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22–332 2017

LONG-TERM FINANCING OF THE 

HIGHWAY TRUST FUND 

HEARING 

BEFORE THE

COMMITTEE ON WAYS AND MEANS 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

JUNE 17, 2015 

Serial No. 114–FC06 

Printed for the use of the Committee on Ways and Means 

( 


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COMMITTEE ON WAYS AND MEANS 

PAUL RYAN, Wisconsin, Chairman 

SAM JOHNSON, Texas 

KEVIN BRADY, Texas 

DEVIN NUNES, California 

PATRICK J. TIBERI, Ohio 

DAVID G. REICHERT, Washington 

CHARLES W. BOUSTANY, JR., Louisiana 

PETER J. ROSKAM, Illinois 

TOM PRICE, Georgia 

VERN BUCHANAN, Florida 

ADRIAN SMITH, Nebraska 

LYNN JENKINS, Kansas 

ERIK PAULSEN, Minnesota 

KENNY MARCHANT, Texas 

DIANE BLACK, Tennessee 

TOM REED, New York 

TODD YOUNG, Indiana 

MIKE KELLY, Pennsylvania 

JIM RENACCI, Ohio 

PAT MEEHAN, Pennsylvania 

KRISTI NOEM, South Dakota 

GEORGE HOLDING, North Carolina 

JASON SMITH, Missouri 

ROBERT J. DOLD, Illinois 

SANDER M. LEVIN, Michigan 

CHARLES B. RANGEL, New York 

JIM MCDERMOTT, Washington 

JOHN LEWIS, Georgia 

RICHARD E. NEAL, Massachusetts 

XAVIER BECERRA, California 

LLOYD DOGGETT, Texas 

MIKE THOMPSON, California 

JOHN B. LARSON, Connecticut 

EARL BLUMENAUER, Oregon 

RON KIND, Wisconsin 

BILL PASCRELL, JR., New Jersey 

JOSEPH CROWLEY, New York 

DANNY DAVIS, Illinois 

LINDA SA ́ NCHEZ, California 

JOYCE MYER, Staff Director 

JANICE MAYS, Minority Chief Counsel 


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C O N T E N T S 

Page 

Advisory of June 17, 2015 announcing the hearing .............................................. 2 

WITNESSES 

Bill Graves, President and Chief Executive Officer, American Trucking Associations, Arlington, Virginia ................................................................................ 40 

Robert W. Poole, Jr., Director of Transportation Policy and Searle Freedom 

Trust Transportation Fellow, Reason Foundation, Los Angeles, California ... 30 

Chad Shirley, Deputy Assistant Director for Microeconomic Studies, Congressional Budget Office, Washington, DC ............................................................... 5 

QUESTIONS FOR THE RECORD 

Questions from The Honorable John Larson, a Representative in Congress 

from the State of Connecticut, to Bill Graves, President and Chief Executive 

Officer, American Trucking Associations ........................................................... 148 

Questions from The Honorable Linda Sa ́nchez, a Representative in Congress 

from the State of California, to Bill Graves, President and Chief Executive 

Officer, American Trucking Associations ........................................................... 149 

SUBMISSIONS FOR THE RECORD 

Alan Lowenthal, a Representative in Congress from the State of California .... 150 

American Association of Port Authorities (AAPA) ................................................ 154 

American Association of State Highway and Transportation Officials 

(AASHTO) ............................................................................................................. 170 

American Council of Engineering Companies (ACEC) ......................................... 179 

American Highway Users Alliance (The HwyUsers) ............................................ 181 

American Public Transportation Association (APTA) ........................................... 183 

American Public Works Association (APWA) ........................................................ 189 

American Truck Dealers Division (ATD) of the National Automobile Dealers 

Association (NADA) ............................................................................................. 194 

Andrew Wells ........................................................................................................... 197 

Associated General Contractors of America (AGC) ............................................... 205 

Association of Equipment Manufacturers (AEM) ................................................. 207 

California Transportation Commission .................................................................. 209 

Coalition for America’s Gateways and Trade Corridors (CAGTC) ...................... 211 

Concrete Reinforcing Steel Institute (CRSI) ......................................................... 213 

Dean Fry ................................................................................................................... 215

Great Lakes Metro Chambers Coalition ................................................................ 219 

Highway Materials Group ....................................................................................... 222 

Innovation NewsBriefs ............................................................................................ 225 

International Brotherhood of Teamsters (IBT) ..................................................... 229 

Institute on Taxation and Economic Policy (ITEP) .............................................. 233 

Los Angeles County Metropolitan Transportation Authority (Metro) ................. 239 

National Association of Manufacturers .................................................................. 241 

National Conference of State Legislatures ............................................................ 243 

National Stone, Sand & Gravel Association (NSSGA) ......................................... 248 

Pedestrian Advocate ................................................................................................ 256 

PublicCitizen ............................................................................................................ 258 

Rick Nolan, a Representative in Congress from the State of Minnesota ............ 261 

South West Transit Association ............................................................................. 264 

The Real Estate Roundtable ................................................................................... 268 

Tire Industry Association ........................................................................................ 272 

Transportation Transformation Group .................................................................. 277 

WageWorks ............................................................................................................... 279 


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LONG-TERM FINANCING OF THE 

HIGHWAY TRUST FUND 

WEDNESDAY, JUNE 17, 2015 

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON WAYS AND MEANS, 

Washington, DC. 

The Committee met, pursuant to notice, at 10:00 a.m., in Room 

1100, Longworth House Office Building, Hon. Paul Ryan [Chairman of the Committee] presiding. 

[The advisory announcing the hearing follows:] 


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ADVISORY 

FROM THE COMMITTEE ON WAYS AND MEANS 

FOR IMMEDIATE RELEASE CONTACT: (202) 225–3625 

Wednesday, June 10, 2015 

No. FC–06 

Chairman Ryan Announces Hearing on 

Long-Term Financing of the Highway Trust Fund 

House Committee on Ways and Means Chairman Paul Ryan (R–WI) today announced that the Committee will hold a hearing on Long-Term Financing of the 

Highway Trust Fund. It will explore the feasibility of various ideas to provide a sustainable long-term solution to the highway trust fund shortfall. The hearing will 

take place Wednesday, June 17, 2015, at 10:00 a.m. in Room 1100 of the 

Longworth House Office Building. 

Oral testimony at this hearing will be from the invited witnesses only. However, 

any individual or organization may submit a written statement for consideration by 

the Committee and for inclusion in the printed record of the hearing. 

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS: 

Please Note: Any person(s) and/or organization(s) wishing to submit written comments for the hearing record must follow the appropriate link on the hearing page 

of the Committee website and complete the informational forms. From the Committee homepage, http://waysandmeans.house.gov, select ‘‘Hearings.’’ Select the hearing for which you would like to make a submission, and click on the link entitled, 

‘‘Click here to provide a submission for the record.’’ Once you have followed the online instructions, submit all requested information. ATTACH your submission as a 

Word document, in compliance with the formatting requirements listed below, by 

the close of business on Wednesday, July 1, 2015. For questions, or if you encounter technical problems, please call (202) 225–3625 or (202) 225–2610. 

FORMATTING REQUIREMENTS: 

The Committee relies on electronic submissions for printing the official hearing 

record. As always, submissions will be included in the record according to the discretion of the Committee. The Committee will not alter the content of your submission, 

but we reserve the right to format it according to our guidelines. Any submission 

provided to the Committee by a witness, any materials submitted for the printed 

record, and any written comments in response to a request for written comments 

must conform to the guidelines listed below. Any submission not in compliance with 

these guidelines will not be printed, but will be maintained in the Committee files 

for review and use by the Committee. 

1. All submissions and supplementary materials must be submitted in a single 

document via email, provided in Word format and must not exceed a total of 10 

pages. Witnesses and submitters are advised that the Committee relies on electronic 

submissions for printing the official hearing record. 

2. All submissions must include a list of all clients, persons and/or organizations 

on whose behalf the witness appears. The name, company, address, telephone, and 

fax numbers of each witness must be included in the body of the email. Please exclude any personal identifiable information in the attached submission. 

3. Failure to follow the formatting requirements may result in the exclusion of a 

submission. All submissions for the record are final. 

The Committee seeks to make its facilities accessible to persons with disabilities. 

If you are in need of special accommodations, please call 202–225–1721 or 202–226– 

3411 TDD/TTY in advance of the event (four business days notice is requested). 


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Questions with regard to special accommodation needs in general (including availability of Committee materials in alternative formats) may be directed to the Committee as noted above. 

Note: All Committee advisories and news releases are available online at 

http://www.waysandmeans.house.gov

f 

/. 

Chairman RYAN. All right. I would like to have everybody take 

their seats, if they would. The Committee will come to order. 

First, I want to thank Chairman Reichert of the Subcommittee 

on Select Revenue Measures. He has done a lot of hard work on 

this topic, and he is one of our team leaders on this. And he is 

going to continue working on this issue through the Subcommittee. 

I also want to thank our witnesses: Chad Shirley, from CBO; my 

old friend, Bob Poole, from the Reason Foundation; and former 

Governor of the great State of Kansas, Bill Graves, from the American Trucking Associations. Everybody here holds all three of you 

in high regard. I am looking forward to an informative discussion 

on a very important issue that—Members on both sides of the aisle 

have requested that we dig into this issue, and I am glad we are 

doing this here today, because we need your ideas. 

The roads, the bridges, and the highways in this country are in 

a sorry state. And the Highway Trust Fund that pays for them, 

well, it is broke. But, instead of fixing the problem, we have dodged 

it—on a bipartisan basis. Five times we have come up with temporary solutions, and transferred money from the general fund into 

the trust fund, which, in English, means we have patched a pothole 

and not fixed the problem. We are talking over $63 billion, in total. 

And, according to the latest projections, we are looking at a $168 

billion shortfall over the next 10 years. So things are only getting 

worse. We need to find a real, long-term solution, and that is one 

of the things we would like to investigate in this hearing today. 

Now, ever since we built the interstate highway system, we have 

had a simple principle: The user pays. The people who use the 

highways should pay for the highways. So far, that has been done 

mostly through the gas tax. Problem is, the current user pay system doesn’t pay enough. Ever since 2008, the trust fund has spent 

more than it took in. And the reason? Well, the reason is pretty 

simple: People have been using less gas. They are driving more 

fuel-efficient cars. It is a good problem to have. You get a lot more 

miles to the gallon than you used to. And so, gas just doesn’t track 

use as well as it used to. We just can’t chase fuel efficiency with 

much higher taxes. 

So I want to make something very clear. We are not going to 

raise the gas tax. There is not much happening in this economy to 

help it grow but lower gas prices, that is one thing that is happening that is good for consumers. Working families have been 

struggling for years to get by. They have looked high and low for 

good-paying jobs. Their paychecks have not grown much at all. And 

now they are finally catching a break at the pump. It would be 

downright unfair to take that away from them. So we are not going 

to raise gas taxes, plain and simple. 


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But we are confronted with a big problem, and there is no easy 

solution. By the end of July, the Highway Trust Fund will begin 

running out of money again. I was hoping last month that we could 

have extended the Highway Trust Fund to the end of the year, to 

give us the required and appropriate time to come up with a 

longer-term solution. But that ran into last-minute opposition. It is 

going to be difficult to reach consensus on a permanent solution, 

but there are a lot of ideas out there. That is why we are here 

today, that is why we are having this hearing—to hear more about 

these ideas. 

There is talk about handing more authority over to the States, 

making greater use of tolls, creating more public-private partnerships, and repatriation as a middle solution. There are a lot of 

ideas worth considering. But, either way, we need to find a real solution, a permanent solution. 

So, again, I want to thank our witnesses. We appreciate your 

taking time to speak with us today, and I look forward to hearing 

your testimony. 

And all I can say is we are all ears, and we are looking forward 

to your testimony. 

And, with that, I would like to turn it over to the Ranking Member for any opening statements he might like to make. 

Mr. LEVIN. Thank you very much, and welcome. Mr. Chairman, 

we need to be all ears, but we need action. And we have been sending letters to you. We Democrats really are determined that there 

be action. The key words are ‘‘long term,’’ because, just short—six 

short weeks from now, as we know, the spending authority expires 

and the balance runs out. Short-term extensions, there have been 

24 to date. 

And the facts really are startling: The American Society of Civil 

Engineers gave our national infrastructure a D-plus grade, and 

when it came to my home State, they even took the plus off. It is 

a straight D. Bridges are in terrible condition: 145,000 of them in 

every State. And a quarter of them are more than 60 years old. 

And two-thirds of our highways are in poor or mediocre condition. 

Two-thirds. 

So, if safety weren’t enough of a factor, economics is. A major 

2014 economic report from Standard & Poor’s Rating Agency notes, 

‘‘Each dollar of infrastructure spending, if allocated wisely, translates into much more than that, in terms of economic growth.’’ And 

here is what the report finds, a $1.3 billion investment in 2015 

would likely add 29,000 jobs to the construction sector, and even 

more to infrastructure-related industries. That investment would 

also likely add $2 billion—$2 billion—to real economic growth, and 

reduce the Federal deficit by $200 million for that year. 

So, inaction is not an option, and this cannot be done on a partisan basis. A long-term infrastructure bill must be a product of our 

coming together, Mr. Chairman, you and I and all of us on this 

Committee of jurisdiction. 

And I close with this: All options should be on the table, except 

doing nothing. I yield back. 

Chairman RYAN. Thank you. Mr. Shirley, why don’t we start 

with you? 


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I want to just mention to all witnesses, your full written testimony will be inserted in the record. And if you can try to confine 

your remarks to 5 minutes so that we can entertain all of the Members’ questions, we would be much appreciative. 

Mr. Shirley, we will start with you. Please turn your microphone 

on. 

STATEMENT OF CHAD SHIRLEY, DEPUTY ASSISTANT DIRECTOR FOR MICROECONOMIC STUDIES, CONGRESSIONAL 

BUDGET OFFICE, WASHINGTON, D.C. 

Mr. SHIRLEY. Thank you very much. Chairman Ryan, Congressman Levin, Members of the Committee, I appreciate the opportunity to be here today to talk with you about the status of the 

Highway Trust Fund, and options for financing highway construction. 

In 2014, Federal, State, and local governments spent about $165 billion on highways, another $65 billion on transit. About threequarters of that spending came from State and local governments, 

and about a quarter from the Federal Government. Most of the 

Federal spending comes from money in the Highway Trust Fund. 

For decades, the trust fund’s balances were stable or growing. 

More recently, however, the amount of money collected from taxes 

on gasoline, diesel fuel, and other transportation-related items, has 

been less than spending. To address that shortfall, lawmakers have 

transferred $65 billion from the general fund to the Treasury to the 

trust fund since 2008. 

The Highway Trust Fund’s current sources of revenue cannot 

support spending at the current rate. By the end of this fiscal year, 

CBO estimates that the balance on the highway account of the 

trust fund will fall to about $2 billion, and the balance in the transit account will fall to about $1 billion. Because of those declining 

balances, the Department of Transportation would probably need to 

delay payments to States before the end of the fiscal year. Beyond 

that, if nothing changes, the shortfall in the trust fund would 

steadily accumulate in subsequent years. 

Lawmakers have three broad options to address the projected 

shortfalls in the trust fund: Reduce spending from the trust fund, 

increase revenues credited to the fund, and continue to transfer 

money from the Treasury’s general fund. One option would be to 

reduce Federal spending on highways and transit projects. If lawmakers choose to address the shortfall entirely by cutting spending, 

all of the receipts credited to the fund during the next year would 

be needed to meet obligations made during or before 2015. Beyond 

that, the authority to obligate funds from the highway account 

would decrease by about a third over the next decade. Similarly, 

the authority to obligate funds from the transit account would decrease by about two-thirds, compared to CBO’s baseline. 

A second option would be to increase the revenues credited to the 

fund. That could be done in several ways. For instance, one way 

would be to increase the existing taxes on gasoline and diesel fuel. 

The staff of the JCT estimated that a one-cent increase in those 

taxes would raise $1.7 billion per year. That amount would decline 

to about $1.5 billion per year by 2025. Increasing those taxes by 

roughly $.10 per gallon would eliminate the projected shortfall. AnVerDate Sep 11 2014 07:03 Apr 18, 2017 Jkt 022332 PO 00000 Frm 00009 Fmt 6633 Sfmt 6602 I:\WAYS\WAYSPS\22332\22332.XXX 22332

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other way to increase revenues would be to impose new taxes on 

using the highway system, such as one based on vehicle miles traveled. Still another way would be to impose taxes on activities unrelated to transportation. 

A third option for addressing the shortfall would be to continue 

to transfer money from the general fund to the Highway Trust 

Fund. Unless spending were cut, or revenues were increased, that 

would require a transfer of $3 billion before the end of Fiscal Year 

2015. After that, the amounts needed each year would start at $11 

billion in 2016 and grow to $22 billion by 2025. The projected 

shortfall in the trust fund has generated interest in greater use of 

borrowing by State and local governments or private companies to 

pay for highways. The Federal Government encourages borrowing 

through tax preferences that provide a subsidy for highway financing projects. 

In addition, the Federal Government offers loans and loan guarantees to assist with highway financing. Through both of those 

channels, though, the Federal Government bears some of the cost 

of such financing. Despite some prominent examples, the experience with private financing in the United States is very limited. 

In particular, highway projects that have used private financing 

have accounted for less than 1 percent of all spending for highways 

over the past 25 years. Some of those projects have failed financially because the revenues for the projects were over-estimated. 

Perhaps because of that experience, projects that are now under 

construction rely less on tolls as a revenue source. More commonly, 

private partners are compensated from a State’s general fund, thus 

limiting the risk to the private partner that it will not be repaid. 

As a result, the risk of lower-than-expected revenues stays with the 

public sector. 

Ultimately, borrowing is only a mechanism for making future tax 

revenues or future user fees available to pay for transportation 

projects today. It is not a new source of revenues. Borrowing can 

augment the funds readily available for highway projects today, 

but revenues that are committed to repaying borrowed funds will 

be unavailable for new transportation projects or other government 

priorities in the future. Thank you very much for your time, and 

I would be happy to answer any questions that you have. 

[The prepared statement of Mr. Shirley follows:] 


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Congressional Budget Office 

Testimony 

The Status of the Highway Trust Fund and 

Options for Paying for Highway Spending 

Chad Shirley 

Deputy Assistant Director for Microeconomic Studies 

Before the 

Conunittee on Ways and Means 

U.S. House of Representatives 

June 17, 2015 

This d()Cunwu is ~mbnrg~d umil iris tlt!it~rrtd nt 

IIJ:OOn.m. (EDT).,, W.:d,,ki"J,/unt 17, 21JI5. Tht 

~ontmts mal uot!H publislNd. tm~rlmittttf. qr qf/tmui# 

t:ommunicAud by nny prim. /Jr()(Jdt:aJ.t, or tkmonit: 

mtdin brfon tlmt timt. 

CONGRtSS OF 1HE UNiffO STAlES 
8 


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Notes 

Numbers in the tat and tables may not add up '0 totals because of rounding. 

Unless other";"' indicated, all years are federal fi>eal yeors. which run from October 1 to 

September 30 and are designated by thecalendar y<.u in which they end. 
9 


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Summary• 

Spending (or Ui.gh\\rays and Mass Tran.si1 

The Highw>yTrust Fund 

Contents 

Options for AddrtSSing Projeet<d Shortfalls in cl>e Highway Trust Fund 

tinancing Righwa)'s 

Tax-Preftrred Bonds 

federal Loans and Loan Guaramees 

Private Financing 

Budg~rary Principles for the T reo:ument of Projects \\!lith Complex Financing 

Abouc This J>ocume,nt 

Tables 

I. Estimated Revcnu~ CrMited to the Highway Trusr Fund, by Source, 2015 

2. Projections of the Highw•y TruSt Fund's A<eoums Under CBO's March 2015 Baseline 

3. Completed Highway Projws That Used Public-Private Partnerships \'<lith 

Prh•atc: Financing 

4. Ongoing Highway Projects That Use Public-Private PMtnerships \'V'ith 

Priv.ltC Financing 

Figures 

I. Spending for Highways and Transit. by Level of Government, 1956 to 2014 

2. Reeeiprs. Outlays, and Balance or Shortfall for the Highway Trust Fund 

Under CBO's March 2015 Baseline 

3. Estimated New Commi1ments Th<1t Couki Be Accommodated by the 

HisJ>way Trust Fund With No Changes in Recciprs 

7 

II 

12 

14 

16 

17 

20 

18 

19 

6 
10 


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Chairman Ryan. Ranking Member Levin, and Members 

of Lhe Committee, thank you for the invitation to t('Stify 

about the status of the Highway Trust Fund and options 

for paying for highw.1y improvements and consuuc;tion. 

Summary 

[n 2014, gov<'mmentsat various ~ds spent $165 billion 

to build, op<rate, and n».in».in highways, and they sp<nt 

$65 biiJion on mass transit systems. Fo r both types of 

inff'o~suuctun:) m0$t of thar spending W<l.$ by $t:m: :utd local 

go ... ernmems; about one--quarter of that total carne from 

the fodual government, mostly through the High, ... -ay Trust 

Fund. For several docadc:s. the trust fund$ balances were 

stable or &J'Cming.. but more r<:a-ndy. annu.al s~nding for 

highways :.md transit h.1.'i' exceeded the amounts credited 10 

the trust fund from taxes oolleoted on gosoline, diesel fuel, 

and other transportation-rdart:d producrs and activities. 

Sina 2008. in fact, lawmakers have uansfmed $65 billion 

from the U.S. Treasury's gener..J fund to tile Highway 

Trust Fund so that the rrust fund$ obli~t ons could be 

met in ot timely manner. 

Moreover. with it.<> current revenue sources, the: Highway 

Tru.n Fund cannot support ·Spending a1 the currem r.ue. 

The Consressional Budget Office ts1inmes t!tat sp<nding 

in fiscal year 2015 for highways and t.raMh programs 

funded from the Highway TruSl Fund will be $14 billion 

and $8 bi llion~ espc:ctivcly~ wf,ert":as rc:vt'nues colloctc:d 

for those purposes are projected to be $34 billion and 

$5 billion, respec:tivdy. By CBO's estimate» at the end of 

fiscal year 2015, the bala.nce in the uust fund's highway 

account will f.tll to about $2 billjon and t.he b.'llan<:e in its 

transit accoum will be aboot $1 billion. 

The Department on ransportation (DCYI) would probably need to delay payments to .states a.t some point before 

the end offiocal year 2015 in order to keep the fund~ balance above zero. 3S required bylaw. Jn fact. because oft he 

timing of the deposits to the trust fund, DOT has smed 

that it would e~ to dday payments if cash b.tiJnccs fell 

below $4 billion in <he hi.ghway aooount or below $1 biiHon in the transit ae<:oum. Then. if nothin& chaJ\(;t$• the 

trust fund's b3Lmc:c: will be insufficient to meet all of its 

obligations in fisc.t.l year 2016, and the: trust fimd will 

incur steadily accumulating shonfalls in subsequent 

years. 

Several opUons (or combinatioi\S of those opdoJ\S) coukl 

be pursued co address projected shortfalls in the Highway 

Trus-t Fund: 

• Spnding qn biglnuap ond tmmit rould be reduaJ~ If 

lawmakers c.hose to add~'<$$ 1he projeCted shonfal~ 

soldy by cutting spending. no new obligations ftom 

the fund's hi&hway accoum or its transit account 

could be made in fiscal ycor 2016; <hat would al.o be 

the case for the uansit account in fiscal )"eat 2017. 

Over the 2016-2025 period. the highw.ty ae<:ount 

would sec: a decrease of about one-third in 

the authority to obHgatc funds, and the transit 

aocount's authority would dcc.r~ by abom l\YO· 

thirdt. oompart"d with CBO's baseline projections. 

• R~vmu~ mdited ro rht rnor fond <YJuiJ k incre~J. 

Lawmaker> could address the projecred shortf.tll• by 

raising existing t.txes on motor fuds or other 

ansport-a ri on-re ~ltcd products and octi ides~ by 

imposing new ta.~es on highway users. such as vchic.lemHes traveled (VM'D taxes; or by imposiJ\g taxes O J\ 

acti\•ities umdatcd to tl'3nsponation. The staff of 

the Joint Commiuee on T:ax:uion UCT) e-stimates 

that a one--cent ine«a1e: in taxes on motor fuelsprimarily ~lin e and diC$CI fuel-would initially 

raise about $1.7 biJlion annuaJI)' for the trust fuJ\d, 

dediningover the J\CXt 10 years to abom $1.5 billion 

e;a.c.h y<"ar. If lawmaker$ choK to meet oblif;)lions 

projtcted for the ttusc fund solely by raising revenues:. 

they \'<'Ou.ld need to increase motor foci w:es by 

roughly 10 cents pu g.aJion,starting in fiscal }'l':ar 

2016. 

• TIJ< trust fond amid amtimtt-IQ ,ycdw suppkmmts 

frt>m tl~ T"asurjs gmtral fimd. Lawmakers could 

maintain funding for surfuce tr.ansponacion programs 

at d~ a\'eragc amountS: provided i1~ rec::ent year$, but to 

do so they would need tO transfer $3 billion bcfo~ the 

end ofilscal year 2015 and be1 ~en $11 bil.lion and 

S22 billion e"ery yeM thc=fier through 2025. 

Spending resuhing from such general fund mmsfcrs 

could be: paid for by reducing other spending or by 

inc.re.'lsing revenues: from br<Xtd·based taxes. or su<::h 

transfers could add to defidts and •hus increase f«<eral 

borrow-in&. 

The projected shonfalls in the Highway Trust Fund have 

generat<:d interest in greattr U$eofborrowi•lg by state and 

&ocal governments to finance highway projects. ln partie--

ular. St.lte and local governments (and some priv.nc enti· 

ties) can use fa:<·preferred bonds lhat <:onvey subsidies 

fro1n the fcd(fal govtrnmeru in the form of tax cxemp· 

tions, credits, Or p.a)'mCntS in Jieu of cr«fiu tO finance 

road construction. Similarly. some of those governments 

make use of direct loans from the federal governmc:m to 

finance projcxts. 

Federal policies dtat encourage partnerships betwec:n 

the private sector and a stone or local &o''ernment may 

f'Xilit.ttc the provision of additional transportation 

i1\frasuucmre, buc a review of those ptojtcu ofFers 

HttJe cviden« that public~privoue JXlnne:rships provide 
11 


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2 nmSTAlUS a nU>J.DGIII\'Al' lRUIT RJNI)Al<D OmOJ'SFOR PAlWG FOR IUGI!WAYSI'L\"DII'G JUNE 11,201; 

addidonall'($()u.rces for roads except in cases in whkh 

st.ues or localities have c.hosen tO resulct spending 

throug,h .stlf-impo.sed leg.al consuait\ts or budgetary 

Jim its. 

Only .a small number ofhiehway projects in the Unirod 

States have involved public--private partnerships with pri· 

v.ue fin<tnclng. Some duu have lx:en financed through 

tolls have failed financi.aUy lxcausc: the private-sector 

p.lrtners initiaUy overestimated their ~·en es and as a 

l'C$uh have been unabk to fully rtpay their project$ 

debts. PerltaJ>$ OlS a response. projects that at( sdiJ under 

construction rely less on t·olls as a revenue source; more 

commonly. private partners arecompe1\sattd rrom a 

state's general funds, thus limiting the priv:ate risk of not 

being repaid and leaving 1hc:: risk of lower-than-expected 

revenues to the public partner. 

~;a ess of its sot.m::c:. ho cv~ . borrowing is only a 

mtthanism for making future ta.'t revtnues or user fee 

reveJtues available to pay for projtcts S001tcr. it is oot <a 

new source of revenues. Borrowing an augment the 

ftmds available for highway projects. btu revenues that 

are committtd for repaying borrowed funds wiiJ be 

unavailabk co pay for new transporration projocrs or 

other government spending in the fucurr. 

Spending for Highways and 

Mass Transit Almost aU S)'>C'nding OJl highway infrasuucture and transit 

projects in the United States is funded pubtid)'· Althou&Jl 

the private se<:tor participates in building, operating, and 

maimaining proje<:u, the federl\1 governmenr and state 

and local govemmcnts typically determine ·which projects 

to undenakc and how mu<::h to spend on them. Despite 

KVeral prominent examples. private spending on highway 

project$ constitutes only a. small fraction of the total. 

Almost thn::e-quarters of all public spendjng on highways 

is by state and local gover-nment$. Jn 2014. state and local 

governments spent $118 biUion, and the federal govern· 

ment spent S46 biltion. Almost all federal highway 

spending is capital spt"nding.. which is used to build and 

improve highwa)''S; by contrast, about 40 percent of the 

total for state a.nd loa! governments is capit;al spending 

and 60 percent is for oper.uions: and maintenanc(':. 

Publk-privatc: partr\crships that in"olve private financing 

have accounted for less dun l percent of all spendittg on 

hi&Jlw·>)'$ during the post 25 yea11. 

Real (inflation-adjusted) totlll spending on hi&Jlw•ys b)' 

fode ral, state, and local governmezus increas«< ir~ the 

1980s and 1990s, but it h., fallen off since then. Real 

sptnding, on tr:t.uit programs is much less thaJ\ for highways but has generally grown-especially spending by 

stare and local governments-during recent decldcs: (sec 

Figure 1).' 

The Ulghwa)' Tr ust Fund 

The federal f>Ovc:rnrnent'ssurface transportal ion pro· 

gr.,ns are flnaneed mostly throu&Jl the Hi&Jlw•y TruSt 

Fund, an accounting mechanism in the federal budget 

that comprises rwo separate accounts, one for highwa)'s 

and one for mass transit. The trus:t fund records specific 

cash i.nOow$ from revenues collected through excise wce.s 

on the sak of motor fuels. trucks and uailers. and truck 

res~ taxes on the Uk of certain kinds of "chides; and 

interest crediu:d to the f,Jnd. The Highw.ty Trust Fund 

.tlso records c.uh outOows for $pending on designated 

highway and ma$$ transit progr.mls. mostly in rhe form of 

grants to St<ltcs and &ocal governments. 

Spending from the Highw>y TruSt Fund is eon trolled by 

two types of legislation: 

• Authorization acts t hat pro,•ide budget authority 

(which allow$ the government to incur financ.L'll 

obligouions tMt will result in immedhnc or future 

ou~a)~ of federal funds), mos~y in the form of 

contract authoriry (which p<"rmits the governmenl ro 

enter into contracl$ or to i1tcur obljgations in advance 

of appropriations), and 

• Annual appropriation :M:tS, "'<hich customarily set 

limits on the amount of contract authority that can be 

oblig<ncd in a given year. 

1ltc Moving Ahead for Progr<ss in tlte 21st Ctntury Aet 

of201 2 (MAP-21) amhorizcd current hi&Jlway and tnn• 

sit proyams throu&J> fiscal y<:ar 2014. That authoritation 

was subsequently t~nded. Most recently. the Highway 

and Transportation FundingA<t of2015 (Pubtio law 

114-21) authori7.cd thoS< programs until July 31. 2015. 

The extension pro"idcd comrac.t ttuthority for highw3y 

and transit programs at an annualized rateofS5 l billion; 

the 2015 obligation limit•tions total aboUt $50 billion. 

1. fot mo·rt irtfonn:aUOI\ Ol) UDntuau~ t:ptndinc. u.t Conuusio!UI 

Budttt OffKt. P.blit SpmJiltlm TIWN:I,.wcr-. .,, ~ur 

hrjr.h'Ndtw, 1P56t• 20/.f(Mat<:b 2015). •www.d>o.tovl 

publiaUon/49910. 
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1ES11MONY DIE STAniS OF TilE IUGJIWAY lRllST FUNI) A!'D OPTIOJ<S fOR PAl1NG fOR IUGJJWAYSmlliNG 

Figure 1. 

Spending for Higltways and Transit, by Le\'el of Go"emment, 1956 to 2014 

&lhons ot 2014 Dollars 

1.60 

140 

120 

100 

so 

60 

40 

20 

Spending for Highways State and loc~ l Gcwt rnments" 

1%1 1966 1971 1976 19S1 1986 1991 2001 2011 

1.60 

140 

Spending for Transit 

120 

100 

so 

60 

40 

~t:::::::::::::::::::==~~::~::::::~====~====~====~=ed ra :~:::::::: 1956 1%1 1966 1971 1976 19SI 1986 1991 2001 2011 

Source: Con9fessJOnal8udget Offiot ba&ed on Information from the Office of Management and Budget, the Cens.us Bureau. 1M American 

Public TransportatJC>n AS$0dation, and the Bureau of Eoonomic Analysis:. 

Note: The spending shOwn Mre IncludeS outlayS from tM Highway Trust kind (shown in Figure 2) and also olhQt outlays. Spedfically, this 

figure a110 inctudes abOut S28 billion from the American Reoovery and Rein\-estment Act of ~9 (ARRA) tor highways ancl spending 

from amounts periOdically appropriated to assist state and 5ocal goveuvnents in rebuitdirtQ highways alter natural disasters. Similal1y, 

this figure also indudes spending ffom thecapitallrwestment Grant program, whkh ptimaJity sup potts new n111 transit programs, al'd 

the operations of the Federal Transit Adrrinlsttation. Those amounts come from general funds:, as did about S8 billion in spending 

from ARRA and $765 mil ion from the 20131ie9islation that provided functs for relief aoo ftcOYifY from Hurrk:ane Sand~ 

a. Fos 2012 through 2014, state and local spending was estimated by updating prior· year spen<Jng to account for changts in spending as 

reported In monthly surveys of highway a net trans1t construction projects. 

Exdst taxes on motor fuels OCGount for 87 percent of the 

Highw·~y Trust Fond's n:venoes. mostly from the t<\X of 

18.4 cents per g;illon on g;150line AAd edunol-blended 

fuds. 3 Rc<:eiptS from the gasoline rax oow consdtute 

2. 1'ht:cotalc.a.truiJ 18.4ctnuptrt2llon.OfduJ, 18.3~nuis 

acc&rtd 10 IN Hithway Trwt Fund, and 0.1 «tH tO« to tht 

lttkin& Undtrtround Stontc Ttrtk Trust fund. (f~ Omnib!D 

Bud$tl Rcooncilial..,n Ace or 1993 incr"'kd t~ VJ tax by 

4 • .} emu, froll~ 14.1 OtnlJ to ISA unu.; tht adckd l'«:('ipu Wfft 

rtot initiallytudit«< to 1he 1ru.n fund but in nelld wmt intotlu 

Tr=wf• to•m.l fw>d.) 

almost two-thirds of the fund's rota! rtvenues{set: Tablt 1). 

Under current law. all but 4.3 cents per gallon of that tax ls 

set to expire on Scptemlx:r 30. 20 l6. If chat O«UJ"'$, the 

n:«ip" from rhe remaining t.."l.X will no longer be c:.r«iited 

10 t:he uust fur.d bm instead will go into the Treasury's general fund. The socond-largesc shm, aocouming for abouc 

one-quaner of the ftmd's revenues:. comes from tl\t diesel 

fuel mx of24.4 (-COt$ per gaJion. The remainder CQmes 

from other ta.-.:c-.s and from a ve-ry small amou1\t ofi1ntrf$t 

'hat is credit«! to the fund. Most of the revenues from 

motor fuel t<U:ts are credited lO the h~way account of the 

3 
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4 nu; STArus <»" nu; l.DGIII\'Al' lRUIT fUM) Al<l) Om<l!<S FOR PAlWG FOR IUGI!WAY SI'L\"DII'G JUNE 11,201; 

Table 1. 

Estimated Revenues Credited to the Highway Tr ust Fund, by Source, 2015 

&lhons of Dollar$ 

Share of Total Trust Fund 

HighW"f Transit Revenues and Interest• 

Account Account Total en ! 

Gasoline Tax 2o.6 3.8 24.4 62 

Diesel Tax 8.5 1.1 9.7 25 

Tax on Tructsand TraileJS 3.8 0 3.8 10 

Use Tax on Certain Vehicles LO 0 1.0 3 

Tire Tax on Trucks 0.5 0 0.5 1 

Total 34.4 4.9 39.4 100 

Source: Con~essional 8udgit Office. 

a. ln 2015, CBO esti~ ~ a ~11 amount of interest will be creditid to thi Highway Trust Fund, in keeping with provisions of the 

Hirll'$1ncenbves to Restort Employmtnt Act of 2010. 

rrust fund. but 2.86 cents per gallon goes into the mass 

transit account. which ttceives about 13 percent of the 

trusl fund's total revenues and interest. 

llislory of the Trusl Fund's Bolanees. For several decades. 

the b.'lLmces in the highway account were rclativdy stable 

or growing.. but si1tcc: 2001. rcctipts have consistently 

fllllcn bclowapcndifUres.' (fhe tr'.msit account was not 

established until 1983 ;md. until 2006. it had a different 

acoounring tKalmcnt tl1at makes historical comparisons 

inapplic.,blc.) During the 1980s and the first half of the 

1990s. balances in the highway account held steady in 

Lhe vicinity of$ 10 billion. The mos-t re«nt increase 

in the gasoline taX oc:curr«i in 1993. and after the 

Taxpayer Relief Act of 1997 tediree1ed 4.3 cents of that 

t.l.X from the uneral fund [() the Highway Tr ust Fund. 

the unexpended baL'lnct in the highway ac<:ount began to 

grow rapidly. reaching aJmost $23 billion in 2000. In 

1998. the Transponation Equity Ae1 for the 21st Century 

(known 3$ TEA·21) authori1.c:d spending that was suffi· 

cienr ro gradually draw down rhose balances. As a result 

of that kgislation and the Safe. Aecounc.>bk, Fkx.ibk. 

Efficicm Transporcation Equity Act: A Legacy for 

Users (SAFETEA-LU), which was enaeted in 2005, 

ou1lays have generally exc~d revenues in ~ 2001. 

3. In 201 o. th( trw:t fund uw a s.ianificant d('(CC"ttt' in outlays 

b«aus( sUt« 1pun fuu<h from th( g<nC"~ fund o( ~ TrC"arury 

tlut wcu 2ppropriaud in l~ Amt:Jica.n R«ov«y and 

Rci.o,·cttnxot Act of 2009.11uc ace. did uoc requi.rc $U.tcs to 

rrutch fcdual funds or C"V<U to cooulbotc f'iwcU to projms. and 

1M SliD( pro;«u that wtrt digibJt for fuodint from W Highway 

Trusc Fltlld "''C"rc digjblt for funding und(r th( act. 

Sinu 2006. wllen cermin accounting changes specified 

in TEA·21 took efTecc, spending from the transic account 

hcl.S grown and, since 2008. has exceeded revenues 

credited to the aeoount. TEA·21 and SAFETEA.LU 

authori:-..ed spcnding from the ac<:ount that has ex~«< 

revenues credited co the fund by bet,vecn $3 billion 

and S4 billion "''cry year. 

lk<;a~ of looming shortfalls. since 20081awm.akcrs 

have enacted legislation to transfer a total of $65 billion 

lO tl1e ttun fund- mostly from the Tr¢.a.sury's general 

fund-including$22 billion in 2014. Those intra· 

governmental transferS have allowed the fund to maintain 

-a posith•e balance, but they did not change the amounc 

of receipts collected by 1he governmenr. Aller thos.e 

1ransfe.J'$, ;u 1heend of fiscal year 2014, the trust fut~d's 

balance totaled $15 billion. 

Projections ofOutla)'s and R'-venues in 2015. Aeoording 

to CBO's <stimates, absent further legislation. the hig)l· 

way account wiiJ end fiscal yt"M 2015 with a bal:mce of 

$2 billion-<lt the end of2014, that balance was $11 billion (sec Table 2). By CBO's estimates, ou a)~ from the 

hig)lwayaoooum will to.U S44 billion in 2015, but rc:ve· 

nu« and intete$t earnings will amount ro just $34 billio1\ 

for the year. T he situacjon is similar for the trat\sit 

accot.mt. whk.h is on rmck to end fiSCll }'<::U 2015 with a 

balance of abou' $1 billion, CBO estim:.ucs. down from 

$3 billion a year earlier. Revenues aod interest C'ami11gs 

are projected co amou•uto $5 billion in 2015. but 

o utllys are expected to total more than $8 billion. 
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TESllMONY DIE STAniS OF TilE IUGJIWAY lRllST FUNI) A!'D OPTIOJ<S fOR PAl1NG fOR IUGJJWAYSmlliNG 

Table 2. 

l'rojeclions oftl1e HighwayTrusl t'und's Accounts Under CBO's March 2015 Baseline 

&lhons of Ooll.ars, b'J FIS(.otl Year 

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 

Highway Account 

Start·ot·Year Balance 11 2 • • • • • a • • • Reveooes and lnttrest0 34 34 35 35 lS 35 35 35 35 35 34 34 

llltragovemmental Transters< 18 0 0 0 0 0 0 0 0 0 0 0 

~tlays 45 44 45 45 46 46 47 48 48 4~ 50 50 

Ell<l·of·Year Balance 11 2 

Transit Account 

Start-o1·Year Balance a a Reveooes and Interest' 5 5 

lntragovemmental Transsers< 0 

~tlays 10 10 10 

End·of·Ye.ar Balance 

Memorandum: 

OJmulative Shortlal~ 

Highway account n.a. n.a. ·8 ·19 ·29 ·41 ·52 ·65 -79 ·93 ·108 ·125 

Translt account n.a. n.a. ·3 ·6 -9 ·ll ·17 ·22 ·27 ·32 ·37 -43 

Source: COngressional Budget Office. 

Note: n.a. = not applieabkt:. 

a. Before the end of frscal year 2015, C80 ptojecu:, revenues crecfited to ttle highw:Jy and traMit accounts of the Highway Trust H.lnd will be 

insufficient to meet the fund's obligations. Under cunent law, the trust fund tannot inQir negatiYe balanoes, nor Is i1 permitted to borrow 

to to\!Qr t.II'II'I"'Qt obllgatiOM pre~ted to the fund. Unck!r the DE!fidt conuot Act of 1985, hOWE!YQf, C801S baseline tor highway spenclng 

must incorporate the assumption that obligations incurred by the Highway Trust F\lncl will be paid in full. The cumulative shortfalls 

shown here Ulus are estlmatQ<fon the basis of spending that k consh:tQflt with obligation tlmltatloos contained in CS01s March 1015 

baseline-adjusted for projected lnftatlo or h'9hway and uat'ISit spendi~. To meet obUgatlons as they OOI"nQ due, thE! OE!pantt'lQnt of 

TranspottatiOn estimates, the highway a«<unt must maintain cash balaheas of at k!ast $4 billion, and thQ b'M'Sitaecount must maintain 

balances of at least Sl billion. 

b. So~ taxes tMt are creditOd to tht Highway Trust Fund are scheduled to ext)ire on SQptembef 30, 2016--among them me taxes on 

certain heavy vehicles aocl ti'es and all but 4.3 cents of the federal tax on motor fuels. Undef the rules that govem CSO's basetine 

projections, hOWE!\'er, these es ima ~H reflect the assumption that all ol thOse expiril'lg taxes would bE! extended. 

c. The Moving Ahead for Progress In the 21st Century Act and the Highway and Transportation Funding Act of 2014 required certain 

intragovernmental transfers, 11"10$ttyfrom the U.S. Treasury's general fund, to thi Highway Trust Fund in 2014. ThOM amounts totaled 

abOut S22 billion. CSO's baseline reflecM an assumption that no adehtionat transfers ffom the gener11 fund wUI O«uL 

Unless oddilional funds ar< provided (ei<her 1hrough an 

increase in revenues or through additional transfers from 

the general fund). the disparity between th<: receipts cred~ 

iced to the fund and outla)'$ from the fund ,viJl rt'<}Uire 

DOT 10 delay its reimbursements to sutes for dte tOSlS 

of oonstruorion. CBO estimates that such 01 delay \voukt 

probably lake dfe« sometime before 1he end of fiSGal 

year 2015. Such ask)\'1<lown i1t paymentsO«urrM in 

2008 when DOT announc~ that b.Uanc.es: in the high4 

w.1y account h:ad f-alkn bdow what it needed to reim4 

bum states for the bills presented to tl1e fund. Because 

deposits: into the fund art made only twice each month, 

DOT has testified that it would need to delay paymems if 

cash balancC< fell below S4 billion in 1he higllw>y 

account or below $1 billion in the transit accounL' 

Projections of Outlays and RO\·enues From 2016 

Through 2025. COOS baseline projections reflect the 

assumptions that expiring excise t~-.xe:s would be extended 

and that oblig;ttions from the trust fund would grow at 

the rate of inflation. Under thO$C: assumptions, CBO 

4. Oep.a.nmtnt o(Tr.a.nspon.a.tion. Offi« of lmptaor Gtocn.l, 

&fo'~" tq DOT; M11Nf~Wi'rtllftl, Hif!tw'7 Trwtt FH'Itij 

S«IVNo/ C.rdtl '"'/''«-'~ f~ Ulflimtilndint 1111d A«~4SMrt/J 

l'>oj«tW.. CR-20 12-071 (Much 2012), p. 22,~ . .;g.do<.r;ov/ 

nQCk/S736. 

5 
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6 nu; STArus a nu; l.DGIII\'Al' lRUIT fUM) Al<l) Om<l!<S FOR PAlWG FOR IUGI!WAY SI'L\"DII'G JUNE 17,2015 

Figure 2. 

Receipts, Outlays, and Balance or Shortfall for tlte Highway Trust Fund 

Under CBO's March 2015 Baseline 

8111ionsofOollan 

Highway Account 

!0 AcliAI : PrqC'CICd Outtays-• 

30 

·30 

·60 

·90 

·120 

·150 200S 2007 2009 2011 2013 2015 2017 201~ 2021 2023 2025 

Transit Account !0 N:t~: Pl(f{<ted Recei~ 30 

·30 End·of· Year -!0 Balance or Shortfall 

·90 

·120 

·150 

2005 2007 2009 2011 2013 2015 2017 201~ 1011 2023 2025 

SOurce: COngre-ssional Budget Office. 

Note; Under current law, the Highway Trust Fund cannot Incur negat1ve baiMCes, nor Is it permitted to bOrrow to CO\~J unmet obligations 

l)fesented to the fund. Under the: DQfidt ConuOI Act ot 1985, hOwe~r. CBO's baseline: for highway s-pending must Incorporate the 

assumption that obligations incurred by the Highway Trust Funes will be pald In full. 

a. Projections of out~)'$ are calculated by adjusting thi obl~ation limitations set in the Consolidated and Further Continuing Appropriations 

Act of 2015 to acx:ount for proje-;ted inflation. 

b. Projections or rQOeipt$ ate based on tnaJket eonctitions, and they it.eorporate an assumption under CBO's March 2015 baseline that some 

taxes (including taxes on certain heavy vehicles and tires and all but 4..3 cents of the federal tax on motor fuels) that are credited to the 

Highway Trust Fund but scheduled to expire on SQptembe.- JO, 2016, wll be extanded. 

