvements.

During his testimony, Graves did not suggest how much the federal diesel tax, which currently stands at 24.4 cents a gallon, should be raised, but, he said, “ATA believes that a reasonable increase in this tax could fi-nance a significant share of the programs . . . assuming the revenues are not diverted to other uses.”

Gregory Cohen, president of the American Highway Users Alliance, who also testified March 19, told TT the diesel tax would have to be raised about 10 cents a gallon “just to account for inflation over the last 14 years.” Federal fuel taxes were last raised in 1993.

Graves presented the commission with two ways the increased funding could be used to improve the movement of freight throughout the United States.

Under ATA’s Freight Corridors Initiative, the higher taxes would finance projects identified by the Federal Highway Administration as “providing congestion relief at bottlenecks on corridors which have the most significant impacts on trucking mobility and on the U.S. economy,” according to Graves’ testimony.

He also suggested using fuel tax revenue to finance the construction of a new four-lane, truck-only highway network adjacent to current high-volume freight corridors.

“Over the next several transportation reauthorization bill cycles, a highway network could be built to facilitate the exclusive movement of freight by trucks throughout the nation,” said Graves, who estimated the cost between $200 billion and $300 billion.

However, Peters told TT that “fuel taxes alone are not a viable solution” to pay for the nation’s transportation needs and that “it is difficult for Congress to look at the totality of transportation needs and block off funds.” “Focusing specific money on specific projects is a challenge,” she said. “It’s not just a question of how much we spend — it’s how we’re spending.”

Similarly, Jack Schenendorf, vice chairman of the commission and a longtime congressional staffer and attorney, said, “The enormity of our need is so great that to address those [funding] problems in the future is going to take raising money in other ways” separate from just fuel tax increases.

Commission member Pat Quinn, who is co-chairman of truckload carrier U.S. Xpress Enterprises and current ATA chairman, told TT the federal fuel tax “is the only tool we have . . . for up to 15 years” to fund transportation infrastructure.

However, Quinn said at least 20% of the revenue collected from the tax has been diverted to transportation projects that do not directly benefit freight movement, a problem that has resulted in “a patchwork quilt of earmarked [transportation] projects.”

Other officials testifying before the commission also called for increased fuel taxes and segregated funding for a federal freight transportation program. “We’re in harmony with ATA; we need revenue streams fire-walled for one purpose . . . to address the very serious capacity problem as it relates to freight,” said Charles Potts, vice chairman of the American Road and Transportation Builders Association.

“We’re willing to pay; we’re just not willing to pay for business-as-usual, where all the revenue is thrown into one pot.” Scott Haggerty, testifying on behalf of the National Association of Counties, said the federal fuel tax “is the only proven viable funding source.”

Haggerty later told TT that because “the trucking industry is making more of a contribution with increased fuel taxes, that funding needs to be protected by the federal government.” Rolf Lundberg, senior vice president of congressional affairs for the U.S. Chamber of Commerce, told the commission that “fuel taxes are currently the simplest and most effective way to fund transportation.

Among other officials who testified were: Robert Darbelnet, president of AAA; John Horsley, executive director of the American Association of State Highway and Transportation Officials; Craig Rockey, vice president of policy and economics for the Association of American Railroads; and Patrick Jones, executive director of the International Bridge, Tunnel and Turnpike Association.