Reeetpts include revenUQS credited to tht Highway Trust Fund and intragovernmental transfers, mostly from the U.S. Treasury's general 

fund. Slnot 2008. those uansfers have totaled about $65 blllton. 

projects, shonf.tJis io both acooums of lhe: trust fund 

would grow steadily Lu-ger over the: next decade because 

revenues from che exdSt" ta;'(es art" expccced to grow very 

lhde, but spending would continue to rise (see Figure: 2)., 

By 2025. the cumulative shonfalls would totaJ about 

$125 billion for the highway aeoount and about 

$.43 billion for the transit account, CBO esl.imates. 

5. CBO C(lnnrucu iu butl.ine in tccor<bnct v.;m provi-,t.on' 'et 

fonh in the Balan«<< Bud,e"t at~d Eme"mcy Ddicit Control At:t 

ofi98S :wd in WConveuiona.IBudgtt and lmpou.udnxnt 

Control Act of 1974. 

RevenUC$ generated by e:xdse taxes md credited to {he: 

Hi;hw-ay Tn1SI Fund are projecud to d~line dig.htly over 

the c:omingdecade from about $40 billion in 2016 to 

aboul $39 bill ton in 2025. mostly because: increases in 

rc:vcnuc:s from taxes on Lhe: use of diesel fud and on truck 

sales are ~xpec td to be of&e1 by declines in revenues 

from the: tax on gasoline. Tax rc:venu~ from dies(:l fud 

and truck sales arc: projec{c:d to increase, on average, by 

about 2 percent annually over >< 2016-2025 period. In 

contrast. revenues ffom the t<lX on gasoline are projecccd 

co decline at an av(:rage annuaJ rate of2 percent over that 
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1ES11MONY DIE STAniS OF TilE IUGJIWAY lRllST FUNI) A!'D OPTIOl<S fOR PAl1NG fOR IUGJJWAYSmlliNG 

period, m.Unly bccaose of mandated increa5('S in 

corpor.;uc: 3ver-;agc fuel (()()no my s•<tndoa.rds. 6 

If L1wmakers do not address tiH~ projected $hortfalls, all 

revcmles(;J'(:dited to the Highw.tyTrust Fund in 2016 

will be uS«! to mc:c:c oblir;uions made lxforc chat yc:ar. 

Mos-t ob gations involve capital projectS that take years 

to oomplcte--meaning that outlays for such projtc.ts are 

often spre.ld across se.,.cral yean after funds have been 

commincd. (The ~dc:ra.l Aid Highway program. for 

example. typically spends abou< 25 percem of its bud~;et· 

ary resources in t1lc ~ar funds at( first mack avaHable for 

spending; the rest is spent over the Jlc:x-c several ytarS.) 

Thus, in any given )-eJ!, the VMt majoril)" of omlays from 

the Highway Trust Fund stem frQm oonu ac1 :tuthority 

provided atld obligated ir\ prior year$. Because exisdng 

oblig.uions far exceed the amount$ in the fund at any 

given time, most of the trust fund'$ currt':m oblig:nions 

wi!J be met using tax revenue$ duu have not yet b«n 

collec<od. 

As a result. the ft1.1l.d's balao«S t\J'e not indicacive of the 

.vnounts Clivailable to CO\'Ct proposed new spending 

authority. A more uS<:fuJ measure is the projected bal· 

ances in the trust fund minus prior obligations that have 

no<}~' been liquidated and d>a< must b< paid for from 

fmure ux revenues collected u1tder current law. At the 

end of2014. for example. $65 billion in concr.tct author· 

hy for highway pro&rams had been obl i.gat~ but not yet 

spent and another $26 billion was a,'aiJable to states but 

not )'tt oblig;ned. for a total of $91 billion in contr.lCl 

authority. T a.x receipts d.edic.ut'd tO the highway account 

are proj«:<ed 10 b< about $35 billion p<r y<ar over <he 

2016-2018 pc:riod for a tom) of$105 billion. Thus, 

under the calculation sug&C$ted above, there would be 

onlyabom Sl6 billion (SI05 billion plus <he S2 billion 

in the fund at the end of2015 minus $91 billion) in the 

fund over the next thr« years to cover the O)S($ that 

would result from providing new spending authority. So 

even if st.ues \\'ttc given no furrher authority to spend, 

close to another three years' worth of motor fuel ra:ces 

woold need to be collw:«< jusr lO meet the hig.hw~y 

account'sobligations at rhe c:nd of2014 plus any new 

oblig.ariot\S from contract autborit)'· made avJ.ilabk: btfore 

20 l5. r~r the trallSit aocount. rolleaions of almost five 

years:' worth of taxes. at ~tn $5 billion per }'tar. would 

6. f-or mOlt infonn:uioo, so« Congrusloru.l B...dg.« Offict, f/qw 

'IX'-u/J p,._poW Ft;.ti &()mH1f7 S/1Jtt/111't/s Ajj{(t rlk 1/~u.w; TN41 

Ftmtl! (May 20 12). ww\\·.c:bo-t"v/publiau.ion/4J19S. 

be nted«< to mtet current obligations and any new obli· 

g-ations from contracl authority made 2vai.lable before 

20157 

Options for Addressing Projected Shortfalls in the 

Highway Trust Fund 

Lawmakers ha\•e three primar)' options for addrming the 

projcC<od shonfalls in <he Highway Trust Fund: 

• Reduce spending on high"~~)'$ and tr.msh. 

• lJlGrt:Ue taX($ dedicaced to the uust fund. or 

• Transfer general t(Vtnues to suppkmem cbe trust 

fund. 

Of COUI'$C, many oombin.ations of such changes are 

po$$ible. 

Reduce Spending from Jbe Trust l'und. Polieymake!S 

migln wam 10 addr<SS projwod shonfaU. by limiting 

federal spc:nding for highw•ys ;md mass mu>si< to <he 

amount of rC\•enucs generated b)' users. Tl\.tt reduction 

in spending would probably have sig..tificant negathfe 

oonsequ<"OCC:S for the rondition and perfonnance of the 

nadon's highway :md mass tr~nsit infr.astrueture. In ~di· 

tion. unless: some other federal spending was increased or 

fcxler.d ~es lowered, the r«<uccion in federaJ spending 

would slow economic uowth and employment during 

the next few }'CarS relative: to what it would otherwise be. 

Over the long<"r term. the smaJler amount ofinfrasuuc~ 

cure would impose a dr-..g on economic performance, bm 

the smaller amowu of federal debt sten1ming front the 

decrease in spending would provide an economic boost. 

Jf lawmakerS chose to avert projecrcxl shonfaJJs solely by 

cutting spe-nding. then the trust fund could 1\0t support 

any new oblig;uions in 2016, probably signific•mly 

del-lying invC'$tment in infrastructure and haltin.g numer· 

ous transportation projeclS across th<' coumry. Neithtr 

th<' highway account nor the uansit account would be 

able to suppon newoblig,uions in 2016 b«ausc f(.im· 

bu rsements to states for multiyear proj«ts alr~ady under 

7. Stt Ofi".ct ofManagtmau 2nd 8udgtt. Bto.tro· ()f tiN 

U.S. C.."'""'"" }'isul Ym2016:Apl"'.i"'(f<bru.:uy2015). 

"ww,"bilthousc-tovlomblbudg<t/Apptndix. At cbt tnd of fisal 

yn.r2014, tht ba.lllll« i:n W ttuuit acc:oWlt wu about S3 bimon, lxu untpc-m (QCltraa authority for tn.nsit pror;:lmf tQQkd $16blll.ion inobtipttd ~m«<1Dd $S bi.Uionin unobli&Jttd 

T 

() 
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8 nu; STArus <»' nu; l.DGIII\'Al' lRUIT fUM) Al<l) Om<l!<S FOR PAlWG FOR IUGI!WAY SI'L\"DII'G JUNE 11,201; 

Figure 3. 

Estimated New Commitments Tit at Could Be Accommodated by the Highway Trust Fund 

With No Changes in Receipts 

(BilliOns of dOllars) 

60 

50 

~0 

10 

Source: Congfessional Budget Office. 

Highway Account 

Transit Account 

Note: The figure shOws the new comrrutments that could be provided trom the highway and transit aocounts or thQ Hi9f\'WaY Trust Fund as 

lOng as the: mlnlml.Wn balance: tn the highway account was at least S4 billion and the minimum balan« In the mnslt aooount was at 

tD:st $1 billion and the obligation llmltation for each acoountclld not exceed the amounts prolected in C80's March 2015 baseliM. 

a. Data fOr 2015 repr9W'nt the Obligation limitatiOns contained In tM Consolidated and FurtMt COntinuing ApprOJ)rlations Act, 2015, and 

contract authority that is e~t from those limitations. 

b. A W~all amount of new commitments colAd be provided by the transit i«<Unt in 201~ but the amoiA'lt is not perc:eptible in the figure. 

way would be: expected to cxcc:«< the: estimated f'C\•c:nue 

collect o. s for dtar )T-at. The highway account would be 

able tO support newoblig-.uions in 2017. but t he transit 

account would not (see Figure 3). Such sudden .shifts in 

t11e amount of annual SJXndingauthoriry would probably 

make progrnm administration and planning difficult for 

DOT as wdl as for nate and local gr.llll recipients. 

Over the 2016-2025 period, obligational auchority for 

the highway account woukl be about one-t hird las, and 

for the transit acoount, about two-thirds lm, than the 

amounrs proj«:rod in CBOS baseline. Such a cut would 

reduce- obligations for highway programs from current 

projections of about $47 billio1\ per year, on average. 10 

about $3 1 bil.lion ptr year, on average, from 2016 

chrough 2025. Similarly, such a cue would reduce: obligations for trl.Ulsit projects from current projccdons of 

abour $10 biHion per year, on average. to about $4 billion 

per y<ar. on average, for che 2016-2025 period. 

The conuquene« of s uch reductions i1\ federal spending 

could be amc:liorntcd, at leas-t in part. if state and local 

government·s responded to the rtducUon in federal 

fUJ ds by increasing their ow1~ spending through somt 
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1ES11MONY DIE STAniS OF TilE IUGJIWAY lRllST FUNI) A!'D OPTIOJ<S fOR PAl1NG fOR IUGJJWAYSmlliNG 

combination of raising additional revenu(S, shift:ing 

spending from other purposes, -and borrowing. 

lf total funding for investment in highways and mass 

tunsit W<lS sig.nifican ~~ reduced. then it \ VOtlld be espe· 

c:ially imporc.ant to allocoue the remaining funding, and to 

use chat infrasuucture. in the most cfTee-tivc way. Spedli· 

cally, rhe neg;uivc con~quences of a substantial reduction 

in fundiog could be partly alkvioued if the remoining 

spending was focused on projects wirh t$pcdally Luge 

benefitS and if people's usc: of highw-~)'$ and mass transit 

was focusM on the hi.ghc.st-valuc um (for example, 

through taxd on vehide-mile.s traveled or GO \~tioo 

pridng).' In addition. the economic: efficiency of each 

dollar of funding GOuld ~ improv~ if the federaJ governmenr limited itS supporr to proje<:ts (such as rhc lntel"$tate 

highw.a)'$) that otTer signific.1J\t benefits to n~ e than one 

srotc,le:.lvingst.ue and local governments to fund projc.;ts 

wich more: loc:aliud bendirs. If the peopk who benefit 

from a project bear ilS costs. the likelihood is diminished 

that too ar~ a project (or too many project.s) will be 

uttdcrtaken or that too many infrastructure ser\•ices: will 

be consumed rdadve to ~ rtsOurces neM~ to provide 

them. 

Increase Revenues Oedic.aled lo the Trusl •·und. Another 

~pp oach to brioging the rrust fund's finances into bal· 

ance would be to incrta..o;e its revenue.c;-for example, 

by raising the taxes on motor fuels; by imposing mileage· 

based, or VMT, taxa~ or by imposing ta.'Ccs on activitia 

that otn: not rdated to tr.\nsport.l1ion.' nc:r~ing d1c 

charges th.at highway users P."'Y also couJd promote more 

efficient U$e of the system. Economic effic:icncy is 

enhanced when highway users are cha ~ according to 

tl1e margi.nal (or inGrc:tnettt.a1) cosu of their use. htdudittg 

the external costs that their highway use imposes on -soci-

<' )~ A COJnbination of a fuel tax and a VMT ca.'( that 

accounts for h~ type and v:dght of' a v~hide and 1he 

lcxatior~ and time of its use could provide incentivC'S for 

reducing driving's $0C.ia.l costs and could genernte funds 

for federal spending on highways.10 But generating 

s. f-or~ comprehcnsi~·e discuJsion or tht b<ndiu t.r~d cbal.t.tnttt: 

of con~nion pricinc.. indudin' ()pciom f« its dtsip and 

iropl<mmt:)Uon (or highw.J.y•. J« Cong.r<$$tonaJ lkadget Office. 

UJ;n& PrkPtt 14 RI(J{t•N Tlw/fo Ctnttst«nt (Much 2009). 

www.c:W.go~ /publ.ieuion/2024 . 

9. 5« Cootrtn.ion.U B~t Offict, Alt'-""1-tiatt Appllt4(lwstll 

FWIIIi"t HithwRJS (Ma.r<.h 2011), www.cW.gov/publ.ic:u.ion/ 

22059. 

additional funds tl1at way would raise ques-rions of fair· 

nm, including. for cx.unple. whether the strucwre of 

user charges would impose relatively greater burdens on 

low-income and rur-AJ u.sers. 

Fu~/Tt.tx~. Excise t.-l.'(CS cr~ ted t O the Highway Trust 

Fund corne primarily from taxes or~ gaso in~. ~th:uto

blended fuels, and diesel fuds. Those excise taxes were 

bst increased irt I 993. and their purchasing power is 

about 40 percent below that in 1993. If those taxes had 

been adjusted to keep pace with 1he consumer price: 

index. for exam pit. the ux on gasoHnc. '\\1tich is currc:mly 

18.4 centS per g.Jion, would be obout 30 cents per gal· 

ion, and d1e tax on diesel fuel, currently 24.4 e<nts per 

g,tllon, would be about 40 eems per gallon. 

Acc:ording to JCT's estimates, a one-cent inc.rc-asc in the 

taXes on motor fuels:. effective Oc:tobcr 1. 2015. would 

initially raise about S 1.7 billion annually for the Highway 

Trust Fwtd. ded •~g over the 1H~Xt 10 years to about 

$1 .5 billion annually.11 T he decline occurs mainly 

becaUk, under currel\l law, annual incJ'C"ases in the use of 

diesel fuel are expected 10 be more than offset by annual 

dcdiJ~es in g;uolinc usc because of mandated inGreak$ in 

oorporate average fuel economy standards. If lawmakers 

chose to meet oblipujons proj«:tcd for the trust fund 

solely by raising revenues, they would have tO incre:ue the: 

la:«$ 01\ motor fuek by roughly 10 cents J)(r eaJJon, 

starting in fiscal year 2016. 

Fuel t.lXes offer a mix of positive and negative cha.r-acteristics in terms of many people's conceptiorl of equity. They 

s;adsfy a •user pays" criterion-that those who rcceh·c the 

benefits of a good or service sltould pay its eo<t. But they 

also (';;lJl impose: a larger burden relative to income on 

people who live in low-income or rural households 

becaus.e those people: tend to spend a larger share: of their 

income on transportation. Fuel raxes impose a burden 

C\'tn 01~ households that do not own passenger vehidC"s 

by r.tising tr.lnsponation costs~ which are rdlocted in the 

price. of purchased goods. 

10. Foruamplt,$« D);~dAt..Un,PrkintFJVitht Tnms~ ~A«.,smt 

for&mul UfN, Workint Paper 2.011·03 (Coogr«Sio.W. Budgtc 

Ofrt«. Much 20IS). www.cbo-:o,•/publicaUoo/S0049. 

ll. Beau$( OOse ~et <d~.~« ell< tax ~ o( UKQmt ilnd J,.11yr'Qll 

t~l:<f., highu n:cifoe tn« would ltad co a rtduction in rtvmuu 

from inc:orm tax« and pa)'fOU w:«. The tstim:t.td shO\Y'Il bert <b 

n04 rtt't«c ~-< fo<ductioos. Those redu<Uom wo~d a.mown co 

about 2S ptrctot of the «timattd incrcast ln acist cu r«<:ipu. 
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Fuel taxes have two desir.ililc characteristics that a.re 

reL1ted to e<:onomic dfsciency: They cost relatively little 

to implement (the government collec.ts taxes from fuel 

distribut·ol'$, and users p.•y che tax:cs when rhey purchase 

fuel), and they ofT~r users some incemive to cun .. 1.il futl 

usc. rhus reducine some of rhe .social costs of tf'owel. However. a fud tax discourages some uavel too much and 

other tr.Jvd roo little .. bcxa~ se it dO<:$ nor reflect the Luge 

difTercnces in cost for usc of crowded roads compartd 

with uncrowded roads or for uavd by trod>s thar have 

similar fuel enicicncy but a use different amounts of 

pavement d:.tmage. Moreover. for 01. given ta'( r;ue on fu-els. 

the inandve to reduce mik:age·related costs d iminishes 

over time as more driving is done i.n vehicles th:n arc 

more fud efficient. 

VMT T~s. VMT ttl.'<C$ provide suongcr incentives for 

efficient usc of highw•ys than fuel <aX<S do because VMT 

wccs arc better aligned i~ h the costs imposed by users. 

Most of those cosu-ind uding pavement damage, congcstjon. aocidcms, and noise-arc tied more closely to 

tile: num~r of miles vehicles tr.wd tl1an they are to fud 

consumption. 

For VMT taxes to signifiantly improve efficiency, 

however, they would need to VOl}' gre•rly •=rding to 

vehide type, time of travel. place of travel, or some combination of sucl1 c.haracteristk.s. For ocample, because 

pavement damage increases sharply wilh vehicle \l,l(ight 

but dc:crc::ases with the number of axles on a vehicle, the 

porti ~ ofVMT taxes a.ssc:s5(d ro maintain pavement 

could be small or nonexistent for passenger vd1icles but 

substan~iaJ for heavy-<luty crueks. partic.ularly th~ with 

high ~ight p<r axk . Similarly, VMT taxes could be 

higher for any c.ravt:l on crowded utban roads duri1tg pr.ak 

hours chan for tmve! in off-peak l1ours or on roads that 

are less coogesltd. 

In fact, a system ofVMT t~es uld not e~ ro apply 

to all vehicles on every road. There already exist lw 

comprehensive' systems of direct c harges for road US(": 

Toll ro:ads. la es . an.d bridges are co rnmo ~ i1l the Unite-d 

States, and several states and foreign countries place 

ei&h -and-d~ta ce tJ..'<~ on trucks. Expansion of existngs)~tems could focus on highly congested roads or 

on entry points into oculgestod ar~aso $Uch targeted 

approaches would oost less to implement if they required 

re:lacivdy simple equipment to be placed in V('hicles. 

Ahernativdy. the focus could be on spedfic vehicle 

types: Although trucks (excluding light-duty trucks), for 

example, collSt.itute only 4 percent of all vehicles in rhe 

United States, they a<:count for roughly 25 p<r~nt of all 

costs that hig.h\\\ty users impose on others, including 

.-tlmost aU of the cos·($ assodared with pavcmeru damage. 

The costs of implementing VMT tues include c:<tpital 

costs for equipment and operatin.e cos-ts for metering.. 

payme-nt collection, and enforcement. The oost to C$tab .. 

lish 01..nd operouc a nationwide program of YMT cues is 

uncen.Un and difficult 10 estimate because: projections so 

far are based mainh• O J\ $:0lalltriaJs that have used a variety of e,•olving technologiC$ and because the cost wouJd 

depend on whether VM.T taxes v.tried b)' dmc. pL1cc, or 

type of vehicle. Although the costs of charging drivers are 

dedirting wilh impro,•efntnts in technology, the oosrs 

remain higher than those for collecting revenues through 

the motor f uel t;uC'S. The idC".a of i1n posing variable VMT 

taxes also has raised oonccrns abom privacy: The collec· 

tion process could give the government access to specific 

inform:uion about when and where individual vC"hides 

are used. 

Impose Uxn Un~ at~d tu Trttntportlllion. Lawmakers 

could aJso impose new taxes or incrtaSe existing ones: on 

acth•it:ies that arc unrelated to tr.msponation. Such raxcs 

could be designed in many ways and might raise more or 

k$$ than the projected shortfall ill the Highway Trust 

Fund. However. such taxes would not provide the same 

incentives to us.e highway infrasu uctureC"fficitJHiy as 

would increasing ta.'<es on motor fuels or imposing a 

VMTta.x. 

Transfer Mone)' From the General Fund. Lawmakers 

could cho()S(: ro continue to suppkmenr he Highw.1y 

TruSl Fund with general revenues. thus providing more 

money for hig.hwa)'S and transit S}'Stcms than is collected 

from excise tox<Sdedictted to those purposes. For 2015, to 

continue fu1lding for surface tromsportation progTArtl$ at 

the amounts for whid• obligation limitation was provided, 

lawmakers ·would need to rmnsfer $3 billion co the Highway Trust Fund, CBO es•imates.

12 That uansfer would 

allow the trtiSt fu1td to maintain cash balances: of at least 

S4 billion in the highway ;u;oount and at kast $1 billion in 

the Lran.sit account. Subsequently, to continue funding for 

u.r~ce lr.u\$p0rtation prouarns at the average amounrs 

provided in rectm yem, adjusred for inflation. lawmakers 

12. For rno ~ lnfomution. t« Congrenio.n,] dg~t omu. ~un to 

tht onon.bl~ od« M. l..tvin r~eudinc: lh.t ~~Unu. M rc:v~m 

Jhortf.tH if tpmdinc 2u1bority for the Hi&ftway Tnm Flu)d \Wr~ 

c-x ~»dedbeyond May 3 1.20 1) (M1y20IS). www.c:bo.govl 

pti;l.it":uiorJ50234. 
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1ES11MONY DIE STAMOFTIIB IUGJIWAY lRllST FUNI) A!'D OPTIOJ<S fOR PAl1NG fOR IUGJJWAYSmlliNG 11 

woold need to transfa $ 11 billion in 2016; such trans· 

fers would need 10 incr=e gradually to $22 billion by 

2025 to maintain current spending, adju$ted for inAation. 

At that pocc, by 2025, CBO projects, &eneral fund tt.tn$· 

fers would account for about om -chi d of rhe rocdpts 

credit«! 10 the HiaJ""'Y Trust Fund. 

Spending that res~dted from such transfers could be paid 

for by reducing other &pendjng or by inc~:lSing broadbased taxes. such as inoome taXeS; or it ooukJ add to 

defidts and thus increase federaJ borrowing,. Reductions 

in other spendin_g ' vould mean that the benefits of the 

-spending on tr-.lnsport.1..don would be at least partially 

offiet by a reduction in whatever benefits that other 

spending would hove provid«<. Boosting the ol...,.dy-high 

fed<'-ral debt would have lo ng·tC'rm negative effects on the 

economy. 

lnc.re:lSing broad-b.ued wes- would offer advantages and 

disadvantages oomp3rtd with raisint taxes on highway 

~rs. T' vo arguments <:.1.n be made in support of using 

such a source of funding for highways. First, some bene· 

fitsofbener highway infrastructure: arc: distributed more 

broadly 1han to just hi&hway users. For example. Kduc· 

iog transponadon cosrs for suppliers and customeB 

increases efficiency by allowing businesses 10 sp«iaJizc 

more in terms of the products and services they produce 

and the materials they use. Seoond , a~ amounts oould 

be raised through sm:UI ehangeo in tox rates. JCT hoseoti· 

mated that raisi1lg. all tax r.ues on ordinary individual 

inoome by 1 per«ntage point would yield a.J\ average of 

$69 billion per ycat from 2015 10 2024- more than all 

of the current H.ighwoty Trust Fund taxes oombined. n 

Moreover, funding highw•ys through bro.d·bos«< taxes 

does not impose a larger burden rdative to income on 

rural or low-inoome user$ (unlike some mxcson f\tcl use). 

In ocher respects, howa'er, the use of general revenues 

J'O$C$ djsadvantagts. In particular. the approach gives 

users no incentive to drive lessor to use less fuel. and it 

docs not satisfy the principle that a user-pays syste1n may 

be fairest and most efficient. Moreover. ~'tn a smaiJ 

ittcreasc in existing w ra1es would hamper ec01\omic 

eflkienC)' by discouraging work and saving and by 

encouraging people to shjft income from mxable to 

nontaxable forms and to shift spending from ordinary 

to t"".<fedtoctibk goods and sc"·iccs. 

IJ. 5« Co..~ttos Mal Buclt~t Offior, Opti.nJ for &dwbrttlu 

Ckjidt: 2015 f# 202.f(N'o,'(ntbtr 2014). p. 29. www.tbo.gov/ 

budttc·opcjorufl014. 

Financing Highways ·nl< project<d shonf:Uis in the Highwoy Trust Fund have 

gt:ner.ued inl<'.rest in increasing 1he amount of Spt'ncling 

char can be sustained in the 1\ear t<'.rm by encouraging 

state and local governments to rely more heavily on debt 

financin;. Mo$"t hi4;hway projecrG now nre pnid for with 

c:orrem stotte or federal revenues. Apan from increasing 

their own t:axes or c:uning other spendiog, st.1te and 

&ocal governments or other public entities could finance 

addilional spending on highways in a number of ways. 

induding one or more of the following: 

• lssujng W·prcfcrrtd government bonds. 

• Obtaining rederal loans or loan guararuees-. or 

• jolJ\ing with a private parwu [0 obtain privatt 

financing. 

Ta.x-prt:ftrred govC'.rnment bonds indude tax-exempt 

bonds (among them qualifi«< private activity bonds. or 

QPABs) and rox el'<'dit bonds. both of which transfer 

some of the cost of borrowing from state and loc.al gov .. 

ernmcm:s and the private $«tOr tO the federal government 

in the form of forgone federal tax revenues. Investors are 

generally willing to accept a relativdy low tate of return 

on taX-preferred bonds because interest income is exempt 

from federal (and many nate) taxes and because those 

bonds are backed by the taxing authority of the public 

emhy. 

Federal loans or loan g1.1ara.ntees can redl~c state and 

Jocal gove:rnmems' borrowing oosts, depending on the 

t~rms of the loan, in part bec.ause the federal government 

assumes tltc risk th<lt would be borne by a lender 3nd paid 

for by a borrower in t~ form of higher interest rate$. A 

curK1\t federal loatl program offers state and local govern· 

ments an opportunity to borrow money for highways and 

cercaiJt other tr:U\.Sj>Ore<uion projects ar interest rates that 

are based on the long·term TI"C<lSury rate. 

Assessfnents of the experie1\« wilh priva1e financing of 

highwa)'S in the United States suggest thou turning to 

a priv.tte partner does not typically yield additional 

financing,. although doing so may speed the provision 

of financing and make new roads available $OOOCr than 

chc:y ·would have been otherwise. Priv:ue financing can 

provide the capital necessary to bu.ild a new road. but it 

comes with th~ expectation of repayment and a fumre 

return, tile uJtimate source of which is tither rax revenues 

colle<:led by a govern men[ or fe<s from road users, like: 

0 
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tolls-tlle same S()Uroes that are available to governments. 

All told, the total cost of rhec1pir.U for a hig.hw.ty project, 

whether th<:u capital is obtained through a govcrnmem or 

through a public-private partners-hip. t<:tlds to be similar 

once all relevant costs are t<tken into accoum. Rcgardk:ss 

of its sou.roe. fioa.ncitlg is only a mechanism for .nakint 

future tax or user fee revenues available to JXlY for projects 

s:o<>ncr; it is J\Ot a J\ew source of revenues. 

Ta.x-Preferrcd Bonds 

The f«<er.tl &O''ernmcnt provides ~vcr-altypes of rax preferences to subsidiu: infnstrucwre financing. Ta."':--~xtmpt 

bondt use the ,,..d)~e$tab ished t3X preference of paying 

intel'('St th:u is not sobjcct to fede,.al income tax. Such 

bonds can be issutd to fittaoct: the fuJ\Ctions of state and 

local governmems or. in the case of QPABs. oerr.Un types 

of projects under-takt-n by the private sector. A S«<J\d, 

more rceendy developed type of tax preference for infra· 

$ttuGture fiJ\at\cin& is associated with tax cr~dir btJ,JJ, 

Such bonds come in two basic forms: those that provide a 

t3X cr~i t to the bondholder in lieu of JXtying inrcresr and 

tl1osc that allo"•' the bond issut'r to claim a tax c~dit. 

(For iss-ue: I'$ widt no tax liability. the: credit in the secood 

SC(nario 1akc:s tile form of a paymem from the: Se<:retary 

of the e.asuf)~ Such bo11d.s are known as direcr·pay ta.'C 

crodit bonds.) Tax-exempt and tax crodit bonds alike 

transfer some of the <»St of borrowing from st:lte and 

local governments and the private sector to rhe federal 

governmem, dther in the form of forgone federal r:.u: 

revenues or, in the case of dirccc·pay tax: crtdit bonds. a 

federal outlly. 

Tax prtfel'(:nees provide federal supporr for infrastructure 

finandng ,\.flil(' generaJiy allowin.g scue and local govemm~Ol$ to ~xercisc: broad discretion ov<"r the ()'pes of 

projects they finance and rhe amount of d~t tiH:y issue:. 

Howevtr, tax prc:ferenc.c:s are r~ot governed by t he annual 

appropri.uion process, so lawmakc:l'$ exercise less overs-ight over their corninuation and use than is applied co 

fedeul gr;:mt lind loan programs. Also. because forgone: 

~c:nues <U'e not identifiable: in the federn.l budget. 

the ~tSe of tax preferences can m.uk the full scope of the 

government's finandal octivities. Usingsom~ types of 

tax-preferred bonds can b<: an inefficient way to deliver a 

federal financial subsidy to state and local tpvemmentt. 

\"Xlith a 1-u exemption for interest inc;ome, for example, 

state and local borrowing costs (and 1he oosu of 1..he private emicies that make usc ofQPABs) are reduced by 

signifiC.llltly less th.'n the amount offorgone foderal 

~venues: the rema.indc:r of th.-n tax expenditure accrues 

to bond buyers in the highest inoome tax brackets. 

Subsiditing borrowing through the usc of paymentS 

made dirtedy to borrow~rs can be more efficient- in 

terms of d1e benefits to stoue and loc..U governments: per 

dollar of federal cost-and more conducive to budgl't31)' 

review and <:oncrol." 

T<L'I:·E.~enJpt Co,·ernmenc Bonds. Federal tax exemptions 

for int<!rest income from government bonds {and 

QPAS.) allow i$$uers of •uch debt to seU bond. that P"Y 

k>wer rate$ of interest than do wcable bonds. Because 

purd1ascrs of lax-exempt bonds demand a n:turn that is 

at le.ut :u high as the aftcr·t>JC yield they could obtain 

from comparable ta.x:able bonds, the .amount by which 

che return from tax-exempt bonds is lower than the yield 

on comparable taxable debe depends on che income cax 

ra.te of the marginal (or market-clearing) buyer of taxexempt bonds. Thus, the amount of subsidy chat state 

<10d local governmentS receive by iS$uing tax-exempt 

bonds is determined not by an explicit dc:cision of the 

federal government, but indir«:tly by the feder.tl tax code 

and the linancia.l d rc:umswJC:C$ of potenti~l inves.1ors. 

JCT estimat('$ that the tax exemption for state and locaJ 

d<bt r<$Uited in $33 billion of forgone fede ral revenueo 

in 2014; for the subsequen1 four ~am, it e$clmates that 

mx-cxemp1 debt will reduce revenues by an additional 

$147 billion. According to dot• from the lntern.I Revenuc 

Service, tax·exempt bonds issued between 1991 and 2012 

co lina.ncc hig.hw.ty and other tr.a.nspormtion projects (both 

for new construction ;md co refund existing {r~.mporuuion 

debt) accounted for bw ... "Cen about one·dglnh and one--

fifth of che tor.a.l v..Iucof t:u-cxempt bonds issued th;n can 

he d.>SSi6ed by the type of project fin.meed. Thus. a ""lgh 

estimate of the tax: expenditure for transportation bonds in 

2014 would he hem~en $4 billion :md $7 billion. Data 

from propriewy sources sugg<st that high'")' bond. m•y 

account for as mud1 as one-half of all taX..-aempt debt 

issue-d to finance transportation proj~l$. J 

14. Formou lofotmuiMI, su Contrnt;ional Budttt Olftetandjoim 

Commitcft on Ta:u.1ion. SMillitlh:.;nt,!nfivttrw.r.m lm·tJro.ntl with 

1irx-~ fk,Js (Ooolxt" 200'?). wo,vw.cbo-tovlpublicalion/ 

413S9. 

15. Str joint Commimoton Tu.alion, Eltlnuun•fFN.m~l T-.'<: 

Expmdituwtfor F'uu1 )J-.4112014-2018. JCX·97·14 (AtJt.Uft 

20 14). p. )~. http://eo.u"a"tov/)PuXT: hHtrnal ~nur &n;cr, 

Suci«itf o( lncocnr, "'Tabk 2. Loc-e·Trnn Tax.f.ump« 

Co nnmcn l Bondt, by Bond Purpost :~.nd Type or lsatr." 

www.in.t;ovluadSOJ-Tax-Sucs~Tu-E.x..-mpc·Bood.StatinitJ: and 

iboms.;,n ~ultn, .. Tr.antporu.tion Hithlithu." TM &nJ St~p 

Yn~(,'1rioutUn~tt). 
22 


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TESllMONY niH STA'IUIOPTIIIl iUGilWA¥ !RUST FUm-'"'> OPllO."S fOR PA11NG fOR IUGIIWAYSI'INliNG 13 

Quolilied Pm'OI< Activity Bonds. Qualifotd priva~t ae~ivit)• bonds,,. W<•a<mpl bonds lh.t1 financ:. bru in f.-. 

muaur<<>n<lo<hcr proj«a ,~u,.,. prim.trily undcnaken 

by • prin« en<il)' ThUJ. QPABs <Skruially provide 

publicly .. suppou~ fin~ncing. to pr~·one businc:kf or 

individu~t; ;a qu;Ulliffl ~rnm~nul uni( k"'" ,, 2 

conduit betwtc-n those cntilic$ and the purchaser of the 

bond. QPABs may be i,.ued "' finance a wide ranee of 

infraitructurc (and ocher) projects. including rhose for 

tran$pon011ion. 

SAFETEA-LU allow«! QPABs <o be issutd for «r<ain 

.surf~ tu.nspora,uion projo::ts. but thc law platc'd a gp 

of S 15 biUion on 1hc iuuancc of •ucb bonds. Aaoldlllr; 

., DOT (uofMay 12. 2015), bond.wim • v.olll<of 

S5.8 billion h•ve been issued lOr 14 projccu in .U •ince 

2005. DOT hu .ollou«d anomer S5.3 billion of that 

$15 billion 10 proj«l$ that. al<houg)lapprovcd. have 

not st.uc«< and could use QPABs in c.hc fmurc; about 

60 pcrcenr oft h.;u amount has ~n alloca1ed durin& the 

J>.l" ~>r or .a. Tha1 kavc. roughly $4 billion available 

for future :applic.;a.nu. Ho"'t''cr, the $11 b illion in bonds 

eumndy i•ued or alioa<ed under <he S 15 billion cap 

may OVC'rstatc the: ilmou.oc ofQPABs th;u thofot' projccu 

,.,;n u:soe C\"tfttu.l!ly. bcausc JOmc projcct.s dut m:.dw:d 

a QPAB alloa1ion luve .witehtd to other fonm of 

finonc:in~ For =mpk. in Ap<il2014. DOT .ollomed 

.bout $5.3 billion from QPABs to .cv<n proj«u ma1 

had no1 l'" is•ued bonds. By M•y 2015. however, only 

three of them lud i:ssu(d QPABs. all for amO,IIH$ that 

were signiftenntly Ius tha..t originally :aJiocattd. 

Giving priv~tc entities~ to the ta.X•acmpt m;uket 

using QPABs lowc:rs 1hc cos• of capiul for <hoJ< borrowers. and can promote infr.uuucturc projocu ~n state 

and loaJ p;wcmmtnts h;,a,·c sdf-imposal Iimitt: on bor· 

rowinr;. But. like l.&X<X<mpt gn=mcnt bond•. QPABs 

result in fofl)Onc tOIX rtYtnues.. And. to th(' n:tcnt t~t 

pri'\';Ue fund inc w.t.S :a.vail.lbk without QPAS,. ~belt at a 

higher cost, only projeeu of marynal valu< ' VOllld be 

unable to ~ivc rinand,lg " 'ithoUl th<'f'n. 

Because of the g.rowitt(;. nu1nber of projcc:u: seeking to ll~ 

QPABs. some financi~ market ana.l)'$ts arc cona-rncd 

that the limit on their usc ,.,;_u be- ~heel soon. ~·clop· 

mcm ofl~. compla infr.tStruautt projteu often u.kc:s 

)"r".US. to fmMKW .tn.ai)'SU ~ sedd"' ccruinry dut 

QPABs ,.;11 be ovail.lbl< if m<>·cl.oc-to apply for 1hcm. 

In his 2016 budtJ<< propooal, lh< Presiden< propootd 

meit.Suta to addrus tht: borrowing limits. First, tht: 

Pr .. iden< p"'po"'d raising me cap. by $4 billion. <o 

SJ9 billion. According 10 JCT'satima<es. such an additional a.Uocalion would btQn to bt l.tSied .so~titnC' in 

2017. Scoond, 1hc Pr<tiden1 pro)>O$C<Iaud.oririnr; • n<w 

t)'pt ofQPAB for fin~ncint infrasuuetul\" itwutm~nt 

rh.-at would N- fl1lly u.x-~nmpt AAd th:u uoould :ako not 

be subjcc.1 10 any volume gp. 

Ta..'\: Credit Bonds. St.uting in the late-: 1990s. the Congress 

curn«< to t4\X credit bonds as a w.ty to ful:u}Gc-: public 

o:pt:nd.itures. In tht:ir early form, those bonds .allowed 

their hold:t:rs to ~i\'t: .t c~dit ~nst federal income tax 

li.abiliry instead of -or in ~diUon t~ cash intuC':S. 

!J'Piea!IY paid on the bonds. The amount of me cmli• 

equals the er<dil ra((, which is''" by me Sccro.uy of the 

Tr«1$U'}\ multiplied by lhe f;occ amount of me bond. 

T:ax crMir bonds offer some Qdv.anug:s over other cypcs 

of <ax-pr<ferrcd bond., sueh "' W·<X<rnp< bond<. 

B«ause bondholders pay hl.Xes on the amount of ercdit 

they daim, tax cl'f'dit bonds: do not result ill invesl·ors in 

high marginal tax brackets rccdving a portion of the for· 

gone tu rc\·enun. Rather. t.he revenues fottone by 1he 

ftdcral go-Trnmen< 1hrou~ w: cmli< bond• r<ducc 

$UU: <>nd local bor ..... inr; COOlS dolbr for dolbr. a mor< 

cfficicnt ~of fedcr.ll ruourcts thm du:t raulting from 

tu-cx<mp< bonds. Tax cr<di< bonds ako allow 1hc 

amount offtderalJuboidy 10 be determined cxplid•ly • 

r.uher <han depending on o<hcr federal polie<s (such as 

margh•al income ;~Jt rates). 

The American Rrcovcry ~n d )~ nvest ment Act of2009 

authoriltd Build Amt:rk:a Bonds. c.ucrcdh bonds thou 

w<rc sold only in 2009 and 2010. S1>tc and loeal govern· 

m<':nts issued the bondJ t:hhc.r as cudicion.al u.x credit 

bonds or. if an.Un conditions "'"-rc l'nC't. as dir«t·fU)' t.u 

er<dit bonds (known" qu.ol1f!ed Build Am<riea Bond.). 

ln. contrast 10 urli<'r t1X c~it bonds. Build Amt'ria 

Bonds h.wc: ~interest r.ue (or coupon) thou is J('t by the 

i5Sucr ra<hcr <han by the S.Crt:tuy of me Treasury. For 

the dirtGt·pay bonds. t~ fcdcr.tl goverom('_nt provided 

pa.yments direcdy lO issuing stoue and loca.J governmtnu 

equal to 35 per«nt of the intere$t, in lieu of a tax Grt'dit 

going tO the bondholtkr. 'Jne .tmoum of that financinG, 

subsidy is grt'.ater t~n the rcdi)Clion in the: interut cos1s 

thou thOS(' JUte:: MKf loa~ prm~nts would hot\'C rt:.ll• 

iocd if they lud issutd lradi<ion•lt.a-cedi• bonds 

bccau.c, in <he Lm<rc..,., 1hobond buyucwminr; 

<he""' ertdit would have had to be compeD5a<M wilh 

...cfdjdonal int<'f<'$1 income for the resulting a.x liability. 
23 


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14 nmSTArus a nU>JDGIII\'Al' lRUIT fUM) Al<l) Om<l!<SFOR PAlWG FOR IUGI!WAYSI'L\"DII'G JUNE 17,201; 

The imerest subsidi($ provided by dir«t·pay tax credit 

bonds appt"ar as ouda.ys in the federal budget, makirlg the 

cost more transparent and. in principle. enabling comparison with other federal outlays for the f.ame purpo$¢$. 

Also~ because the )~dds provided to holders of direct-pay 

taX credit bonds are similar to the yields of other wable 

S«urlties. dirc<:t·pay w credit bonds are more :mra<:tive 

to tax-exempt entities than other tax credit bonds are and 

may therefore increase the pool of funds awailable to stare 

and local governments to finance infrastructure projects 

and other activities. 

The President's budget proposal for 2016 includ« a 

dir«t-pay ta.'( crc:dh bond with a credit equaJ to 28 pc:rc;cnt of each interC$t payment. By allowing. state and local 

governments to suhstilUte taxable for tax e:~empt bonds. 

the propos:al V.'Ould inc:rtaSC axabl~ intef'(:St income, 

booS<ing federal revenues by S54 billion ber-V«n 2016 

and 2025, aceording ro ]CT. Because rhe propooal also 

would increase subsidy payments: co sr.ue ~nd loc.1l gov· 

ernments (which are re<:orded in che federaJ budget as 

outlays) by an estimated $58 billion. the net efTccc 

would be to increase che ct.tmuhnive IO·year deficit by 

$1 billion." 

Federal Loons 3nd Loon Guarantees 

The federal gon~rnment also subsidil:CS borrowing by 

st:ate and local govemmems by providing and guarantee· 

ing loans for infrastructure. Such c.r«iit assist.ance can 

reduce nate AAd local governments' costs because it can 

facilicue borrowi1lg at interut r.ues rh:u are lower lhan 

otherwise mi.g.ht be available. and it may open addilionaJ 

~ccess to the capit.U market$. Specific.1.Uy. in providing 

loans aJ\d loan guara..ueC'S, the fed-eral governm-ent 

assumes the r~k that would be borne by a lend-er and paid 

for by a borro,vtr in the fonn of higher interest rates. 

The Federal Credir Rd'orm Act of 1990 (FCRA) estab-

]i,hed rules for ealcul'ling rhe budgerary costs of direct 

loans and explicir loan gtoaranr«.< issued by the federal 

governmenr. The budget"'}' eosr offeder.U credit assiStance 

prograrns is recorded as the net pi"(;S(nt value of the cash 

flow'S to at'ld from the governm-ent- the loan amount and 

the expected repaymems- when the loan is disbursed tO 

recipitms.1

' That subsidy cost repres-entS an estimate of 

tl1e rltt oost that tht gov.ern.ntnt bats. ln con~r:ast, the 

16. S« Joim Cou:unitt« on T a.ution, Esti•llflltM BMtd E/f«ts ~~~~ 

&wmuP,.,vitf0,t C#m•iluJ intlNPmitknli Fiu11/ Y.nrr2()J6 

&Jgll p,,_,J, X·~·I S (Much 6, 201$), httpdlgo.uA.govl 

JPu~. 

c.lSh flows associated with that loan betwe-en the Treasury. 

an :Jg.ency. and borrowers occur over time and are not 

recorded in the budgcr. 

An Unponant aspect of the budgetary treatment of 

federal c.rcdit programs is that agencies muSt receive 

an appropriation equaJ to the estimated subsidy oost 

before they c.an make or guarantee a lo."ln. 

18 In the case 

of dirtcc loans.. FCRA specifies th.u Joan repaymenu 

rue unavailable for fu un~ spending,; those repayments are 

alre-.adya«ounted for in the estimated 1\<'t ptt:$tllt value 

of the loan, so they are not avaiJable to ~re\•olvc"' into new 

loans. Sucla a revolvjng fund is lhe model on w·hich m.any 

state inflfiStruc.ture banks arc based. However, for the fed· 

cr.l.! gove.rnmenc, those rtpaymems represent pan of the 

financing for the original o~ .. n.s and are implicit in the 

subsidy calculation. Allowing loan ~paym~nts to bt ustd 

for 1tew loans-without 3.J\Y addicional appropriation to 

cov-er the .subsidy costs of tht new loans- would raise th~ 

tfftccive FCRA subsidy cost of the original loans to 

100 pcf"(;(:nt (the same <l.S for grants). 

FCRA accounting. howe..-er, does not provide a com pre· 

henslvt me-asurt of the .economic cost of crtdic assistance. 

Through its use of Treasury,.,,. fordisc:ounring. FCRA 

implicitly u-e:.us m.uket risk-a type of risk chat im•escors 

re<Juire. compensation to bear-as having no cost co the 

governmcnr. Specifieally, FCRA's procedures ineorporate 

the expected cost of defaults on governmtnt loaM or lo:u\ 

guaramees but not the cost of risk associated with unccr· 

t.tinty ::t~ot the m-'gnimde and timing of those def.tults. 

Investors require compcns•uion-a "market risk pre· 

mium•-to bear that risk. That premium on a rlsky loan 

or guarantee cornper\Mte.s i1westorS for tlte incrt:a~ like· 

lihood of sustaining a loss when the overall economy is 

w<:ak and resources are sc.areeo that likelihood is reflected 

in higher expected returns and lower prices for assets that 

c.vry more market risk. T.1i.xpa~rs bear the investment 

risk for federal cr«iit obligJtions. By omining the cost of 

mark<'t risk and th-ereby undtrs-r.uing the economic cost 

of federal credir obligarions, FCRA accounting may lead 

17. lll( riel pr<:KOt \'aJI.I<: i$ the lin&J( IU.lllbt:.r i.lut txJ>r«$($ J, 0qw of 

eurrw1 v.d futur-e income (or paymtnu) in t<.rms of an tquh•akm 

lwnp runt r«e:ivlfd (ot plld) today. 

IS.Incontn.·n, noappcopriadocu ut: n«tmcyfot tht: periodic 

rc-vlsioru 10 $Ubs.idy e«inu.t« th;lt ~tncit<S m~ to rtf'k<c a.cuu.l 

cxptriwor with &oms and s:w.rwt«t. P<.ITIW\('m indtfinitt 

budget authority o.iscs for th<m rc:viJion•. which a.,r<: r«<rd«< i.n 

the budttt u incru~ ot dterel$t$ln out.byr. 
24 


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1ES11MONY DIE STAMOFTIIB IUGJIWAY lRllST FUNI) A!'D OPTIOJ<S fOR PAl1NG fOR IUGJJWAYSmlliNG 15 

policyma.kus to favor crtdh assistance over other forms of 

~d that have a similar (()C)Oomic oost.19 

Loans Made Under the Transportalion Infra..~ruclure 

f'inance and lnnova1ion Ad. DOT adminjsrers a Joan 

program w1der the Transportation Infrastructure Bnance 

and Innovation J\<.t of 1998 (Tlflt\) rhar pro\•ides crcdh 

mistance co s&ue and local governmems to finance high· 

way projects and other types of surface transpon.uion 

infrastructure. The TIFIA pro&r.>m offer> subordinated 

federal loans for up to 35 years at intcrtSt r.ues that are 

based on the ~<J.te for Tr~o y securities of simil<1r matu· 

rity. (On June 1. 2015, the interes-t r.ue on the 30-ye-ar 

Tr<asury bond was 2.94 per«nt.) TlFIA assim.ncc may 

lx used for up to 49 J)(rcent of a proj«r's cost. Combined with other feder--Al gr.uns and credit assistance. 

Tl FIA loans e2n be part of a p•duge of feder.l assisw>e< 

that funds up to 80 p~rcent of ch~ <:Ost of a project. 

MAP-21 made several changes to the TIFIA proeraJn, 

notably inc:~.asing the amoum of budget authority for 

the sub$idy cost of the progr.tm's loans from $122 million 

pt"-r year in the previous authorization for hig.hway and 

uansit programs to $750 million in 2013 and $1 billion 

in 2014. Be<:ausc. OOntt'.l.Ct amhoricy is provided for onJ)• 

.bout thr<e·founhsof2015, TIFIA has received 

$750 million so far this yt:ar. If an insufficient a JnOUJH of 

th:u budget auchority was used. provisions of the law 

directed DOT to reotllocone some of those funds co St:ites 

for usc: by their formula program.s. J>.. of April I. 2015. 

uncommi11ed bud&et authority for TIFIA totaled $1.139 

billion. As ar<Suh, on April24. 2015. DOT realloC<~ted 

about $640 million to st;ues.20 

MAP-21 also authori7.td master Gredit agrtcmet\tS and 

created a.n extra inttr(.St rate subs-idy for projects in rural 

ar<:as. Master credit agruments would :.lllow DOT to 

make commitments offuture TIFIA loans. contingent on 

19. Mor«»wr. subs.idy t.Ut:f c~ut«< und« FCRA txdOOt f«<m.l 

adminiurati~ e,ons, tw.n thok chat art tntntitl. for puJtf';ne 

dv v.t1~1ot' of the covurunuu's d~n to futurt ttf»)'l'llotnts, sudl ;u 

loan krvici~ .nd rolkction CO:fl:t~ chou oosu atot accowutd for 

sepantdy in tht biJdttt. F<lr more infonn.uiOct, t« C. tt~ti<>nal 

BOOttt Officot. F1ir· V.IM kMtt.,tintf« ~I Ctwlit Pr(}Qftms 

(Much 2012), W'\loW,cl».tov/publieuion/-43027. 

20. CtqM)" G. l'.t..dau. Ftdm.J Hi&hway Administration,, Notk~ 

tisc:al Ynr (FY) 2015 ~cllitributioo o(Tra.ruporution 

Wr.uuucmrc Finolnct and h\00\'ation Aa (TI FIA) Fund:t and 

Anodat«t Obtitation. Limitacion (Apr1J 24. 20 15). 

hup://llrwa.dot.t:OYII<t"tt.tldir«ti,-«Jno0cct/n4510783.cfru. 

future aulhorizations. to a group of projects secured by a 

common rtvenuc sowc;c. Under provisions of MAP~21. 

rural projects tttdve a minimum of 10 percent of lhc 

funds appropriated and ar<! digibk: to r«cive loans at half 

the Tre:.asury r.ttc. Such an interest rare subsidy makes 

a project relatively less expcnsi,·e for the sponsors- and 

rdarh•dy more expensive f'or the fedcraJ governmcm. It 

may t¢S:Uh in federal loans for projects lhat would not 

Otherwise general~ Cf\Ough fe'\'~1\Ue$ tO ('.OVer the COStS of 

financing the projc<:ts. 

Proposals for a Federal Infrastructure Bank. ),~ recent 

}~rs, the Congress has considered several proposal$ for 

establishing a federal bank to fund infrastructure projects 

through loans a.nd gr.lnts.11 In recent year'$, 1hc President's 

budget has included a request to create a similar entity . .n 

\'<lhethcr federal credit assisunte is provided through 

an existing federal ;agency or a newly created special 

cnlit)', however, it would irwofvc similar budgttary (;O$tS 

10 Lhe fcdeml g.ovcrnmem. The suppon offered for su.rfacc uanspowuion by most proposed infrastructure 

banks '''ould not differ subsuntially from the loans and 

loa.n guarant«S already offered by DOT through its 

TtFIA program. Therefore, differtJ\(;(;$ berweer1 the exist· 

ing TI FIA program and an infrastructure bank would 

primarily be operationaJ, concerning the o/f'C'$ of infrastructure ro fund. the kinds of crtdh assistaJlte to pro· 

vide, the k l«tion. process for projeccs. the aJ»OUJ\1 of 

kvcrage co pro\•ide for f«fc,..tl funds, and the amoum 

of priv<'te•se<:tor participation to encourage or ttqllire. 

For ex:ampk. an infr.OtStructurc bank could focus on 

financing transpott:adon infmtructure. or it could 

define infrasrru<:ture more broadly to include sewers, 

wanew.ucr treaunent facili ies~ drinking warcr supply 

facilities, broadband lnttrnet 3C(($$, or even schoolt. ln 

principle. an in frastructure bank could use any of Stvcr.ll 

methods to finance projects. including federal loans, lines 

of crtdit, and guararuees- for private loans. 

CBO Ius previously analyud an illuStrative federal 

infrastructure bank- one that is representative of 

certain reccnr proposals but that would focus on surf.'lCe 

ll. Othtr covotmmtnt pc-ogr-t.nu that providt- at-dit u-si«ana for 

infrascructurot proj«ct indudt the EnvironmmW. Proc«:tion 

A!;rocy':t $tWU for IU.tt'$" f(\'OtviOJ &oJ.n fundJ (M ~Itt projtcu 

and m.td infrutructurt- banl«. all apical.iud with f«knn funds 

and ad.ministt-r(d by $tat«. 

22. Somot ocber pt6p<>uh to t-Scabli.sh an infrasctu«Wt twtk jndu<k 

providi~ bond Uuuranc( to inutn. 
25 


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1a lilt $TAll!$ 111 1ltE IUGiiWAYllllST RIW A.'J> Of'DQiS lOR PAlL'<G IOIIDGIWAT $POill~ Jl.~ (7,2015 

tn.nspon.uion progr.un.s.ll That entity. which '",uld be 

fcckn.lly funckd and controlled. \\"'OUid selttr ncv.·. 

locaiJy proposed oonstruccion projecu for funding on 

tl1e b..sis of several criteria. including the projects' C0$1S 

and bc-nt:fau, and it would prcwide financing. for the projccu through &o.tM :.md lo:lJl. guv:3.nteN. To repay tht" 

lo.ulS, project$ would have to usc toll$, taXes. or other 

dedicated re\'CJ\ue strc-<uns. Financial assi.sunce could be 

provided to any con.sonium of partners with an di&ibk: 

project. such as <t group of state and local em hies or a 

g.roup of J\o n&o"crnmentaJ partners. The bank could 

provide the subsidy amousns neo:Jed to compensate 

privatC·S«tor i1tvestors for brndics that accrue to the 

gener.J public and to the economy at lart<· 

Such an infr.aslructurc bank could have a limited role in 

enhancin& investment in s:urf.tor uansportation projects 

by providint new federalsubsidie> (in the form of loans 

or loan ll"aum<a) to certain brge projects. potentially 

including muhijunsdict:ion.J or mulcimodal projoc:u, and 

by a.llo"in& the bend'iu of potential projccu to be mote' 

tt:Jd.iJ)f compared in a cornpttiti,·e st"leaion process. 

A kty limitation of such <1 bank is that m.any surbu 

tr.ansponAtion projects would not be good cmdld.ltes: 

for ics wpport. bccaust 1110$( projects do not in•·oh·e toO 

tollrclions or other mechanisms to colka: funds dir«tly 

from proi«t UStn: or oc.b.n bcndlci..uics. 

PriYale FIIWidag 

Only a un.ll number ofhig.way projcas in the United 

St.un hoave involved public-private panne11hips ,.;th pn· 

v;~;ce 6n.tn<int,"' Assessments of thO:St proj«rs indicate 

that such partnerships may occekrate th.: :~Vail.bi ity of 

finandng- for exampk. by circumventing stones~ tdf. 

impos«J limits on borrowing-but they do n01 generally 

rauh in additional financing. Some of the pro;c:cts that 

have been financed through tolls hoavc failed fm•ncially 

bccdllSC the priv:ate-$CCtor partners initiaJiy overestimated 

1.hdr revenots and as a rts:uh have bun uJUble to fully 

rtpay their projtcts' debt$, Perhaps as a responst:. projttts 

2.}. Su eo.,trtuio.lll Budtct rr~ I.Nji.sf"n«tlf.W &mn lllfll $urj'RU' 

Tnu111~riAI~ (July 2012). www,d,o.gov/f1'1bliQUonl43361, 

2 ... For addi na.J Wornution on tht tx)Xli<o« with P'•blic·priV<1lt 

l~.artntohipt. ~«die t«tU:uony of Jou:pb t<JJe, Ai,inant Oircaor 

fot ~1,iO'OtO)nOm,ic Studies, Congrmio.ul BucS&ec Offi«, brff,lrt 

the Pant! oo 1\Jbljc.Jlri,~tt Partoc:nbip. Hot.m Com.roiu« oo 

lfatupotuU~ and IAfrucruawe. A/Jik-Pnr>A.'f' PArmmJnJtt for 

H~Pr.jt'di(M~rch S. 201-t). "'"'"""".<bo.gov/pubticacionl 

4SIS7. 

that are slill under con.suuccion rt:ly less on tolls il5 a reve· 

nue JOurcc: more commonly. priv.ue p.mners .ue com· 

penJatC'd from~ stareS general funds. thliSiimiting the 

priwue risk of notb<ins rep;Ud and l<'<lving chc risk of 

&ower·than+expccced revenues to the publk: partner. 

lncreo15ingly. public-priv;ate p.1f1tlerships aJso h.we 

rt.pl:u:cd the funds obt.a.ined rhrottth J>riv.lte me.tns (at 

mark('t t?.t('J) with taX•tXt.mpc bonds or bo1\ds that pro· 

vide a credit ag.,inst taxes ow«t. '11l1U chatlge has brou&)1t 

the projects more in line with the way states typicaiJy 

finance infr.u~rucwre projecu.lowcrint the private part· 

ners' COSts at the expense of costs 10 federAl taxpa~rs 

and increasing the :lmOUI\1 or tht tO\'err'lffiCIU'$ implicit 

equicy and risk. In doing so. newer projecu may have 

diminished the in«ndvcs :l$JOCioucd y,·hh priv.tte 

linancing 10 control costs and to be completed quickly. 

In uktition. mo~ t«fnt ~{Vt'emt'nts have reduced priv.ue 

p;~nn<"rt' dcbt·.trrvia potym<'ntJ chat iJ., intertSt p.ty· 

m<"nts on any mone-y borrowed tO finMl« thC' projeasby tncrustn& the shoan: oflinandn& provided by the owe 

or IO<.Iityor by the f<de...J &O•·cmmcm. AccordinOY, the 

fonancin& provided by th.: TIFIA prou.un 0< by,..,.. 

eumpt priv;~;te xtivity bonds Ius btcome il)(ft.uindY 

prominent for hig.way projcciS tha! iO\-oh·e public and 

priv<ttC' p.1MOt'U. 

The histOry of privately financed ~ in dx United 

Su.tcs t'ncompa.sxs 36 proj«ts th:lt vc C'icht't under way 

or hoave been completed durin& the p.»t 2S )'<•rs. The 

value of the <ont"GIS for thO« projects totals $32 billion. 

a little ltJSthan I pc'r(t'OI of cht': approximately $-4 uiUion 

that ~l.llevels of ~·<'rnmt':nc spent on highw.t)'S over the 

period. (Both of those amountHrc in 2014 doll.u..) In 

1ht p.tSI few yurs. tht numbt'r of p.u-tneuhips for ro..d 

projccu with privAte financing has incruscd~ one·h.Uf of 

the $32 billion in contrdCtS has bct'n committed in the 

past five ~at"$. 

The amOllnt of risk crJntf('rrtd co priv.ue p.utners has 

v.uiccl from projccc to project. ln some instances, the 

financiaJ risk WJ.S borne: primarily by t~p.,~rs. wl1o were 

re!ponsiblc for rep.lyintdcbt incurred by the priv~ue p.trt· 

ntr. Under one 1>royam in FSoricb. for cx.lmpk, privotte 

bu!inesscs fin:t.nce coach J>rojw cntird)' with priv.ue debt 

that is 10 be rt'p.aid over a prccktcnnine<l cime usUA!Jy 

five ~ar1 wilh future yams fronl the fcder-.a.l &O"Cnl· 

mcm, state ful\ds, and revenues from tolls colkctcd from 

US(rt or tht compkccd road. The ,.,lie's guM.tnC« of 

n-paymtn(S dimin~tet: much of the tr.tnsfer or risk that 
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TESllMONY DIE STAMOFTIIB IUGJIWAY lRllST FUNI) A!'D OPTIOJ<S fOR PAl1NG fOR IUGJJWAYSmlliNG 1 T 

takes place whh other privately fioanctd projects. Thus. 

the fin:,mcing is essentially public.. and the Slructure of 

tlle public·prlvate partnership is similar to that of an 

<l.pproac.h without pr1v~tc financing. In other instances. 

the private partner has borne more of the risk of the 

investmenr-specifiully. some of the private partners• 

money might b. lost if the projeet did not produee 

revenues .u expected. 

Over the past 2 5 years. 14 prh•atdy ftna»e<d projeetsof various siteS but all involving comr~ts of at least 

$50 million- have b<en completed (see Table 3). A 

r<:Yiew of those projects offers liule evidence that publicprivate partnerships provide additional m;ourCd for 

roads cxc::ept in cases in which states or localities: have 

choscrl to restrict spending, through self.iJnposed legal 

constraints or budgetary limits.. To varying degrees, rhc 

proj~ts thac made ust of privace fitlancing were in 

s-tatc:s in which the government could have issued 

bonds to hnance the work through rradicionaltneans. 

ln some cases, J: vevcr, the use of a pu.blic·private: part· 

nel'$hip accde:nllcd ot pi'Qjc:c;r~ <~CCC$$ tO financing by dr~ 

cumveming restrictions that states have imposed on 

themselves and that limj, their abilio/ ro issue addidooaJ 

debt. (Earlier financing of a road project adds value when 

it allo"' the public to enjoy rhc b<nefits of the new road 

sooner than would otherwise be possible.) 

$(ver.al.such projOGI$ are .still undtr construc tion ($CC 

T.'lble 4). New public.· private p.."lnnerships have sought 

to reduce their borrowil~.g eosrs by rdyin.g on publicly 

subsidil'.<<l borrowing rhrough the TIFIA program and 

duough QPABs issued by local municipalities; the 

QPABs have tax ~vam:ages thar lower rhe private part· 

ner$ debt·suvice payments.. All but two of chose projoc•s 

have made usc of feder.t.l sub$idies through the TIFIA 

program. That choiceoffinancingconstitmesa return to 

some feac-un:s of the t~didona l approach in which the 

public sector- the federaJ governmem. in panicularretains greater risks. c:spech.tUy the risk of default. For 

innancc, the South Bay Expressway, which had received 

some finctncing from che TIFIA program, illu$U\ltes wh<tt 

can happen to raxpayers as the uhim:ue equity holders. 

The projeCt filed for Ch;tpter II b.'"kruptcy in M.vch 

2010. finally emerging in May 201 1. The new hnancing 

and ownershipsuuc:ture required by 1he bankruptcy 

court imposed a loss of 42 percent on federal taxpayers, 

replacing ,he originai TIFIA invC$tment with a JXICb.ge 

of debt and equity worth only 58 percent of the o riginaJ 

investmenr.11 New pubUc:~priv.tte partnerships also typi# 

cally secu~ state or local loans or grants as part of their 

financing. In the otht.r C'a$e5, projoc' ma..tagers who are 

re:$ponsible for a project's fin<Wcing h;we had to take 

out bank loans. Tha' sour«: of private capital WO\S 

more attractive: during the recent economic downturn 

as imerest rates fell relative to the yields for bonds in 

municipal bond markets (includine those ofQPABs). 

Fewer ongoing proj«t$ today ;Me using priv.tte debe. 

Budgetary Principles Cor the Treatment of 

Projects With Comt>lex l'lnancing 

Under the pri1lciples that gove-rn fedual budgeting. 

the budgetary tn:at.ment of complex financing arrang~ 

ments-•ho.se chat i1\volve an intermediary ocher than 

the Treasury r.tising money in private capital markets on 

b<h.lf of the federal governmenr-should depend on its 

economic substance: who controls tl1e program and its 

budget, who seleccs the managers. who provid($ the api· 

tal. and who owns the: rcsulfing llit)~24 ls the activity 

govc:.rntnental (that is. initiated. COntrolled, or funded 

largely by the g<>"eroment for governmental purpoS<S) or 

is it an initiati,,e of the private sector (driven by market 

forces independent of the government)? 

An investment that is t$SC'nliaJiy government.al should be 

shown in the budget whedler it is fin.-nced direccly by 

the Trt.ast.uy or indirutly by a third pany dlat is borrow· 

ing on behalf of the government. ACtivities need not be 

conducted by a federal agency to be classified as govern· 

men ..I and included in the budget. When doubt exists 

about whether a prog.ra.m should be r«<tdcd in tht fed· 

eral budget, those same principles indicate that "'borderline age-ncies <'tnd transactioM should be ioduded U1 the 

budget unless there are ex<:eptionall)' perSuasive reasons 

for exclusion. •27 

Likewise. spending financed by .til forms of agencies' 

borrowing, including debt not bocked by the full faith 

and credit of tltc: U.S. governmtJlt, appears in the budget. 

However, bond proccc:ds or rcpar.:able equity invest menu 

are oot t(OOrdtd as federal receipts; they are 3 m('ans of 

financing a project- not che ultimate source of capit."ll, 

which is the income that will be geoer.ued by their 

opera lion. 

2 5. Ra.ndall _f(nu-n, "'ToUw;t.y Ex:iu Chlpt.r-r II: TIFIA EtwJ, Up 

TU.iot a HairQ..It,"' &nJ /JMJ(f"(M1y 6. 2011), hul>:lfUoyv.rl.coml 

3(nSn.j. 

U . Set Convmional ~td&c:t Office:. Thirri-Pif.rly Finmui~t&•fFMm~l 

Projer;, ~ 2005), \\"WW bo.g..-,v publ~tioo 6SS4. 

21. The: Prc:Udtnt't Conuninion on Budgc:t Conc::c:pu. &pqrt •f riN 

PrniJ('IIIt C,wmiuNm qn BMtd Cmr~JII (Octobc:r 1967). 

() 
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18 nu; STArus a nu; l.DGIII\'Al' lRUIT fUM) Al<l) Om<l!<S FOR PAlWG FOR IUGI!WAY SI'L\"DII'G JUNE 11,201; 

Table 3. 

Completed llighway Projects TI1at Used Public-Private Partnerships With Private Financing 

Sources of Funding (Milltons of 2014 dollars) 

Public Total 

Public ctualified Proiec-t Cost 

euyout of Private (Millions 

Oateof Sources of Bankruptcy Private PriVate TIFIA ActiVitY of 2014 

Opening Revenues Ot<:lared Part.wrs Deb I E<luity Prooram B ...... OUotr' dOIIan) 

1Jo.6>s Gr...,.ay(Va) 199S lo-. No ,.. 410 /1:) 0 0 ~ 

SMiflrpres•l""" (CaW.) 199S lois No v .. 164 33 197 

c ..... eo~Jrl>ra 

8ypass(Te<.) 2000 lo-. Yes ,.. 97 19 w 

AU.rn: Crl:f·6190flbre 

TIJV'oei(N. J.) 2001 olsllax~ No ,.. lS7 :1()6 46l 

SotthOrnCOIV'<dor (S.c.) 2001 lois Yos ,.. 264 U4 

P"""""" Parkw<¥ (Va) 2002 Tols No ,.. 701 JOl 

ROJI<J NOfUl(Mas~) m , .... Ho ,.. 51.1 515 

Sotth 8"f flri)!I!$SW<lY 

(South secoon; CaM.) 2007 lois Yes ,.. 428 224 177 828 

SIH.lO (SegmooiS 5 ancl6; r ... ) 2012 lois Ho ,.. 7'11 231 470 l450 

1-495 HOTLanes (Va) 2012 lo-. Ho ,.. 380 643 643 591 2,257 

l'ISMer~ l.antS(Fia.) 2014 loiS/faxes Ho ,.. 842 234 661 250 1,977 

HOftttTau'Mi f,xpress 

(Sogmercs 1anc12: Tex.) 2014 Tols No ,.. 459 101 429 618 2,200 

PcrlcA!MrOTuooet(Fia.) 2014 ,., .. Ho ,.. 368 87 368 334 llSl 

I-95110VIll0llarot$(Va) 2014 To .. No ,.. 285 .lOS 257 91 938 

SOurce: COngre$sional Budget Office baSed on data from Uie Federnl Highway Administration. 

Note HOT = high occupaney/t<>ll; HOV = l'ligh occupancy Yehide; TIFlA = Transporration Infrastructure Rnanc-e and lf'lnOttation Act 

.. A qual!f~ priv<~te activity bOnd rs a bOnd Pssued by or on behalf ot a local or state gov«nm«~t to finance the project of a private bus1MS'S . 

The Sat., Accountable, ReJible. Efficient Transportation Equity Act. A lQ9C1Cyfor Users (SAFUEA·lU), enacted In 2'005, added highways 

(and freight transfer tadtltles) to the types ot prlwte projects for which tax·exempt Qualifying prlvate activity bOnds may be useo. 

b. Mostly loans or grants from states or tocallti'es. 
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1ES11MONY DIE STAniS OF TilE IUGJIWAY lRllST FUNI) A!'D OPTIOJ<S fOR PAl1NG fOR IUGJJWAYSmlliNG 1& 

Table 4, 

Ongoing Highway l'rojccts ·n,at Use l'ublic-l'rivate Partnerships With I'rivate f'inancing 

Sources of Funding (Millions of 2014 dollars) 

Public 

Qualified Total 

Start and PriV-ate Project Cos-t 

Ex:pected End of Sources of PriVate TIFIA Acli'tity (Mittions of 

Construction Reve-nues Debe EQuity Program Bond$• Othe,. 2014()ol .... ) 

1·635lBJ ffet:wa)'{Ttx) 10U-1016 TO!~ 724 917 654 s~ 2.824 

Ml.tolWI TUMtts(Val 1012-1017 lol~ 716 429 686 l3l 2)23 

A.,c>o ... _(C>II) 1013-10~ T<J<es l7U " ~2 311 

(bo R~ Bridl)esbSI End 

O'OS6Iflll(lndJ 2013-2016 Tots/Taces 79 16S Sl6 580 1)40 

J.69St<110nS0ndJ 2014-2016 TlJCes 41 2+1 80 34< 

US.·lH1""'9'dl.an<s(O>!o) 2014-2016 TOI~ 21 21 60 20 87 21l3 

C..llals Budge (N .Y) 2014-2017 foiSITlll<es 107 <74 4SJ 42S 1.m 

MotflT.lfran ~&Se911entlA(Tu) 2014-2018 '"'" 420 5,)2 2~ 172 I)W 

Hoc M~Ufucloi{Ga) 2014-2018 ToiS/Taces 60 m <99 834 

RapK!Brld9e Rep actmt(ll~M) 2015-2017 '"'" S9 794 26S 1,119 

SouflttnONo Vtterans ~l'n¥3!1' (<JI.) 2015-2018 '"'" <9 209 2SI l2S 634 

l-4Ulllm.)li(FII) 2015-2019 '"'" <IS< 103 1,2S6 I,OlS u.n 

Source: Con9fessJOnal Budget Office based on Information from the Federal Highway Administration. 

Note: TIFIA = Trnnsportation Infrastructure Finance and Innovation Act. 

.. A qualif~ pri\latQ actiVity bOnd is a bOnd issued by or on I>Qhalf oc a local or statQ gov«nm«~t to financQ thQ project of a prtY"atQ businHS . 

b. Mos-tty loans or grants from states or tocallti.ts. 
29 

f 


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2 0 nmsTAlUS a nU>JDGIII\'Al'lRUST fUM) Al<l) Om<l!<SFOR PAlWG FOR IUGI!WAYSI'L\"DII'G 

About This Document 

This testimony was p~pared by Sarah Puro and Chad Shirley with conu1butions from Mark Booth, 

Tri5tan Hanon. Michael Kinc.a.id. Nathan Mu5ic.k. and Logw limmerhoff and with guidance from 

joscph Kik. In k«ping with CBO's mandate to provide objeah,·e, impatdal anai)'Sis, this testimony 

con rains no recommendations. 

jeffrey Kling and Robert Sunshine reviewed the cestimo1ty, john Skttn edited it. a11d Jeanine Rees 

prepared it for publication. An ekctronic venion is available on CBOS website (www.cho.gov/ 

pllblico<ion/50298). 
30 

Chairman RYAN. Thank you. 

Mr. Poole. 

STATEMENT OF ROBERT W. POOLE, JR., DIRECTOR OF TRANSPORTATION POLICY AND SEARLE FREEDOM TRUST TRANSPORTATION FELLOW, REASON FOUNDATION, LOS ANGELES, 

CALIFORNIA 

Mr. POOLE. Chairman Ryan, Ranking Member Levin, and Members, thanks very much for inviting me to testify. In 2005, I served 

on a TRB special committee on the long-term viability of fuel taxes 

for transportation funding, 10 years ago. We concluded that, in 

coming decades, per-gallon fuel taxes should be replaced by permile charges. Three years later, the Infrastructure Financing Commission agreed with that recommendation. I have written extensively on the problems with today’s trust fund, and today offer four 

recommendations for your consideration. 

My first recommendation is do no harm. In fixing the trust fund’s 

problem, the emphasis should be on strengthening the core principle of users pay, users benefit. The best protection for needed 

transportation investment comes from dedicated user fees funding 

that is immune to the constraints of the budget process. This is 

how nearly all other infrastructure is financed. Airports, electricity, 

railroads, telephones, water supply, they don’t have problems like 

fights—perennial fights over tax increases. 

Reliable user-fee revenue streams enable long-term revenue 

bonds to finance major projects, rather than funding them piecemeal out of annual appropriations. Any uses of general fund revenues to bail out the trust fund undercut the user pays/user benefit 

principle, and make the program less reliable, going forward, since 

the Federal Government will have less and less general revenues 

in coming decades. 

My second recommendation is to set real priorities for trust fund 

spending. If it is politically untenable to increase fuel tax rates, 

then spending must be trimmed to the level of user tax revenues. 

You should ask which aspects of the trust fund spending are truly 

Federal in nature, versus State and local in nature. Government 

agencies across the country are having to review their budgets and 

separate core programs from many things that are nice to have, 

but are not really core. Congress has an opportunity now to do this, 

or start doing this, regarding the trust fund. 

A couple of examples on this. Federal programs’ top priority, in 

my view, should be reconstructing and modernizing the interstate 

highway system, our most important asset, which will need an estimated $1 trillion over the next two decades to do. Yet, according 

to a recent GAO analysis in my written testimony, only half of the 

$50 billion trust fund spending goes to highways and bridge 

projects at all, and only $3 billion is spent on major projects of the 

kind that would be involved in reconstructing and modernizing 

NHS and interstate highways. 

Also, why should just highway user taxes support the two highway safety agencies, NHTSA and FMCSA? Nearly all other Federal 

safety regulatory agencies are funded out of the general fund, not 

out of user taxes. That’s just a point. 


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My third recommendation is that Congress should encourage the 

eventual transition from per-gallon fuel taxes to per-mile user fees. 

It is clear that State DoTs are taking the lead on this with pioneers 

like California, Minnesota, and Oregon. There are many unanswered questions, though, about which mechanism will be most 

feasible for collecting the fees, while protecting privacy and ensuring that they actually replace, rather than add to fuel tax revenues, 

which is the premise. 

Congress could further these efforts right now by focusing more 

of FHWA’s research dollars on pilot projects in a larger number of 

States. Another useful step would be to encourage increased use of 

per-mile electronic tolling for major highways. Congress could expand the existing three-State pilot program for toll-financed interstate reconstruction. More States should have this option, and existing States should not be able to sit on their slots indefinitely 

without using them. 

The revamped pilot program also needs much stronger protections for highway users to ensure that the new tolls would be pure 

user fees, not a cash cow to bail out State DoT budgets. Highway 

user groups will certainly oppose expanding the pilot program 

without much stronger safeguards along these lines. 

My final recommendation is that Congress should give States increased tools to make their transportation dollars go further, and 

long-term public-private partnerships, P3s, are an important way 

to do this, and well-suited to major highway and bridge projects 

like interstate highway reconstruction. Tolls provide a bondable revenue stream so that major projects could be financed now, rather 

than years or decades in the future. And P3s shift many of the 

risks of mega-projects to the P3 company, rather than taxpayers. 

The Federal Government assists in these kinds of projects in two 

ways: By enabling the issuance of tax-exempt private activity 

bonds, and providing subordinated loans via the TIFIA program. 

The current PABs law only allows $15 billion worth of tax-exempt 

bonds. Two-thirds have already been used up. So the reauthorization needs to include, we suggest, a doubling of the $15 billion cap 

to keep that pipeline flowing. 

Finally, TIFIA was expanded in MAP–21, and doesn’t need a bigger expansion. But the money would go further if Congress were 

to make one important change. The MAP–21 law increased the 

maximum TIFIA loan from 33 percent of a project budget to 49 percent. It really should go back to 33 percent, consistent with TIFIA 

being GAAP financing, and enabling more—the existing amount of 

money would go a lot further if it were only funding up to 33 percent, rather than 49 percent. 

That concludes my testimony. I am happy to answer questions at 

the appropriate time. 

[The prepared statement of Mr. Poole follows:] 


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Rethinking the Highway Trust Fund 

Testimony of 

Robert W. Poole, Jr. Director of Transportation Policy, 

Reason Foundation 

5737 Mesme•· Avenue 

Los Angeles, CA 90230 

310-391-2245 

June 17, 2015 
33 


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2 

Chairman Ryan, Ranking Member Levin, and fellow Members: 

My name is Robert Poole. I direct the transportation policy program at Reason Foundation, a 

nonprofit think tank with offices in Los Angeles and in Washington, DC. I'm a graduate of MIT 

with two degrees in mechanical engineering, and additional graduate study in operations research 

at NYU. 

My Credentials on Today's To!lli;. 

I have been studying surface transportation policy since 1988, when I researched and wrote the 

Reason Foundation policy study that inspired the first toll concession project in California, which 

became the prototype for express toll lane projects nationwide. My transportation research over 

the years includes highway finance, congestion pricing, bus rapid transit, and many related 

topics. I have served on transportation advisory bodies to the states of Califomia and Texas, and 

have advised the state DOTs of close to a dozen states, as well as the Federal Highway 

Administration, the Federal Transit Administration, the Office of the Secretary of Transportation, 

and the Government Accountability Office. 

1 was a founding member of the Transportation Research Board standing committee on 

Congestion Pricing, and am a current member of its standing committee on Managed Lanes. In 

2005 I served as a member of the TRB special committee on the long-term viability of fi.tcl taxes 

for transportation fi.mding. Our report concluded that the fuel tax was not a sustainable long-term 

funding source, and that it should be replaced by some form of per-mile charging that would be 

independent of the type ofvelucle propulsion1

. That conclusion was amplified several years later 

by the final report of the National Surface Transportation Infrastntcture Financing Commission, 

which analyzed a wide array of possible fuel-tax replacements and concluded that a mileagebased user fee was the most effective alternativc2

. 

My testimony today draws on my more than 25 years of transportation policy research. 

Overview ofT estimon 

As is widely known, the federal Highway Trust Fund (HTF) is no longer being supported 

exclusively by highway user revenues. Since 2008, Congress bas shifted over $60 billion in 

general fi.md money into the HTF, so as to avoid reductions in annual federal highway and transit 

spending. Given the intense pressu.res being placed on general fund monies and "discretionary" 

spending due to the overall federal budget's problems, there are serious concerns about whether 

such HTF bailouts can continue. At the same time, there appears to be little political supportHouse, Senate, or Administration- for fuel tax increases that would bring HTF revenues into 

alignment with current and projected spending. 

1 Comminee on the Long-Tem> Viabilily of Fuel Taxes for Transportation Finance, The Fuel Tnx and Alternatives 

for Transportation Funding, Special Report 285, Washinglon, DC. Trausportalion Research Board, 2006 2 Na1'ional Surf.1ce Transp011arionlnfl'astnacture Financing Commission, Paying Our 1Vay: A New Framework for 

Transporlarion Finance. Febmary 2009 
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In my testimony I suggest that Congress needs to take these realities seriously as it develops a 

bill to reauthorize the federal program. I offer for the Committee's consideration four 

recommendations to guide a fundamental rethinking of the federal role, as follows: 

I. Preserve and strengthen the users-pay/users-benefit pri11ciple on which the HTF was 

founded, and which remains the basis for most state highway programs. 

2. Set meaningful priorities for the Highway Tmst Fund, to balance spending with existing 

revenues. 

3. Encourage state efforts to develop mileage-based user fee models that address the many 

current unknowns and concerns over this proposed transition. 

4. Give states improved tools to make their existing transportation funding go further. 

Recommendation No. I: Preserve and Strengthen Uscrs-Pay!Users-Benefit 

3 

This recommendation is analogous to what physicians arc taught as a basic principle: "First, do 

no harm." Users-pay/users-benefit is the basic principle on which Oregon and all the rest of the 

states created fuel taxes dedicated to highway capital and operating costs, starting in 1919, and it 

is also the principle adopted by Congress in creating the Highway TnlSt Fund in 1956. Dedicated 

user fees (tolls) and user taxes (fuel taxes) have a number of inherent benefits. As outlined in a 

20 I 0 Reason study3

, they include the following: 

Fairness: Those who pay are the ones who receive most of the benefits, and those who 

benefit are the ones who pay. This is the same general principle used for other network 

utilities, including electricity, natural gas, water supply, telephones, railroads, and many 

others. 

Proportionality: Those who use more highway services pay more, and those who use 

none at all pay nothing directly (though they do pay indirectly thanks to the highway user 

taxes paid by c·ompanies shipping goods to them on the highways). 

Se/flimifing: If a user tax or user fee is the sole source of funding, that is supposed to 

impose a limit on how high the tax or fee can be: only enough to fund agreed-upon 

investment. By contrast, in Europe motor fuel taxes are a general revenue source, and in 

most countries generate several times as much fuel tax money as they actually spend on 

transportation investment. 

Prediclability: A user fee or user tax produces a revenue stream that can and should be 

independent of the vagaries of government budgets. 

lnveslment signal: The user-pays mechanism provides an answer to how much 

infrastmcture to build, assuming that the customers have some degree of say in the 

matter. The contrasting fortunes of state fuel taxes (numerous increases) versus federal 

fuel taxes (gridlock since 1993) speaks volumes about the credibility of the respective 

federal and state transportation programs. 

Using general fund and other non-transportation revenues to bail out the HTF undercuts the 

integrity of the users-pay/users-benefit principle. It has already led to calls from several parties 

for either diluting the principle further, by opening up the HTF to a much larger array of non-

' Robe11 W. Poole, Jr. and Adrian T. Moore, "Res101ing TnJSt in lhe Highway TnJSI Fund," Policy Sludy No. 386, 

Reason Foundation, Augus12010 
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highway programs4 or to abolish the HTF and dedicated funding altogether, with all federal 

transportation spending henceforth coming from the general fund5

• The latter approach would 

model the U.S. federal role after those of most countries in Europe, in which ntel taxes are a 

general government revenue source, and transportation makes do with whatever funding the 

national legislative body decides to allocate. Using figures provided in the Eno Center report 

noted below, one can see that national government fuel tax revenue in Gennany is 1.8 times the 

amount spent on all modes of surface transportation. Even worse is the U.K. situation, in which 

the national govemment collects nearly three times as much in ntel tax revenue as it spends on 

all modes of surface transportation. In effect, highway users are getting a very raw deal in those 

systems6

. 

4 

Thus, rather than reinforcing the trend of using general fund money to bail out the HTF, a far 

more pmdent policy for the longer te.nn would be to strengthen the users-pay/users-benefit 

principle by limiting HTF spending to the amount brought in from user-tax revenues. Rather than 

tying the Tmst Fund's future to increasingly dubious general revenues, this approach would 

restore soundness and reliability to the HTF. This approach is beginning to be taken seriously by 

transportation experts. 7 

fu:~dation No.2: Set Meaningful Priorities for Trust Fund Spending 

In order to make HTF spending match the approximately $40 billion per year in projected 

revenues, Congress would have to take a hard-nosed look at the large array of programs now 

included in the federal program. Over the decades since it was created in 1956 to fund the 

constmction of the Interstate highway system, the program has expanded in scope to cover just 

about anything related to highways, transit, ferries, bicycling, and even walking. All of these and 

many other programs serve some useful purpose- and each has a vocal constituency in support 

of its continuation. 

But one question Congress needs to ask is this: which of the myriad programs within the current 

HTF are truly federa l in nature-as opposed to being essentially state or essentially local in 

nature? One way to set priorities would be to identify the truly federal programs and, over time, 

refocus the HTF on only those programs. My Reason colleague Adrian Moore and I reviewed the 

HTF from that perspective in 2010, and came up with the followi11g general guidelines: 

Maintaining and upgrading the Interstate highway system; 

Coordinating multi-state highway and bridge projects; 

Fostering freight corridors, to enhance interstate conm1erce; and, 

Funding transportation research and safety efforts8

. 

'Tony Dntzik, Gideon Weissman. and Phineas Baxandall. "Who Pays for Roads? How the 'Users Pay' Myth Gets 

in the Way of Solving America·s Transportation Problems," Frontier Group and U.S. PIRG Education Fund. Spring 

2015 

' Joshua Schank. et al.. "Tite Life and Death of the Highway Trust Ftmd," Eno Center for Transponation, December 

2014 

• Robe11 W. Poole, Jr., "Abolish the Highway Tmst Fund?" Public Works Financing, May 2015 7 Ken Orski, "A Conservative Vision for tlte Future of the Highway Trust Fw1d," lnnovarion NewsBrieft, Vol. 25, 

No. 5, Jtme 13, 2015 8 Part 4 in Poole and Moore, op cit. 
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5 

A 2009 GAO report analyzed HTF spending over the five-year period 2004-20089

. It identified 

$24.2 billion in miscellaneous spending over that time period, not counting direct outlays for 

either highways or transit projects. Were just those activities eliminated, the annual savings 

today would be in the $5 billion range. Another $1 billion per year could be saved by eliminating 

the Congestion Mitigation and Air Quality (CMAQ) and Surface Transportation Program (STP), 

based on GAO's numbers. Shifting the funding ofNHTSA and FMCSA from HTF to the general 

fund would save another $1 billion a year. Note that this list of possible lower-priority items does 

not include the Federal Transit Administration, though in principle transit is an essentially 

local/regional responsibility, not federal or state. 

A more recent GAO report sheds further light on the current allocation of resources just within 

what is nominally the highway and bridges portion ofHTF10.It analysis ofFY 20 13 HTF 

spending found that of the entire $50.7 billion total, only $24.05 billion- less than half- is spent 

directly on roads and bridges. l11e report then examined that $24 billion to see where the money 

went. Given an assumed priority for major corridors for interstate commerce, such as the 

Interstates and the other highways comprising the National Highway System, the report 

identified just $4.6 billion spent on highway and bridge "major projects." And of that total, only 

$3 billion was devoted to actual construction, reconstruction, or rehabilitation. In other words, in 

a system that was created to foster interstate commerce, just sL1.: percent of its current budget ($3 

billion out of $50.4 billion) is devoted to actually investing in those facilities. To me, this fmding 

cries out for Congress to rethink and revamp how HTF monies arc being used. 

Both the TRB cotfllllittee on which I served and the Infrastructure Financing Commission made 

detailed cases for the necessity, over the medium/long-term, to transition from per-gallon fuel 

taxes to per-mile charges. The latter are now refen·ed to as mileage-based user fees (MBUFs). 

Given ongoing trends toward (a) ever-higher miles per gallon ratings of new cars and tmcks and 

(b) the likely increasing market penetration of alternatives to petroleum-fueled internal 

combustion engines, we need a funding mechanism that will be independent of propulsion 

sources on an ongoing, sustainable basis. Charging per mile driven- obviously with higher rates 

for heavy tmcks than for personal vehicles-is widely considered as the best alternative among 

both transportation researchers and state DOTs. 

It is also clear that the prime movers in working on this transition are state DOTs, with help from 

various transportation research institutes. A decade ago many people assumed that if this 

transition were to come about, it would be imposed top-down by the federal government. Today, 

it seems far more likely tbat state DOTs, with support from their legislators, will pioneer 

MBUFs. Oregon is widely acknowledged as the leading pioneer, though Minnesota and several 

others bave also carried out important research and pilot testing. A recent trend is the fonnation 

ofMBUF coalitions among adjacent states with significant cross-border travel (e.g., Washington, 

Oregon, California, and Nevada) to compare notes and learn from one another's pilot projects. 

• Govenuucm Accountability Office, "Highway Trust F\uld Expenditures on PtlJlX>Ses Other than Consltttction and 

Maintenance of Highways and Bridges During Fiscal Years 2004-2008," GA0-09-729R, June 30, 2009 10 Govemmeut Accountability Office, "Highway Trust Fund: DOT Has Opportunities lo Improve Tracking and 

Reporting of Highway Spending," GA0-15-33 
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6 

At this point in time, there is no consensus among those actively working on MBUF pilot 

programs about the best way to charge per mile driven or about how to phase in the transition 

from fi.1el taxes to MBUFs. One early Jesson from the Oregon experience is that it will be 

important to offer motorists and trucking companies choices not of whether to pay but of bow to 

pay. For example, among the ideas proposed or being tested in Oregon are the following: 

I. A no-tech alternative, in which motorists could opt for a flat annual fee for unlimited 

miles, paid at the time of rumual vehicle registration. 

2. A very low-tech alternative, in which states that have a1mual vehicle inspection (or smog 

check) would record annual miles driven from the vehicle's odometer at such inspections, 

with the relevant fee added to the annual vehicle registration fee. 

3. A modest-tech alternative, important for people who cross a state border frequently and 

need to document how many of their miles were on either side (e.g. Oregon/Washington 

or New Y ork!New Jersey). A devic.e that plugs into the under-dashboard diagnostic port 

could use cell-tower locations to disting11isb total in-state miles from total out-of-state 

miles. 

4. A higher-tech alternative, in which a c.ommercial company would provide a GPS box 

offering a package of services, one of which would be miles driven. 

None of the above, even the last, involves real-time " tracking" of every place the vehicle goes. 

So privacy need not be a serious obstacle to the MBUF transition. But since there is still a great 

deal to learn about consumer preferences, possible roles of private-sector vendors, and how to 

orchestrate the phase-out of fue l taxes and the phase-in ofMBUFs, there is a need for more states 

to engage in serious pilot projects such as those now under way in California and Oregon. 

The Mileage Based User Fee Alliance is recommending that Congress create a competitive grant 

program for large-scale multi-state trials. Among the key issues to be addressed would be 

privacy, cost of collection, and equity11. This new grant program could be funded by making it a 

priority within FHW A's ongoing research budget. 

Another step toward increased per-mile charging would be to encourage states to make greater 

use of per-mile electronic tolling on major highways. The rationale for this is to use new toll 

revenue to finance the enormous cost of reconstructing aging Interstates as they reach or exceed 

the end of their original 50-year design life- without any identified federa l program to cover this 

investment need. A detailed 2013 Reason Foundation policy study used FHWA unit cost data to 

estimate, for each of the 50 states, what it would cost to reconstruct all the existing Interstate 

lane-miles, plus selective lane additions, where justified by conservative projections of car and 

truck traffic. A number of these corridors were proposed as dedicated truck lanes, due to future 

volumes of truck traffic. The net present va lue of the cost of this endeavor, in 2010 dollars, was 

just under $1 trillion12

• 

The study then used the state-specific traffic projections to estimate the toll revenue that could be 

generated over 40 years, using modest per-mile toll rates for cars and for trucks, indexed to 

inflation at an asswned CPI of 2.5% per year. Tbe NPV of revenue (net of operating and 

11 The MBUFA website provides briefposilion papers aboul aspects of mileage-based user fees: www.onbufa.org. 12 Roben W. Poole, Jr., " lnterslate 2.0: Modemizing lbe lnlerslale Highway System via Toll Finance," Policy Study 

No. 423, Reason Foundation. September 2013 
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maintenance costs) came in very close to the NPV of costs, suggesting that a toll-fmanced 

Interstate reconstruction and modernization program is within the realm of financial feasibility. 

Were many states to implement such a program, they would be leading the way toward the 

overall transition from per-gallon taxes to per-mile charges. And since the Interstates alone 

handle 25% of all U.S. vehicle miles of travel (VM1), and other limited-access highways 

probably handle another 6% or more, if aU such hjgbways eventually were reconstructed on this 

basis, one-third or aU VMT would be paying MBUFs. The Reason study also caiJed for rebates 

of state fuel taxes for all miles driven on the newly tolled Interstates, consistent with the 

principle that per-mile charges should replace, not supplement, existing fuel taxes. 

7 

There is a current pilot program that pennits three states to each reconstruct a single Interstate 

using toll ftnance. Missouri, North Carolina, and Virginia hold the three slots- but none of them 

bas reached political consensus on making use of it. To increase the odds of one or more 

pathfinder states solving the political problem of gening to "yes" on this, Congress should make 

several improvements to the pilot program: 

Add a use-it-or-lose-it provision, with a time limit after which the slot would lapse unless 

the state gains political support to move forward to implementation. 

Increase the number of states allowed to participate, to encourage potential pathfinder 

states to take part. 

Allow a participating state to use toll fmance for aU of its Interstates, so it could plan a 

comprehensive 2"d-generation Interstate system. 

Require that participating states grant rebates of state fuel taxes for miles driven on the 

reconstructed, tolled Interstates. 

Provide stronger protection for highway users, by ensuring that the new tolls are pure 

user fees that can only be used for the capital and operating costs of the rebuilt 

Interstates. 

These provisions are critically important to gain the support of highway user groups, which have 

legitimate complaints about paying twice (fuel taxes plus tolls) on legacy tolled Interstates and 

about tolled Interstates being used as cash cows to fund a wide array of other transportation and 

in some cases "economic development" projects. 

Recommend31'ion No. 4: Give States Increased Tools for Lo fi~rm Public-Private Partnership_§ 

If Congress is unable to increase, or even maintain, the current level of HTF spending, the least it 

should do is to give states more and better tools for doing more with their existing funding. A 

powerful tool that fewer than a dozen states are using thus far is the long-term public-private 

partnership (P3) in which the private sector designs, builds, finances, operates, and maintains a 

major highway or bridge typicall y of the scale of $500 million to several billion dollars in cost. 

Over the pastl2 years, the largestl6 P3 projects of this kind have involved a total investment of 

nearly $28 billion. Most of these projects involve some degree of state investment, on the order 

of20-25%, analogous to a down payment. The rest is privately financed by the winning 

concession team, using a trux of debt and equity. 

There are many advantages to this type of procurement. Because the same entity will be 

constmcting and operating the project over many decades, its incentive is to build it more 
39 

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durably so as to minimize its life-cycle cost, rather than the initial constmction cost. The P3 

company also accepts many of the mega-project risks that are usually bome by taxpayersconstruction cost ovemms, late completion, inadequate maintenance, and in many cases tratlic 

and revenue. Because these are examples of project finance, the total cost is raised up-front, and 

the bonds are paid off over many years as highway users benefit from the improved 

infrastmcture. And proper maintenance is contractually guaranteed for these high-profile 

projects. 

Congress has provided two financial tools to help make these projects possible. So that the 

private investors can compete on a level financial playing field, Congress authorized states to 

issue tax-exempt revenue bonds, whose interest rates are similar to revenue bonds for state-led 

projects. These are called Private Activity Bonds (PABs), and there is a stanatory cap of$15 

billion. Congress also created the popular TTFlA credit support program, under which P3 

projects can obtain subordinated loans to complete a financing package. These tools would be 

more viable going forward into the next reauthorization period if each were modified. 

8 

The PABs program in recent years has been well-used. As of the end of2014, about $5 billion of 

these bonds had been issued, and another S5 billion had been approved for issuance by DOT. 

That leaves only S5 billion of the original $15 billion available for a growing pipeline ofP3 

projects. To enable more such projects to be financed, Congress should at least double the cap to 

$30 billion, especially if the reauthorization is for a long period such as six years. 

The TIFIA program is generally working well, with a healthy loan portfolio and several of the 

loans already having been repaid. Congress greatly increased the size of the program in MAP-21 , 

but it also made an ill-advised change. For most of its life, TIFIA loans have been limited to 

providing a maximum of33% of a project's budget, consistent with the intent that it is to provide 

supplemental, subordinated debt, not primary debt. Congress increased this maximum to 49% in 

MAP-21, which has two potentially negative consequences. First, it makes projects overly reliant 

on federal loans, as opposed to private financing. Second, for a given annual budget, it could lead 

to a smaller total number of larger TIFIA loans, leaving many deserving projects unable to be 

financed. My recommendation is that Congress restore the original 33% limit. 

These two changes would encourage continued growth i11 the use of long-temJ P3 procurement 

by state DOTs, enabling them to do more with their limited budgets. 

This concludes my testimony. I would be happy to answer questions, either oral or in writing. 
40 

Chairman RYAN. Thank you very much. 

Governor Graves. 

STATEMENT OF BILL GRAVES, PRESIDENT AND CHIEF 

EXECUTIVE OFFICER, AMERICAN TRUCKING ASSOCIATIONS, 

ARLINGTON, VIRGINIA 

Mr. GRAVES. Chairman Ryan, Ranking Member Levin, Members of the Committee, I appreciate this opportunity to appear before you to comment on an issue of great national importance: A 

long-term and sustainable funding source for building our roads 

and bridges. I am particularly appreciative of Congressman Renacci and Congressman Blumenauer for their passionate advocacy 

on this issue. 

While representing ATA, I am proud to be speaking on behalf of 

many organizations whose members are daily users of our transportation system. The consequences of failing to act are great, and 

we stand ready to support you in making the tough choice that lies 

ahead. While I will speak to ATA’s preferred option for sustainable 

funding, let me say at the outset that almost any policy you adopt 

that supports a multiple-year program and can be relied upon in 

the future, we will support. The consequences of inaction are just 

too great. 

As we all know, Americans cherish their freedom of mobility to 

travel in pursuit of economic opportunity, educational training, 

medical care, or recreational enjoyment. People and products have 

been moving freely since our Nation was founded. That mobility 

has served as one of the pillars in constructing the interstate highway system, along with the need to efficiently and quickly mobilize 

our military resources. 

President Eisenhower got it right when he envisioned this interstate transportation network and all it would do for this Nation. 

In my lifetime, beginning with President Eisenhower, Presidents 

Reagan, Bush, and Clinton all found a way to successfully enact an 

increase in the Federal fuel tax. But since 1993, Congress and subsequent Administrations have been predicting the demise of the 

fuel tax without ever identifying and successfully advocating for an 

alternative funding source that would be long-term and sustainable. 

Today’s conversation has been taking place for 22 years. And I 

believe it is time for Congress to acknowledge, in the near term, 

that the fuel tax continues to be the lesser of all the infrastructure 

funding evils. I believe it is the only funding option that actually 

makes sense. But over that 22-year period, what has made this 

challenge even greater is that Americans have been promised over 

and over again that a fuel tax isn’t necessary. Yet rarely is an alternative proposed that has a chance of being adopted. And, if it 

were, it would likely fall short of what the fuel tax has provided 

for over 50 years: Long-term and sustainable funding. 

Roads and bridges aren’t free, and they are certainly not cheap. 

Yet Congress has been operating under the assumption that pennies might fall from heaven. For years, while personally advocating 

a fuel tax increase, I have been instructed that it wasn’t going to 

happen, that I needed to be thinking outside the box. I have been 

told to come up with creative financing options to embrace privateVerDate Sep 11 2014 07:03 Apr 18, 2017 Jkt 022332 PO 00000 Frm 00044 Fmt 6633 Sfmt 6602 I:\WAYS\WAYSPS\22332\22332.XXX 22332

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sector investment, or agree to make this problem go away by passing it down to State and local governments. 

So, after 22 years of thinking outside the box, we are here discussing the fuel tax, spending general fund dollars, passing off all 

or greater responsibility to the States, or simply erecting toll roads 

across the country. We know the fuel tax works. It is easy to administer, Americans are familiar with it, and, with some modifications to account for the emerging class of non-fuel vehicles, it would 

continue to be viable for years, if the rate were raised. 

General funds: With all the fiscal challenges the Federal Government faces, adding one more large mouth to feed makes no sense. 

Once we start down the path of paying for roads and bridges without user fees, you will have a very hard time ever going back. Some 

have suggested that devolution is simply a realignment of Federal 

and State responsibilities. 

As a former Governor, I can tell you that a large number of 

States don’t seek to assume this financial responsibility, nor do 

they have the financial capability to do so, not to mention the incredibly unwise notion that we should leave the condition and capacity of our interstate network of roads to the discretion of 50 

State legislatures and Governors. This idea is a ruse to dodge the 

tough responsibility of finding adequate funding for road and 

bridge construction. 

And the other oft-heard suggestion is to simply toll our interstate 

roads. Toll systems certainly have a limited place in this country. 

But they are a more expensive option than the fuel tax we currently enjoy. How could Congress or an Administration ask citizens 

to pay more than they otherwise would need to pay, in order to get 

the same system that they could get for less? 

My father found opportunity in digging his way out of the Depression by starting a trucking company in 1935. He honed his 

transportation skills serving in World War II, hauling supplies in 

Europe. After the war, he built a company that provided economic 

opportunity for over 2,500 men and women. I am not just sitting 

before you as a spokesperson for ATA. I am the son and grandson 

of truckers, representing men and women who work each day on 

this Nation’s highways. 

Trucks will keep moving America forward, but only if we have 

a network of roads and bridges for them to travel. And to do that, 

Congress must find the courage to admit what I believe it already 

knows. 

Thank you, Mr. Chairman. 

[The prepared statement of Mr. Graves follows:] 


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Before the 

Committee on Ways and Means 

United States House of 

Representatives 

Testimony of Bill Graves 

President and CEO 

American Trucking Associations 

Hearing on 

Long-Term Financing of the 

Highway Trust Fund 

June 17, 2015 

~· ATA 

v. 

l ;dd§Millijfi '·4' 
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Mr. Chainnan, Ranking Member Levin, members of the Committee, thank you for the 

opportunity to provide testimony on this very important topic. I would like to extend special 

thanks to Congressman Blumenauer for his persistent etforts to put this hearing on the 

Committee's agenda, and for his steadfast leadership on transportation issues. The American 

Trucking Associations is the largest national trade association for the trucking industry. Through 

a federation of other trucking groups, industry-related conferences and its 50 affiliated state 

trucking associations, A TA represents more than 37,000 members covering every type of motor 

carrier in the United States. 

Highways are critical to the movement of freight and to our nation's economy. Trucks carry 9.7 

billion tons of freight, 69 percent of the total market. 1 In addition, the trucking industry moves 

$I 0 trillion of freight va[ue,2 catTying nearly one-third of the nation's GDP. Trucks move three 

times more freight than all other modes combined. The industry is also a major source of jobs, 

with seven million people employed, representing five percent of the non-fann workforce. 3 

The Trucking Industry's Investment in Tt·ansportation lnft·astructure 

Mr. Chainnan, the trucking industry has long made a significant investment in surface 

transportation. In 2013, trucking companies paid $ 16.5 billion in federal fuel taxes, heavy 

vehicle use taxes, retail taxes on new trucking equipment and tire taxes.4 This represented 44 

percent of total user fee revenue to the Highway Trust Fund. And this is in addition to the $21 

billion in state highway user fees paid by catTiers. 

5 Altogether the industry contributed nearl y 

$40 billion armually toward transportation system investment nationwide, or six percent of total 

tn•cking revenue, not including tolls and pem1it fees. 

Condition and Performance of the Highway System 

Regrettably, a staggering lack of investment in our nation's b.ighway system has produced a $740 

billion backlog in funding required to address deteriorating highways and bridges, and the traffic 

congestion that routinely chokes passenger and freight travel. Americans spend an estimated 4 I 

hours sitting in traffic each year, costing our economy $12 1 billion in wasted time and fuel, and 

imposing an $800 tax on the average commuter.6 Congestion on the Interstate System alone cost 

the trucking industry $9.2 billion in 20 I 3 and wasted more than I 4 1 million hours, equivalent to 

5 I ,000 drivers sitting idle for a full working year. 

Current highway capital investment across aU government agencies is approximately $88 billion 

per year. However, it is estin1ated that $120 billion to $144 billion annually is required to 

address all needs. Federal funding, which accounted for 52 percent of state capital outlay in 

2013, is an indispensable revenue source and cannot be easily replaced, especially by states with 

1 American Tmcking Associations, U.S. Freight Transportation Forecast to 202:>, 2014. 2 U.S. Depariment ofTransponation. U.S. Census Bureau, 2012 Commodity Flow Survey, Feb. 2015. 3 American Tmcking Associations. Amel'ican Trucking Trends 201 :>. 

' American Tn•cking Associations. American Tn•cking Trends 2015. 

' Ibid. 6 U.S. Oepariment ofTransponation, Beyond Traffic: Trends and Choices 2045. 
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low populations and large highway networks. A few pertinent facts illustrate the consequences 

of underinvestment: 

Two-thirds of highways are in poor or mediocre condition; 

One-quarter of bridges are more than 60 years old; 

63,000 bridges are structurally deficient and require replacement or significant 

improvements; 

67,000 bridges are closed or load posted; and 

Poor road conditions are a factor in one-third of crashes. 

The Impacts of Funding Uncertainty on States 

Multiple short-tenn extensions of highway policy, coupled with the HTF's continued funding 

uncertainty have bad devastating impacts on states' ability to move forward on many important 

infrastructure projects. Prior to the 2014 extension ofMAP-2 1, transportation officials in 35 

states indicated publicly that their programs would be impacted by a shutdown of federal surface 

transportation funds, and nine states retracted or delayed projects totaling over $366 million due 

to uncertainty about future federal investment. 

This year 19 states have so far indicated concerns about the feasibility of future transportation 

projects, and state DOT officials have suggested that over $1.1 billion in projects is at risk if 

federal funding is disrupted. Seven states have already delayed or cance led projects valued at 

$1.63 billion.7 This represents more than45,000 lost jobs. Georgia, for example, aJUlOU!lCed 

that it would delay 329 projects valued at $715 million due to the uncertainty of federal funding. 

Arkansas stated that 130 projects worth approximately $520 million are at risk this year. Texas 

has indicated that the state would not be able to start any new major capital projects until federal 

uncertainty is resolved. 

Delays and cancellations of projects due to a lack of certainty created by a destabilized HTF 

layers on project costs that will ultimately be borne by taxpayers. Congress' failure to address 

the long-tenn fiscal needs of the HTF is directly responsible for the loss of thousands ofjobs, 

and is a major factor in the declining health and safety of our nation's transportation systems. 

Revenue Options AT A Supports 

Mr. Chairman, while the trucking industry already makes a substantial contribution to the 

Highway Trust Fund, clearly federal investment is falling short, and we are therefore willing to 

support an even greater commitment. While we will consider providing support for any revenue 

source that ensures stable, long-term and sufficient funding for the HTF, AT A believes that any 

revenue measure should meet the following criteria: 

• Reasonably unifonn in application among classes of highway users; 

7 American Road & Trauspooation Builders Assn., Looming Highway Trusr Fund Crisis: 

Jmpacr on $1(1/e Tmnspor/(11/on Programs, May 27, 2015. Stales that have publicly disclosed delayed or canceled 

projects in 20 15 (Nmnber of projects and value): Ark. (9: $120M): Del. (1: $100M): Ga. (329: $?15M): Mout. (I 

$40-45M): Tenn. (33: S400M): Utah (25: $65M): Wyo. (18 $28.5M). 

2 
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• based chiefly on readily verifiable measures of highway and vehicle use; 

• should not provide opportunities for evasion; 

• inexpensive and simple for government to administer, collect and enforce without 

imposing excessive administrative and record keeping burdens on highway users; and 

• should not create impediments to interstate commerce. 

Fuel Tax 

An increase in the fuel tax, with indexing, can meet current and future highway investment 

needs. While improvements in vehicle fuel efficiency - particularly in light-duty vehicles - will 

have a progressively negative impact on revenue from fuel taxes, the fuel tax is today and will, 

for the foreseeable future, be a viable revenue source for the HTF. According to the Department 

of Energy, over the next decade on-highway fuel use will drop by just five percent.8 

Highway Access Fee 

A new arnlUal flat registration fee could be levied on all vehicles, with revenue deposited into the 

HTF. Since all states currently collect a registration fee the infrastructure is already in place for 

efficient, cost-effective collection. States could be permitted to retain a portion of the revenue to 

cover additional adtninistrative costs. 

Royalties from New Oil and Natural Gas Leases 

A portion of the royalties from new energy leases would be deposited into the HTF. While 

short-tenn revenue estimates are relatively small, future income could be significant. 

Barrel Tax on Imported Petroleum and Domestic Crude Oil 

The federa l tax code currently imposes a tax on crude oil prior to entering the refinery, and on 

imported petroleum. l11erefore the infrastructure is already in p lace to collect an additional fee 

dedicated to surface transportation. While a significant share of cmde oil is refined for onhighway use, a large portion is used for other products such as home heating oil and jet 

fuel. Mitigating the impacts of an increased tax on these industries is an important 

consideration. 

Position on Current Proposals 

As previously stated, AT A is willing to support any proposal that addresses the long-tem1 

solvency of the HTF and meets the criteria outlined above. We have evaluated the various 

proposals that have been introduced by Members of Congress and to date have issued statements 

in support of two bills: 

The UPDATE Act, sponsored by Rep. Earl Blumenauer (D-OR) would increase the fuel tax by a 

phased in I 5 cents per gallon and adjust the tax rate to inflation annually. When the fuel tax is 

fully phased in, the average automobile driver would pay just $1.51 more each week, while the 

cost to the average commercialtntck driver would be $ 12 per week. 

8 U.S. Department of Energy, Annual Energy Outlook 2015. 

3 
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The "Bridge to Sustainable Infrastructure Act," sponsored by Rep. Jim Renacci (R-OH). This 

legislation would provide for two years ofHTF funding from ti.tel tax indexing, followed by 

additional revenue identified by a Congressional commission. 

Revenue Sources ATA Opposes 

A number of revenue options have been considered which do not meet the criteria for a fair or 

efficient HTF revenue source. 

Increase in Heavy Vehicle Use Tax - Tmcks subject to this tax comprise less than one percent of 

registered vehicles and less than four percent of vehicle miles traveled. Furthennore, because it is 

a Oat lee, there is no tie to highway use. 

Increase in federal excise tax - The 12 percent tax on new tntcking equipment discourages 

trucking companies from purchasing new vehicles, which tend to be safer and more ti.tel efficient 

tban older models. An increase in this tax would exacerbate this problem. A TA supports 

eliminating the tax altogether, provided replacement revenue can be found. 

Increase in tire tax - The tire tax generates a relatively small amount of revenue; it currently 

accounts for less than one percent of HTF funds. Raising tbe tax by an amount necessary to 

generate meaningful revenue would necessitate a prohibitively large increase in the rate of tax. 

Vehicle Miles Traveled Tax - While some believe that a VMT tax is the logical replacement for 

the fuel tax, it faces many obstacles which must be overcome before ATA can support this 

concept. A VMT tax will have extremely high collection costs due to both capital and ongoing 

administrative expenses. While the fuel tax is collected on less than 1,000 taxpayers, under a 

VMT tax more than 250 million individual accounts would have to be established: one for each 

registered vehicle. Besides the high administrative costs, tax evasion is likely to be extremely 

high. We also have concems about privacy and data security, among the many other challenges 

that will have to be addressed. 

Interstate Tolls - While not a potential HTF revenue source, it has been suggested that in the 

absence of sufficient federal ti.tnding, states should be given the option to toll their existing 

Interstate Highways. Tolls are au act of desperation, a symptom of the faiJure by elected 

oftlcials to provide necessary funding for highways from more efficient sources. Tolls are very 

expensive to collect, with up 20 percent of revenue going to collection costs even on facilities 

using tl1e latest technology. Tolling existing Interstates pushes vehicles onto secondary roads, 

which are less safe and require more maintenance. Federal exemptions that allow states to toll 

existing Interstates should be eliminated, and A TA will adamantly oppose any attempt to expand 

states' lolling authority. 

General Fund Subsidies 

Since 2008 an imbalance between authorization levels and HTF revenue has caused Congress to 

subsidize the HTF with General Fund money to the tune of$64 billion. While we appreciate 

Congress' efforts to prevent the Fund from collapsing, these continuous infusions of short-term 

4 
47 

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money have broadly negative impacts. State and local transportation agencies cannot properly 

plan or program funds for the long tenn without the certainty of user fee revenue. ll1is recent 

pattern of lurching from one extension to the next increases constmction costs and forces project 

delays and cancellations. This destmctive practice must stop. It is past time for Congress to 

provide the HTF with sufficient, long-tenn revenue that agencies need to address their 

considerable maintenance and constmction backlog, and to begin the process of determining how 

to accommodate the transportation needs of 70 million more people over the next 30 years, 

without having to be concerned about whether their federal allocations will be available over the 

next 30 days. 

Conclusion 

Mr. Chainnan, the committee must identifY a long-term, stable and suftlcient revenue source for 

the Highway Tmst Fund. It is important for all to understand that the decisions made by this 

Committee over the next few months will have effects beyond the immediate solvency issues. 

The federal commitment to investment in transportation, if not properly addressed this year, 

could be placed in jeopardy for many years, or even decades, to come. Tllis is not just an 

esoteric debate about a line item in a budget. Congress' actions have real consequences, and the 

decisions this Committee makes will determine whether a business succeeds or fails and whether 

a job is created or is eliminated. And most importantly, these decisions will detennine the safety 

of the motoring public as we11 as the safety and efficiency of the mi 11ions of professional drivers 

operating daily on our highway system. 

5 
48 

Chairman RYAN. Thank you. Let me ask all of you a quick question right now, and let me start with you, Mr. Shirley. 

We have had patches for a long time. I am looking at a list here. We had a patch in 2008, which was an $8 billion general fund 

transfer. We had one, two, three, four patches in 2009: 7 billion 

was the first one, the three subsequent ones were not offset. Then 

we had three patches in 2010 from the general fund, totaling $19.5 

billion in just 3 patches there. So, having these temporary patches, 

obviously, is no way to run a railroad—no pun intended—but it is 

something that we are not unfamiliar with. 

There has been a suggestion that we look for a user pay solution 

to the trust fund shortfall that can be enacted by the time the next 

expiration occurs in July. But from all of your testimony, what I 

am hearing is that there are several promising options that may 

realistically require several years to develop and implement in a 

best-case scenario. 

The point I am trying to get at is, first, it seems to me a general 

fund transfer this summer is unavoidable. Do any of you think we 

can enact and Treasury could implement and collect sufficient 

funds by the end of July to avoid a general fund transfer? Let’s 

start with you, Mr. Shirley, and just go. 

Mr. SHIRLEY. Thank you. I see—I am not clear exactly on the 

timeframe of the spend-out that the Treasury—I am sorry, that the 

Department of Transportation is facing on the trust fund, other 

than we do understand that there would be a need for additional 

funds in order to prevent delays in payment some time before the 

end of the fiscal year. 

Some of the alternatives that have been proposed to the fuel tax, 

such as a vehicle miles traveled tax, and there are experiments 

that are in place in some other States, could certainly take some 

time to put together. 

Chairman RYAN. If we want to keep the fund full and levelfinanced, level-funded, is there any other way than a general fund 

transfer to do that in the timeframe we are talking about, with the 

expiration—or the insolvency occurring at the end of July? 

Mr. SHIRLEY. General fund transfer certainly would take care 

of it. 

Chairman RYAN. Bob. 

Mr. POOLE. I don’t see any way to do that. I mean you have a 

very short-term problem, and I think that is probably the only realistic short-term solution. 

Mr. GRAVES. I am certainly not going to disagree with CBO and 

Bob. I think that there is no doubt we are going to see another 

transfer. 

Chairman RYAN. Yes. So the question is, for us here, we don’t 

like transfers any more than anybody else does. We think it is bad 

for planning, bad for certainty, bad for our transportation strategies. So what we are trying to figure out is, how do we come up 

with a longer-term solution? We like doing 6-year highway bills. 

That is the tradition here, that is what our goal and aspiration is. 

But the other solutions that are out there to replace gas taxes— 

Bob, you mentioned three or four of them—those aren’t really 

ready for prime time yet, are they? I mean give me a—Bob, this 

is for you. Those aren’t ready for prime time. How long would it 


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realistically take to take one of these innovative ideas and solutions and get it actually occurring in a law? 

Mr. POOLE. Well, on the mileage-based user fees, I think you 

really are looking at probably close to a decade of pilot projects and 

experiments at the State level, possibly some implementation on a 

large scale at the State level to figure out, really, how to do this 

in a way that is economical to collect—which I think is possible— 

that protects privacy, and gives users a real choice of method. 

But we are nowhere near there, and I think, if Congress tried to 

do—to impose a Federal one in the next year or two, you would 

risk a huge fiasco and a tremendous backlash from the motoring 

public. And I don’t think any of us want to go there. 

Chairman RYAN. So I—— 

Mr. POOLE. The one thing you could—this reauthorization could 

easily do the expansion of the interstate toll financed reconstruction program with stronger safeguards. And we will have to have 

lots of discussions with ATA about that. But I think that is something that is a near-term possibility, and—including the use-it-orlose-it provision for the States that—the three States that are sitting on their slots and not yet using them. You need to give them 

a push to actually figure out how to get to yes on this at the State 

level. 

But that could start the ball rolling on some major projects. That, 

plus increasing the cap on private activity bonds. I mean those 

things would keep the P3 pilot programs—the P3 programs going. 

Twenty-eight billion dollars have been financed in the last decade 

through major P3 projects in the highway and bridge sector. And 

a lot more of that is possible if we don’t run out of financing ability. 

Chairman RYAN. Okay. So to continue this thought a little further with you, Bob, we know that the current financing mechanism 

isn’t really working, and I want to ask you a question about why 

that is. We know that a long-term solution isn’t actionable right 

now. So we have to find an interim measure. That is pretty much 

what this Committee does—the Transportation Committee, they 

are the authorizers, they are the ones who determine the things 

you just discussed. This Committee does the financing in between. 

So we have to figure out what the bridge is, the financing bridge. 

But, to the point about why the current revenue system isn’t 

working, let me ask you this. We have Federal regulatory policies 

like CAFE, you know, the Corporate Average Fuel Economy standards. They mandate more fuel-efficient cars. So, on the one hand, 

we have these laws and regulations that mandate more fuelefficient cars. On the other hand, we have fuel taxes that are measured on a per-gallon basis. So the farther those gallons can take 

a car, the less money per mile the taxes raise. So, we have this contradictory Federal policy—— 

Mr. POOLE. Exactly. They are going at cross purposes. 

Chairman RYAN. Exactly. So, you know, also, people who drive 

electric vehicles don’t pay gas taxes. In fact, this Committee, I remember, I think 2005, 2006, we had a tax incentive for people to 

buy gas—I mean electric cars. 

So, we are at cross purposes here. Even if we decided to raise gas 

taxes, it is just another temporary solution to a long-term problem 

that doesn’t solve the problem. Am I not correct in that? 


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50 

Mr. POOLE. I agree. That is my assessment, certainly, and that 

was the assessment of the TRB committee 10 years ago, that we 

were going to be in this situation by about now. And it is going to 

get worse and worse. That was before the CAFE standards were increased—— 

Chairman RYAN. Right. 

Mr. POOLE [continuing]. Dramatically a few years ago. And that 

is—they are going to devastate the State and Federal transportation budgets over the next couple decades, as they fully work 

their ways out to—— 

Chairman RYAN. So we have Federal policy colliding with each 

other. And the casualty is our roads and our bridges. So we are 

going to have to figure out what is the interim financing bridge to 

get to this better world of a more accurate, consistent system that 

doesn’t have this contradictory Federal policy. 

There are lots of ideas out there. I don’t want to take up all of 

the time, because I want to give other Members the opportunity. 

But I thank you very much for your indulgence. 

Mr. Levin. 

Mr. LEVIN. Thank you. Thank you for your testimony. Mr. 

Chairman, as I hear the back-and-forth in answer to your questions, I think the problem is a bridge to what. And we keep on 

building a short bridge because we don’t face up to the what. 

And to simply focus on the interim, the interim has been used 

as a reason not to do the long-term. And, you know, I wish we 

really had a video today. Your testimony has been graphic, but 

nothing would be like having videos as to the conditions of roads 

and bridges in this country. 

I was in Nepal last year, before the tragic earthquakes. And then 

I came back here to Washington and to Michigan, and I thought 

some of the roads were as bad as I had seen in Nepal. And so, I 

really think the time has come for us to make a basic decision, and 

that is whether we are going to make one. 

And my concern about the focus on finding an interim, and arguing about how long, is that it becomes a reason for us not to face 

up to what needs to be done, long-term. And that is why my suggestion is that we just should not take—begin to take ideas off the 

table, because that becomes, essentially, a stalemating of action. 

So, in my few minutes left, just the three of you, just have a little 

discussion—or, if you want, a debate—about the premise user-pay/ 

user-benefit. The three of you just argue. Talk. 

[Laughter.] 

You have 2, 21⁄2 minutes. 

Mr. SHIRLEY. I will briefly start off. The idea of the user pay 

is that it provides incentives for the users of the highway or the 

infrastructure to use it more efficiently if they have to pay for the 

infrastructure. And alternatives that would not be user pay 

wouldn’t contain those incentives. 

Mr. POOLE. I think another key lesson comes from Europe, 

where they have gas taxes, but the gas taxes are a general revenue 

source. And if you compare the amount that comes in in gas taxes 

in Europe, in most countries, with the amount they actually spend 

on surface transportation, they typically take in two or three times 

as much in fuel taxes as they actually invest in the infrastructure. 


dkrause on DSKHT7XVN1PROD with LOCATORS
51 

So, I mean, making a direct connection between the users and 

having the money be dedicated to transportation is critically important. If we lose that, I think we may go the way of Europe, and 

have higher and higher payments and less and less actual investment because of losing that tie. 

Mr. GRAVES. Congressman, it just feels to me like, you know, 

for 50 years this is what our Nation has known, that users pay. 

I mean people do get that concept. Now, they expect you to deliver, 

programmatically, what they are paying for. And I think we have, 

you know, room to go in that regard. 

But I think we make a terrible mistake to move away from that 

concept. And I would also argue that, as Chairman Ryan just mentioned, even, you know, with another extension, we end up once 

again reassuring the American public that we don’t need to find 

new sources of revenue, we are just going to go find—you know, 

clean out the sofa for dimes and nickels and come up with some 

sort of general fund solution, and everybody is reassured that they 

are never going to have to increase their—you know, the user fee. 

I just think we need to have a more honest discussion with the 

American public about what is necessary to upgrade and improve 

this road system. 

Mr. LEVIN. Okay, close. You know there is talk about electrification, and how that doesn’t quite fit with user fees. It is often raised 

by people who don’t support the effort for more electric vehicles. 

And private activity bonds, I think, need to be looked at. And often, 

it is raised by people who sometimes would propose their elimination. 

So, I think all that shows we have to face up to this, and we need 

an interim, as long as it is not another excuse for the failure to act 

long-term. And 24 times, is it? That is exactly what has been happening in this country by this Congress, by Congresses. And we 

need to do much better. Thank you. 

Mr. REICHERT [presiding]. Thank you. The gentleman’s time 

has expired. 

Mr. Johnson, you are recognized. 

Mr. JOHNSON. Thank you, Mr. Chairman. You know, according 

to the Wall Street Journal, ‘‘simply using the taxes that are supposed to pay for highways to pay for highways makes the Highway 

Trust Fund 98 percent solvent for the next decade.’’ I would like 

to ask to have this inserted in the record. 

[No response.] 

Mr. REICHERT. Without objection. 

[The submission of The Honorable Sam Johnson follows:] 


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dkrause on DSKHT7XVN1PROD with LOCATORS22332A.038

Abolish !he Gas Tax - WSJ hup://www. wsj.com/anicleslabolish-tbe-gas-tox-1421281241 

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REVIEW & OUTLOOK 

Abolish the Gas Tax 

A better way to fund roads and bridges than more pain at the pump. 

Gas l)(iees in Coll)US Chrisd, Texos PHOTO: AP PHOTOifX)RPUS CHRISTl CAUER-TIMES 

Jan. 14, 2015 7:20p.m. ET 

Tumbling energy prices are the first lucky break for U.S. consumers in years, but 

Washington is feeling left out. So the gougers of both parties are joining to steal 

some of the proceeds with the first gasoline tax hike in more than two decades. 

The federal gas tax is now 18.4 cents a gallon and the logic seems to be that 

motorists won't notice an exh·a dime or more since gas prices are down 40% on 

average from the 2014 peak. Congress can then "invest" the windfall in roads, 

bridges and other projects. A convenient pretext for a tax increase arrives in May 

with the expiration of a temporary highway funding bill, and many otherwise 

intelligent Republicans are open to the idea, perhaps as a tax swap. 

Now here is a formula for popularity that only a lobbyist or liberal could love: As 

one of its first major acts, the new GOP majority would make the commodity 

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Abolish the Gas Tax • WSJ h11J>:IIwww.w$j.<omlanicleslaboli$h-1he-gas·tax-1421281241 

that most Americans must buy every week more expensive, offsetting the 

discretionary-income gains from cheaper gas. Republicans should be talking 

about downsizing the federal gas tax instead, with a target of zero. 

The gas tax-plus a 24.4 cent tax on diesel and other excises- finances something 

called the Highway Trust Fund, or HTF. The proceeds from the original1956 

three-cent tax built the interstate highway system and its expansion and 

upgrades over the decades. The tax was increased in 1982, 1990 and 1993. 

The problem is that since 2008 federal HTF spending has far outpaced dedicated 

gas· tax revenues, and Congress has made up the difference with $54 billion in 

cash transfers from general revenues. To cover future HTF obligations and close 

the deficits, fuel taxes need to rise by 10 to 15 cents a gallon, according to the 

Congressional Budget Office. 

The solons now claim the arc of history bends toward precisely that. The real 

purchasing power of 18.4 cents has slipped amid inflation and the rising cost of 

labor and materials. Vehicle miles travelled are plateauing and cars are more 

efficient, eroding the projected growth of the tax base. 

But since the 1990s, the Highway Trust Fund has come to fund much more 

than new roads and bridges and highway maintenance, abandoning the 

original "user pays" principle behind a gas tax. Drivers now see about a quarter 

of their gas taxes diverted to subsidize mass transit in merely six metro areas 

and sundry other programs for street cars, ferries, sidewalks, bike Janes, hiking 

trails, urban planning and even landscaping nationwide. Trolley riders, et al., 

contribute nothing to the HTR 

Federal spending on such side projects has increased 38% since 2008, while 

highway spending is flat. Here's what the politicians won't say: Simply using the 

taxes that are supposed to pay for highways to, well, pay for highways makes the 

HTF 98% solvent for the next decade, no tax increase necessary. 

Your local interstate will not close ifHTF "goes broke." The feds will continue to 

spend all the money that the gas tax will continue to throw off. Some projects 

would merely be delayed, or states and cities would fill the gaps. 

Another myth is that U.S. roads and bridges are "crumbling," to use the 

invariable media description. Federal Highway Administration data show that 

the condition, quality and safety of U.S. surface transportation are steadily 

improving. The Chicago Federal Reserve Bank noted in a 2009 paper that roads 

2 of4 6/1712015 8:42AM 
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Abolish the Gas Tax - WSJ http://www.wsj.com/articleslabolish-the-gas-tax-1421281241 

have "indisputably" improved over the last two decades and that "the surface of 

the median interstate highway mile is suitable for superhighway speeds not 

typically permitted in the United States." 

Some highways do need repair and modernization, and the U.S. does need more 

roads to relieve congestion and encourage trade and economic activity. The real 

crisis isn't the amount of money but how it is spent. 

The 47,714 miles of the interstate highway network would likely be less complete 

absent federal support, but the system was officially finished in 1992. It is less 

rational for drivers nationwide to send so many dollars to Washington for 

Congress to apportion among winners and losers as they did under Eisenhower. 

Today, the costs of transportation can be reasonably borne by the people who 

enjoy the benefits, which will generate more accountability and fewer political 

boondoggles. 

In an ingenious 2013 paper, Pengyu Zhu of Boise State University and Jeffrey 

Brown of Florida State studied federal highway spending between 1974 and 

2008. They found that the gas tax tended to redistribute money from poorer to 

wealthier states and to regions with lower transportation needs than other parts 

of the COWltry. 

Texas recovered only 88 cents of every dollar residents paid in taxes, while seven 

states and Washington, D.C. (no surprise) received more than twice as much. 

Such misallocated resources are the inevitable result of the political mediation 

oftheHTF. 

Almost three-quarters of highway spending is already supplied by state and local 

governments, and if the federal role is reduced, they can decide either to 

increase their own gas taxes; fund roads some other way, such as tolls or publicprivate partnerships; or use tax dollars for other priorities like schools. States 

can build cheaper in any case, since the Davis-Bacon prevailing wage rules and 

Buy America procurement provisions that accompany federal funding don't 

apply. 

Democrats always want to raise the gas tax. When prices are high, that's the best 

time to encourage drivers to buy an electric car or take the bus. When prices are 

low, they can skim some of the proceeds for other spending. The mystery is why 

Republicans would go along. 

3 of4 611712015 8:42AM 
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4 of4 6/1712015 8:42 A1'vl 
56 

Mr. JOHNSON. Thank you. Mr. Chairman, I would just note 

that I have recently introduced legislation by the name of Right of 

Way for American Drivers Act that would begin to do just that: Pay 

for it. 

Speaking of the gas tax, some in Washington are calling for a 

higher gas tax. Mr. Shirley, for the record, isn’t it true that a majority of the tax burden of a gas tax increase would fall on hardworking, low-income Americans? Yes or no? 

Mr. SHIRLEY. A higher relative burden of the gas tax does fall 

on lower-income households, compared to higher-income households. 

Mr. JOHNSON. Okay, I appreciate that. 

And, Mr. Poole, I see you are a big fan of tolls. I have to tell you, 

folks back home in Texas would most likely drive you off the road 

because my constituents have had it up to here with tolls. In fact, 

you can’t get out of Plano, Texas, without getting on a toll road. 

North Texas is said to have the largest toll network in the country. 

So you know I have actually put out legislation to stop the Federal 

authorization for tolling. 

Wouldn’t you agree that tolling is like a double tax? I mean folks 

have already paid for the road with their gas tax dollars, and now 

they have to pay a toll. Don’t you think that is a double tax? 

Mr. POOLE. I agree. I am opposed to double payment. And we 

have supported at Reason Foundation rebates—all electronic tolling makes it possible to give—to calculate how many miles people 

have driven, paying tolls. And you know the vehicle, so you know 

the fuel economy. You can figure out how much gasoline or diesel 

they used, and give rebates based off that. And that is an integral 

part of the planning in Oregon, for example, for mileage-based user 

fees, that it would be—that people would get rebates for the fuel 

taxes they paid, and wouldn’t be paying both the user fee and the 

gas tax. 

Mr. JOHNSON. That is interesting. Okay, Mr. Chairman, I yield 

back the balance of my time. 

Mr. REICHERT. Mr. Lewis, you are recognized. 

Mr. LEWIS. Thank you very much, Mr. Chairman. Let me thank 

all of the witnesses for being here. 

Governor Graves, thank you for your leadership, and thank you 

for your statement. When I first came to Congress almost 30 years 

ago, I served on the old Public Works and Transportation Committee. And we tried to do something to authorize our transportation needs. Democrats and Republicans came together. We never 

thought that our roads and our bridges were partisan, we just did 

it. And there is a need today to come together. 

You know, I represent a city, the City of Atlanta. And we have 

three major interstates coming through the heart of the city: I–75, 

I–85, and I–20. We have a lot of trucks, and we need to do something. I want you to tell the Committee, I want you to dramatize 

it, to make it plain, to make it clear. If we fail to act, if we fail 

to do something, what is—what would happen? 

Mr. GRAVES. Well, Congressman, it is happening already. I 

think the cost to this Nation in terms of congestion, what we are 

wasting every day in terms of burning fuel and emitting into the 

atmosphere, what we are wasting in terms of missing our commerVerDate Sep 11 2014 07:03 Apr 18, 2017 Jkt 022332 PO 00000 Frm 00060 Fmt 6633 Sfmt 6602 I:\WAYS\WAYSPS\22332\22332.XXX 22332

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cial delivery schedules, not to mention just every individual who is 

late for this, that, or the other, or doesn’t get to a job interview or 

a medical appointment, or whatever. 

I mean our trouble just getting here this morning, and the condition of the roads in this city, you know, we are having a hard time 

with a driver shortage, because most drivers get paid by the mile, 

or in some form or fashion based on meeting a delivery schedule. 

And it is a hard living to make. And, therefore, we have a lot of 

people who are turning away from our industry, just because the 

conditions out on the Nation’s highways are such that they just 

don’t want to do that. 

So, it is having a tremendous impact. And, you know, we are not 

benevolent. We have to absorb the cost associated with the safety 

concerns, the maintenance concerns on vehicles, the delays that we 

have to endure. We build those into shipping rates, and those get 

passed on, and Americans all pay more than they otherwise need 

to for their products. So it is a very real problem, and it exists 

today. And when we look at the numbers, they are staggering. 

We can’t cut our investment in the Nation’s infrastructure. We 

need to increase, on an annual basis, somewhere in the neighborhood of $25 to $50 billion. We are going to lose our competitive 

edge as a country, vis a vis the rest of the world, if we don’t figure 

this one out. 

Mr. LEWIS. Could you tell the Committee what the impact is of 

short-term fixes and emergency action, rather than being bold and 

preparing for the long haul? 

Mr. GRAVES. Well, it would be my opinion the problem with all 

the short-term fixes is that it always messes up State governments 

and their ability to adequately predict what revenue is going to be 

available and what projects they can do. Some of your States have 

very, very short construction seasons, and we end up essentially 

delaying. We end up with whatever inflationary factor it is that 

kicks a project a year down the road. It is one more year that a 

road is less safe. It is one more year that we have the same kind 

of congestion that is detrimental to our economy. 

So, I mean, delay just leaves us, again, right where we are and, 

again, having the same conversation that started 22 years ago. 

Mr. LEWIS. Thank you very much. 

Mr. Chairman, I yield back. 

Mr. REICHERT. Mr. Brady. 

Mr. BRADY. Chairman, thank you for holding this hearing. This 

is long overdue. 

A couple of observations, then I want your advice on something. 

Governor, I agree. We ought to have a real serious discussion about 

moving away from user pay in our transportation infrastructure. I 

think that is a critical part of how we fund, and we ought to have 

a long discussion about moving even farther away from that. 

Secondly, our transportation system, how we fund and operate it, 

you know, reminds me of a leaky bucket. We have diversion into 

non-highway and transportation issues, you know, you have very 

long permitting processes that drive up the cost and delay them. 

We have issues like Davis-Bacon—very sensitive, but have an impact on all that. And so, I think one of the keys to pouring more 


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58 

money into this system is to fix the bucket. Before or as we do that, 

I think it draws more support to this. 

I am skeptical that tax reform on the international side is the 

solution. The two are unrelated. I am sort of old-school. I think 

changes in the Tax Code should accrue to make us more competitive and create a stronger tax growth for growth, which will help 

to generate revenues, generally, for the country. 

So here is my question. There doesn’t seem to be one single solution to this problem. It will be—require a series of them. What I 

have noticed is, you know, around the world, other countries draw 

much more private investment to infrastructure than America. 

Dramatically more. Countries we wouldn’t even expect it in. I think 

in France, 70 percent of the water and sewage systems are created 

by private investment. We already know long-term expressways 

are privately funded. Airports, the 100 largest airports in the world 

by revenue, 36 are created by private investment. Yet that trend 

toward investment in America, in modern, efficient infrastructure, 

has grown a bit, but still is largely missing. 

I think part of that could be because of these very capitalintensive projects. I think tax exemption on municipal bonds is 

part of the problem. I am not saying end that at all, but if you start 

off with a 40 percent disadvantage in the cost of capital, you are 

not likely investing in infrastructure. I am not suggesting that. 

But my point is I don’t think a minor lifting of the private activity bond solves the problem. How do we draw—as part of the solution, how do we draw more private investment into infrastructure 

in the United States? It seems to me we do have a lot of capital. 

These are needs. I think they can be structured the right way. As 

part of the solution, what do we do? 

Mr. POOLE. If I may, since I have done a lot of work on that 

subject, I find it is truly ironic that Congress is perennially grappling with ‘‘there is not enough funding, there is not enough funding,’’ and yet the global infrastructure investment funds have 

raised hundreds of billions of dollars for sound infrastructure, and 

large-scale projects, many of them in Europe, in Latin America, in 

Australia. And so far, only $27 billion in this country. 

We could do a lot more if—Federal Highway Administration is 

doing some good work on developing, basically, prototypes for the 

kinds of long-term agreements that States who don’t have the experience with this could adapt. We really need a bigger effort to—this 

is not the whole solution, by any means—— 

Mr. BRADY. No, no, I get that. 

Mr. POOLE. But it is a piece that could go a lot further. And 

U.S. public employee pension funds, like CalPERS and CalSTRS 

are starting to invest in these kinds of infrastructure projects. They 

see the long-term—you know, a project that generates revenues in 

a long, steady, increasing fashion is a very good match for pension 

fund liabilities. So—and insurance companies have the same kind 

of long-term—we need to figure out how to mobilize more of that 

capital, and get it into the investment cycle for—— 

Mr. BRADY. Yes. You know, we are doing that in some of the 

States, not on the private side, but on the public side. You know, 

States are advancing—or local communities are advancing dollars 

for projects. States are reimbursing on a per-mile and per-use 


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basis—so you are already laying out sort of the cost benefit of these 

projects, it is just happening on the government side of the equation. My question is, why can’t we be doing more of that, not as 

the full solution, but could that not be helpful in filling that gap 

on the private-sector side? 

Mr. POOLE. It would be very helpful. We have major bridges 

that need to be replaced. We have aging interstates, like I–70 in 

Missouri, that still has some of the original pavement from the 

highway that I–70 was built on top of that is falling apart. So, 

mega-projects of that sort are really good fits for the long-term P3s. 

And that, again, is part of the solution. It is not the whole thing, 

but it would help a lot if we did more of that. 

Mr. BRADY. Okay. Thank you all very much. 

Mr. REICHERT. Mr. Neal, you are recognized. 

Mr. NEAL. Thank you very much, Mr. Chairman. 

I want to thank our panelists, as well, and note that Congress 

has not been very good at doing the seminar side of things. Mr. 

Tiberi and I, in our respective positions on the Select Revenue 

Committee some years ago, along with Mr. Blumenauer, we addressed this issue head on with the American Trucking Associations and with the American Chamber of Commerce. We brought 

in witnesses. And here we are, 8 years later, in stalemate over the 

same issue. 

And Governor, one of the things that you noted correctly was 

that President Eisenhower had the vision to move forward, but also 

to connect another very important element, and that was he had 

Lyndon Johnson as the Majority leader in the Senate, and Sam 

Rayburn as Speaker of the House. We saw this as an act of national purpose. We saw it as an act of national will. Not the divisiveness that currently confronts this Congress on every single 

issue that comes along. One bad story, let’s get rid of earmarking. 

We have watched Congress be reticent about the challenges that 

we face every day, when we have had this opportunity to go forward. And I really hope Chairman Ryan is going to lay out his 

ideas as we go forward on this issue. That is what the Chairman 

does. And it is important for all of us to ask questions. But at some 

point, 8 years later—after we began these hearings—we have to 

have some action. 

Now, let me call attention to something specific, Governor. The 

Port of Boston is now being dredged for the purpose of accommodating the tankers that will come through the new Panama Canal 

expansion, the double tankers. Those are going to be union jobs, 

$350 million of dredging, more longshoreman. And I supported the 

FTA with Panama, because of that very purpose. 

So, could you address the issue of what is happening with congestion at our major ports, including Logan Airport in Boston, as 

well as one of the great ports on the East Coast, the Boston Port? 

Mr. GRAVES. Well, I think you all know that one of the problems we face in this country is that so many of our ports, airports, 

major infrastructure projects, were built so many years ago, that 

no one anticipated the kind of expansion and activity that would 

ultimately take place. So we have land-locked ports that don’t have 

any way to expand. And therefore, there is congestion, just inherent with where they are located. 


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You start bringing in thousands and thousands of trucks every 

day to move containers. I think there is great potential in some of 

the inland intermodal facilities that we are starting to see spring 

up, but they are not inexpensive. We have had—I hope you all 

know the number-one customer of our class-one railroads are trucking companies. We are putting more and more freight on intermodal movement than we ever have before. But, to tell you the 

truth, it barely scratches the surface, in terms of the tonnage that, 

overall, gets moved in this Nation. 

And, as I often say to people, we—you know, in 2006, for the first 

time, we had 300 million people in this country. In 2042, we are 

going to have 400 million people in this country. That is just a lot 

of stuff, a lot of mobility, a lot of demand. And yet we are basically, 

you know, treading water on our infrastructure investment. 

Mr. NEAL. In addition—I am glad somebody mentioned the private activity bond cap. That is something that ought to be able to 

apply here. We ought to be talking about something I worked very, 

very hard on, the Build America Bonds effort, which was extraordinarily successful. Massachusetts alone issued $5 billion in Build 

America Bonds, municipal bonds. 

There used to be a can-do attitude about infrastructure in America. And I am delighted that Sam Johnson said his constituents 

have about had it with toll roads. This is a public responsibility 

and we have to increase efficiency and productivity. 

And, Mr. Shirley and Mr. Poole, would you speak about those 

three bonding opportunities that we have that I just addressed? 

Mr. POOLE. Well, I think bonding is critically important. We 

really need to be financing, through long-term kinds of vehicles, 

more of the needed infrastructure than we have. We are way behind, as several people have mentioned, in what we should be 

building. And so, if you continue funding almost all of these big infrastructure projects out of annual appropriations, it is a losing 

game. To catch up, to have a chance of catching up, you have to 

go to more long-term financing through revenue bonds. And all the 

vehicles that would do that deserve serious consideration, in my 

view. 

Mr. NEAL. We need to embrace here, Mr. Chairman, pro-growth 

economics. This economy has grown at 2.1 percent and even less 

in previous years. For 15 years, with downward pressure on wages 

and very little growth in the economy, and we can’t find a common 

path forward in infrastructure? This used to be the easiest thing 

to do in Congress. Members would rush to the well in an opportunity to put their cards into the polling place so that they might 

vote, based upon requests from local government for hospitals and 

colleges and airports and roadways and bridges. And, for all of us, 

this stalemate has ill-served the American people. 

Mr. REICHERT. Mr. Neal, thank you. 

Mr. Tiberi. 

Mr. TIBERI. Thank you, Mr. Chairman. Thank you for your 

leadership. And I want to associate myself with the Irish-American 

from Massachusetts over there, my friend, Mr. Neal. I have been 

using the same argument on trade, by the way. That is a discussion for another time. 

[Laughter.] 


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I will talk to you about it, too, Bill. 

Mr. NEAL. Will the gentleman yield? 

Mr. TIBERI. Sure. 

Mr. NEAL. I did cite the example of the Panamanian FTA. 

Mr. TIBERI. I know you did. 

[Laughter.] 

Thank you. Let me take—and I am serious about his comments. 

I do associate myself with him. 

I will take a little bit different tack. Mr. Poole, as we have done 

today, and as we have done over the last 8 years, much of the focus 

has been spent on revenue, and I understand that. Much of the 

focus has been spent on the solvency of the trust fund, and I understand that. But there is another aspect of this that I found in your 

testimony to be quite interesting, and I want to take it a little bit 

farther, because I think Governor Graves is right, that this is a 

crisis, and this is a conversation that we need to have with the 

American people in a broad way. 

And that is the struggle that we all have here. If I am at an 

event, talking to a group of people, and a gas tax comes up, and 

the wealthiest person there drives a Tesla, he is not as invested as 

the person who drives a Chevy Cruze. 

So, the question I have, though, is I had a county engineer in my 

district who has complained for a long time about Federal regulations. And to prove the point that he was complaining about, he did 

a road construction project with State and local funds and a very 

similar project in the county with Federal funds, same distance, 

same basic type of project. As you can expect, the one with Federal 

funds cost twice as much and took twice as long. 

We never seem to have the discussion here in the context of making the fund solvent. I understand revenue component is extremely 

important. Mr. Neal is right. But, from a taxpayer component, that 

is extremely important, too. What can we do to ensure that we provide our constituents, our taxpayers, the users of the highway, the 

greatest bang for their buck when Federal dollars are involved in 

a construction project? What can we do that will actually make 

that dollar go farther, by the way, so you can build more—— 

Mr. POOLE. Right. Congressman, you have really hit the nail on 

the head, that Federal projects, because of all of the regulations 

that go along with them—well-intentioned things, Davis-Bacon, the 

Buy America, and a whole lot of others, and all the different regulatory oversights, if the project is Federalized, really do—double 

may be an exaggeration, but certainly 30 or 40 percent more is 

pretty routine. And I know some State DoTs that try hard to figure 

out projects that they can do without a dollar of Federal money in 

them, in order to have the cost savings. So that clearly—regulatory 

reform would be one key to making the dollars go further. 

Another, of course, as I said in my testimony, is to look really 

hard at what the scope of the Highway Trust Fund is. I mean there 

are all kinds of things in there that are nice to have, but aren’t 

necessarily core Federal concerns. There are things that, over time, 

have migrated from being solely State and local responsibilities to 

now shared Federal, State, and local responsibilities. 


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I know this is not really this Committee’s jurisdiction. But on the 

other hand, if you cannot come up with a medium-term revenue 

fix—— 

Mr. TIBERI. All right. 

Mr. POOLE [continuing]. I suppose you could go back to the authorizers and say, ‘‘Look, you guys haven’t done your job of figuring 

out a scope of the program that is actually fundable.’’ 

Mr. TIBERI. Let me just add one more thing. In my home State 

of Ohio, the Ohio Department of Transportation has looked inward 

because of a lack of a reauthorization bill. And they have actually 

implemented cost-efficient reforms that have redirected some $600 

million from their operating budget into capital projects in our 

State. So they are leading. Ohio has streamlined project delivery 

for more innovative methods, such as design-build. 

I sat on the conference committee of MAP–21, and it was supposed to reduce red tape. Not as much as I wanted to, but it was 

supposed to reduce red tape, streamline programs. But many of the 

reforms that were in MAP–21 have yet to take place. 

So, looking long-term, I ask the three of you—and you don’t have 

to answer—if you can just help put pressure on us and the administrators of this highway fund, to do what not only we have said 

for them to do, but do more to make taxpayers’ dollars go further. 

Thank you, I yield back. 

Mr. REICHERT. Thank you, Mr. Tiberi. Mr. Becerra, you are 

recognized. 

Mr. BECERRA. Mr. Chairman, thank you very much. Gentlemen, thank you for your testimony. 

In California, we are told by our State transportation agency that 

there are about 6,800 bridges that are structurally deficient. That 

is one in every four bridges in the State of California. 

There is also a letter that was recently issued by Caltrans, our 

State transportation department, that said the following: ‘‘Caltrans 

may be forced to shut down ongoing construction, due to an inability to absorb the Federal shortfalls with State cash, in the event 

that the Federal Government doesn’t move forward with financing 

the Highway Trust Fund.’’ 

Governor Graves, let me ask you a question. I have to believe— 

and let me add one other thing. LA County’s metro agency, which 

deals with a large sector of all transportation within Southern California, also said the following: ‘‘In order to avoid massive cost increases associated with construction stoppage or delay as a result 

of any shortfall in Federal funding for these projects, LA Metro 

would refrain from beginning any new project construction all together, as well as stop any construction bid notices for projects that 

are in the pipeline, because of the uncertainty of Federal funds.’’ 

What, Governor, does that do to a State, a State government, 

when it comes to planning its long-term projects, not just in a 

metro area, but in the entire State, if you have a Federal Government for the last several years doing 2-month extensions of funding 

when you have long-term, multi-year projects to have to worry 

about? 

Mr. GRAVES. Well, it is, obviously, incredibly disruptive. 

I mean, I will tell you that in my 8-year experience, I thought 

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sionals, they understood what the needs of our State were. I 

thought their planning efforts were just, you know, outstanding. 

But it involved that partnership with the Federal Government. 

Were we frustrated from time to time with some of the regulatory burden? Yes, we were. But we eventually worked through 

that. And it was the—and I know we need to think programmatically, because, at the end of the day, it is the delivery that 

matters, that we got something built and done. 

But the States have to know that you are going to be there for 

them in that funding partnership. And every time there is a bit of 

uncertainty, it sends shock waves through the various States, who 

are in various stages of planning. I mean not every State is on the 

same schedule, in terms of a 5-year plan or a 10-year plan, or 

whatever it might be. We happen to have done a 10-year plan in 

our State while I was in office. 

But they count on you, they expect this partnership to be—to 

work both ways. They will adhere to whatever requirements the 

Federal Government sends their way. But they expect the money 

and, clearly, that is where our problem is today. 

Mr. BECERRA. I think you said the operative words, ‘‘They 

count on us.’’ And I think—actually, I compliment all three of you 

for saying pretty clearly that there are pretty straightforward ways 

of doing this. And I think I have heard a lot about user fees. And 

I tend to agree with you. You are going to use it, you should pay 

for it. And we should step to the plate. 

I think you all have been saying this—folks on the outside, in 

State government, local government have been saying this for quite 

some time. In fact, in Los Angeles—not just city, but county—we 

have stepped up to the plate. We have actually passed user-fee proposals, ordinances, that provide a pot of money that we can come 

to the Federal Government with and say, ‘‘Look, we are willing to 

impose a user fee on ourselves through bonds to show you how serious we are about completing these projects,’’ so it is not just going 

to be Federal money that helps pay for California’s projects. Our 

local dollars are being invested, and we are ready to fork it over, 

put it on the table to show you how serious we are about these 

projects. 

I believe that any delay is just an excuse. We have every opportunity to move with proposals that are clearly before us. I think I 

would agree with you gentlemen, that user fees are clearly the way 

to go. And the sooner we get to it, the better, because we are just 

deceiving the American public by making them believe that we can 

fund all that we need without coming to the table. 

And so, you are right. Folks have a belief, and they have a right 

to believe that we are going to be at the table coming up with solutions. I hope you will continue to weigh in, give us your thoughts, 

because we should not be doing these piecemeal, itty bitty babystep extensions of funding for projects that don’t get done in 2 

months. No contractor, general contractor, who is going to build a 

highway buys cement or asphalt or lumber for 2 months. You buy 

it ahead of time. And if there is any place where the adage ‘‘time 

is money’’ applies, it is in construction. 

So, thank you all for your testimony. Hopefully we will get there 

and solve it, and people can count on us. 


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I yield back. 

Mr. REICHERT. I thank the gentleman. I will yield myself 5 

minutes for questions. 

And I first want to thank the three witnesses for being here. And 

I think you have heard at least one voice today saying that we 

need to do something. All of us here believe that. There is frustration for not accomplishing some progress here. And, of course, frustration in trying to find a solution which we know would include 

more than one aspect of all of the things that are being talked 

about here today. 

So, we know it is difficult, and recognize there is a problem. 

When you start to look at some of the options that you have all 

talked about—the Federal gas tax and tolling and public-private 

partnerships and vehicle miles traveled, and the Transportation 

Infrastructure Finance and Innovation Act, which is a program 

that provides credit assistance, the mass transit account has even 

been—people have talked about phasing that account out to help— 

reducing the Federal burdens, which we have talked about, some 

of the Davis-Bacon issues which I support, and some other regulatory issues. And then also streamlining the National Environmental Policy Act, NEPA, requirements is another issue that has 

been talked about. 

So, in trying to find a solution here, we have to go through an 

awful lot of gymnastics to get agreement, not only amongst the 

panel here that you have before you today, but in the House of 

Representatives, on to the Senate, and then the White House. 

Right? So we need your help. 

I come from the State of Washington. We have had our issues 

with bridge collapses, as you know. On the Skagit River Bridge, 

three vehicles plunged into the river as a result of the bridge failing after a collision. We have had some other bridges collapsing in 

Washington State. This is not a story that is new to, I think, Americans. In every State we have had similar experiences. 

I would like to revisit the P3s. I think Mr. Brady focused on that 

somewhat. And Mr. Shirley, Mr. Poole, you both highlighted the 

current role of public-private partnerships in financing. The first— 

could you discuss specific benefits that you have seen? 

And, Mr. Graves, you may also have some opinion on the private 

partnerships. 

And, second, if there are benefits that you have seen, what obstacles, current obstacles, do you see that would prevent us from getting to those? 

And then, lastly, what, if any, impact would greater access to 

public-private partnerships—what kind of benefit would that provide to us? 

So, a three-part question. I hope you got it. I can repeat it, if you 

didn’t. But I would like to hear from all three of you. You have 2 

minutes. 

Mr. POOLE. I think there is an important set of benefits from 

the long-term P3s. One of the biggest ones is—these are really a 

best fit for mega-projects, $500 million to several billion dollarscale projects, bridge replacements, and so forth. And risk transfer 

is a very important benefit. 


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Mega-projects are notorious, worldwide, for cost overruns, late 

completion, and over-optimistic traffic forecasts. Most of those risks 

can be transferred to the P3 entity, which has skin in the game, 

by making an equity investment in the project and then taking on 

those risks. And it means the taxpayers aren’t burdened with 

them. That, to my mind, is the most important benefit of the P3s. 

Another, of course, is that it means you are financing the project, 

instead of building it out of operating cashflow, annual appropriations. We need to do a lot more long-term financing of the major 

projects. And so P3s are a mechanism to do that. 

Mr. SHIRLEY. The risk transfer that takes place will depend on 

the nature of the particular structure of the deal for a P3. 

I would also point out that, in some instances with private financing, there can be incentives to move the project along a little 

bit more quickly. We have seen some evidence that some projects 

come to fruition a little faster with private financing. 

Mr. REICHERT. Mr. Graves. 

Mr. GRAVES. I think, Congressman, it is important to note that 

P3 generally means a toll project, whether it is a bridge or a road. 

And since it is a private investment, there is an expectation that 

there is going to be a return on investment. So, inherent in that, 

you at least potentially have some additional costs that otherwise 

wouldn’t be there if the government were doing it on its own. 

We think P3s have a place in this dialogue. We think, certainly, 

there is a lot of bridge projects that they match up nicely on. The 

experience in this country with a lot of tolled road, private investment in roads, is mixed. Some have not done and fared nearly as 

well as some anticipated. And a lot of that has to do with the 

amount of diversion, where people just simply are not going to pay, 

or can’t pay the cost to use that facility. And, therefore, they start 

to run, in our case, commercial vehicles off onto routes that they 

otherwise shouldn’t be on. So there can be a safety issue, from our 

perspective, as well. 

Mr. REICHERT. Thank you. I appreciate your comments and 

would just quickly mention that I look forward to continuing this 

discussion next week. We will have a hearing in our Subcommittee 

to delve deeper into some of the solutions. And we will see where 

this investigation takes us. 

So, Mr. Doggett, you are recognized. 

Mr. DOGGETT. Thank you. Thank you very much, and thanks 

to each of our witnesses for your testimony. It has been a long time 

coming. We asked for this hearing at the beginning of this Congress. And now, I don’t know, 17, 18 months later, we finally have 

you here. And I think your testimony has been very helpful. 

Certainly, Governor Graves, I agree with you that this affects 

our competitiveness in so many areas of our economy. Our foreign 

competitors see the tremendous advances that we are making in 

technology, not just on highways, but—and transportation—but in 

other areas. And then they take that technology and adapt it, copy 

it at home, and gain a competitive edge over us. And I think that 

is a real problem. It cannot help but cause significant harm to our 

competitiveness if we are not meeting the needs of a 21st century 

transportation system. 


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I think it is also a security issue. When President Eisenhower 

developed our interstate system, he recognized the importance of 

tying the country together, and the importance, from a security 

standpoint, of having adequate transportation. 

It seems to me what is missing from our transportation policy 

that you have addressed very well is, of course, first and foremost, 

money, revenue. We cannot build these highways with fairy dust. 

It takes dollars. And those dollars have not been forthcoming. 

But a very equally important factor is certainty. It is amazing 

that, during the first 6 or 7 months, when we were trying to get 

the hearing that we finally have today, the lead proposal from 

some of our Republican colleagues was to finance our highways by 

eliminating Saturday mail delivery. That and other ludicrous proposals were offered as a way to address needs that are urgent and 

that our planners need to be able to know that the funding is not 

there, just for the next 3 or 6 months or even a year, but that it 

will be there as these significant projects need to be developed. 

I really live on Interstate 35, between San Antonio and Austin, 

back and forth. And it is one of the biggest bottlenecks. I think the 

bridge over the Colorado River in Austin has been listed as number 

one, but it has plenty of competition around the country as being 

a major bottleneck, with a steady stream of 18-wheelers both ways. 

It is clearly not just Willie Nelson who is on the road again, but 

many of my neighbors that are out there. 

And there is great uncertainty there, because you never know 

when that traffic is just going to completely stop, you can’t get to 

your work, you can’t get to pick up the kids, or, in my case, simply 

move from one office to another to meet with constituents. 

I do agree with my colleague, Mr. Johnson, on one factor, and 

that is there is a bit of a problem in tolling roadways that have 

already been financed originally by taxpayers. Our former colleague, Senator Kay Bailey Hutchison, included a provision in the 

Transportation Act once about that. And we are headed to a situation in Texas where it will be impossible to get to any of our major 

cities—Austin, San Antonio, Dallas, Houston—unless you are willing to pay a toll or stop every few blocks on the access road. 

The other revenue source that I have some concern about—and, 

Mr. Poole, you have addressed this in an article that you wrote 

back in February, and perhaps at other times—is the notion that, 

speaking of fairy dust, that there is some magic way we can handle 

this through repatriation. And you looked, I believe, at all of the 

proposals: The one from the Administration, which you described 

as the most foolhardy; the one from Mr. Delaney; the one from 

Boxer and Paul. And, in February, said that you could not support 

any of them. Is that still correct? 

Mr. POOLE. That is still my position for the reasons I stated, 

that it would be another big departure from the user pays principle, which I think is crucially important, to strengthen, rather 

than continue weakening. 

Mr. DOGGETT. And that a one-time fix, whether it is repatriation or Saturday mail delivery, or some other gimmick, would not 

provide the certainty—— 

Mr. POOLE. Exactly. 


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Mr. DOGGETT [continuing]. That is important, along with the 

funding. 

Mr. POOLE. Yes. 

Mr. DOGGETT. And I was pleased to see that our colleague, Dr. 

Boustany, was quoted earlier this month in Politico as saying that 

this is—‘‘It is not a real way to fix the problem of finding the cash 

for the chronically under-funded highway program.’’ 

There is a tendency to believe, because we have some carpet tax 

dodgers that have hidden money they earned here in the United 

States in the Caymans or some other tax haven, and they are just 

dying to bring it back at a nickel or a dime a dollar, which is a— 

anyone would love to pay on all of their Federal taxes, but only 

these folks, that haven’t paid anything in many cases, want to 

bring it back. It is so tempting, even though the cost, when you actually go out and score it, of most of these repatriation proposals— 

well, as the President told me at one meeting here a year, yearand-a-half ago in a presentation, he has looked at it and the math 

just doesn’t work. And I don’t think it works either for certainty, 

in terms of tax fairness, or any other way, to be a funding source 

here. 

I hope we can come together. I think there are many people here 

that are willing to cast some tough votes, to provide the revenues 

needed to fund our transportation system, but it has to be done in 

a bipartisan way, rather than just setting up an argument to attack someone as being for more revenue for an essential public 

service. 

And your testimony here today, all three of you, is helpful, I 

hope, in advancing that. And, hopefully, we can get an answer 

sooner than we got this hearing, and—— 

Chairman RYAN [presiding]. The time for the gentleman has expired. 

Mr. DOGGETT. Thank you. 

Chairman RYAN. Thank you. Mr. Boustany is recognized. 

Mr. BOUSTANY. Thank you, Mr. Chairman. I am really glad we 

are holding this hearing. This is really an important topic. 

In my home State of Louisiana, we have two key infrastructure 

projects that have been on hold. One is completion of Interstate 49 

south. This is a project that has been on the books for two-and-ahalf decades. 

Now, why is it important? This is the energy corridor for the 

country. I mean it links key ports and key energy infrastructure 

that supplies this country. It is also an important hurricane evacuation route, which is important more locally. And then, third, we 

have a number of fatalities, a rising number of fatalities each year. 

This is a project that has been on the books, it is authorized. The 

limitation is funding. We have to fix the problem with funding and 

financing of infrastructure. 

Secondly, I have a key bridge on Interstate 10 in a location that 

is seeing $65 billion in new investment coming in related to energy 

and trade. This piece of infrastructure is a limitation. The bridge 

is increasingly dangerous. The maintenance schedule has escalated. 

We have to fix this. So, I mean, these are local cases in point for 

the necessity. 


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Now, why is it important? The infrastructure is key to addressing the issues that my friend, Mr. Neal, talked about, and that is 

2 percent growth is just unacceptable in this country. And infrastructure basically serves the key elements of growth, whether it 

is the energy sector or the international trade and exports. 

I firmly believe we need to get to a user fee system that works, 

is broad-based, and sustainable. And I have some concerns about 

one source of funding that has actually been vetted about, and that 

is it has been talked about perhaps replacing or supplanting or 

augmenting the gasoline tax, or a motor fuel tax system, with a 

per-barrel fee on crude oil. 

I don’t think that is a very good idea, for a number of reasons. 

One, I think it adds additional complexity in how do you—you 

know, in terms of separating out the user fee piece versus consumers of other types of crude-based products that have nothing to 

do with the highway system. That is a problem. I think it would 

also cause serious competitive harm. We are now seeing our refineries, for the first time in many decades, being competitive, not 

only more profitable domestically, but very competitive internationally. I think we would harm that. Finally, I think the per-barrel 

increase that would have to be put in place, in terms of a fee like 

this, is somewhere on the order of $10. I don’t think that would be 

very popular, either, at a time when, you know, we are just starting to see lower oil prices. 

So, I have a concern about that particular method of payment or 

financing, but I would be curious to get your input. I don’t think 

it fits the classification of being a broad-based user fee that is sustainable. 

Mr. GRAVES. Congressman, that option is on our list. We 

actually—because we know how difficult your challenge is, collectively, we tried to sit down, as an industry, and come up with a 

whole lot of things that we could support, if it wasn’t just a—if it 

wasn’t a fuel tax, if it wasn’t indexing, I mean, if it wasn’t some 

sort of freight fee, I mean, we just—and the barrel tax is on the 

list. 

I will tell you we discussed at length the concern you addressed, 

which is there are people who derive benefit off of a barrel of oil 

who have nothing to do with running cars or trucks on the Nation’s 

highways. It is—at least in our conversation, it was there simply 

because we acknowledge that there has to be a path forward somewhere, and we didn’t want to be at the table, being prepared to 

support whatever you all might, you know, grasp as the best path 

forward. But I recognize the concern on the users of the barrel of 

oil. 

Mr. BOUSTANY. Thank you, Governor. Mr. Poole, do you want 

to comment on that? 

Mr. POOLE. I agree exactly with your objections. I think it is— 

it would have all kinds of unintended negative consequences on 

other parts of the economy, and is another departure from the 

user—the real user-pays principle. 

Mr. BOUSTANY. Are there any thoughts on how we capture 

electric vehicles, vehicles fueled by electrical—or batteries and so 

forth? I mean this is a growing area, and it is currently outside of 

the scope of the motor fuel tax. 


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Mr. POOLE. A number of States, a small number—I think 

maybe less than a dozen—have started putting in an annual fee 

tied to the vehicle registration fee as a way of recovering something 

from users of electric and some other types of alternate fuel vehicles. That is a good start, at least. They certainly should pay for 

using the highways. 

Mr. BOUSTANY. Does anybody else want to comment on that? 

Governor. 

Mr. GRAVES. Well, I would only say that I would imagine, in 

most instances, the person that is driving the vehicle was previously driving something that burned gasoline or diesel, and so 

the concept of paying something for the use of the roads, again, is 

not something they are not familiar with, and I don’t think there 

is going to be a huge outcry to support the roads of this country 

through some sort of a registration fee on non-fuel vehicles. 

Mr. BOUSTANY. Thank you. 

Chairman RYAN. Thank you. Mr. Thompson. 

Mr. THOMPSON. Thank you, Mr. Chairman, and thank you for 

holding the hearing. And thanks to all the witnesses for being here. 

You have all done a great job. I think there is one thing that we 

can all agree on, and that is that Congress is failing the American 

people in our responsibility to help ensure that we have safe and 

efficient infrastructure upon which to travel and to move our goods, 

and that is something that is totally unacceptable. We do need to 

step up. We do need to address this. And we need to do it sooner, 

rather than later. 

A number of my colleagues referenced the fact that the cost of 

dealing with this problem somehow falls disproportionately on 

hard-working people. And I guess it is hard for me to understand 

why the same concerns aren’t voiced when you look at the costs 

that fall disproportionately on those same hard-working people 

when it comes to repairing their automobiles. 

I know in California, my home State, 34 percent of our major 

roads are in poor condition. And I am told by my State folks that 

it costs the motoring public $17 billion a year to drive on these 

roads that are in such bad shape, about $703 per motorist. So, who 

do you think pays that cost? The same hard-working folks, the 

same trucking companies that are trying to move goods across the 

country and across the States. 

Also, in California we have two of the top three most congested 

urban areas: Los Angeles and the San Francisco open area. I am 

told that costs—that congestion costs billions of dollars a year, and 

can be translated to—costs about $1,000 per commuter in lost 

wages and time spent on the road in their cars and in their trucks. 

It disrupts the amount of time it takes to deliver goods from either 

manufacturing to a point of distribution or whatever else your 

truck drivers, Governor, are doing. And that is just totally unacceptable. And we need to fix this now. We can’t wait any longer. 

The construction costs, I am told, for building infrastructure are 

down 20 percent since before 2007, and they have been flat since 

2011. And, at the same time, bonds are at an historic low. It seems 

to me that this is the time to lock these construction projects in 

place, and to set it up so every State, States with short construction windows, States with long construction windows, can get to 


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70 

work and make these repairs and improvements that are so much 

needed. 

And I would like to ask all three witnesses, is this the time to 

fund these projects? Should we lock this in now, and get going? 

Mr. GRAVES. Well, I will start and say, you know, the time is 

now, next week, next year, 5 years, 10 years from—I mean, again, 

we are starting to lag so far behind, in terms of the investment we 

have made—and, as I said, the blessing we have is our economy 

is expanding, and will continue to expand. And, therefore, the demand and pressure on all our infrastructure will continue to grow. 

So it is—in some way it is not an option, you all have to address 

this, it is just getting around to finding the will to do it. 

Mr. THOMPSON. Governor, let me just ask you. I got a memo 

today from a constituent, and it says that our transportation system is in an historically unique state of decline and, if not addressed soon, will make even strong investment potentially incapable of meeting the level of structural decay. Do you agree with 

that? 

Mr. GRAVES. I do. I think any of you that have driven in your 

own communities, your own States, or certainly, if you travel much 

around this country, are seeing the same problems everywhere. 

The States are doing a great job making an effort to sort of fill 

that void. And you have seen a number of them take action as of 

late. But it is a drop in the bucket, compared to what the overall 

demand for investment is. 

Mr. THOMPSON. And I can tell you I am from a State that has 

taken action. Many of my counties in my congressional district are 

what we call self-help counties. They have taken action. They have 

taxed themselves in order to step up and help contribute to fixing 

the infrastructure problems that are hampering all of us. And the 

only holdback, the only dark spot in all this is the Federal Government’s participation. 

I know my constituents want this addressed now. They are ready 

to go. And they see us as failing in our job—— 

Chairman RYAN. Thank you. The time of the gentleman has expired. 

Mr. Smith. 

Mr. SMITH OF NEBRASKA. Thank you, Mr. Chairman. Thank 

you to our witnesses, as well. Obviously, these topics are very important, this topic of transportation and the Highway Trust Fund. 

And it is interesting how I think the general public certainly wants 

solutions. They want their taxpayer dollars to end up where they 

are intended to end up. And yet there seems to be frustration, in 

terms of bureaucracy. 

I mean the President himself kind of looked back on the stimulus 

and the so-called shovel-ready projects as not so shovel-ready, or 

I—in discussion with my constituents, I mean, there were small 

communities who had a project ready to go, and when they pursued 

the dollars from the stimulus, it actually delayed the project further. And so, that creates frustration. 

I know many folks are frustrated with Highway Trust Fund dollars going to non-highway projects. And I was just wondering, Governor, if you could touch on, you know, the use of these dollars— 


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obviously, there is a shortage of dollars—and how they might by 

used on non-highway projects. 

Mr. GRAVES. Well, I would first of all say that, you know, one 

of the—you all did such a fine job on stimulus that people did come 

away with a notion there was going to be a massive infusion of dollars into infrastructure programs, and it really didn’t turn out that 

way. And I think that left everyone a bit disillusioned. And I think 

we missed an opportunity there, to some extent. But we won’t, you 

know, relive that history. 

You know, we obviously have a frustration with where some of 

the dollars we pay into the Highway Trust Fund go. But we also 

have come to appreciate that there is a big diverse transportation 

community in this Nation. As I mentioned, you know, if we had our 

druthers, would we want, you know, the money that goes to public 

transit to come out of the Highway Trust Fund? No. But the reality 

is, as a Nation that is now approaching, as I said, 400 million people in a few years, there are more and more communities and 

States that, essentially, must have public transit options available 

to them. So it is a partnership, it is a deal we have made, maybe 

in our perspective, with the devil, but it is one we are willing to 

live with and continue to work on. 

Mr. SMITH OF NEBRASKA. Okay. Do any other witnesses wish 

to comment? 

Mr. POOLE. Well, I think I address this point at greater length 

in my written testimony, which I hope you will have a chance to 

read. I think there is a huge scope for rethinking the wide breadth 

of the Highway Trust Fund programs. Again, this is not this Committee’s job, per se. But, from Congress’ overall standpoint, it is 

really time to start saying, well, the Federal Government can’t do 

everything in transportation, it really needs to focus more on the 

core problems that are uniquely the Federal Government’s responsibility. 

Mr. SMITH OF NEBRASKA. Mr. Shirley. 

Mr. SHIRLEY. Let me just briefly acknowledge that, you know, 

highway projects typically do take some amount of time for the 

money to spend out, and they take time to build and put together. 

Mr. SMITH OF NEBRASKA. And another concern that has been 

brought to me is the concern that it takes as long to build a highway today, perhaps, as it did 50 years ago. I mean I would hope 

that we would have more to show for new technology and new 

methods than that. And so that creates a frustration that, as we 

heard earlier, you know, we have a diminishing source of revenue, 

and yet an increasing need for the dollars. And so it kind of—you 

know, chasing those, as was stated earlier, chasing projects with 

reduced gas mileage—or increased gas mileage and efficiency, it is 

just, I think, a troublesome combination. 

So, with that, Mr. Chairman, I yield back. 

Chairman RYAN. Thank you. 

Mr. Blumenauer. 

Mr. BLUMENAUER. Thank you, Mr. Chairman. And I deeply 

appreciate the fact that we are having this hearing today. 

Mr. Chairman, I agreed with much of your opening statement. I 

have one slight exception that I will reference in a moment. But 

Mr. Thompson pointed out that the American public is right now 


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72 

paying the price. They are paying hundreds of dollars a year in 

damage to vehicles or being stuck in traffic. Mr. Graves’ teams of 

drivers are losing money, and wasting fuel. The American—there 

are people in this room, if we were able to have real hearings on 

this, who could dive in and give you details about what those problems are, what the solutions are, and how to refine them. And I 

hope that we will be able to have those hearings. 

The Committee has a bill. I have had legislation to extend the 

road user charge experiment that Oregon has been doing for the 

last 10 years to extend it to other States to refine it. That is part 

of a long-term solution everybody agrees with. I think the Committee ought to look at it after a year-and-a-half. 

I am hopeful, however, that we don’t somehow believe that there 

is nothing we can do. 

Chairman RYAN. Will the gentleman yield just real quickly? 

Some of these are not in our jurisdiction, as you well know. 

Mr. BLUMENAUER. It has been referred to this Committee. 

Chairman RYAN. Oh, okay. 

Mr. BLUMENAUER. House Bill 679 is here. It is a dual referral. 

The notion that somehow we can’t do anything over the next 6 

weeks, I would respectfully suggest, is not the case. The gas tax is 

legislation that is well known, it is not hard, it is simple. Six Republican States have raised it already this year. This is something 

that, if the Committee wanted to, we could have hearings on next 

week. We could have Members go back over the Fourth of July recess and talk to people at home, their Chambers of Commerce, 

their unions, their contractors, their truckers. The vast coalition 

that is ready for us to step up and take action we could hear from 

during that period. And we could come back in July, in the course 

of a week, finish the hearings, and get a bill out, and it could be 

enacted. It is all about will. This is not complex. It has been done 

by Republican and Democratic Presidents alike. So I just respectfully suggest that we could do better. 

But I want to go to the Chairman’s point, that he doesn’t think 

it is a good idea to raise the gas tax because it is problematic for 

the people out there. I would ask unanimous consent to enter into 

the record testimony that would have been given by the road builders about the tax and political implications and costs on fuel after 

these States have raised the gas tax. 

Chairman RYAN. Without objection. 

[The submission of The Honorable Earl Blumenauer follows:] 


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dkrause on DSKHT7XVN1PROD with LOCATORS22332A.042

Testimony of the American Road & 

Transportation Builders Association 

Long-Term Financing of the Highway Trust Fund 

House Ways & Means Committee 

June 17,2015 

Chairman Ryan and Representative Levin, we appreciate you scheduling today's hearing to 

discuss the status of the Highway Trust Fund. The federal highway and public transportation 

programs are already on their second temporary extension since the 2012 surface 

transportation law, the "Moving Ahead for Progress in the 21" Century Act" (MAP-21), expired 

more than eight months ago. President Obama and leaders of both parties and both chambers 

have all routinely pointed to a long-term surface transportation reauthori~ation bill as an area 

of common ground where meaningful progress could be achieved in 2015. That will not 

happen unless and until t he Highway Trust Fund's revenue stream is stab li~ed and increased. 

The root of the trust fund's revenue challenge is not an antiquated gas tax, alternative-fueled 

vehicles dominating the U.S. automobile fleet, or improved vehicle fuel economy, but a more 

direct and obvious flaw: the federal motor fuels tax rates and other highway user fee rates have 

not been adjusted for 20 years. As such, it should surprise no one that the Highway Trust Fund 

is on the verge of insolvency. The only surprising thing is that it did not happen sooner. 

While the federal motor fuels tax rates have remained constant for more than 20 years, the rest 

of the world has moved forward. The U.S. population, highway-related freight shipments, and 

traffic congestion levels have all grown substantially since 1993. The figure below 

demonstrates why~ at a time when our infrastruc-ture needs are greater than ever, revenues 

from the motor fuels tax are buying less and less. 
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Cost Increase Since Federal Moler Fuels Tax Rate 

was last ld)IISied In August 1993 

200 

1.80 

..., 

lAO 

120 

100 

110 

1!0 

40 

Ill I ,_~Motor FUels Prke ol Asphltt: Price of Iron & St«< Hou:rfy Prodtii<'Oon 

T•• llt•1• Work«r Wte• 

MriiflfBJJ=:==~'f =:A.-.. 

--. --· 

Allowing the Highway Trust Fund's structural revenue deficit to persist has forced five separate 

revenue shortfalls since 2008 and a six crisis is looming later this summer. Instead of 

generating sufficient resources to support needed federal investment in the nation's surface 

transportation network, Congress has chosen to infuse the trust fund with more than $60 

billion from non-transportation portions of the budget- $50 billion of which added to the 

deficit. The U.S. Department of Transportation (DOT) will be forced to begin rationing 

reimbursements to state departments of transportation in August unless the trust fund is 

stabilized. Further, the Congressional Budget Office (CBO) projects that without new resources 

the trust fund will be unable to support any new spending when FY 2016 begins- requiring a 

one-time cut in surface transportation investment of nearly $49 billion. 

This uncertainty about future federal investment has caused seven states in 2015 to delay 

roughly $2 billion in planned highway improvements. Given federal funds support on average 

52 percent of state highway and bridge capital projects. we understand why a number of states 

would be hesitant to move forward without a reliable federal partner and expect that number 

to increase as the July deadline gets closer. 

Mr. Chairman. let me be clear. The Highway Trust Fund has a revenue problem. not a spending 

problem. Federal highway investment is $800 million less today than it was four years ago. 

Furthermore. House Republicans rejected an effort in 2011 by then House Transportation 

Committee Chairman John Mica (R·Fiorida) to scale back highway and public transportation 
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investment to the levels existing trust fund revenues could support. The House approved last 

week a FY 2016 Transportation, Housing and Urban Development Appropriations bill that 

maintains current levels of trust fund-supported highway and public transportation investment 

levels. The evidence is clear an overwhelming majority of both parties support either 

maintaining or increasing federal surface transportation investment. 

We should also be clear that the Highway Trust Fund has a political problem, not a substantive 

one. Congress created two independent commissions in the 200.-:; surface transportation law to 

provide recommendations on how to stabilize the Highway Trust Fund. Both groups reported 

roughly the same conclusion: increase the federal gas tax in the short term and transition to a 

vehicle miles traveled fee to pay for surface transportation improvements. Stakeholder groups 

ranging from the U.S. Chamber of Commerce to AAA to the American Trucking Associations to 

Transportation for America all support increasing the federal motor fuels tax. Despite 

unsupported claims about declining gas tax revenues and reduced driving, the ceo projects 

constant Highway Trust Fund revenues for the next eight years and U.S. DOT data show driving 

levels have increased for three consecutive years. Furthermore, a February U.S. DOT press 

release states unquestionably, "U.S. Driving at Highest Level Since 2007, New Data Show." 

Mr. Chairman, Congress has been told time and time again increasing or creating new highway 

user fees is the most equitable, transparent, and effective approach to address the nation's 

growing surface transportation infrastructure challenges. Unfortunately, scorecards from 

professional conservative lobbyists and misconceptions about the political concerns of 

increasing user fees are clouding this situation. I want to share with the Committee two new 

research pieces from the ARTBA economics team that clearly illustrate the lack of political 

consequences and impact on the price of gasoline from recent state gas tax increases. 

89 Percent of Gas Tax Supporters Re-elected 

Voting for a gas tax increase to fund transportation Investments has not hurt Republicans or Democrats 

at the ballot box. Ninety-five percent of all Republican state legislators who voted to increase their state 

gas tax to fund transportation improvements in 2013 and 2014 and ran for re-election last November 

won their races. That was a one percent higher winning percentage than that racked up by all state 

Republican legislator.; who voted against a gas tax increase during the prior two years. 
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On the Democratic side, 88 percent of state legislators who voted in favor of a state gas tax increase and 

ran last year were re·elected, as were 86 percent 

who vot~d •fno." P•rc•nt of Republican State Legislators Who 

Voted "'Yes" on a Gas Tax Increase and 

Won R~lectlon In 2014 This analysis shows two things members of 

Congress need to know. First, a bipartisan 

majority can be found to increase transportation 

investment If the leadership of both parti<!s 

O)etuOllty le:Old fi»thcr thin play politia and awe 

their colleagues a chance to vote. Second, if 

legislators are honest with their constituents and 

clearly explain why a gas tax increase Is necessary 

and important and what benefits their 

constituents will derive from it, they have little 

reason to fear the ballot box over a gas tax vote. 

,...... .... !WI • ._,.. __ ......., ... ,(_=_=--------

Pl!<cent of Oemocratlc State t.egislotors Who 

Voted ""Yes• on ~ Gas Tax fnaease and 

Won Re-electlon in 2014 Seven state legislatures passed a gas tax oncre1se 

or its equivalent during the last election c:yde, 

accordong to the analysis by ARTBA's 

Transportation Investment Advocacy Center: 

Massachusetts, Maryland, Pennsylvania, Virginia, 

Vermont, Wyoming and New Hampshire. 

Three of the states passing increases had a 

Republican governor and GOP control of both the 

House and Senate-Pennsylvania, Virginia and 

-=

-

~~lw.ri,l 

-

..,_ 

\lllplt .. 

.. 

~ 

Wyoming. Three had Democratic governors with 

party control of both legislative chambers- Maryland, Massachusetts and Vermont. New Ham~hire 

had a Democrat as governor and a split party state legislature. 

Republicans helped pass gas tax Increases wnh 216 votes in six states, 34 percent of Republican state 

legislators in office at the time of the vote and 36 percent of Republican state legislators who cast a 

vote. No Republican legislators supported the Increases in Maryland and only one legislator supported 

the increase In Massachusetts. All but eftht who supported gas tax bills and ran for re-election won. 

The analysis shows 384 Republicans voted against the gas tax measures in the seven states. Of the 305 

who ran tor r~lection, 19 lost. 

Democratic state legislators cast 673 votes in favor of a gas tax increase, 82 percent of Democrats in 

office at the time of the vote and 87 percent of Democratic state legislators who cast a vote. Of the 546 

who ran for re-election, 681ost. Democrats cast 101 votes against a gas tax Increase. Of the 83 who ran 

for re-election, l2 lost. 

4 

"''" 
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I 

A totall,385 state legislators cast votes on gas tax measures, the analysis found. Of those voting, 191 

were registered as signing the Americans for Tax Reform (ATR) state pledge "to oppose (and vote 

against/veto) any efforts to increase taxes"- 180 Republicans and 11 Democrats. Thirteen percent of 

the signees ignored the ATR and supported increased revenue for transportation improvements, the 

analysis found. Only one legislator who defied the ATR and sought re~lection was not returned to 

office 

Percent of Republican State Legislators Who 

Voted "'No• on a Gas Tax Increase and 

Won Re...,lection in 2014 

Percent of Democratic St3te legi~ ;)tOr$ Who 

Vote!d ••No" on a Gas Tax lnaease ind 

Won Re-election in 2014 

"'w"'-"

l't.M~""--"' 

w-,umrw 

........ 

~ 

- ---...._ 

'"""'"" 

""""' Mb 

... 

~~ 

~lb 

- ... 

Only a Portion of State Increases Passed Through 

Ask any American driver. They will tell you the price they pay for a gallon of gasoline can 

change significantly week to week. In fact, as the chart below illustrates, U.S. Energy 

Information Administration (EIA) data tracking the weekly national average retail price 

Americans paid for gasoline shows it has fluctuated an average five cents-per-gallon since 

January 2005. 

The fluctuation has varied state-to-state. For example, our review of weekly price data 

compiled the EIA for nine states since January 2005 found: 

Ohio retail gasoline prices have fluctuated an average 10 cents-per-gallon weekly; 

In Minnesota the average weekly fluctuation has been seven cents-per-gallon; 

In California, Colorado, Florida, Texas and Washington, it matched the national average 

fluctuation of five cents-per-gallon; and 

The fluctuation in Massachusetts and New York was slightly lower than the national 

average at four-cents-per-gallon. 

·-

5 
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Wtdttytll.-rce In U.S. Rt~lf Guoll,._ Pli<ts.lOOS to l014 

On twt•l~. U.S. ttttiltU S)ricU dunp Scents:~~ wt:tk{USI Ot dO'N~j 

Politicians often cite concerns about raising prices at the pump as a reason to oppose a gas tax 

increase. But given the weekly volatility of retail gas prices, would a modest gas tax increase 

even be noticed by consumers when they purchase motor fuel? We analyzed the retail price 

impact of recent gas tax Increases in five states-Massachusetts, Maryland, Pennsylvania, 

Vermont and Wyoming-to find out. But first, an understanding of the factors that determine 

pricing for a gallon of gasoline at the retail level is helpful and provides necessary context. 

Short Run Impact of Gasoline-Related Taxes on Retail Prices 

For our analysis, we obtained daily average retail gasoline price data for all U.S. states from 

December 1, 2012, through December 31, 2013, from the Oil Price Information Service (OPIS), 

which Is recognized as one of the world's most comprehensive sources for petroleum prices 

and news information. Its client list includes the top 200 oil companies, thousands of 

distributors, traders, government and commercial buyers of petroleum products. 

We also obtained source information on 19 changes in state gasoline tax rates (both the excise 

and/or any related fees that are calculated as a cents-per-gallon change) that occurred in 13 

states during 2013. 

Our econometric model estimated the daily change in retail gasoline prices at the state level 

with a fixed effects model using state panel data. The independent varia bles include the daily 

difference In state gasoline-related excise tax rates and the lagged daily difference in the 

national price of Brent crude oil for a period of 30 days prior to each observation. State- and 

time·fixed effects were included individually and as an interactive variable. This was to account 

6 
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for any seasonal and state-specific supply and demand factors that could impact the retail price 

of gasoline, such as the local competitive environment, refinery capacity and utilization, 

gasoline inventories, different fuel blends, seasonal demand and differences in state economic 

factors. 

The gasoline-related tax rate adjustments in the 13 states included legislatively-approved 

changes and variable rates that occur automatically based on a price index. States with variable 

rates set their cents-per-gallon rate either annually, every six-month or each Quarter. 

Four of the changes tracked In the model were newly-enacted increases, including new tax 

rates in Massachusetts, Maryland, Vermont and Wyoming. Variable rates were increased in 

California, Florida, Georgia, Kentucky, Nebraska, New York, North Carolina and West Virginia. 

There were four decreases in gasoline tax rates tha t occurred in states that review their rates 

more than once a year - Georgia, Nebraska, North Carolina and Vermont. There was also a 

decline in the Virginia rate. 

The model included all of these changes. 

Although not always understood by consumers. media. or politicians the motor fuels tax. while 

folded into the overall price at the pump. is not collected by retail sales outlets. The federal 

and most state gasoline taxes are collected either when motor fuel is removed from the bulk 

storage terminal or at the distributor level.1 

Our econometric model showed that when you hold all other factors constant. on average 

about 39 percent of an increase in state gas related taxes is passed through to the retail price of 

gasoline the day the tax goes into effect. 

The model estimates that an additional16 percent of the gas tax increase is passed through 

over the next 30 days. 

The results did not show any price impact after 30 days, which is consistent with other studies 

that have found factors considered long term price changes are usually realized within 30 days. 2 

Changes in the lagged daily price of crude oil for up to one month were also significant, as 

expected. 

1 U.S. f ederal Highwav Administration, Motor Fuel Tax COmpliance Outreach. 2 Stanislav Radchenko, togs in the respon5e of gasoline ptkes to chonges in crvde oil prices: the role of shorl·rerm 

and lang-rerm sho<:ks., January 2004 

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These results also confirm previous research that suggest state gas taxes are just one 

component of a complex pricing scheme that Includes consideration of the price of crude oil 

and other state specific factors. 

,....--- State Gn T..x 0\anats tMtwHn Otcember 2012 and December 2013 

I Date of G.u Tax Rate Befote Olance Gas Ta Rate Aftet Ch1n.n 

St~te Chonge Type of Chance bet. OthOt' Total Amount Elldse Othe< Total 

Tex T .. Tox ltonts Tu Tox Tax 

Ca1ifornla 7/L 2013 Varb~t kat~ :160 7.0 410 3.5 39.5 7.0 ... , flonda 1/1/2013 Veri able Rate 40 12.6 16.6 0.3 4.0 12.9 16.9 

G&or II 1 1/1/2013 Vath•ble Rate 7.5 12.1 19.6 ·0.1 7.5 12.0 19.5 

Georgia 2 7/1/2013 Vat1able R.ltt 7. 5 12.0 19.5 0.6 7.5 12.6 2D.l 

Kentuckv 7/1/2013 Variable R.ltt 28.5 1.4 29.9 2.4 30.9 L4 )2.3 

Mlssachuuns 7/V2013 Gu Tax lncrt:tSf! 21.0 0.0 21.0 3.0 24.0 0.0 24.0 

... ,, •• d 7/117!113 Gas Tax Incrust: n5 0.0 21S 3.S 23.9 3.1 27.0 

Nebrnki 1 1/1/7!113 v.;wt.abft:R.Jte 26.2 0.9 27.1 ·L6 24.6 D.9 l5.S 

N•btub 2 711/2013 VMI-ibfe~ 2.4.6 0.9 25.S L7 26.3 0.9 272 

SewYM 1/1/7!113 V¥iab'tbtt &0 17.8 25.8 o.a &0 1&6 26.6 

~orth Corollna 1 7/l/20l3 VMiab1t Ratt 37.5 0.3 )78 0.1 37.6 0.3 37.9 

~orthc.tollnal2 1011/2013 Vanab1e R.ttl 37.6 0.3 37.9 ·0.1 37.S 0.3 373 

Vttmoflt 1 1/1/201) Var1blt R<rt~ 19.0 7.5 26.5 0.2 19.0 7.7 26.7 

Vermo11t 2 4/1/7!113 Vanable R.'te 19.0 7.7 26.7 .0.1 19.0 7.6 26.6 

Vermont 3 5/1/201) Gas Tax lncrtue 19.0 7.6 26.6 5.9 18.2 14.3 32 5 

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Real World Short Run Market Impacts of Changes in State Gasoline Taxes 

To test the results found with our model, we looked at "real world" occurrences of changes in 

the daily price of retail gasoline at the state level. 

Five states enacted gas tax increases or reforms in 2013 and January 2014 that translated into 

higher cents-per-gallon rates-Massachusetts (3 cents per gallon), Maryland (4 cents); 

Pennsylvania (9.8 cents), Vermont (6 cents) and Wyoming (10 cents). 

By using daily retail price data obtained from OPIS, we were able to compare changes in the 

price of gasoline the day before the enacted increase with prices the dav of the increase, the 

~the increase and again after one week. one month and one year. The overall price 

change would take into effect both the increase in the state gas related tax, as well as all the 

other market dynamics affecting supply and demand. 

The data show the following: 

• The state gas tax rates Increased an average 6.5 cents for the five states. 

8 
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On average. the pump price for gasoline increased only one cent-per-gallon the day 

the increase went into effect an increase of 0.3 percent, compared to the baseline 

price from the day before. 

o The day after the gas tax increase went into effect. the average pump price 

compared to the baseline was only 1.4 cents. or up just 0.4 percent. 

o One month after the tax Increase had gone into effect, the average pump price 

had risen by nine cents per gallon, or 2.5 percent, compared to the baseline 

price. The change, however, was. in each case. in line with that which had 

occurred in the national average price of gasoline over the same time period. 

which was up 4.2 percent. 

o One year after the tax increase had gone Into effect. the average pump price 

had dropped 13 cents-per-calion below the baseline pump price. a decline of 

3.7 percent. Again, this was in line with the national average pump price, which 

had dropped 3.3 percent. 

These finding corroborate the results found with our empirical fixed effects model. They also 

strongly suggest that that any additional increase in retail pump prices caused by a gas tax 

Increase will likely be Nlost" in the weekly price fluctuation that has been documented over 

the past 10 years. 

Although our model estimated that 55 percent of any change in state gas tax-related rates 

would be passed on through the retail price of gasoline within 30 days of initiation, in the real 

world this change is countered by other market dynamics related to overall supply and 

demand. 

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Estimating the Retail Price Impact of a 15 Cents per Gallon Increase in the 

Federal Gas Tax 

The American Road & Transportation Builders Association (ARTBA) has proposed enactment of 

a 15 cents-per-gallon increase in the federal motor fuels tax to put the Highway Trust Fund back 

on solid financial footing and provide the first significant increase in federal surface 

transportation investment revenues since 1993. The ARTBA proposal would fund a six-year, 

$401 billion federal highway and transit investment authorization and permanently elirnindtt: 

the program's $15 billion per year "funding gap." 

To mitigate any perceived political backlash that might be caused by t he proposed gas tax rate 

increase, ARTBA suggests the Congress provide American tax filers with an annual income of 

$100 thousand or less with an annual tax rebate of $90 for the six-year authorization period. 

The rebate would return to 94 percent of all tax filers the $90 per year they would pay, on 

average, in additional federal gas tax. 

The federa l government gave much larger tax rebates to middle and lower income tax filers in 

2001 and 2008. 

Our econometric model suggests a 15 cents· per-gallon increase in the federal gas tax would 

result in the following retail market Impacts: 

Holding all other factors constant, the retail price of gasoline would increase just under 

six cents per gallon the day of the rate increased. 

It would increase an additional 1.2 cents as a result of the tax increase after a two week 

period. 

• An additional 0.4 cents and 0.8 cents would be paid by consumers at the pump in weeks 

three and four, respectively. 

In total, the model estimates that 55 percent of the gas tax increase- about 8.2 centswould be passed on to consumers through the retail price of gasoline over a one month 

period following the rate increase. "Real world" observation of that actually happened 

in the five states that increased their highway user fee in 2013, however, suggests the 

increase at the pump could likely be less than estimated by our model. 

ARTBA's empirical analysis and examination of daily price data strongly suggest that changes in 

gasoline-related taxes are a small part of the overall dynamics driving the retail price of 

gasoline. Our fixed effects model, which is the first to examine the impact of a change in state 

gasoline-related taxes on the dally retail price of gasoline, suggests that just over half of an 

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increase in gasoline-related taxes is actually passed through to the consumer at the retail 

pump. 

Furthermore, the likely impact of a 15 cents-per-gallon increase in the federal gas tax would 

likely be in line with the weekly retail gasoline price fluctuations that Americans have 

experienced over the last 10 years. 

In an interesting side note, EIA data show the U.S. average retail price for all grades of gasoline 

was $1.06 per gallon the week before the federal gas tax was last adjusted by 4.3 cents {up to 

18.4 cents) in August 1993. In each of the following three weeks, the average national price 

variation-up and down-was within a penny. A month after initiation of the adjustment, the 

average price per gallon had decreased a half-cent below the baseline. 

It's Time for A Real Highway Trust Fund Solution 

Mr. Chairman, it's a truism that has been said many times before: we do not have a Republican 

road network. We do not have a Democratic road network. We have an American road 

network, an American bridge network, and an American transit network. 

And if one thing has been learned over the past decade, it's that neither political party has had 

the will to enact a long-term funding solution when they had the numbers and opportunity to 

do it. It is going to take bipartisan cooperation, a bipartisan solution and bipartisan political risk 

to get the job done. 

And by long-term solution, we do not mean a four- to six-year patch from repatriated overseas 

profits of a few large companies or some other one off mechanism. That will just leave us 

facing another $16 billion a year-plus funding cliff at the end of the next authorization. We 

need a sustainable funding solution to put this critical national program back on solid footing 

for the next decade. 

While some are worried about the political consequences of voting for a real trust fund fix, the 

rest of America is worried about commute times growing, bridges being closed, shipping costs 

increasing, and jobs being lost. 

It's time for both parties to work together for America to put this behind us. 

12 
85 

Mr. BLUMENAUER. Thank you. 

Governor, I would like to turn to you, if I could, maybe in a different hat. Because I recall when you were Governor of Kansas, 

you had to face this question about funding your own issues. Do 

you have some thoughts about what calculation you went through 

in Kansas, what difference it made, what you did? 

Mr. GRAVES. Well, obviously, you know, we are a large, rural 

State. And roads and bridges—you know, mobility is very, very important, both to our economy and to individuals. What we did was 

essentially do a road show throughout the State. We assessed what 

the needs were, we came up with a list of the projects that we felt, 

you know, met the criteria for action, told people what the cost was 

going to be, created the program, and went out and just sold the 

fuel tax to the State legislature. And it was actually, I will confess, 

a little easier than I thought it would be. But—and it had tremendous benefit. We did a $13 billion program over the course of 10 years, and it was of great importance 

to our State. And Congresswoman Jenkins was part of that, so she 

remembers. 

And I mean it is hard. There is no doubt about it. We don’t think 

that, you know, for one instant that what we are asking of you isn’t 

hard. But, again, as I said in my remarks, I still believe the fuel 

tax is the lesser of all the funding evils you will confront. 

Mr. BLUMENAUER. And it didn’t destroy your political career? 

You were—— 

Mr. GRAVES. Well, I was term-limited out, which is a wonderful 

thing. 

[Laughter.] 

Mr. BLUMENAUER. Yes. Some of us are starting to look at it 

favorably ourselves. Thank you very much. 

Chairman RYAN. Yes, thank you. 

Mr. BLUMENAUER. Thank you, Mr. Chairman. 

Chairman RYAN. Ms. Jenkins from Kansas. 

Ms. JENKINS. Thank you, Mr. Chairman. And thank you all for 

being here. A special thanks to my fellow native Kansan, Governor 

Graves. 

It was a pleasure to work with you in the State’s capital, and it 

has been equally pleasurable to work with you in the Nation’s capital. 

We have talked some already this morning about the publicprivate partnerships. But I have a more specific question. So, for 

Mr. Shirley, studies have shown that for every dollar that government spends on P3s it is likely to attract several dollars of private 

capital, provided there is sufficient market for the type of project 

being financed. In your testimony you state that the scoring of P3s 

depends on where control of a given project resides. Historically, 

CBO has not scored private capital raised by P3s as reducing 

spending obligations. 

So, my question is, what could be done to change that? If detailed instructions were specified as conditions for accepting government financing of a P3, would the resulting project be scored as 

reducing spending obligations? So, if you would comment, please. 

Mr. SHIRLEY. So, one comment, certainly at one level the rules 

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makers. Another comment would be spending by private parties is 

not something that is scored. So whatever sort of private capital 

happens to be spent on highways or infrastructure is not something 

that the CBO would score. 

Ms. JENKINS. So if we gave you specific instructions, then you 

would include that in scoring. We would get credit for that. Is that 

what you are telling me? 

Mr. SHIRLEY. Ultimately, I would discuss and—with some of 

my colleagues, their understanding of the scorekeeping requirements. But, yes, my understanding is that the Congress has the 

ability to alter scorekeeping rules if it so desires. 

Ms. JENKINS. Okay. Obviously, Kansas roads and bridges are 

important to the good people of Kansas. We have a strong commitment to that. But sometimes the scoring in this town gets in the 

way of making good decisions. And so we would be happy to work 

with you on that and, again, I appreciate your time. 

I yield back. 

Chairman RYAN. Thank you. Now we are in the two-to-one 

cycle, so we will go to Mr. Paulsen. 

Mr. PAULSEN. Thank you, Mr. Chairman. And I know we have 

kind of exhausted, I think, the topic of the hearing, some of the 

focus on the long-term financing connection to the Highway Trust 

Fund, but—and there are other options that are outside of our jurisdiction, as was just mentioned a little while ago. 

And one that I think is worth mentioning—Congressman Tim 

Murphy and Congressman Tim Walz, in a bipartisan effort, I have 

been a part of the effort in past years, as well—focuses on more 

Outer Continental Shelf exploration for energy resources, and then 

dedicating those royalties and those monies to transportation. In 

fact, I think the score was something like the largest investment 

in U.S. infrastructure funding in the history of the country. So I 

think that is absolutely something we do need to look at that 

hasn’t had as much attention. I think those are probably conservative estimates. And that also looks at locks and dams and bridges 

and a whole source of our transportation infrastructure. 

But I want to get into one other point and follow up on what 

Congressman Tiberi had mentioned earlier. And, you know, we 

have had a lot of conversation today that has been centered around 

the trust fund, obviously, and that is rightly so. But the important 

other piece of the equation is the regulatory aspect, right? Making 

sure we have reforms that are in place that are actually channeling 

the resources in the most efficient and appropriate manner possible, reducing red tape to ensure we are spending money wisely. 

And a lot of folks recall the tragedy we had in Minneapolis back 

in 2007, when the I–35 bridge collapsed. And had they rebuilt that 

bridge using the normal regulatory process and timeline—that was 

a major artery into the Twin Cities, and it would take, like, 3 to 

5 years to complete. Instead, we were able to cut through a lot of 

the red tape. We streamlined the regulatory process, all without 

sacrificing any safety, any quality issues. And the new bridge 

opened in September of 2008—so, essentially, 1 year from the 

starting point of when the collapse happened. Furthermore, the 

cost of the bridge was projected to be something like $350 million, 


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87 

but the final price tag came in at about $234 million. So you saved 

more than $100 million. 

And, Mr. Poole, I will start with you, just because you kind of 

were having a conversation with Mr. Tiberi before. What lessons 

can we learn from that rebuilding effort in Minnesota that could 

be applied to similar projects across the country? And what does 

streamlining the regulatory process mean for individual project 

costs, as well as the greater balance of the Highway Trust Fund 

in general? Mr. Poole, go ahead. 

Mr. POOLE. This is not an area that I have really studied and 

researched, but there are other examples. When the Northridge 

earthquake happened in Southern California, which I lived through 

as a resident, a bridge on I–10, the Santa Monica Freeway, collapsed. And it was rebuilt in something like 4 months with 24/7, 

round-the-clock activity and significant incentive payments for the 

contractor to get it done expeditiously, because it was such a crucial artery. 

I don’t know how the regulatory barriers were gotten around in 

that case, but that is another good example, along with your I–35 

case, that, if the barriers are not there, we can do tremendous 

amounts of speedy construction of needed things. So it suggests 

that this Congress—maybe not this Committee, per se, but this 

Congress—really needs to do a much better job of environmental 

and other kinds of regulatory streamlining for the—in the interest 

of better highway projects. 

Mr. PAULSEN. Mr. Graves, I mean, for your members—and I 

talked to the general contractors and others that just say, ‘‘Yes, 

that should be a model we should be using, actually, in terms of 

future projects.’’ Do you ever have those conversations with your 

members? 

Mr. GRAVES. Well, from conversations with Chairman Shuster 

I know that, while everyone is proud of the reforms that were in 

MAP–21, the Chairman would love to take that to the next level, 

and all the more reason why getting a bill done is, I think, so critically important. 

Mr. PAULSEN. Mr. Poole, let me ask one other question, because you mentioned earlier the trust fund and were identifying 

what the Federal priorities are, what the State priorities are, the 

core focus of what the program should be, the nice-to-haves, et 

cetera. Because the trust fund has been diluted, right? It has been 

diluted over time, and is now going into all these other different 

areas. Do you have any sort of sense of what percentage of the 

trust fund now is not going to highways, bridges, et cetera, as it 

was originally set up to do? And just to kind of paint a picture a 

little bit, every penny, every dollar. 

Mr. POOLE. Well, there is a GAO analysis that is referenced in 

my written testimony that says about half of the trust fund is not 

actually being spent on highway and bridge projects. It is being 

spent on planning and CMAC and all kinds of other things that, 

you know, you really need to be—somebody should really be taking 

a look at to see is that really the purpose of the program, to do 

huge numbers of things, even paying for the safety regulatory 

agency out of the user fee revenues, rather than out of the general 

fund revenues? 


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So half is the—you know, half of the $50 billion is not being 

spent directly on highway and bridge projects. And when you look 

at the major projects, it is really only about 6 percent of the total 

$50 billion that is actually going to build or rebuild major highway 

and bridge projects around the country. I mean, I think that is 

complete distortion of what the program was set up to be, and it 

is way overdue to be rethought, from first principles. 

Mr. PAULSEN. Thank you, Mr. Chairman. 

Chairman RYAN. Mr. Pascrell. 

Mr. PASCRELL. Mr. Chairman, we have had a very civil and 

reasonable discussion up until now. One could almost be lulled into 

some sense of fantasy. I think, Mr. Chairman, with all due respect, 

that I don’t sense—maybe you do—a sense of urgency about funding transportation, because—I am glad Governor Graves is here 

today. We are missing Governors that stand up nowadays. Because 

I am going to ask him a question afterward about devolution because there is a movement, as you know, afoot to move all of these 

responsibilities—graduated, of course—to the States. 

Now, when we look at the States and their trust funds, it is also 

very interesting. In fact, there are three States—Montana, Tennessee, and Arkansas—who just delayed projects this summer due 

to Federal uncertainty. Well, if they come and listen to this discussion today, they would say, ‘‘No kidding. No kidding.’’ 

So, I see a lot of familiar faces here today, great faces, good people among the guests. I see advocates for—from the construction 

industry, from engineering, Chambers of Commerce, transportation 

advocates, and our highway users like Governor Graves. There are 

the truckers, our transit users, engineers, and our highly-skilled 

construction labor force. Of course, we are talking about jobs here. 

And this is not make-work. This has to be done. 

They bring their members into our offices time and time again. 

They track us down the hallways. They tell us how our roads are 

crumbling, our bridges—you know, we travel these roads, we go 

over these bridges ourselves. Instead of heeding the call, we are 

lurching from crisis to crisis. It is almost as if the folks that are 

holding up our infrastructure investments must have watched too 

many episodes—and we mentioned this before—of The Jetsons. We 

wouldn’t need roads, because we would be traveling in flying cars. 

However, due to neglect, our roads and bridges are something 

that Fred Flintstone would be more familiar with. It is our job to 

find solutions. So, ensuring the solvency and the sustainability of 

our Highway Trust Fund is a key component. And we have done 

this in the past. 

Up until 2010, we were always able, as a Congress—and even 

our Presidents, it didn’t matter which side of the aisle that we were 

on, it didn’t matter whether they were awake or asleep, we were 

always able to come to a conclusion and resolution of this. So, I 

wouldn’t look at that very lightly. We have passed a dozen extensions since SAFETEA expired. We have made eight infusions of 

general fund dollars. That’s dangerous. That’s very dangerous, as 

you have pointed out. 

My colleague, Jim Renacci, and I have presented a bipartisan 

plan to fund the Federal Highway Trust Fund in a sustainable 

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gaining, they have all agreed that this is the way to go. There are 

two things: A short-term solution indexing the gas tax for inflation, 

which would probably mean about half-a-cent per gallon. Let’s 

talk—why are we afraid to touch the live wire here? Why are we 

afraid to do this, when it must be done, or come up with another 

solution? 

So, for the long term, Mr. Renacci and I have suggested we put 

a bicameral, bipartisan commission together to work for 16 months 

on a plan or plans that would come before the Congress, and we 

would have a long-term plan. Now that, indexing the gas tax, gets us about $27.5 billion over 

10 years. And we would have at least the beginning—at least we 

have done something tangible instead of talking the damn thing to 

death. Once that funding runs out, Congress has a choice. We could 

either adopt the commission’s plans to fund the highway bill, or 

come up with our own plan. 

Now, I have to ask you one question. I only have a few seconds 

left. Let it hang in the air. What do you think about devolution, 

Mr. Graves? 

Mr. GRAVES. I think devolution is a huge mistake, and I don’t 

think the States are ready for it. They couldn’t accept it anyway. 

Chairman RYAN. Thank you. 

Mr. PASCRELL. You know there is legislation—— 

Chairman RYAN. The time for the gentleman has expired. 

Mr. Marchant. 

Mr. PASCRELL. Thank you, Mr. Chairman. 

Chairman RYAN. Thank you. 

Mr. MARCHANT. Thank you, Mr. Chairman. In Texas we use 

private activity bonds on—mainly on our very largest projects. So, 

in talking to our highway commissioners, their question is what is 

the future of private activity bonds, what is the prospect of raising 

the amount, and is it going to be a long-term part of our solution, 

or is this just something that was used to stimulate some temporary growth? I will let—— 

Mr. POOLE. There is certainly a lot of support among the P3 

community, the road-building community for example, for a big increase in the current $15 billion cap on private activity bonds and, 

essentially, making it a permanent part of the overall program, because it has proven to be very effective in helping put the financing 

packages together for these P3—large-scale P3 projects. 

Mr. MARCHANT. Governor Graves. 

Mr. GRAVES. I agree, yes, absolutely. And they were a big part 

of our efforts in our State during the program that we put together. 

I think they are one of those critical elements. And I want to use 

this opportunity to say, whether it is tolling, whether it is P3s, the 

private activity bonds, there are—there is a place in what we need 

in the way of infrastructure for all these items. It is just that the 

underlying basis, in my opinion, still has to rely on the fuel tax. 

Mr. MARCHANT. Does Kansas use—or is anyone on the panel 

aware of the use of revenue anticipation bonds? Are revenue anticipation bonds a key part of—was it a key part of your road program 

in Kansas, Governor? 

Mr. GRAVES. I believe it was, yes. We had some certainty at the 

time of what the Federal funding stream was going to be, and I beVerDate Sep 11 2014 07:03 Apr 18, 2017 Jkt 022332 PO 00000 Frm 00093 Fmt 6633 Sfmt 6602 I:\WAYS\WAYSPS\22332\22332.XXX 22332

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lieve that was what underscored our effort to raise the State fuel 

tax in order to have the money to meet those—the—match up with 

the Federal money. And the anticipation bonding is a big part of 

our program. 

Mr. MARCHANT. So you would contractually set aside your Federal funds that were coming in? 

Mr. GRAVES. Yes. 

Mr. MARCHANT. They couldn’t be touched to plan for. So States 

generally don’t have a problem with that concept, do they? 

Mr. GRAVES. Not that I am aware of. 

Mr. MARCHANT. So if you were trying to stimulate long-term 

capital growth, not repairing potholes, not repairing, but going in 

and putting in relatively new, long-term systems, if you raised the 

gas tax and then required that the raised amount of that gas tax— 

say a penny or two pennies—had to be dedicated to only revenue 

anticipation bonds, where you would get an immediate flush of new 

bonding and new activity, that would make, I think, a significant 

district across—difference across the country. 

Have you ever given any thought to what—how your State would 

have responded to that? 

Mr. GRAVES. Well, I think that, in terms of the attractiveness 

of the bond program, that is clearly something that the—you know, 

would make people more inclined to want to make that investment. 

And I think, again, if you are—you know, we try to pay for things 

as we go, if you will, or at least make commitments that we will 

pay for them as we go. So it makes perfect sense. 

Mr. MARCHANT. Thank you. 

Thank you, Mr. Chairman. 

Chairman RYAN. Thank you. 

Mr. Pascrell, is there a motion you want to make? 

Mr. PASCRELL. Yes, Mr. Chairman. I motion—seek unanimous 

consent to introduce a report by the American Road and Transportation Builders Association on the looming Highway Trust Fund 

crisis. 

[No response.] 

Chairman RYAN. Without objection. 

[The submission of The Honorable Bill Pascrell follows:] 


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Looming Highway Trust Fund Crisis: 

Impact on State Transportation Programs 

Federal funds, on average, support 52 percent of annual state department of transportation (DOT) 

capital outlays for highway and bridge projects.' Uncertainty surrounding the short and long-term fiscal 

condition of the Highway Trust Fund continues to have a significant effect on state transportation 

planning. 

MAP-21, the latest surface transportation authorization bill, was set to expire at the end of September 

2014. Before a last-ditch effort by members of Congress led to an eight-month extension, DOT officials 

in 35 states had publicly stated their state programs would be impacted by a shutdown of federal 

surface transportation funds. In fact, nine states retracted or delayed projects in 2014 totaling over $366 

million due to uncertainty about future federal investment. 

The highway and transit programs are now authorized through May, and the U.S. Department of 

Transportation says it will need to begin slowing down reimbursements to state DOTs in July if 

additional trust fund revenue Is not generated. As a result, 14 states (indicated on the map below) have 

expressed concerns about the feasibility of future transportation projects. According to state DOT 

officials, over $1.8 billion in projects is at risk if federal funding is disrupted. Already, four states have 

delayed or canceled projects valued at $805.4 million . 

• 

1 ARTBA analysis of Federal Highway Administration Highway Statistics data 

CT 

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MD 

• 

DC 

.....) 

SU1tet thlthave delayed 

MU.nceledproj.tcts 

Stites that are 

considerin.c proiect delaYf 

C 2015 The American Road & Transpo<talion BUidets Association (ARTBA). Allligtts reserved. No part of ttts do<:u'neril may be 

repmduced or lransmined in any fllrm <r by any means. eleclronie. mechanical, photooopyirg, recording, or olhefwise, wifho<t prior wrilten 

perrri!;sion of ARTBA. 
92 


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In addition to DOTs. transit agencies are impacted by this uncertainty as well- the Southeastern 

Pennsylvania Transportation Authority (SEPTA) delayed the start of a procurement process for a fouryear contract until they "see how things transpire in Washington," according to SEPTA Chief Financial 

Officer and Treasurer Richard Burnfield.' 

Below are a series of news article excerpts of state officials describing how this threat would impact 

state DOT transportation improvement efforts. 

PROJECT DELAYS INFLUENCED BY FEDERAL U NCERTAINTY 

1. Arkansas: 

"The Arkansas State Highway and Transportation Department (AHTD) has withdrawn 56 construction 

projects scheduled for consideration in its April21, 2015 bid opening due to continuing uncertainty of 

Federal-aid reimbursements available from the Federal Highway Trust Fund. The estimated value of 

projects withdrawn from the April bid opening is more than $112 million and includes $50 million 

authorized by the Arkansas Highway Commission for its 2015 highway overlay program. This brings the 

total number of projects withdrawn from the 2015 bid openings to 61. The estimated construction value 

of these w ithdrawn projects is $162 mill ion .... 'Now t hat we have cancelled our overlay program for t his 

year, there are few areas in t he State that are not affected by projects withdrawn from the April bid 

letting,' said AHTD Director Scott Bennett. 'If you stop and think about the economic Impact this has -

not only on construction jobs, but the lost commerce that results in each local area because 

construction isn't taking place-then you begin to understand the trickle-down effect and the urgency 

of solving this national problem."'3 

"Bennett says about $1.1 billion worth of highway improvements over the next two years are in 

jeopardy because of the condition of the federal fund, and the state has already cut $60 million worth of 

highway projects this year."' 

2 Progressive Railroading 3/16/15 (http:Uwww.orogressiyerailroading.com/passenger rail/article/Transitagencies-plan-their-moves-as-Congress-dances-around-fundlng-guestions--43738) 

'Arkansas matters.com 3/24/15 (http:Uwww.arkansasmatters.comfstory/d/gory/arkansas·highway-proiectscancelled-over-uncertain/34398/XKifsJj2zk6gu4vnYfe80w} 4 thecabin.net 2/21/15 (http://thecabin.net/news(local/2015-{}2-21/arkansas-officials-warn-canceled-hlghwayprojects#.VOuB7fnF98EJ 

Cl 2015 The Ame1ican Road & Tr.10sport:Dln 8uifde<s AssodallOn (ARTBA). All r1gi'O reserved. No pert of 1his ~ may be 

reptOd\J<led or lransmiUed in any form or by any means. electronic, mecharical, pi>Otocqlyirg. reco<dirg, or ~se. will1001 prior wnuen pem-O$sion of ARTBA. 
93 


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2. Georgia: 

Between July 2014 and February 2015, the Georgia Department of Transportation has placed 112 ready 

to let projects valued at $214.9 million on hold due to lack of federal funding.' 

3. Tennessee: 

" Tennessee's highway director has delayed $400 million in road project$ until fi$cal 2016 because of 

uncertainty over future federal funding. John Schroer, commissioner of the Tennessee Department of 

Transportation, notified state lawmakers In a Friday letter that the 12 construction projects and 21 rightof-way acquisitions were supposed to be finished in foscal2015, which ends on Sept. 30 next year ...• The 

33 stalled projects are In addition to 13 project.s moved from fiscal 2014 to fiscal2015. Those could be 

delayed further if federal funding expires at the end of May, said Heather Jensen, a moT 

spokeswoman."' 

4. Wyoming: 

Wyoming DOT Director John Cox: "With the uncertainty of when- or even if- Congress will authorize 

the rest of the 2015 program, Wyoming and other cold-weather States may miss this construction year 

for a full third of our programs. We have already delayed 18 projects worth some $28.5 million. It will 

also force us to advertise projects late in the construction season, resulting in less competitive bidding, 

less value for the public's investment, and the potential for delaying Important and needed projects that 

will improve communities and their economies.•' 

• GDOT 1/15/2015 lhnps:{/wwvl.dot.ga.gov/aboutGeorgiadot/8oard/Presentat,ons[februarv2015Lening.pdf) 

' The Tennessean 10/30/14 (hnp://www.tennesscan.com/story/news/politics/2014/10/29/tdot-delays-milllon· 

worth-road-projects/18140949/) 

' Prepared Testimony of John Cox before the Comml!!ee on Transportation and Infrastructure of the United States 

House of Representatives 3/17/15 ( http://tran<pomtioo.house.gov/uploadedfilcsl2015·03·17-cox.odf) 

0 2015 The Amenc3n Road & T~ Builclers Assodld<lo ~TBA). All ti!;'IS reseMd. No pan ()(11'0$ docunelt may be 

reprodlad orll'llmtnltled lrlony fl:rm or by llf'/ me<R. eleclrcrlc, mecllarical, . ~~ or otheN.ise.- p1orwntlen 

pe:nissico ol ART8A. 
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STATES CONCERNED ABOUT UNCERTAINTY 

5. Colorado: 

"At Colorado DOT, [executive director Shailen) Bhatt says, 'We' re evaluating the program right now.' He 

says the state may let the situation in Washington play out a bit before making decisions, but adds that 

there are definitely projects that we will not advertise and we will not let contracts if the funding is not 

there:·• 

6. Connecticut: 

" Kevin Nursick, spokesman for the Connecticut Department ofTransportatlon, said 'uncertain federal 

funding' is something the DOT and the state has to deal with continually. 'We have had basically 

stagnant federal funding levels while infrastructure needs have been increasing,' he said. 'On top of that 

... Is the uncertainty of federal funding in the future. 'This has left states in a very tough position in trying 

to plan infrastructure needs,' Nursick said."9 

7. Mississippi: 

"If U.S. Congress does not take action with regard to the Highway Trust Fund, the Mississippi 

Department of Transportation's {MOOT) main focus will continue to shift toward system preservation, 

and the backlog of highway and bridge projects will continue to grow .... 'If Congress doesn't address 

long-term infrastructure needs, our transportation network is going to continue to deteriorate,' said 

MOOT Executive Director Melinda McGrath. 'This delay is not only halting progress, but it w ill eventually 

create safety hazards for the traveling public."'10 

• Engineering News-Record 2/27/15 (http:ljenr.construction.com/policy/washington observer/2015/0227-statedots-plan-ways·tg·cope·with·uncertain·federal·funds.asp) 

• New Haven Register 2/25/15 (http://www.nhregister.com/general-news/20150225/uncertain-funding-aproblem-for-aglng-roads-ln<onnecticut·nation) 10 MOOT 3/19/15 

(http://sp.md0t.ms.gov/Publit%20Affairs/usts/News%20Releases(ltem/displayifs.aspx?List=ae1b236c-924d-498c· 

bl4e-aafec6dc2864&1D=l447&5ource=http%3A%2F%2Fspgomdot%2FPublic%2520Affairs%2FPages%2FNewsReleases%2Easpx&ContentTvpeld=Ox01008760667SCA7A95408880E8BFBB944273&1sDig=2l 

e 2015 The American Road & Tnu>spo<tation Builders Asscdatlon (ARTBA). All ttgl'b reseM!d. No pan o1 tnis doa.rnent may be 

reproduced <X uansm!tted In any form <X by any means, electronic. mechanical. pholooopying, recording. <X othe<'Mse. Wlhout prior 'Millen 

permission or ARTBA. 
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8. Montana: 

"Michael T. Tooley, Montana DOT's director, said his state is 'having to come up with contingency plans 

right now, because the way the federal measure was set up, May 31st is just the start of our 

construction season and because ... we have such as short one we like to try and get 85% of our work out 

the door in those first couple of months.' ... Montana DOT hasn't postponed bid lettlngs yet. But Tooley 

says, 'We are looking at the late March lettings for the f irst potential projects to slip to later months.' He 

adds, 'We are not going to meet our goal of letting 85% of our work early .... May 31st was not a good 

time to have this issue come up.'u11 

9. Nebraska: 

"The state plans to delay fed erally funded highway projects beginning in July 2015 unless Congress 

passes an extension of highway funding before May 31. Randy Peters, director of the Nebraska 

Department of Roads, said it's too risky for the state to begin work w hen federal funding is uncertain. " 12 

10. Nevada: 

"Nevada DOT Director Rudy Malfabon says his agency hasn't yet postponed bid lettings, but it has 

advised the State Transportation Board about the 'slate of projects that would be slowed down if we 

don't see any relief on funding.' They include highway preservation projects on Interstate 80. Matfabon 

also says, 'The lack of long-term funding just means that we have to very hesitant to pull the trigger on 

larger projects.' For example, near Las Vegas, the state DOT would like to widen the freeway and 

frontage road and construct bridges over rail tracks. He says, 'But if we don't have the federal funds to 

do something ... of t hat magnitude, what's the use of pulling the trigger on something that large If you 

can't pay for it?'"13 

11 Engineering News-Record 2/27/15 (http://enr.construction.com/policy/washington observer/2015/0227-statedots-plan-ways-to-cope-with-uncertain-federal-funds.asp) 12 Norfolk Oaily News 2/23/15 (http://norfolkdallynews.com/news/nebraska-eyes-road-funding-options-asfederal-aid-declines/article 1 d451 bdO-bb6f-Il e4-b991-033e56029cel.html) 

"Engineering News-Record 2/27/15 (http://enr.construction.com/oolicy/wasbjnston observer/2015/0227-statedots-plan-ways-to-cooe-wlth-uncenain-federal-funds.asp) 

Q 2015lhe Amencan Road & Transpartaoon Bullele<s Association (ARTBA). AI rights rese.-. No part of this doo.rnerC may be 

repro<Juce<l "'transmll!ed in any fonn "'by any means. electronic. mechanical. photocopying, recO<ding, or otl'!e<w!se. ""hout prior v.rittlln pem11ssion of ARTBA. 
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11. Pennsylvania: 

"'Act 89 put us in fairly good shape compared to other states, but federal funding Is a key component,' 

PennOOT spokesman Rich Kirkpatrick said. 'We get $1.5 to $1.6 billion a year. If somehow federal 

funding stopped, all the progress under Act 89 would be delayed.' ..• (According to former PennOOT 

Secretary Barry Schoch, a special adviser to Gov. Tom Wolf,) 'Every time the federal government defers 

action, It's lncrea.slng the cost.'"" 

12. Utah: 

Utah DOT EKecutive Director Carlos M . Braceras: "With the uncertainty of when-or even if-Congress 

will authorize the rest of the 2015 program, Utah, and other cold-weather States may miss this 

construction year for a full t hird of our programs. It will also force us to advertise projects late In the 

construction season, resulting in less competitive bidding, less value for the public's investment, and the 

potential for delaying important and needed projectS that will improve communities and their 

economies.Hs.s 

13. Vermont: 

"'In the short term, If Congress doesn't pass a spending bill, we will borrow money on a cash flow basis 

from the state treasury,' says [Secretary for Vermont's Agency of Transportation Sue] Minter. Minter 

says come May, there will be a budget gap in the highway trust fund of $15 billion. Not passing a new 

spending bill would mean the loss of $200 billion to $300 billion for Vermont. 'We will have to put a halt 

on all these important projects and there are hundreds of miles of paving to be done this summer and 

hundreds of bridges needing repair," says M inter.'".-

,. TRIBUVE News 2/2V15 lhno://triblive.com/ncwskllctbenym89Q62-74/fe!leral·funding· 

pennsvtvaniaWaxzz3SiVKQOWQl 

15 Prepare<! Testimony of Carlos M. Braceras before the Committee on Environment and Publ'c Works of the 

Unite<! Stites Senate 2/ 25/ 15 

lhttp;llwww.eow.gnate.gov/puoficlindex.cfm?FuseAction•Foles.Voew&Fife5tore id=3ebb37c8·2aQf-4bc7·aea2-

S945b7a856bdl 

"myChamplalnValley.com 3/12/15 lhttp://www.mvchamolalnvalley.com/storvldlstorv/federal-funding-set-!orun·oul·for·hiahway·trust·f/77497 IPXagY2EKcUo80UXRNuGa0g) 

C 2015 The -.can Road & Transpcrtalion &ilders Assocollfion (ARTBA). 1>1. ~gtu reserved. No part Ill !his docl.rnert may be 

rep<oduoed Of U111'4Mitted In orry form or by any meano. eleclronic. med>ancal. photoc:llP)'irg, recording, or olho!wll;o, \Whoul pllor v.<itlen 

permission of ARTBA 
97 

f 


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14. West Virginia: 

"In West Virginia, funding uncertainty caused state DOT officials to reduce and rework highway funding 

levels in 2014, and that has continued this year. Gregory L. Bailey, state highway engineer, says that 

before 2014, West Virginia's annual highway program had totaled about $500 million, but 'because of 

the funding levels and the uncertainty, we've reduced that down to a little over $400 million a year.' The 

mix offunds also changed. Highway expansion projects, which had been about $250 million a year 

before 2014, were trimmed to about $120 million. But what Bailey terms the state's 'regular' 

progrom-which Includes paving, small bridge-replacement jobs and resurfacing-rose to $280 million a 

year from $250 million. So far this year, Bailey says WVDOT hasn't postponed any projects, 'but we're 

about a month away from making decisions on what we do on that front, if we don't see any movement 

on the extension, or something."'" 

"Engineering News-Record 2/27/15 lhtto:l/enr.construction.com/policy/washington observer/2015/0227-gatedots·plan-ways-to-cope-with·uncertaln-federal-funds.asp) 

® 2015 The Amelican Road & Transpo<1ation Builders Assodalioo (ARTBA). AI rights reserved. No part of 1111$ docunent may be 

reproduced or transmlted In any form or by any means. eleclrooic. mecharical. photo~. reoooing. or Olllei'Mse. v.i1hoU prior v.ntten penrOsOOn of ARTBA. 
98 

Mr. PASCRELL. Thank you very much. 

Chairman RYAN. Mr. Reed. 

Mr. REED. Thank you, Mr. Chairman. Thank you to our witnesses today on this important topic. I am very much interested in 

this, as a former Mayor of a small city up in Western New York. 

I can tell you we look at this issue very closely. 

And not to echo everything that has already been said, I want 

to kind of move away from that and maybe get into a more creative 

way of looking at this, because one of the things, coming to Washington, that I have tried to commit myself to is not maintaining the 

status quo, but disrupting this place, and seeing if there are new 

ways to skin the cat, so to speak. I understand, and I have concluded, that this is going to be a multitude of solutions type of 

process that we are going to have to put together here. One solution is not going to be the panacea for the issue before us. 

So, Mr. Poole, you spent a tremendous amount of time—from the 

testimony I see you have been at this issue for quite some time. 

I have been looking at some international models as alternative 

sources. For example, I have been looking at the Hong Kong model, 

in particular, for mass transit. And I believe they have utilized 

their under-utilized development rights above their mass transit facilities to fund their mass transit structures. 

That is intriguing to me, because that seems to be a creative way 

to try to look at this in a way that—look at our Federal assets, potentially, that are under-utilized, and maximize them with new 

revenue lines that could come in. Do you agree that the Hong Kong 

model could be an issue, could be a way to address the mass transit 

issue, in particular? 

Mr. POOLE. Well, the Hong Kong mass transit railway is just 

about the only urban rail system that is financially self-supporting. 

It is a government corporation that runs as a business. And a key 

to that is exactly what you mentioned, it is the real estate ownership that system has. And it is a good model, if you are starting 

from scratch. 

The problem is, in places like Washington, D.C., New York City 

or Chicago, the mass transit system doesn’t own the real estate 

surrounding its stations. So you have to try to come up with imposing, after the fact, some kind of value-captured tax on the real estate that is privately owned adjacent to those facilities. And that 

is a lot harder to do than if you are starting with a clean sheet of 

paper and building a system from scratch with the transit agency 

owning a lot of that real estate. 

Mr. REED. So, again, being that this is going to be a piecemeal 

type of solution that we patch together, potentially long term, 

would not the expansion of mass transit be a possibility, the expansion of the system—— 

Mr. POOLE. Yes, yes. I mean—and the Washington Metro did a 

little bit of that with—I think it is the New York Avenue Station, 

the Gallaudet University. They have some degree of value capture 

in that new station that was added to the system. So that is a 

place where the idea could be used. 

Mr. REED. Okay. 

Mr. POOLE. Yes. 


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99 

Mr. REED. So, going further, do you have any other examples of 

creative new lines of financing that we should take a hard look at? 

And, if not, do you know of anybody who is really taking a leadership role, nationally or internationally, looking at America’s infrastructure needs on this issue that you could direct me to? 

Mr. POOLE. Well, I would suggest reading some work that Professor David Levinson at the University of Minnesota has done on 

rethinking how we organize and pay for an urban transit system. 

David is a very respected academic who—— 

Mr. REED. Do you know of any ideas that he could offer that you 

could give me? 

Mr. POOLE. Well, one of his ideas was increased reliance on 

value capture. Another was on—that transit systems should be 

charging something closer to market-level fares, except for lowincome people who would get—— 

Mr. REED. How about things like—even thinking outside the 

box and kind of spitballing here a little bit—things like looking at 

our international—our national right-of-ways in regards to advertising space, advertising royalty payments, those types of things. 

Do you see any legitimacy there to explore further? 

Mr. POOLE. It is worth looking at any and all of those ideas—— 

Mr. REED. How about looking at the technologies of tomorrow 

as we get into driverless cars, and things like that? Obviously, 

there is going to be some spectrum space that is going to have to 

be necessary in order to operate those vehicles. Do you see any 

value in that under-utilized or untapped resource today? 

Mr. POOLE. Well, the Federal Government owns a huge amount 

of spectrum that is not very efficiently used. The DoD, the DoT for 

the FAA radars that are big spectrum hogs. Newer technology 

could free up a lot of that spectrum, and could be, then, used to 

more productive uses in other infrastructure and other parts of 

the—— 

Mr. REED. Again, those are long-term potential ideas that need 

to be—get ready for prime time, as Chairman Ryan indicates, or— 

a lot of these proposals are. 

The other one that is interesting to me is looking at the different 

alternative. And I have the AASHTO report here. It is a report of 

the oil, gas, and minerals receipts for the Federal Government. 

There is a score here, I think, of $14.2 billion from 2015 to 2020. 

Are any of you familiar with that revenue line, as a potential 

source? And I want to know if that resource, Mr. Chairman—to the 

witnesses, if that score—— 

Chairman RYAN. Thank you. 

Mr. REED [continuing]. Is based on present analysis of our oil 

and gas reserves that are located in America, or old reserves? 

Chairman RYAN. Thank you. 

Mr. REED. Thank you. I yield back. 

Chairman RYAN. If anybody has a quick answer. CBO. 

Mr. SHIRLEY. I am sorry, that one in particular is not one I am 

particularly familiar with. But I will certainly have somebody get 

back to you. 

Chairman RYAN. All right, thank you. 

Mr. Young. 


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100 

Mr. YOUNG. Thank you, Mr. Chairman. I thank all of our witnesses for your time here today. This is a really important hearing, 

pursuant to what is a broader competitiveness agenda. I really feel 

like the United States—it has been discussed here—is falling behind with respect to infrastructure financing, development, and so 

forth. 

I think part of the answer is, indeed, P3s, public-private partnerships. For the uninitiated, that is essentially allowing, say, local 

governments to contract longer term with private entities for the 

financing, for the design, building, operating, ultimately maintaining of pieces of infrastructure. Indiana, my home State, has been 

a leader in this area, along with Texas and some other States. But 

the United States more generally, we lag the world. 

And, Mr. Poole, you spoke to this. Let me put some numbers to 

the extent to which we lag the world. Between 1985 and 2011, 

there were nearly 2000 projects funded worldwide. But the United 

States accounted for only 377. Now, there are a variety of reasons 

for this, including certain States not having authorizing legislation 

for P3s, but that is changing, increasingly. And there are now 33 

States that have legislation for such projects; 39 have some form 

of P3 legislation. 

But one thing I hear again and again from industry and local 

government—and this relates to the Federal Government—is that 

P3s are difficult to get approved locally, because of competition 

with tax-exempt municipal bonds. That is why I agree with testimony today, again, offered by you, Mr. Poole. We need to raise the 

cap on private activity bonds for highways, and we are working on 

legislation to make that happen, along with some of our colleagues. 

We need to allow a very limited amount of P3s, I think, in the public building space to utilize tax-exempt financing. 

And I also think we should remove restrictions to allow more of 

what is known as infrastructure recycling. And without getting into 

the details of that, I would just offer into the record an article from 

the Wall Street Journal that explains this concept. I ask for unanimous consent. 

[No response.] 

Chairman RYAN. Without objection. 

[The submission of The Honorable Todd Young follows:] 


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THE DISCUSSION PAPER 201S·04 1/AY 201~ 

HAMILTON 

PROJECT 

Financing U.S. Transportation 

Infrastructure in the 21st Century 
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Financing U.S. Transportation 

Infrastructure in the 21st Century 

Roger C. Altman en~rrort' 

Aaron Klein 

Bipnrtl.<nll Pollq1 Ce11tt1· 

Alan B. Kr ueger Pri11Ul011 Unh'trslzu 

M AY 2015 

NOTE: ·n,is discussion paper is a proposal from rhe autho•·(s). As enlphasi7.ed in 1he Hamilton Ptojeet's 

origin2.l strategy paper. the Project was dcsig1u'tl in part to provide a forum for )(.'ading thinke-rs across the 

nation to put forward innovative and potentially importa•U tcOnomic polic.y ide-as that share the Project•s 

broad goals of promoting economic growth. broad· based participation in growth, and economic security. 

The author(s) are invited to express their own ideas in discus...~ion papers. whether or J\Ot the Projt.'Ct•s s1aff or 

advisory (OUI11:ilagrcc-s with the Spt."ci6c proposah. 'lhis discussion paper is olfercd in that spiril. 

BROOKINGS 
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Abstract 

The nation's tn.nspoct.Uion in(rastructure. itls wldel)' asrecd, h eroding and in llccd o( iiW(':Sh1lt':tlt. Most policymilkers recognlte 

the o,.,.;,. ofim· .. tlng In the sy11em, such as g;uru 111 productt\ity. global corr.p<tltl\'tMSS. •nd job aeatioo. Low public bori'OI\Ing 

rates ha\~ also aatc:d an auractiw- climate for incrta.wd ("ttbb~e in\UlmettL IIO\\"n'U. goyunmcntl.c:adcn Mve (aikd to G:Srft on 

.. itich in•=mtnts to n .. ke and how topoy !Or them In ord<rto break thl$1ogjam.tlus pop<r propoO<Stv;o trxksal' solution•. som< 

o(whichan b< Implement«! quickly, tndothen can b<c.uc:ut<doverthe long., term. In the short term, "-ep<opose lmprovem<nl 

and expan\ion of I he 1hn~rlatJon Wrajlructurc fulllnce and r nnowtion Act lending program. reauthorization of Budd Anu.nca 

Bonds. bellcr ulUit~Alion o(lbc ArmyCorpsofF.ngincets and the Harber Maintenance Trust Fund, and reform ofth~ f~1emlaas tax. 

Over the longe1· ttrm, we recommend investing ln re$Carch to improve user (C'C' technology and using federal ifu:entives to encourage 

states to adopt standardized and innovative user ree tedu10logy. rostering cooperntlo1\ In po()lcd procurement among states anO 

municipalities. and tlc\ocloplng and imple!'uemi•l8 a broad n:uional strategy to gutde ln(rastructurt in·;cslment in the Untrtd Shttu. 

Acknowledgments 

The acthors thank Sarah Miller fOr her resnrch &SSUt•nce. 
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Table of Contents 

ABSTRACT AND ACK~OWLEDCMENT$ 

CHAPTER 1. INTRODUCTION 

CHAPTER 2. HIGH-LEVEL CHALLENGES TO FEDERAL INFRASTRUCTURE INVESTMENT 

CHAPTER S.. BENEFITS OF INVESTING IN HIGH-QUALITY INFRASTRUCTURE 

CHAPTER 4. PROPOSALS FOR THE SHORT TEAM 

CI-IAPTER 5. PROPOSALS FOR THE LONGER TEAM 

CI-IAPTER 6. QUESTIONS AND CONCERNS 

C HAPTER 7. CONCLUSION 

AUTHORS 

ENDNOTES 

REFERENCES 

16 

21 

24 

25 

26 

27 
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Chapter 1. Introduction 

M ost Americans feel the burden of a weakening 

trunsportation infrastructure. Tile cv'idcnc~ is right 

In front of us: in poor rood and bddge collditions, 

aging airport.~ and $e.1.ports, weak pa.ssenger mil service. 

and lnndcquatc publlc trnnsportorlon. Most economists nnd 

gow:-rnrnl!ul lca<.krs ugn."f: on tht! merit$ of upgrading these 

S)'Stems to improve productivity. glob31 competitivenes..\, and 

job creation. Most also agree that our nation would benefit 

from fOO~.-ral net ion on lnfmstructurc. There nrc disagreeme-nts, 

hov.~ver.on which invt.stmentsto m:lkeand how to p::ty rorthcm, 

and these di$.'\g~ments hav~ led to counterproductive inactioo. 

It iscruci31 toresolvethissrakmnle and launch a federal inithltive 

tO incrl.)aSc imrcslmCnl before the decay of U.S. infrastructure 

further affects n.-.ttonal wt11·being. For exa1nple. the dedining 

condition of the American road system alone already Imposes 

a large toll on the e<ononl}' in traffic delays and vc-hic:lc- re-pairs. 

Moreover. economic reasons suggest that now is an opportune 

time for mfrastruclurc i•wcstmcnt. First, ptlblic borrowing rates 

are near historical lows, with the federnl government abJe to 

borrow funds at an interest rateof2 percent. 3ndstate and local 

governmems. eJtjoying similarl)' low rates.' For ony given rate of 

return on illfrastructure investment, :1 lower cosroffund$ tod."\)' 

results in g.rearer net bcnefiu for society from the invcsrment in 

tht! longer run. 

Second, •It hough I he labor mark<! bas rebounded significantly 

from the economic recession. the job sectors mos.t involved in 

building infrastructure rentain rdathrely we.1k. According to 

the U.S. D<·partmcnt of the 'frea>ury (Dol'), 61 percent of the 

jobscreoned byinv¢$tment in infmsLruelurearc in construction. 

with another 12 percent in m~nufacturing (DoT with rhe 

Council of Economic Advisers 2010). '£he uncmploymt!fH rate 

for constru<tion workers was 8.9 pcrc4?nt in 20l4, signitlcantly 

higher than 1h~ 2014 national average of6.2 pen:ent (Bureau or l..:lbor Statisti<s n.d.). 

Finally. improving infrastructure today provides an 

opportWlity ro hlcorpor:ue new in(orrnation on the v·alue of 

lnc:rtaslng resilience. Suptrst·orm S.1ndy. I lurrie1ne Katrina, 

ond olhc:r nnlural disasters have demonstrated the significant 

costs of inndequale :111d decaying roads, br;dges, and tunnels, 

a.s well as the potential economic rerurns from inv.:stments 

that make these byways more re..~illent. By in\'e.Sting now, with 

the knowledge gaint'd from r<.""<:cnt <:xpcricnccs, we can more 

etlkiently <.lnd eft'ectivdy maximi1..e the return on i nfrnst ruc::turc 

hwcstment. 

Given the importance and urgency of the.~ investments, '""C 

propose a two-track sotutio1\: n first track thnt offers approaches 

that could lk implemented quk kly nnd O\'Cf the short term, 

dr3\1tlng on existing pr~rram o;; and agencies; :-tnd a second 

Lrnck o( more-strategic approac-hes Lhat could be rolled out and 

implemenr.-cl ov~r the ll)nger lerrn. 

fn the ::shorl·tcrm track. we propose (l) improving and 

txpanding the Trn1lsportation lnfros.tl'ucture Finance: llnd 

Innovation Act (TLFIA) lending program, (2) bringing back 

Build Am<ricu Bonds (Bi\Bs}, (3) usmg 1he Army Corps of 

Eng netr~ (Army C.('lrp.S) and I farbor M<1in1enance Trust Fu nd 

(HMTF) in o more efficient way, and (4) indexing the federal gas 

'3:< so it v;arics wi'h rctnU g:;~solinc prices. 

On the long·term track, we ecomou~•ld (1) (~,.,"<feral incentives 

and guidelint.S for the de\·eJopment nnd lldoption of new 

technologies to collect user fees. (2) cooper>tion among stoles 

and rnumcipaliucs to foster poo!ed procu rement, and (3) 

rlevclopme..nt and irnplementlltion of a national strategy that 

calls for feder-JI actors 10 commit themselves to a long-lcrm plan 

for infrastructure Investment ln the United States. 
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Chapter 2. High-Level Challenges to Federal 

Infrastructure Investment 

h~backboncofAmcrlca'seconomyisourlmn~por l'tion 

inrnulructure $ys,ttctl. Key p3rts of 1hls 'yacem have 

~en decaying for t1 variet)! of reasons .. us doc.um~ntcd 

by eorll<r llnmlhon Projc:<:t reports (Basso and Duvall 2013: 

F.ngel, F1scher, and Galetovic 2011: Kahn and l.tvin«>n 20 1~ 

and cltacf among thern i~ .t lack of in\'estment. The cost of I his 

d«ay loon en Invisible at first, wilh smaU problems and delay> 

uuslna minor costs and inconvcnien«. 0\er timt-. thest emu 

mognify. Extr<me r<SUhs,such as thecollal"" ofthtlnttrSUit 

JS Bndgt ln Mlnnnpollsln 2007 or the collapse of the Skag•t 

Rh-.r Brld~ on lntmtm S in Washington State in lOU 

ar< still quite l'llr<. Without inanstd invntment, coli•P'<' 

could b«omt •no« common: tht A m<rkan Society of Civil 

FIGUFI& t, 

F.ngineers (201 3) deems one In four brldgcs cilhcr functlon•lly 

obsolete or srructurall)• deficient. Furthc:rmon!', th~ World 

Economk Formn's ttnnua\ Global Competlti~tctneu Rtporu 

show thot in the past $ixye•,.. the United States hao fall<n from 

ninth to sixteenth in ovcralllnfro;tructurc quality (Porter and 

Schwab 2008: World Economic Forum 2014). The American 

Socl.ty of Civil EnginttrS ;.,ues onnu•l. ln<rt•slngly dirt, 

usesstntnt.s of the: nation's undapinning5. 

It wa.s not always this way. Hlstor>caUy, lnfrostructure 

in\'C:S.Imcnt nxc:ivcdstcady $Uppor1 <~t alllcvda of ,o-.unm~nt. 

1h< legendary New Yorlr. City m•yor Fiorello 1!. La Guudia 

c:apturtd this •pint io his r<parttd observillon that •there 

Puhlic lnfra~lructurt) Speuding by Fedcml, State. and l_,ocnl Governments, 1956-.2014 

>.5 

2.0 

... 

Q 

" IS 

0 

~ ct 1.0 

-- ~andkw..\1 1---Tot .. ~"kiCAt«Pntted{,(JI't HMI4ilP,N 

llltOOKING'i 

Sow ... c:.;)o")C.i.;,lrl. 

...... ........... ~ .... """"' '*dt.oni tt.~to M'CI~II.Ok ,...~*"'~--~--- ~ 

~ ........ ~ .. ~ ..... "' --....... ~ ....... ~._.. ......, ,.,."*"" .... -....."""""' ......... ..... ., ........ "'* hl'aoctv'll:!tor,.,....~ ... ~di)-_(O ..U ....-o.IIDWt i'O ~ 
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is no Democratic or ~epublican way of cleaning the streets."' 

lndC<>d, the federal gasoline tax W:l$ fir$t enacted under 

Pn:.)idc:nt Dwight D. Eisenhower h> fund construction of the 

interstate highway system. 1l1is federal tax became the key 

revenue source (or the llighway'l'rust Fund (H'l'F), the na!lon's 

primary finance mcxhanism for highw·ay constru<.:lion unO 

ma.intcnan,c.Subsequcot increases: in this hu O«urred under 

President Ron3fd Reag;.~n. who W:.\S the first to expand the 

UTf to cover mass transit, and under President Rill Clinton. 

However, the federal garoline tax currently Mands at 18.4 

cents per gaUon, the same level ~s t was in L993,l If the gas 

tax had been selto autom01tico1llyadjust for inflation, it \\'ouJd 

currently be 30 cents per ga11on. J.ookM at another way, 

motorists in 1993 were paying about 17 percent of the average 

price at the pump ($1.07 p<r gallon) in (cdernl gas taxes. Over 

the past five ye:1rs, federal gas 1\lxts made up only 5 percent of 

the prie< paid at the pump ($3.42 p<r gallon). Even with the 

sharp drop in gas prices al the beginningof20lS.lhc share of 

the price that went 10 fedtraltaxes was half of what it was in 

1993 (U.S. Energy Information AdminiStration n.d.). 

Concomilant with the effective free1.ing of the gas tax has 

been a stagnation. foUowcd by a decline, in total national 

spending on transport.Hion infrJstructure. According to 

the Congressionol 1\udget Office (CBO 201Sb), total public 

$pending on U.S. infrastructure in 2014 wu S416 billion-a 

lower level in rc~l terms than we saw ten )'Cars ago. 1'his sum 

includes funding for highways (48 perGent of total spending), 

aviation (17 pe"ent), rail and mass transit (16 percent), as well 

as funding for W".Jtcr ~sourns su'h as ports and harbors. and 

utilities. 

Not all of this money comes from fe-deral sou tees. HistoricaJly, 

in(rasrructure spending h:'ls largely been I he domain o( $U\te 

ami local governments. For cx::tmple. as shown in figure 1, in 

2014 $tat~ and local go\'ernmt.>nts provided more Lhnn 1hn.:e 

quarters of the fllltding 10 build, m:tintain, and p~ra te 

tbe nation's highways, maS$ tnns.it. airports, and \'v"3ter 

nfr::~st uct\ re. compared to the federal governnlent. which 

supplied just under one quarter of funding (CBO 2015b). 

In recent years thcrt h~\'C been wried atle:mpts. often 

bip:utisan, to exp.1nd federal suppor1 for infrastructure. Cnlb 

fora Nationall nfrastmcture Bank, which would m3kefedcral 

loans lo qualif1ed inftastructorc projC<'ts. beg\tn in 2007. with 

differetH \'C.rsions or this ldN propost.-d ugain in 2013. More 

recemly. President Ob<11\1J. proposed allowing muhinationnl 

corpOrations to repatriate their overseas cash in exchange 

for p.aying a 14 ~rcent tax on the returned amounts. with 

the proceeds going entitel)• to infrMtructure Uwcstmcnt. A 

different pro~!. which rested on repatri:;~;tion of deferred 

foreign corporate income to fund an infrastructllre bank, 

gnruered more lh~n s.evenl)•·five cosponsors in the House 

in the ll3th Congre$S. 1l1ere have also been advocates for 

a hike in the federal gas tax. Nevertheless. no legislation to 

fundamentally reform the !lational infrastructure financing 

system has 3d\'3nced through :1ny legislative committee. 

The challenge we face is how to impmve the quantity and 

quaJity of infrastructure investment in tht United State$. The 

fede-ral government's investment in in( rastructure is dedining, 

budgetary resour«s for diS<retionary programs an: becoming 

even seoarcer, and political gridlock is increasing. Eucerbating 

this, the United Stales has a high!)' decentralized system of 

infrastructure im•estment, operation, nnd control. with states 

and localities r taying a major role in selccLia1g. funding, 

6mmcing. and opcnlting in(rastruclUre. We propm;e ways 10 

break through this logjam and juntp·start new infrnstruclurc 

investmeni through legislative and txecutive :.1ction. [(done 

properly, there should be no long.term adlltrse tfiCet on the 

redentl deflt'it. 

Till! llaM.:Ion ~t • Broot.lngi 7 
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Chapter ·3. Benefits of Investing in High-Quality 

Infrastructure 

There is rnuch evidence ~nd wktesp~:td au:reen\cnt that 

i~ Infrastructure invtscment pays a high rcturr1 to 

society In both the short and longer terms. ln tht short 

term. inrra.5tructurc lnv<.·stmem creates jobs and can grow 

the economy at a hithtr rate than other ~s of go\'t.rnmcnl 

in\-.strnent (l.<duc and WUson 2012). Recent work by th< 

tnternarlonal Montt11ry Fund cond~. •tn coururi~s with 

mfn.structurc n~ now i.J a good time for Jn infranructure 

push. Many adv>nced economies are stuck in a low gro ... th 

and tugh unemploymmt environment. and borrowlns costs 

are low. lncr~o~sed public infr:utructurt~: investment I~ one of 

the few remain ing policy le>·ers 10 suppon growth• (Abiad. 

f.urcerl, •nd 'l'opalovo 201~). 

Quality lnrrastructurc ln\'eSlment :.tlso h1,11:ases the 

eeonomtslong run potential for economic growth, reducts 

nrg:th\'l! alernalili" t~uc.h .,, conge$tion ar\d pollution, 

and improves mobility and choices for con.umers and 

bu.lnC$$ts. lhe prOtm>< of mcre~=g th< economy'< long· 

run growth potential I• • ltrong cbim, but highly rtg~rded 

rt-~arch demonstr.ue! the link betwttn irtfra.structurt and 

productivity. Pubt1c mfraslruclurc investment ha.s been 

linked to sigmticoant prtvatt sector produCtivity gains. and 

ln many casc~J these n:wrns wen: gh~ than prlv:ue cnpltal 

inv.,.tment (Asch•ucr 1989a, 1989b, 1989c). Other rci<arch 

ti.nds that infrastructure im'Cstmcnt also improves n n•gioil's 

economic growth, wllh one e-houHttl being tht productlvif}' 

galn<in the private kCtur (Munnelll992). 

Reaping economic rtturns from hwesting in Infrastructure 

does no< apply only 10 new construclion. In fact. the lat< 

Edw111d Cr.tmllch, b<fore he jomed the Bo•rd of the Fed<nal 

Reserve, argl.ed that t.h(' highest return on in\'t':,tmtnt com~ 

from bringing t"<i\ting lnfr:a~tructure up to a state of good 

repair (Gramlich 199-I).'The hidden coSts of poorly maintained 

Infrastructure c~n be )Ubstantitll. indeed. ol\e $tudy iound 

that more than 27 J)t'r«nt of the n<ltion's major u rb;m roads 

are in substandard condition, which costs the uvcrngc urban 

dri\'CT $377 in Q.dditional fucl and car maintenance a year. 

This eqnat("S to <SAn hilliott in CO$.ts borne by famlll~.s 3nd 

busin ..... taCh ~., dut to poor road cooditions (TRIP lOll). 

ln"uting in buk m&mtcnancc Ci.l1 abo reduce futurt n~ 

(or mon:-<-spcruivc rtp.urs. wtth evidence thu for every Sl 

\ptnl on preo."tnth't p~vement m<Jintfnance. bet'ft"terl $4 and 

$10 art s;~ved on futur< r<hobllitalion (&lodi <l al. 2002: ere & Associot<'$ 200J). 
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Chapter 4. Proposals for the Short Term 

Given the scope of the problt!m, we offer a realisdc: set 

of shorl·tcrm improvl!mcnts that cal'l be: made to 

e-xisti11g prognuns :wd proce:sscs. Fin:l. "''C n:commcnd 

expanding .md rev ~ing tht TIFIA ltnding program by 

increasing its annua 1 funding authorization, expanding its scope 

offl o~siblc projcas beyond surface transportatioll. and updating 

the manner in which project credit mtings are assig11L~I. S<.'Cor~ , 

w~ propose reamhorizing BABs, wh!ch otter several advantages 

over nluniclpal bonds (or the purpose of infrastructure 

financing. Third, we t\dvocatc more-cA'kient usc of the existing 

surplus in the IIMTf. and the Army Corp> to support high· 

priority proje<:ts.l:inally, we propose reforming the existing user 

fee that supports the HTF, primarily the gastox. 

1. REFORM TIFIA 

a. 1J,·,c.kgromrd on 1'TFlA 

'lhe federal initiative that offers perh:lps the greatest 

opportunily (or ncar4 tcrm improvement is I he Til: lA lending 

program. C<mgres.~ re:.lited the potential for TIFIA when 11 

increased the program's funding in 2012 through the Moving 

Ahead for Prosress in the 21Sl Century (MAP·21) legislation 

rtauthori-,.ing federal surface transportation spending. 

However, \\'C believe that there is room to further expand 

and ~n.hancc TIFIA so 1t can provide addttional financing to 

-:~ broader set of elig.ible projects in o more eRicient mner. 

Specificallr. the following steps should be taken: 

Federal funding should be Increased from $1 billion per 

>"'or tu $10 bUhon per rear. This would uUow financing for 

infrnstr\IC:t-ure projects to lot:..lnt•arly $400 billion. 

Project e-ligibilil y can be expanded to include a broader 

definition oftr:\nsportation in(ra$tructure including ports, 

aviation, and economic de\·elopment that maximizes the 

value of u1rrastructurc as.scls. 

Internal il.ccounting ( an be improved to allow· the progr3m 

to (un~l more infrnsln ltturc projcc:ts within 1ts existing 

budget. 

TIFIA has a sixt~n C:u trm:k ~ord; during th{tl time 

approximately $3 billion of federal funds hove been authorized 

to cover S2!.8 billion orlouns. None of these loans has lost federal 

dollm.' Of the fifty lo-•tts made with TIFt A assistance, only 

1 wo have defuultW. :~nd in both those cases the government is 

ex peered to recover almost its full inve tn~rH In (ac:t, the most 

n.wnl cstimal\! projt.'CtS that. amongaii•J'IFIA lo.1ns, the federal 

government will r«:ci\'e 99.9 percent of its money back (Office 

of Managen>eno :uod Budget lOMB) n.d.a). 

Wh:1t i.:; TlFlA? 

TlFlA was created in 1998 as part of 3 broader surfac:ttransporiation n;authorization act, the Transportation F.qulty 

Act for the 2l$t Century. TlFIA was p:utht.l.ly a respunse: ton 

perceived mOJrkct fJilure in whic.h states and local governtner~ s 

had difficulty obtaining financing on rtasonabte 1erms for 

infrastrw.:turc projects back(.'tl with user (ees. such as toll roads 

(US DOT 2015c). TIFIA pro, idcs three (orm.s o( nssistnnce for 

infrutructure financing: dire<:t lo3ns, lo:1n guarantees. and 

standby lin~s o( credit. USOOT l,nYnrds these forms of ~redh 

to eligible oppllcants on a pro)ee<·by·project basis. 

Who i.s eligible 01od wlml types \lf prOjt'(IS ore funded? 

'!hose eligible for TIFIA financing include state 

transportation depattmenrs. public trans:it operators. local 

governments., railroad comp.1ni.es, priv:tte entities, -and spt-cial 

tr:t.nsportation authoritits (USDOT 201Sd). Pdvate entities 

engaged in projects with pubJic sponsors are also c.ligible if 

theyctn demonstrate state S\tppon for the projt--ctthrough the 

project's inclusion in the state's planning documents(the longrange plan and the stale transportation impro\·ement plan: 

USDOT lOISe). Eligible proj,-<15 include highway. bridge. 

int~ clry Mt.nger rail, ctrtain typ<s of freight rail, and 

public transit projects; and projects involving multiple fOrms 

of trnnsportation or access to a port (USDOT 20151). A list of 

sample projects. indudingsponsors, pl'oject type. proj~ct 'ost, 

size of"fJl!JA assistance. prinlary reven\le pledge. and fisct1l 

yeur dosed ur< Included in tublc I. Additionally. projects th>l 

are focu~ on intelligent tnnsrortation systems. such as real· 

time trdffi.c and aCA:ident monitors and red light cam.:ras, are 

now eligible as well. Bec.1use Ttl' IA receives its federol funding 

f1·om the HTF. ouly projects involving surracc transportation 

c:1n receive money. 

Furthermore, TlFlA proje<:ts1nust be or a certain si~c. typic~lll)' 

at least $50 million In c:~.pirnl construction costs, ~1lthough 

the threshold is lower Cor rural or intclligent transportation 
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TAGLE 1. 

Sample l'rojccrs Financed by'l'Jl'IA 

Prima ry Fiscal Project Cost TIFIA AsSiSl3fiCO Pro! oct Sponsor p,qeot Type {millions) (millions) Revenue Year Plodgo Closed 

OtJ1cs Comclor Me>OI>Ol<tan Washington Alrpoots P\.!bhc transit $5,683 $ 1,876 State or lOCal 2014 

:'l.I A)'atl PrOje¢1 Aot110t1ty; Fa ~ax Cou,.y, VA: appropriations: 

loudoo County, VA ~oil revenues 

Tnangk> E.xpmssway Noll h Car'oloa Tu~ AuUlO!i1y RoodW3'/11 St,\35 s:J87 Use< ciJa~I)OO 2009 

3nCI bridge$ 

RonoT~Uon Coty ol ReM, NV: RairoaOs $280 $51 Room tax 2001 

Rao1 Access Corridor Unoon p~ RallR>ad fiMU"lJO& 

Miami lntormodal Florida O<>panmont oiTreropoowUon: Other surboo S2.043 $210 USOI' Charges 1999 

Center t-.iiafl1..Dade A'Jiatlon Department nm~tohon 

&>..J·co:USOOT 2tl'l~. 

S)'Stems projcc:ts. The proje:c\5 :.lso nm!it htwe a dedic<'ted 

revenue 5ource in order to repay tbe federal government 

(USDOT 20151}. There has b<<Jt increasing lotitude in what 

can be considered a dedicated revenue source in order to 

move beyond tolls and direct user fees to indude broader tax 

in c~ment financing or general obligation pledges. Howcvtr, 

no federal funds may b<' ust..'ti as part of1his dedicated revenue 

stream. In addition, the feder.tl government cannot take an 

explicit ~quity position in the project. 

How large isTlFTA and how much cftCct has it had on 

Infrastructure buih? 

The answer to this questiOJ\ ~ nor as straightfonvard as it 

mi&ht appear. As discussed above. TIFIA Is" federal cr«llt 

program. and the "-'IIY lh<: government budgtts and nec:ounls 

for lhc progrnm is very different from the a<:tu;;tl amount of 

infrastructure thatlhc program supports. Tl flA lcv<:r::tgcs the 

federal money allocated in two ways. First, the appropriated 

funds are generally in the form of loans or loan guarant.ee.~ . 

and these nlOt1ies are gradually repaid :rnd can be used 

to fund additional projects. Some money may be lost If lhe 

project defaults on its l>lig~ttion, but, simil-3r 10 other loans, 

thi5 does not mean the <:reditor gets nothing back. '10 be 

concrete. suppose TIP I A contributes $100 million to a project 

that has a 10 percent chance of defaulting. (TlFlA projects 

are cr~dit sc.ored, again like other loans.. and we return to this 

point below l1\ section IV.2.c.) Even i(lhc project defaults, the 

government can cxsx--ct to gc.t 60 pcrcc.ut of hs money back. 

ln lh;at case, the cxpeclcd lo.s.s to the ftdcral governmentor funds pennanentl)' expended-is onl)' $4 million (SJOO 

million x 10 percent x 40 percent = S·ll million). Thus. the 

SlOO million loan actunll)' costs onl)• M million and c.an be 

appropriated :1s such. 

'lhe second way that TJFlA funds ar~ leveraged is through 

the nonfedcral share of the projtt:t itself. For mO$t ofTlFIA'$ 

history, TIFIA's commitment to an)' project was capped at no 

more than 33 percent. Returning to our earl.icr cumple, the 

SIOO milliooTJFIA loan wouldbeJl"rtofn$300 million project. 

Thus, in this hypothetical case the S4 million of appropriated 

fedenl funds was lcvcraJ,'Cd to .support $300 million wortl1 

of Infras-tructure. lhi~ can be thought of as Jever;1ging teal 

fedcr•l dollars at a rateof7S:I, :u;sumingthatlhe$300 million 

would not have been invested in infraslruc'lurc absent the 

Tl FlA funds. 

r'Or mosl of its history. TIFlA's fedeml appropriations were 

approximately $100 million per year. As a result of the MAP· 

21 legislation in 2012, TIFIA's federal funding was increased 

from $12S miJiion per year in FY 2012 10$750 u'lillion in FY 

20t3and$1 billion in FY 2014. 

1l1t recent changes in the TlFIA program both expand and 

reduce the le,-erage ofTLFlA funds into act\lal infraslruclun: 

3clivity. 'Chc increase in appropriated TIFIA dollars allows 

for greater acti\'ity. SpedficaHr. this ntw level could support 

fe<lerall<nding capacity of approximately S9.2 billion in FY 

2014 (USDOT 20150. This includes only the fir>t lcvcl of 

IC\'Ct'l.-tge 4li.scussed above and exdudts the matc:hing from 

o1her. nonfedtral, sour<:es. t-lowe:vcr, the matdling rate 

between TIFIA investment and nonfcderal sour<:es was 

rca:ntly increast-d ns part of MAP-l,l. The maximum TIFIA 

match is llow49 peroent instead of 33 pcrcent.1 hi.seffeclivdy 

lowers the second level oflcverage. from a peak or 3:1 to obout 

2:1, and reduces the scope of proje<ts that TlflA con hdp 

fund.' (f each new TIFLA loom were made at a matching rate 

of5l:49, that wou1d uanslate into total infrastructure: activity 

of 'oughly $18.4 billion. For comparison's sake, at the prior 

3:1 match ratio, the current TlFIA appropri..ttion of$1 billicm 

could gcner~te $27.6 billion o( infrastructure actlvit)'· 
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I low much dcm;\nd 1$ I here to parlicip•lte in th~ TIH t\ 

vrogram? 

In FY 2013101>1 demand forTIFIA funding was $46.5 billion 

(USDOT 2015g). 11lus. TIFIA was 0\'0t-.ubscrll>ed by more 

than two lo ont. Whilt dtmand fell in 2014 •• USDOTwotkcd 

through thl< backlog of appllanu- it an take ..,_,raJ )'tars 

oftcr submiwon of an appli<•lt<>n to reach an utcUted TIFIA 

<h21-thC'fe haw brtn sc"m new prOJ«IS requc-1tlng morr 

than $9 blllion In TIFIA funding in just the fir$1 h•lf of FY 

lOIS (USI)OT 2015g). TIFIA's apf"'al.._subst>ntlallydurlng 

the finundnl crLsis as it became more difficult and t:xpen,slve to 

obt3in otl1rr sourer~ or funding. 

TIFIA also enjoyed JX>pularity during its founding )'O!'Jrs. From 

the first loon in 1999 lhro<tgh 2001, TIFIA made <t\'<tt dtals 

finandng 0\'tf $8 billion of proj«t activity (USOOT 201Sb~ 

HO\,.._cr, from 2002 lhroagh 

2004 only two TlFIA ckab ,..... 

comp!eted,aod in t"'O of those time 

years then- wen.• no tr-.ansactions. It 

ts also .... onh 110tlng thJI one deo~ 

We propo~ 11crea~ing tum1urt CQngressiot~al funding of T/f.'IA 

from $1 billio11 lo $10 billion m ortfer co finance projecu IOIIlffttg 

up to $ZOO bilflmt. 11>t go> I of TIFIA, ewn ot this cnh11nc"l 

lc\'el. is not to fund the entire infrastructure backlog. By Its 

\'ery natur<. TlfJA ts rnnnttodcal with project< that &en<Tate 

ded10tted rtv<ttut, prim•ril) through ustrs and bcne6clori<t. 

lh~ ~s t~ to~ M¥>-er con.s:rmcrion. Howtwr, by 

providing addlllontl fin•ndng lnccnti\'eS and opporlunitt<S for 

these projc<b. "~can help :klclrtss the demand "'u<e exi11ing 

rederal grants for ntw constntction as opposed to using I hem 

for m;linlenance of tXIstlng infrJstructurt. 

An ncrc~se of thi\t m~'gnhude wnuld require signi rtc.mt new 

demand l>tyond I he ulsting SCI of Tll'IA applicant<. Wt 

l>eli<~·c thol in addition to ouracting more oppiiC11nts from 

exis.ting mep ... pro;ects., 1his. increased dem:and can be mel by 

exp•nding the<llglhUity ofTirJA projeas. 

the South ll.ty Expres•w•y (formerly 

SR 125 'Iilii Road) In <:allfomia 

e."t'ericnccd signlfiuut finandal 

problems. with the J>tivatc opcr.-l1or 

liling for bankruptcy In 2010. 

We propose increasing annual congressional 

funding ol'TrrrA from $1 billion to 

Ho'WC\-er, ga._..,n TJFIA's pr('fcrrcd 

st.at\1.$ u • creduor, tht ~m 

Is cxpcatd 1o ~.., 111 of the 

originol loan babll«' (USDOT n d). 

$10 billion in order to finance projects 

totaling up to $200 billion. 

b. CompourrJII of/Jropos,·•l 

Our proposal fnr TIFIA ha& three 

key components: 

1 ncr ease Tll'l A'• ftmdl ng. 

Otsptle Congrcs. tncrcasing appropnattons- more thon 800 

percent in • t"'O ),.r p<'riod-demand for TIF!A funding 

continues to exceed JUpply. 'l11<u are !Tultiple potent:al 

explan:tlioru fO< lh;s Increased d<m3nd: II fint , • ...,., coukl 

simply be the lite or tlw inft.astructure dc6c1l A "-'COnd 

reason coufd be the continued movt'ment away fmtn t'unding 

infrJstructurc through \lpfront revenue and reliance on 

finnnong. TIFIA lf..'lm'h" tl1c IJrgesl ft-dernl f1nnnt1ngprogN•m 

for surf:tct lransportJ.flon infr<~$ffi cture. A lhirtlreaSQrl could 

involve the rectnt financl:al crl<.ls.. Ouringandaftt>rthefi''·'"cial 

criSis, many >lilt> •nd loc&lilid faced problemsacaulng coedit 

markets. part.cuhuiy Cor newer and •~·innovaliH~ 6nanang 

S)'Siems. A final po""bl• rt.UOI1 for the incrusol d<tn.nd ••lh•t 

TIFIA has gro~>l1 l•rt;e enough 10 attract the interesl of very 

Lug.> infrastruclu"' pt'I)J«U. wluch may 001 havt f)I'OV1ously 

coosiden.--d TIFt A, "vcn II) smalk>t size. 

l'.x;••nd TI~1A eligibility. 

Second, TIFIA should he ••ponded to fund o broodcr 

definition of tnfr.ulructure beyond surf'aa transportollon. 

Thl.S broader K1 of aUC"t;: ,..-ouJd include ports, av~ation. and 

e(()nomic denlormn1r prOJ«I.s thJt maJim1u infntilructurcasscts' value. Supporting economic devek>pmtol thot dtrtttly 

max1auzes the value uf infnntructure is good public policy. 

In addition, it on cre<lte 1110r~ revenue streams to help pay 

for projects. A natural next u~p is expansion 10 pons thnt 

need dt·cdging and other in\'CStment and that havt strC"!ns 

re\·enue stre;uns.. Assbting aviation. indud1ng air trJ.ffic 

control upgudes for quail fiN prival~ ~ntities, could OP\"'1'1 up 

.signifiant economic re1urns .md sOlve. 1 probltm thaa has 

lingered Cor dcad<s 

TIFIA's <Jttstlng <lo~ibthly is mtricled 10 surfoce 

transJX>rlnliun. ~lbtori.•lly. rJFIA funding has come from 

the HTF, whtch h.t< be.:n funded by user Cc.s-mu>lly by 
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the gas tax. In recenl years, bowe'\'er, as expenditures have 

outpaeed revenues fmrn the gas tax. the fF has relied on 

3 mix of user fees and transfers of general rCY~nue. Indeed, 

since 2008 Congr(.'SS has pe-riodically authorized tronsfers or 

ge11c:ral revenue into the HTF tO continue funding surface 

transportntion (Kile 2014). 

Our proposal for enb.rging Tl FJA is somewhat agnostic 

as to whether th;lt funding comes via the HTI:, from other 

transportation tru$tfunds (like the aviationfund),or frotn the 

general fw1d. \VIralcYer tl1c fundiug sourc:e, tire reality is that 

T/FlA is tlotfwrded solely by rhegas rax. 'flrus, 'fiFJA project 

tligibility sl1ould not be tied to only surface trirmJX>rlalio,. 

Develop mOI'C·aGcurate credit sc()ring. 

As dis<:um-d abo<c, Til· lA isncredit stlbsidyprogram that rnkcs 

appropriated federal dollars and assigns them to individual 

re.~n .. funds dedie>ted to specific projects. Each project is 

assigned a credit score that represents lh~ expeckc:l cost co the 

government. 'Th~tt expected cost isihnplythcsiteofthe loan. the 

probability of default, and the assumed loss to the go\'Crnmcnt 

gi\'en default. Subsidy ratings are often given, however, in terms 

oft he antl.cipated percentage loss n.._.at1ve to the si1..e ofche loan. 

Over the historr ofTIFIA. the averagt !ub.sldy rating has been 

around 9.3 ptrc<nt of the governm<,ll's exposure (0M6 n.d.a). 

Although indivklual project $Ubs.idy rt\tings vary grt.1tly, in the 

pas1 rew )'to:m; tht' nvernge !'.ub~idy rating has betn 7.0 percent. 

which was substantialty less than the 10.3 percent that e11.rHcr 

estimates had CXJl<.'Ctcd (OMB n.d.b). 

The: federal government h:lS nol yt't lost any funds in the 

progrnm's sixteert vye:\r history. TlFIA's low·tO·nonexistent 

o$~ gh·en default i~ particularly noteworthy. but not 

.surprising. given that TIFlA is taking a minority stak~ in 

proj«ts that ge er"t~ cash nows. Even if rhose cash flows 

signific~mrly underperform expectatiOn$. thc:y continue to 

exist. Infrastructure investing is inherently differen1 from 

venture capital. Complete failure with no revenue rocovery is 

All extremely unlikely outcome. 'fhis is particularly true gh'<'O 

the orhe.r TIPIA requirements. indudiug the requirement 

that Lite project is part of o stare's existing trnnsportation 

improvement plan. 

We propose that the administration-specifically. USDOT 

t1nd OMB-use executive action to align 'flflA's future credit 

scores with its past truck n.-cord. Simply put, almost fineen 

years of ex.pe!"ience provide evidence IO iJIUSll'ate that the 

go\-ernmenthas been engaged in $afe lending. 111 the beginning 

of the program. it wns appropriate to be cons.ervative. 

particularly given other credit subsidy progmms that have 

been problematic.. However, at thissrnge we should learn from 

our experience and adjust our procedur<s accordingly. 

Aligning 1'1Plt\'s credit scoring whh its lrue risk could grc.atly 

expand the program's ability to fund proj<.<:ts. While still being 

p-tu<fefu and c:oasen';'lcive relati\'e to historical experience, 

ouuing TIFIA's average credit sub;idy ><Ore by half would 

increase O\<erall infrastructure fiuancing b)' 11 fuc.tor o( at least 

four. 1l1nt is, the proje<:ted average TIFIA credit subsidy rate 

woul<i be closer to 5 percent than 10 percent. 1hls subsidy rating 

would still be far greater thun what historical experience hn.s 

shown to be necessary. as actual losses have been dot;e to zero. 

The lower subsidy rate allows exi!.ting ·rrFIA funding to support 

twice as much federal go\'ernment lending. Civcn that TIFIA 

projects require nt least a 1:1 match, these new TIFIA funds 

a>u1d support four times the amount ofin(n~.structure as before. 

1t ls important to not<' that this recommendalion can be 

done cntirtly b)' the administration, without any legislation. 

Deuer align ing TIJ)(A's credit subsidy scoring with 

aaual performance would fil {1 hose of previously stated 

administration goal$, including increasing infrastructure 

i1w~ men , rtlnning government through a more data· and 

fact·bas.td regime. ~nd incrusing non(edcm1 iuvtstm.cnt in 

inrrastructurc. 

Lowering the average reserve required against a TIFIA 

loan would not alter variation in individuaJ projt'Ct credit 

scori ng. As projects differ greatly. variable scoring can serve 

as appropriate discipline to deter overin\'estlnet'll in riskier 

proje,ts. Tlf1A exp:msion may resu1t in more applications 

from projects with elevated ltvelsof risk. JfTlf iA is c:xpandcd 

along other avenues that we $U&gest, which would require 

legislotion, then the future risk profile of TIF1A loans may 

look different from how it looked in the past, A riskier future 

profile might suggest prudenc;e at first, ns well as higher credil 

scores on average. However. (or future projects that arc similar 

to those with which we have experience. , ... e see no reason to 

continue inaccurately assigning credit subsidy scores that fail 

to cake Into account pasc performance of similar projects. 

2. RESTORE THE BABS PROGRAM 

A reliance on user fees to build infrastructure introduces;~ gap 

In the timing between revenue for repayment and the need for 

upfront funding to build the project. This gop is mo-<t onen 

resolved by financing through the issuan<e of debt. As stated 

cMlier, state and local governments nre the dominant nccors 

in the building of infrnstructurc. and have been dominant 

for nearly two centuries. Many factors have led state and 

local governments to issue incn·asing amounts of debt to 

pay for infrastructure. including the separation of budgets 

for capital projtcts and operating txpenstS, the creation of 

spedfic in(rastru.:ture authorirjcs, and the federal lux subsidy 

avallablc for municipal debl. 

The development of a robust municipal debt market has been 

one of America's grc;.1t his1ortca1 :advantages used to finance 
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infrastructure projects. The municipal debt market. however, 

has structural ineffic.ienGies. Although the federal government 

subsidizes municipal debt by exempting the inrerest earned 

(rom income taxes. this Stlbsidy may b<!nc6t the American 

taxpayer more th:m tl'e state or local govcrnn.1e:J\1 issuing the 

debt. Th is inefficiency can be fixed th rough ~'" alternative 

form of taxable debt, in which the federal gov<rnment 

provid~ a dir(.'(t subsidy to the municipal hi.sucr rather than 

to the tupa)•er. This innovative ::tppro:.l<.h was pioneered in 

the Mils program, passed in 2009. BARs could take n few 

different forms, but they typically allowed lssutrS to otrer a 

higher interest rate on bot1ds. ln the roughly twenty months 

of the program's history, $181 billion in BABs were issued by 

slate and loca.l governments. There were 2,215 separate GAB 

issuances in all fifty states, the District of Columbia, and two 

territories. According to OuT (201 1), BABs issuers saved an 

estimated $20 billion in borrowing costs. on a present v.-lue 

basis, as compared to uadilionalta.x-<:xcmpt municipa1 debt. 

Unforlunatcl)'• the uulhori~tion (or BABs expired at the end 

ofFY 2010. 

Unlike trndilional tu-txempt municipal bonds, BARs nrc 

at'l 01Un1Ctive OptiOn ror foreign investors. pension funds, 

nonprofits, and other indivuluals und institutions that do not 

80X1, 

Summary of Short-Term Propo~als 

have U.S. tax liabilities. Bt\Bs ure utso auructi\'(: to municipal 

iS!>u.ers because the (edt;:ral go\·et·nmenl directly subsidizes 

interest costs. States and munidpalilies used BARs for longerterm securities in particular, which was appropriate for 

long-lived in(ras:tructurc projecu. In \:Ontrast, most bu)'ers 

of tax-exempt municipal bonds are high·income taxpa)'ers 

and not very sensitive to the intere.\t rn e.~ offered. For local 

governments to raise additional revenue. 1hey often h:we 10 

attrnct additional buyers in lower La:< br11ckcts through higher 

inrtrest rutes-, whiGh is bo1h expensive und inefficient. since 

much of the tax~e.'<em t subsidy goes 10 1he highet·hlcome 

taxpayers with relatively little increases in the an1ount of 

financing raised. 

WI! p.rupo~ restoring the slrttCturc of this taxable debt 

instnunenl in which the state or local issuer can opt to create 

a taxable debt, with the federal government providhlg 3 direct, 

rather than an indirect, subsidy. The Federal government 

could choose 10 set this.subsidyequulto a revenue· neutral rate 

such th:.tt th is change would rer;ult in no net cost to taxpayers 

{i.e., the tax.<~.ble earnings on the interest from the debl would 

exactly offset the subsidy provided). The revcnuc .. ncutral rate 

would likely be around 28 percent (DoT 2011).1lte subsidy r"le 

could be higher for proj<ets that are higher priority, such as 

1. Proposal: Reform the TIFiA program to lncre~ fedeml funding tO StO billion aud support up to S·lOO billion in 

projects; btoaden eligibility requirements to indude. for example, pons and aviation; and administratively 3lign 

scoring of lundrd project$ to accord with historic:alloss rates. 

Rational\.-: Expanding TlFIA can in4;rcasc infruslructure investment in the short run without Increasing c.ost to 

taxpa)'tt$. Expans~n 10 nonsurfncc trnnsportu.tion will benefit the entire transpottatlon system and Js justified based 

on the increasing reliance on general revenue for the IITF. Improving accuracy of scol'ing to align with experience will 

maximize efficiency. 

2. l'roposal: u.., the 1\rmy Corps more efficiently. and r<form the Harbor Maintenance Trust Fund (HMTI') to utlliu 

HMTF•$ e:xistJng surplus to pay for high·priority projects; implement a competitive process whereby ports wou1d 

submit propo$aiS for funding, along similar lines as the existing Trnnsportatio1\ lnvestme.u Gener.tting Economic 

Recovery (TIGER) program run by the U.S. Department or Transportation (USDOT): ond <c>nvert the harbor 

rnaimenancc tax ton more trnditionnl user (ce. 

Rationale: Reforms would increase the value of projects undertaken by the Arm)' Corps and reduce the distortions 

e:reared by the curre111 ad valore.m t.\x revenue struc11.1re employed (or the HMTF. 

l. Proposal: Reinstate the 8ABs program with Q revenue·neutral subsidy mtco(28 percent 

Rationale: 8ABs are a more e-fficient \'o'tl)' of helping state and locnl go\'crnments to fin3ntc Infrastructure projeGts and 

are. atlractive 10 a broadet ~s nent o( potenti3l in\'eStors~ as compared to trndilional tax exempt municipal bonds. 

4. Proposal: Adjust the gas tax for in nation and to rise (but not above or~low set thrC$holds) when the: price of gasoline 

fulls. and vice \'trsa. 

Rat ona ~ The ga.~ mx Is an effi)ienl forrn of a user fee, :.lnd varying the tax inversely with the price of gasoline will 

reduce Uuctu3tions in the af\er·tax retail price of gasoline. 
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those that cross jurisdictional lines or invoh·t n\uhiple modes 

of tnnsportntion, or are specified as projects of import in the 

national strotegy. 

3 . USE THE HMTF AND THE ARMY CORPS OF 

ENGINEERS MORE EFFICIENTLY 

'the Arm)' Corps plays n critical rol~ in imptoving c:rilic-.tl 

ports and waterways and responding to natural disasters. 

Sigclature projects of the Army Corps include the Panama 

C1nal. 1he Penlagon, and the Kenned)• Space Cenlcr. llte 

Army Corps has also worked on lo"'<r-profil< but nonetheless 

c<onomk01Uy signl6cant proj~ s..such as dredging harbors to 

enable ships lo pass, restoring beachfronts afier hurric;ancs. 

and producing neatly a quarte-r or the nation's hydropo\\•er. 

In view of !he critical rol¢ 1he Army Corps hus plnyed 

for more than 200 years and the growing importance of 

infmstructu re resHie.nce in the face of increasingly volatile 

storms, we prot>Ose increasing the Army Corps' acuvity in 

the short run. l hl$ can be accomplished without additional 

costs to ••• payers by more fully utili1.lng 1he HMTI'. 'lhe 

HMTF w>S <Siablished for the openulon and maintenance 

of harbors as part of the Water Rcsoui'C'cs OC'\'dopm.:nt Act 

of 1986 (U.S. Congressional Reseorch Sen•ice [CRSI 2011). 

11te funds collec1ed go into a tnut fund; it takes a separate 

appropriation from Congress to spend the money front chat 

fund. In past ye1N, the HMTF collf'('lecl more than it sptm. 

resulting in a surplus that approached $8.5 billion at the end of 

FY 2014 (DoT 2014). l he Illest version of the Water Resources 

Development Act, enacted in 2013, oddr<ssed this issue by 

authorizing HMTF spending eqm1l to the prior year's rccdpts. 

plus accrued inlereSI. This should rcduc< the build-up of the 

H MTI;, -although to the extent revenues continue to grow. 

the fund .... ill continue to grow as well. In addilion. there is 

evidenct': of significant undercollcction of funds. potentially 

near SSOO mil.llon (CRS 2013). U.S. CUstoms and Border 

ProtccliOJt should collect th~se funds immedi<nely. 

In light oflhe current high level of need for Increased harbor 

nu.lintenance, due to historical undtrin\'CSimcnt as well as 

che ongoing expansion of lhc Panama Canal, we propose 

m.ore·aggressive use or the existing surplus in the HMTF to 

fund high-priority projects. To beSI levernge these funds, we 

advocate a competitive process whcreb)' potts would $ubmit 

propos.1.ls for funding, somewhat analogou$ tn the txlsting 

Tnmsporlation (nvestmcnt Gencracing E-conomic Recovery 

(TIGER) program run by USDOT. The TIGER program 

already evaluates and accepts port projects. havi11g ;~pproved 

thlrly-on• such projec" to date (USDOT 2015h). Aspects of 

this (C)I"npetition c.ould include ('llhanc:emcnt or economtc 

compelitivencss.levcrage of nonfcder:.~l funds. envirocunental 

sustainability, and resilience. 

'fhe h>trbor mainte-nance tax is an 01d valorem tax tll3t, silnilar 

to a sales tnx.is o direct sh~lreoftht'v:.tlueofcargo. ThiSS)'Sttm 

of revenue capture is at odd$ with other tr:msportllion·related 

taxes, i1tcluding tolls and motor fuel taxes, which are aligned 

more \oJith the COSt o( the use of the infrustructurc. A ship o( 

a given size takes up the $UI11e sp::~ce at a port regardless of 

whal it c-orries- wheat or iPads, couoo or BMWs. Although 

trucks are J\Ot ta:ted based on the value of their cargo. ships 

are. Using an ad \'alorcm system (or one mode of transport is 

unne«ssaril)' dislortionary. \Ve propO$C that this ad valorem 

t ;lX be c.hanged (0 a user fee. One proposal to do so was 

authored by Senalors Murray (D-WA) and Cantwell (0-WA) 

In their bill, 1he Maritime Goods Movement Acl Cor the 21$1 

Century (2013). 

4. REFORM TH E GAS TAX 

The ITF wn< t$tnblished in 19;6 as a means of financing rhc 

U.S. lnlersl3le Highway System; today it provides funding 

for the conslruction and maintenance of man}' U.S. and state 

highways. Since the early t980s the HTF has also helped pay 

for publi< tr>nsil projects. However, as noted above, !he federal 

gM tax that largely supports the HTF has been dedining in 

rca.l terms since 1993. Moreover, h~ cost of in(rastructtlre 

maintenance and ne>v construction has increased ovt:r the past 

deca.de, largely bC(:ausc of growing demand from dc\'cloping 

countries SU'-h as China, 30d proceeds from the gas tax have 

paid for considerab1)' 1ess. Starting in 2008. the HTP h~ts 

periodically been in de6dt. with authorilA:d expe-nditures 

exceeding revenue gcncrnted, nnd Congress has employed 

stopgnp measures co transfer more than $50 billion of general 

revtnue to shore it up (CBO 2014). With fuel economy 

expected to improve, :.tnd growth in the total number of miles 

drh•en exp«ted to $low. the lisa I condition of the HTF wiU 

only deleriOrale funhcr iflhc status quo remains (CBO 2014). 

Without adding to the deficit. the alternatives facing Co11grcss 

in the immediate term arc to: 

I. Let the liTF progrum lapse or sharply curloilspending; 

2. Continue to transfer general fund revenue into the HTF to 

make up for recurring shortfalls; or 

3. Reform the edsting user fte that supports the IITF, 

primarily !he federal sas tax. 

We support the l~t choke: reforming the federal gas tax 

so that it generates more revenue, al least during periods of 

relatively low retail gasoline prices. In out view, having users 

pay for it1fnutruc1ure in rough proportion to the benefits they 

rective is mort economically efficic.nt and fairer than using 

general revenue. 

We propose two specific reforms. 'I he first i$ in the spirit of a 

proposal that wa:.dcvdopl-d and recommended by a bipartisan 
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group including former senator llill Bradley (D-NJ), foroner 

go,·ernor Tom Ridge (R·Pi\), nnd former U.S. Government 

Accountability Office (GAO) comptroller general David 

W:~lker. Titey ca1led for a gas tax that would V~ ry inversely 

with gasoline pri<c< (llrndley, Ridge, and Walker 2011): the 

t\lx ""1ould (aiJ when retail gasoline prices rose. Jnd viet vers-a.• 

To their proposal, we would otdd a n1inimum and maximum 

on the gas tax. rhe minin1um would be set below the current 

18.4 cents per gallon Ia:< rale, soil would be possible for the tax 

to be lower than it is today if gas prices rise considerably. The 

maximum would be set at a leve-l substantially greater than the 

current rati'. 

We propose to grndually phase in this variable tax, to give 

consumers and businesses the opponunily to understand 

it and prepare for it. In addition. we would index the 

minimum and maximum lC!vds to aa'l agreed·on measure of 

inflation. Otherwise, the costs of 1l1aintaining tmnsporh1tion 

investment will rise ,.,.ith inflation, but tht funding to pay for 

these investments will not. 

These reForms should help stabilize prices at the pulllp, thus 

allowing users to better plan their budgets and anticipate oosts. 

If this variable t3X hod taken effect a yt.1r ago, the 1-ITF would 

have re<:dvcd more revenue ~tntl the nation's infrastn1cture 

would ha\'e benefitted from the sharp fa.tJ in world uil prkes. 

Although ~vel'lue would vary from year to year depending on 

the prtce or gasoline, tr.lnsport.ltion funds nonetheless could 

be Jpprop ri;~ ed based on expected revenue over a ttn·)'i?:lr 

window and therefore \vould be less sensitive to fluctuations 

in annual tax revea~ue raised. lhe federal government already 

budgets over multiyear periods using projected gasoline tax 

r<:venue. which can deviate substantiall)• rrom e&timat«. 

V/hile our propost\l would require more dctuilcd modeling 

<1nd greater annual deviation benveen estimated nnd collected 

revcnu~ it is still quite possible to S.CI constant multiyear 

funding l!!vcls based on this new rormula for collection. 
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Chapter 5. Proposals for the Longer Term 

Our next ~ct or proposals nims to moderni7.e the 

infrns:tn&cturt finandng system over the longer 

term. \Ve propose three specific cltmcnts. First, in an 

attempt to better align the cost.s and benefits of infnaslructure 

investment. we call for upgrndi1tg user fee technologies. Thi.s 

would invoh·e 11ddit·ional federal spending for research and 

development and to inccntivize and support localities in thdr 

efforts to modernize the t)'pes of user fees ;"&wilablc to financ.e 

infrastructure projects. Second, we call for a federal platform 

to fadlittue cooperation among states and municipalities 

1hrough pooled procurcmcnL Third,'"' call for I he crcMion of 

a nationttl1nfra$tru 1ur~ strategy. While acknowledging that it 

is outside the scope of this paper to detail a nAtional strategy. 

we emphasize the urgent ncc:.-d !or one und caJI on federal aetOrl 

to commit themselves to developing and mplementing~ longterm cohesive vision for infrastructure investment in the 

United StattS.. 

1. UPGRADE USER FEE TECHNOLOGIES 

Our first long-term proposal (OGus.eson user rees, rather than 

on an infr;Jstruc.ture bank or other approaches. beuuse chcsc 

fees or tolls are the best mechanism for aligning the costs ::~nd 

BO ~ 

Summary of Long-Term Proposals 

benefits of infrastructure investment. Furthermore, a 'r.ll\\::lble 

role for oddilionaJ federal spending is to illCentivi7.e and 

supponloalities in their efforts to expand the t)'JX!S of us.er 

fees o.wai lable. 

In an ideal ''~~orld. beneficiaries would simply pay for the cost 

and maintenance of a given in(rastructure ~ystem . Reality is 

fa r morc<:omplic:ated, however. Tr3ns:.ction costs of collecting 

assessments on bencficiariese:m be substantial, though modern 

technology may make thul process more efficient. Identifying 

beneficiaries may not be as simple a.s it appears at first glance, 

especi<'lll)' given rhe long duration of infrastructure assets. 

Distributing costs is another challenging task, parlicularly 

when dc01ling with projc<:ts Lhat cross stale and jurisdictional 

boundaries and/or involve multiple mod~$ of infrastructure. 

Our solutions address aspects of these is.sucs. 

Tht dalsie uur fet mod~l is th( toll ro3d, for \llhich each driver 

pays a toU in cx<hangc (or driving on n ro;1d that is typic:.,Uy 

well maintained and has les.s 1rartk congestion. Howevcr,lhctc 

art usu3lly btneticlarles of Infrastructure who are not users 

or whose benefit is in greaL excess to their use. For example, 

businesS<slocated along newly constructed tollro3ds become 

t. Propo5al: Promote collaboration amo'"& USDOT. private industry. and academic ese--.arch~rs to develop new 

mcchanis.m) (vr wllecti.ng user and beneficiary fees ba.std on state·Of·the-art technology. Feder.al incentivf.s would be 

provided for st:ates, localities. 3.nd relattd authoritk-, tu aclupt .)tandardit.td user fees. 

Ratioruale: User reesarean efficient Vr-:aytofund inir.btruQurt im'CStmC:nt.and themeans()(collecting r~~rromusersand 

btnefidaries will change with lhc "'"lution of lmnspormlion technology. In additl<>n, such technology lsa public good. 

2. Proposal: Create a national, clecuonic platrorm for pooled procurement to reduGe costs. 

Rationalt: SC31e economies in purchasing could reduc-e costs for infrastructure oper.uors and increase sta.bility for 

manufachu'tS. 

3. Propos.al: Appoint a rom mission to de .. ·elop a n~uionalstrategy for infrastructure in..-c:stment. Projects that are deemed 

consistent with the national stt3tegy would receive more-generous rederal funding, sud1 as through 3 higher subsidr 

r.ue for BABs. 

Rationale: A nation31 st-rategy could guide infrastrut:lun.: Uwc.shn(.·nt more effec-tivt:ly. and connecting funding 

me<:h3nisms to the strntcgy could cnsun: that the co1nmission's r<commendations art implemented. 

16 Amu"telng U.S. nspor allcn MIM'lttuelllf'O In lhO 21stCOf'lhll'y 
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more occt'..ssible to COtH•umcrs. increasing the bus.incs.c5• 

revenues. Consider also the property owners oft he l:\1\d arounc.l 

the toll road. p:uticularl)' around the access points: sludies 

ha .. •c shown dmt their land's value will rise. often substantiaiJy, 

us u result of the new infrnstructure (DoT \'lith the Couocil of 

Economic Advisers 2010; G:~r -en 2004; Weinstein and Oower 

1?99). Those who benefit but arc not users should be willing 

to contribucc to lhis infrastruc\\m: invcsunent as long as their 

benefits outweigh their contributions.. HowcVt"r, reaching tlu·sc 

bt.ntficiaries and determining how and how rnu.:.h rhe:y llhould 

pay can be far more challenging than simply setting a toll. 

Ft--dcral infr.~.structure po!icy has 1ong recognir.ed the \\•isdom 

of having those who benefit (rom infrastructure-rcgardle$$ 

of whether I hey directly use it-pay for its COibtructiOJ\ and 

use. Por example, I he federal gas lax ha$ been used to p.ty for 

public transportation sinct the R<.::agan adminislration. The 

logic is thai in congested areas every driver benefits from 

reduced traffic when olhers utilize public transport-ation 

instead of roads. Indeed, recent res«trch has found that 

average high\\ray ddays increased by 47 percem when transit 

service unexpectedly cea_std (Anderson2014), 

Our prQpo$alfi.r upgrq,(c•d uur fee tt'dmologies 

r;undamcntally. infrastructure is 3 long•term invescment and 

should be paid for over the long term- and 11 should be funded 

permanendy, 1,01 jusr tenlt>orarily. Innovative financing 

programs can lead to ne...,. mechanisms rhrough which a 

st·cady fee stream can ensure the durabilit)' of che ii\VCStrnent. 

\Ve propose f(-dcral incentives for states and localities to 

expand rheir capacity to coltect user fees for the financing of 

new inft<lstru.;ture. lhe need for these new funding sources 

it dear. as inftalion·adjusted r«!vettue from gas taxes may 

havenlr<ady peokcd (CBO 201Sa}. Vchi<le> that arc mor< fuel 

efficitr'll, the potenlial tro,vrh of alternative fuel vehicles, 

and shifting altit-udes among millcnnials toward vehicle 

ownership and driving :.aU indicate that revenue derived from 

the traditional gas tax will snuggle to keep pac.e with the cost 

of maintaining the e.'<isting system. 

\Ve propose thnt the (cderal government supporr th i.s 

expansion through three main roles: 

L Assist in developing and standardizing collection of UC\V 

beneficiary fees: 

2. Subsic.lile 1he proj(.'CtS that these n~w fees support, 

particularly amo1lg earl)' adopters, with dit'e<t supporl and 

provision ofins-uratlct~ and 

3. Create new and mnre-tfticienr financing st1·uctures. 

This new .system could help promote the infrnstruc-turc 

investment ln rcscar<h and development that America needs. 

It would build on the American tradition of strong local 

control in proje<t delivery and r.elecrion while positioning 

the fcder<'ll government In areas where il has long held a 

comparntivc aUvuutugc-thc fucililuting of standardlz.ation 

and <lpplied research. 

lhe exncr collection of fees will vary, rcOecting politic-al 

will, technology, :md economic circumstances. We propose 

allowing fltxibility for state and local governments to cievdop 

revenue collectton mechanisms that work. in the-ir region. 

By providing matching funds. tht federal gov4•rnment could 

empower state and local governments to improve coUectios\ 

or revenue (rom users and bcncfici:uics. 'lhis fcder31 subsidy 

could ~ more generous for proje<ts that Involve multiple 

jurisdictions and multiple ;nodes of tratlSj>Ortatton. 

The: federal government would ulso cre01te innovative financing 

tools that will allow states and localities to more tffidently 

coordinate beyond lheir existing municipal boundAries. Since 

new lypes of user fees are inh~ rcn ly ri¥ki~.;·r than slandard 

user fees, they would likely require higher costs to fi1lanc.:e 

rrom skeptical (ftditors, even If they would be woi'Lhwhile 

in h~ long run. This crl!atcs: an C\'CO stronger rationale for 

and greater benefit from federal action than tf' .. dilionul 

infrastructure finance. 

We are not identifying a single type of desired revenue 

collection bc(tluse the pace of tcchnologkal change is so 

rapid. Por e)Ca!Uplc-, O'll•elC'(tric cdr$ do not pay lrnditional 

gas taxes even though they still use the highway and ro:ld5 

system. Also, ca sharing services like Ubcr :.md Lyft may 

(hange the economics of drh•ing and of parking pnvatdy· 

owned vehicles (Shontdl 2015). Driverless cars are anolher 

potentialtechnologieal game chongcr. Such rnpidly changing 

transportal ion technology is causing the nature ofbcncficial')' 

fees to change. llo• ... •ever, il is also mnking possible new forms 

o( beneficiary fees that lake advantage of CPS and other 

mobile devices. 

These new technologies also potentially alter the my in 

which we use infrastru(turt. For txample, the provision of 

free or highly subsidized parking is a significant use of our 

Cxi$thlg infru$truc-turc. By one estimate. the cost of free 

p3rking is $1,750 p(r spnce built and nbout $400 unnually in 

maintena-nce (Litman 2012; Stromberg 2014). As evidence 1hat 

free strec sidc parking $paces are valuable, a new ;tpp allows 

users to f'ssenliall}' sell their slrecl p:1rk..ing space to another 

driver through a priwre, online tmns::tction {McMiUa.n 

2014). Innovation that creates more·efficient use of e:~~:isti ng 

inrmstructure should be prioritized, especially i( it reduces 

the need to build tt)OI"f' infntslrm:ture. 

The odvcnt of new technology to reduce the transaction cost or collecting user ree .'> h~sbeen a significant dev~lopment over tbc 

past twenty·five )'e.ars, starting with eleclro•,ic tnll collection 

(Samuel 2012). States and local agencies have increasingly 
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been deploying elech·onic toll collec1ion as well as capturing 

revenue from windfull increases in property \'alut as a res.ulc 

of infrastructure investment (e.g .• taxingso·called meron(ntaJ 

financing districts). 'I his revolution ln new and advanced forms 

of collccHon frorn infrastruclure u~n and be•lcfidaries has 

created more·etlicienr methods fur revenue streams to support 

illfrastructut·e. Ho\\'e\'er, the local nature of these efforts results 

in fragmented, highly reg!onalited S)'>tems that could benefit 

from greater standardization. As th.: lntenlational nndge, 

·runnel, and Turnpike Association (2010. supplementary 

ttppendb.:) stated, ''The net result is that technical intcroperabilit y 

ttnd commercial interests have created a reg.ional po.nchworl< of 

ditfcrcol [clt--clrooic toll collection) systems :tcross the country. 

operating as E·Z.Pass in the Northe..'l.StiMidwest; StlnPass in 

Florida; FastTrak in Calirornia. and >0 forth." 

1he federal government shouJd establish national revenue 

collection standards. 1'11cse st;mdurd.s should 1t1clude 

lnteroperability of electronic toll colleG'Iion 5uch rh:u a single 

pass .:an work throughout the country. The craJtion of a 

single srnartphone applrcation that would function similarly 

to transponders such as E·ZPass is one potential approach. 

furthermore, requiring-;tnd ptOvlding funds for-existing 

toll plazas on roads nnd bridges that receive fcdecal support 

to switch to d<.'Ctronic co11\.-ction, pnrlicularly with highs-peed lanes, would reduce travel times. congestion, and 

cnrresponding air pollution. 

A nationa I st3.nd3.rd for defining and imp!cmcnt i 11g congest ion 

pricing would be another useful >ystem. Congestion pricing 

can include (n) vari.,ble-ratt tolls based on road conge,stion ;~s 

well il5 (b) fixed pri(.es for driving into cor~ att""-S of a majol' 

metropolitan area. 1hc ~tier (b) is somet ime.~ referred to as 

cordon pricing: il has been succe.t;~(, IIy adopted in London 

and Singapore. and was used sucassfully on a trial basis in 

Stockholm. 'The former (a) c-an shift demand for infr;astruerure 

away fron1 peak times, as has been used to some extent in 

Florida, M>uyland. 3nd California, among other places 

(US DOT 2006). 

Another nation:~ l standard could include mech:.mh:ms for 

state or local government to collect addition3l tax ~renue 

from dlstl'icts in which property values increased as a rcs\tlt 

of new infrastructure (i.e .• value growth above ., specified 

b(lscline). An example of such n mec.ho'lnism already in use i.s 

the incremental fin3nct district. also known as tax increment 

financing, in which local go,·crnments define 11 geographic area 

to benefit from improved infra.structurt ~md eann:.trk inere.1sed 

property tax te:venue5 in that area to pay for the infrascructure 

i.nvcstmenl. Currently, states legislate the usc and parameters 

for these types of districts, but there is little guidan~e on how 

states should most effc-clively structure these dis-triers. 

A founh potential standard would involve a master 

framework for the terms of debt issuance for project finance. 

By standardizing the terms or debt ~S.$\131lCC, whether through 

BASs or other vehicles. investors could more 4!asily ac,css. 

digest. :1 nd pottmlally am~lgamate proJect debt. Reducing 

transactional costs for infr4Slructurc users. be-1\efic[aries. and 

in\'estors will lead to greater investment in inf o.\Struetur~. 

·rhe federal government can also build on the initial launches 

of centers for infna5tructure inve$tment wilhin USDOT 

at\d the Environmental Protection Agency (White Hou.~ 

2015). Combining these centers ir.to one national center for 

infrastructure inves,tmcnt and st.ludarditation could further 

reduce trans:action costs. impm,·t: efficiencies, and enhance 

efi·ecriveness. Ahhough infrastructure rcsponsibilitiC$ al'e 

&pccad across multiple federal agencies.nsdemons.trnted by the 

creation of multiple centers for infrastructure investment, we 

believe the value of creating a on~-.uop shop for the consumer 

(state and local infrastructure providcts antl investors), as 

well as the potential for learning ~111d stanctt'rdil.ation bt.tween 

modes of infrnstructure, outvteighs the benefits of ctcating 

spocinlized but silc>td centers. 'lhus, given the large role 

th:1t tr:msporution plays 1.1mong aU type-s of i11frnstruc1urt. 

we call fOr combining the 'enter$ At USDOT. Part of this 

combined center would act u .1 hub lor affiliated ln$litutes 

focused on developing and promoting uscr-fee technology. 

'I his hub would serve co bring together the wide universe of 

professionals, acadt:mlc~ .. marker: participJ.nts, infrastructure 

provider$, ::tnd g<wern.ne•lt officials involved in infrastructure 

design, c-onstruction, opcr.\lion. and fi_nanc:e. Creati ng such 

a national hub for technology dew~lopment could he-lp spul' 

gre~ter inncw01tion. St'andarditation. and coll;~boration. 

2. FACILITATE POOLED PROCUREMENT 

As discussed earli(r, state and local governments are often 

the :.ctots making hwestment choices about infrastructure. 

from the asph3lt for highways to road sjgns to public buses. 

1he dozens of Slllte governments and the thou.s.'\nds of local 

goV\.--rnments usually m;~ke thtse investments in isolation, 

without necessarily coordin01ting with other agcnoes. even if 

they arc purchasing .\imilar products. This decentralh:ation 

of pa}'ers for infrastructure results in the loss of economies of 

SOlie. 011t oftht!clu.~ie valuesofCljonomiesof s.cnlc comes (rom 

purchuing power: larger putch:lSCfs arc able to negotiate bener 

prlc:cs. 'These costs are therefore g.e1\eraHy higher for smaller 

infrastructore providers. which also !end robe located in a.reas 

that are more rural. 'rhe benefits from solving this coordination 

problem- and r<.-alizing the benefits of e<:onomies of seatemay larg~ y go to sm;~Uer infr.tStructure providers. 

Tbis problem wu.s rcoogni1..cd prt\'iously with the creation of the 

pooled procurement program in the Transporlution. Tre-J.sury, 

and Independent AgcndesAppropri:.nlons A(t of2004. This aet 

and subsequl"ntlegislation created five pilot programs to facilitate 

lhe coordin:.t.lion and pooled procuretnent by transit agencies 

across the country. 'These pilotS each contained ooly a limited 
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number of transit opt.!'rJtors. typically in the same gcogf'lkphk 

region. As an ince.ntivt. the fed~ml go\-etnment agreed to p:1y 

tor 90 pcrctnt of the cost of ito!lns purchas<d through the pilot 

program. far greater than its typicnl matching-grant rate. '1'0 be 

clear, there were no additional federal funds dire<tly ptO\'idcd, 

only a w:<~lvet of $tare and local.n:uch levels down to 10 pt't'cent. 

Overall, the pilors were found tO be ineffecrive, as ·~the additional 

1:cdcral share allowc<l in the pilot program did not sufficiently 

induce greater use of pooled pro<urement" (USDOT 2010). 

Ditfkultles h\ for1nh1g conrortlums.rhe administtatlve lx•rden 

on the agency leading the procurement, and unwillingness to 

C\.'C!coontrol by po1rticipaling agenc:ies to the kad agcn<y were all 

cited as challenges to S\ CGes.~ful pooled procurements (USDOT 

2010). Gi,ren the potential benefits to agencies., especially thou 

operating in smaller jurisdictions. the questiorl btcomes how 

to overcome thc$C orgnnizaliOI\ill dmll(.'flgcs to st~ppo t pook-d 

procurtment. 

Our proposal for poolt~tf pr«ure'''t!."t 

Weproposcatwo-prongtde!Tontopromo•epooledprocuremcnt. 

'£he fu·st prong is the creation of a natk.moJ platform for pooled 

procurement. This \muld be nn elecl ron i.e system. open to all 

infrastructure operators where they could search tOr :md J>OSt 

information regarding their needs for procurement. The federal 

go\•ernment would se:c·ve only as tbe p1atfonn oper<ttor; it would 

not be iltvnlved in any .tdditional way In a(.IUal proct•remenc 

or negotiation. HO'I\'C'\'Cr, crc~ting a national pln.tfonn wou!d 

vastly expand the network of potential agencies that could work 

togelher. In the long run this may not even need to be operatM 

by the federal government. It may weU be that once the federal 

government crt"ates this pl.1tform. it cnn eventuaUy be spun off 

to the private sector or a brood consorliun1 of public 01ld priva ~ 

opc:rotors in a cooperative model 

Platfonns for bringing together infrastructure projects 

arc already occ-urring rcgionaUy, such as the West Coast 

lnfr:.tslructure F...xchange. a part-nership among California, 

Oregon. Washington. a nd British Columbia designed to 

encowage .. public sector dedsion·makers . .. to develop best 

practices and access h .. nds·on training in i nnQ\'ativc linancing 

and m<'linttnance ltltlhods· (West Coasr Infrastructure 

Exchange n.d.). Expanding this idea nationa11)1 as well as 

broadening its scope to include pooled procurement as a focus 

could generate significant value. 

The. $econd prong consists of direct inuntives in ternlS o( 

federal funding. Rather th•n simply getti ng a higher federal 

match r.uc. localities that can demonstrate: cost savings 

lhrough pooled procurement should rec-eive additional federal 

grants explicill)· tiM to infrutruclure funding. Rewarding 

innovative cost savings from procurement through a race·to .. 

the-top style inccnti\'C systt·m might be enough to O\'e.rcoJnc:: 

the organization gridlock and ex.isting impedimentS to 

coordination. 

3. CREATE A NATIONAL INFRASTRUCTURE 

STRATEGY 

Our nation would benefit from a natio113l infrn$tru<:ture 

strategy. 1 he current deantraliud mnureof our infrasrrucru re 

S)'Stem po~c~ fragmentation problems. both in terms of public 

p;trticipation (federal. state, and local) and in terms of type of 

infrastructure (hig.hwa)'· tron.sit. pot~, airport, water system, 

etc.). l'oor accounting sy<ttms !hat do not adequately keep 

track of or inccntivizc wise i.Jwc:stmcnt crcateanother problem. 

Simply calling for incrCO'lsed infr<lstructurc ir\vCStnlCIH J\1i$$CS 

a key area where policy makers could considtr;<tbly improve 

the current frnmework: more· carefully managing investments 

to ensure that projl"<ls with the greatest return are selected 

for investment. Maximizing returns on investmC'nt is a sil'nplc 

poli<y object but one that pro'"' highly difficult to achieve 

with respect to infrastructure. 

A national ~trategyshou!d not be confused with aone·size·fits-all 

1))>!'().1ch. nf 'llStnltture ne«is v11ry stlbsta.ntloJiy based on loc.tl 

and regional factors. A pcrfeotexampleofthi.< is high-speed rnil, 

which may work very weiJ between certain cities, such as those 

in the Northea.SI corrtdor. from 'Nashitlgton. DC. to Soslcm. but 

not nearly .so well be w~n citie.~ i1t les.s popu ;~red (Xlrts of the 

country. 'lhere may be compdHng cases for imensive air traveJ 

corridor.s betwt!t'll nn.ons such us Los Angeles and San Francisco, 

whkh is the b\JSi('.st air c-orridor in fhe cotmtry (USDOT 201Sa). 

·n,us, a national Slr;ttegy n~ds to :lltow for rq;ion011l V;'ltiatlou 

and substantial state and local Input 

Finally, a national strategy must com:ider the interaction 

between hlfra.structure nelwotk:s. A strntcgy for ports that 

focuses on the Gulf Coast coupled with a stralegy for freight 

ra.il thal focuses on the c:.~..stcrn seaboard would be a fuilure. 

Cun·ent tz:ansportation infrastrue-lure policy is heavily 

focused on individual modes, with each working i1lttrnally 

to develop its own strategy (if there is one at all). In some 

instances the data nf'Cessa.ry to measure how well our current 

infrastructure systtn' work$ are not t'Ven collect~. as the 

GAO found: "·then: was not a federal source of data that could 

reliably be uscd to analyze freight truck trends from 2007 to 

2012. b«aust, among other things, lhe data do not sufiic-iently 

distinguish among classes of trucks" (GAO 2014). 

Congress has recognized che increasing i mporronceofstrategic 

planning and, as part of MAI'-21, directed US DOT to establish 

a n:Hional (reigbt SLr.~. egic pl ~w. W1sely. Transportation 

Sc<retary R<l)' l..oHood filled the Freight Policy Coundl. the 

organization tasked with developing thi& p13n, with leadership 

rrom mult1.plc lransport:'ltion modes (highwa)'S, rail, ports, 

and airports; USDOT 2012). Yet, this plan for freight needs 

to be part of an even larger, more·COJnt)rehei\Sivt $lnHegy 

to move goods and people, and provide basic. services 

(telcco!llmunicalions. pO\~Cr. water) in ways that complement 
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etKh other. A broader uauanal infrasuucturt policy with 

input (rom n11 Stakeholders i51he right way tO$Urt. 

Our pn,poslll fort~ 1tatlnual ;,!(mslruc/urt• strategy 

\Ve ropo~ the crt3llon of a national strategy for Amcrian 

infrastructure through .a commission of federaL ~uue, and 

io-.-al partiC'$. ancl..aJmg mfnstructure opentOr$ and priv.tte 

conlpanit"$. Thl, comnu.Sii.Orl. which could be crt01ted thf'OUih 

l<gbl•tion or by ex..:uti"" order, "'OUld be responSible for 

dtveloping a comprehenit\~ nation31 infrastructure stta1t'81C 

plan. 1hb would b11ild on the strategic plans •lrtady created 

on a modal b;,ls,L4 whhin 1hc fcder.tl government. such u the 

freight strategy dlscu&.<cd above, along with the strulCf!k pions 

dc\'doped by states, metropolitan planning organi7.1U Ions, unci 

private infrastructure pnrtntrs. The commii.sion•s first task 

would b.. to idtntify where there is convergence with thw: 

various ccisting stroteg1c plws and where there i> dh''fi<""· 

It "-ould funhcr analyze and idmtofy national gools and 

prioritin. ldnlly, 1he stul<gy would identify "ilich modes 

of infr.utructurc: uc most coU·cffective in addrt".sing k''Y 

challenges in certain corrldor~ nnd regions. The commbsion 

would also mo.1b rcconuntnd.ttions for improving J,vallable 

dora on infrastructure use and ne-eds in a way thl.lt bul.mccs 

individual privacy rights. 'this national strate-gy could guide 

subsidies for ~nore generous funding and financing of 

infrastruclure tnve&tment. 

IIOX3 

Dig Only Onn· 

A n:ational str.ncgy \\'Ould provide a unique opportunily 

to look at our anfnt511'l1Ciure systems and the hweurn~n t 

th<'lt is necessary I'O crt:ue nnd maintain those .systems from 

a user's ptrspcctivt. 1:or example. it would work to unlry 

freight tnvcstmtnt s:trau.-gies with port in\'tstmetu decisions. 

This would muimitr tht efficiency and elftctiv~n ... of both 

n<tworks. The str:ttcgy would ensure that in...uneru to bu11d 

hig.h·spttd rottl between a cicsc.orresponds ~·•th Jn'-tjlmcnt m 

5-trong public transit In those caties. 

Tht national strategy &.hould help coordinate infrn.)trt.cture 

invcstuu."lll at a lu~h level. Howe .. ·cr, there mre significant 

cfficiendes th01t could be gained from enhanced coordination 

at :1 local or granuiJr level. Our proposal rocuscs on 

governance improvcmcniS at that level. We call for &ncreaSt.-d 

coordination with1n geographic. areas among ditferenl 

infr:aSiructural modal providers. An cx.1mpk is the highway 

dtpUtment communtaling w1th the w:attr df:partrnent, 

so that whm m•)or tmpro••mmts n«<< to b.. mode by bo<h 

patties, cons1ruction cm<S dig only one:< (s<:< box 3). We 

also propo$< intreaS<d coordination among the some types 

of infrastructure provld\!rs toordinuting acros.s SC"<>graphles.. 

For example, multiple aubway .systems use simil;u ratl cars. 

Coordinating Jong·tt.nn planning and purchasing thrO\t~h 

pookd procurement could lowt:r costs for the subway systems 

and allow 1he pri\'cte monu(cctures \\'ho build 1he r3l1 cars to 

athil'\·e great.r "ability •nd long-run profitzbihty. 

Alig:nUlg con.stru(:tk)n 'iChtdults 3t tht ~tJte and loallcvds could produce :signUk10tnt )Oivings by combining oclivhit'\, 

A simple tumple Is coordlnation bct\\'c<n the crews (or locol water sy:.h!lliS tand roJ..S maint'enanct. Pl-anntd water 

lnfrostrucrurc impro•·cmcnts, such as exp•n~<~ piP" .opacity or replac.lng ogcd pip«, require digging up roads and 

sid<walk$. 1111• work •hould ""'"r simultaneou<ly with regular road repaving. 'lhis "ould sa\c coSis ror both of 1hc 

infmstruc:lurt pr"O\'lders, as well as reduccsidc·dttcl t'OSU..such as traffic congestion clue 10 t03d\\-ol"k. 

This simple common<tnu soJurlon Is not as easy to lmplt-rucnt as it 01.a) ;enu. II uquirn public andfor pri-nlt "~tt'r 

sys-tems. wh1cb ttnd to opc:ratc on the muntup~t or rf:lioru.Jie,-od, to coordina1e with f'C.)Iad maintcnanc:e. which is often 

at the state or <OUnty 1<-o-.1. Aligning (lmlng fn< major and minor proj«u r<qulr<S significant ad..,.. jomt pl•nnlng. 

Making ~u~ dul work schedules 3nd zones Jre able to o«ur on a s.imuJumrous ~hedule requlfts logistiol pr«iJion. 

Compttlng priorities, Including cmcrg<n<y ond othtr unforts<eD problems lhot alter <eheduling. are unavoidable. 

Furthermon:. negotiations to split the direct s.'vlng~ rrorn combining work will not be ccntk.S.). and the value: gained rrom 

reduced extern.alltles '>uch .t.s traffic congestion and service disruption will rlQI be intcrnaH1-ed. 

Nunethdess. the ~'·lng~ are worth puriulng. lht redtral govtrmnent <oulcJ e,tublbh a pilot program, s.imilnr to what 

the Ob:tm;a admin1,tn.tion did wilh respect to proj<."(.l permitting. This p1lot program "'-ould be open to infrn'"tructurc 

provider) of any (orm and would be coordm.,ttd at 1 rtgtonallt'\-d. To incenlh·lzc participation, the frderal go\·cmmcnt 

•bould pno' ide <>redottd project and perm tiling revitw,indudingelimlnallng duplicatt"" requirement> th:u e<l$touo.s 

infnstru<lure modts. ~implr put, iftbt hlgh,.-.y department has a pcrrou 11 '-OUid •wlr forth< wa1er company and vice 

nru. To 1b.. extent th>l f<dcral granu or funds •r• u>td for sU<b a proj<ct, •t a mimmum 1b..re should b.. no penalty tor 

the dwtl usc of tho"" funds. "!tile thero >houkl b.. a creoli,-. cxplontion ot m<1ho<h to pi"O\ide :additional fundm11 for 

coordin;.~tcd "-Ork th.u reduus costs. 
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Chapter 6. Questions and Concerns 

Any IUS"· and srmll-><alo proposals tltoJ >ttk to 

;~.ddn.•u the in(rutnr&:rurt' cha11et~gt Will raise 

legitinute wncenn. Among the concerns that must 

h< addressed are: 

I. "lherq:ro..,.., nature of user foes; 

2 The risks stemming from ustr fee adoption; 

J. Whether sulfidont demand <Xists for tho fi:<lcnl financL•g 

propostd; •nd 

4. Concernubouttho ability to finance projects a<ross modes 

oflr.an.sporl;aho.,. 

A brid d.scm~sion of e,•ch conctrn follows, W1th 3n 

understand ins that 3ny ofchese concerns eould merit a mort 

In-depth con•'Orutlon. 

t. THE REGRESSIVE NATURE OF USER FEES 

Ui<.•r fe<:s that arc not lied to mcome (~luch is the c.1sc for 

almost all &Q\...-nmental fea) are inherently rq:rossm, 

munlng thatlowcr·tncome Individuals pay a higher share of 

income tow:.1rd the tax than do higher income individuals. · 

Thl< Is generally true for the£'' t3X, highwoy tolls, ond bus 

forts. In genoul • .,. share • desire to rats.: r<>oenue for public 

goods In 3 Pf'OKTC'$$1W'-Ot l.U k."a$l. nonresr~Sn·< llt.lll0t.'1'. 

Yet whh regard to infrastructure, there are Ae\·t-r.,t re:l~nns to 

be ltss concerned with the regrusivity of user fees. 

1~e ben~fit< of tnfr.utructure are lorgely progrot5h'Ciy 

distributed. First, if uS<:N benefit equ01lly from the servle<,then 

th~ l>cndits. as" &hllre ofincome. or't' dist rlburM progrtuively. 

S«ond. to the a:tcnt that u~rs h<~'-e a -:hoke whether to we 

the lnfr:utructure and pa) the extra r ..... then tbere is an added 

lc\'el of prore~:uun again.st t~ essive fees. (For examplt,lower· 

Income drh1'-rs could !.hift a~'-'Y from driving on toll roads.) 

rurthumor<. th• provision or •h:<rnothu (sueh •• pubhc 

trilnsn) is often avoatlab!con a sub$1dt.zcd and progrcssi\"t bms.. 

Th lrtl, the bencftls of building infrastl'ucture, speciti,~lly job 

crt:ltion. are prog~&!i\'ely distributed. Restarch fmtn the 

DoT shows that 80 Jl<f"nt ofth< jobs cr<:>ted In the tor three 

S«tors ('oostr·uc;tion, manufacturing. amJ wholesale and 

rcta1l trode) ore jobs that typk11lly pay In the middle r•nge 

<>fwages (DoT with the (Au nell of Economic Advisers 2010). 

Fin•lly,tbere are often subJI•ntw ben«iu from infn>truc:ture 

that tSCaPf" ea.sy quantitic:ahon • .such ns th~ utility of travcling 

out$lde <ongesred period~ or are01s, broader cx;onomic ttnd 

productivity g&lns. >nd the hwtb lx-n<fits from living in 

woll<ablo commWJili<s. Th.:sc free ben<fot• rruty be dtstnbuted 

progres.sh.~y. or may be dl~tributed ro those: on the! !o~r end 

of the socloooonontle &poet rum who rlo not pay the user fee. 

2. THE RISKS STEMMING FROM USER FEE ADOPTION 

As with most infrastructure, !~lute and local governments a.nd 

i n(ra.stmctureoperntoi'S will be the uhu'n,ucdedsion nmket us to 

whc:tber to Jdopla u~- or h<nelidary-!oe niOdd. Adopting new 

t«hnolog)• comes w•h odduional COSIJ and risks. O.vdoping 

um.l implementing new forms or fer: coUtehon ca.n have lugher 

\lpfront cosn nnd uncertainty OJbout revenues if the redtnology 

dues nol function as oxpootcd. In order to promote adoption. 

~ bclin>c I hat tbc· f~l sovunmc=nt ahouJd prO\'idc )ub$kllc$ 

to early ..dopttrto: o( such &y.uems, ~\lbj«t 10 0"'6Sigtu. These 

subsidies can take the form of diR.'CI paytnents. beiOW·martet 

Uttercst rates, Jlc.,biJity in terms of Wlillng fodtni 11\oldung 

requtr<menU, and nplicit.IC«J!Unct OIIJII·rnk outcomes. We 

define t:til·risk outcomes as tho potentialth•t tho infmtructure 

US\o(1 fd.ih to sc:n\:ratc any sub)tan1ialt'C\'C.,1UC: as compared to 

•<~•motes (t.&. Iouthan 10 percent of pro)O<:ted rtveruc<:). 

Subsidizing tarly adoption would also,,ronlott .st~nd;udt-zaflon.J>artlcularly given the long lt;,td tlmt>.J: oflnfr,Htructure 

projects. ror C:X&mplc. i1111811'e i( $UCb i nab$idy program Wert 

•nnounced tnd•y w1th • St•erous but deehrungsub.,dy "-1 

S:tJie and loc.1l government$ a.nd infroutructure providers 

would ha\•e a strong incentive to adopt these forms of revenue 

~nc.l standardtu collc."Ction While somt proj«ts would move 

qlllddy throuJh pbnnin& and so r«ri.., •ubsidoes, Olhers 

would undoubtedly hit unoxpocrcd •••v and delays. The 

\\Orld of infrustrutturc projcl!ts is rife with such unexpected 

dt'lays. Ho~evt1. as I he tAlly adopling pu>fects dtomon)ltaled 

SU«CSS and the percri\-..J ltvd of risk diminished, th< 

private finan<lng system would be lncreJJingly comfortab!c 

providing caplh1l. As gowrnment subsidies fall over time, 

market Jl3rlltir;~nts would be willins 10 providt> fin1ncing 

on mor~nerous ttrn'l.,, b~ancing some: of the: dcc~.a.se in 

IUb>ldi.,.. 11•u>. we believe thM even •s Initial subsidies fodc. 

our linundng •yst(•m will hav.: l'nOugh IUOI'UCntum to ~U$lain 

ilsd( at the s:t.alt and locallt-vf'ls, 
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fiGURti.2 

TIFf A Project Loan Allocation. hy Project Type 

Other Surface 

Transportation 

Railroads 

6'!6 

Roadways 

and Bridges 

67% 

HAMILTON ' """"' llROOKINGS 

Soorct~ USCX)ff20 ~1 

NQW /II l1FIA.~'(I<liC..-dachJert ~'OIIW Sur'k6 r,~U'lO'I·I'\CtiCII!tfO«<Inli«OU)Ioc lr-t i)'Q;"Ct-. lll,;.porta.~.-,~ ll'M)~¢Mitf!l 

3. WHETHER SUFFICIENT DEMAND EXISTS FOR TH E 

FEDERAL FINANCING PROPOSED 

One critique oftheTII'IA proposal is that it relics on a buildit~and they·wiU come basis. While \\'C Cntl deflnitivtly show 

excts..o; denHltld for the eurr¢nt tevel nf funding. we Olnnot 

definitively show sufficient dcn~and for the site and scale of 

our proposal In addition, the robust and highly de1·eloped 

mu•licipal finance market, whic.:h offers .1 substantial federal 

inctntke in the form of an exemption from federal tax. would 

appear to be a viable alternative. As credit market condit.io11s 

return to a rnore norma1 st3te post-finallclal crisis, the 

competitive value proposed by programs such as TIF!A rnay 

decline. in fact, during several ycilrl or the c:rcdil boom in the 

2000s, fow eligible proje.:ts npplied for TIFT A funds. 

We believe that if there is to be an jmbalance benvten tht: 

supply and den1a1\d for infrastructure financing, it is In 1hc 

nario•t's interest to err on thesidcofha.vingtoo much financing 

avaUab!c rather than too little. Furthermore. knowing thnt 

addilional fimtncing is available may encoumge planners to 

think. for lh( longer term. ·rnis can be pa.rticularly true for 

inrrastructurc projects that are built to lc"els predicted b)' 

future demand rather than current demand. For U:1mple, 

certain interstatt$ thai are congested today o~ned years ago 

to low traffic volume-s and public accusalions of overbuilding. 

Rather, an alternative <:riticistn of our proposals, partlcularl)' 

in the short run. is that v.-e are not be:i•tg bold cno\•gh. The 

potenlial that federal govern1nent support is not compelling 

relative to alrematives. including the municip31 bond market, 

is real. If 1he municipal credit mark.c~ can offer better terms 

that provide $Uffidtnt inc.entivt for a project to get built. then 

that is a good outc.ome. If infrastructure is created to meet 

demand without the support of these propo.sals. we would see 

that as a victory. But wby take this u11necessary risk? 

4. CONCERNS ABOUT THE ABILITY TO FINANCE 

PROJECTS ACROSS MODES OF TRANSPORTATION 

One oft he major problems wilhin federal infrastructure policy 

lu:1s centered on the difficulty in creati 1lg policies and p,.ogrn1m\ 

that !o\'Orkthrough multipleanode!.,orrypes., of transportation. 

For example, TIPIA was criticized for effecth·ely fa,•oring road 

projects over transit proJ<-.:Is (Boxandall 2012). As of April 

2015 rot,dwny and bridge projects rectived two thirds of all 

Ttl'! A loans, public transit recell'ed just under a quarter, and 

railroads and other surf:tcc transportation proj(.."(ts received 6 

percent and 3 pcn:cnl, rcspc<lil'cly (USDOT 20l5b). 
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l lowevcr. changes to the progr:tm co1llained in the recent 

surfac.e tr.msportation reauthorization. MA P-21, have allayed 

conct"rns of some critics ('l"ransporta,ion for America 2012). 

The go\·crnmc;lt h1)s t<'kCil steps to •.vork more proactivdr 

across transporHHion modes. $UC::h a$ the changes within 

USDOT's Credil Council 10 provide enhanced multimodal 

analysis (GAO 2012). 

On a more fundomcll!al lcvel, I he diagnosis of I he problem 

or a lnc:k of muhimodnl c:ooptr:,ltion should not predudt: 

a multhnodal solution. By enhancing the multimodal 

capabililie.< of programs like TIFIA, and encoumging projecls 

that cross nlOd!!s. thtse propo5a1s offer incentives to correc1 

past mistakes. In addition, the requircm .. :nt to rc1y more on 

revenue generated from infra.stmcture, through user and 

beneficiary fees and ancillary economic gr(lwth. ought to 

encourage coopcrotwe 1hinklng. Including more modes 

of transportation with s.han..'d vested interests in building 

infrastru,ture will olso likely enhance coopera1 ion. The 

alternative 10 solving this project wouk! be greater central 

con1tol of a single enlity of multimodal scope. which is a far 

more radknl proposal than this one. 

Tho H:at1"'\on Projoc, • Sroollifi(JS 23 
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Chapter 7. Conclusion 

There is liuledisp\ltethot the United Stott< would benefit 

from tnh;tnted infroutrucn&rc bwe.stmcnt. 'lhe barrh:r 

ha...\ been finding a politically viable solution to th~.: 

financing challenge. An nfr ll uclute overhaul is timtly for 

n1acrocconomit.. und empluymtnt re01sons Public horro\Ying 

tarrs :are ar hinorlCilllo\\·s, and the lo,.,·tr cost of funds today 

will result In grc.tcr net b<ncfils for society in the long run. 

A too, wlulc th<labo< market h .. ...OOunded significontly from 

the economt.e rtas.s.ion.S«tOr$ that c:ontnbutc heavily toward 

infr.ttlruclurt, such as construction -and manufacturlllg, 

mnaln stock >rnl "ould benefit from gr<at..- demand 

Br .. klnJ the pottl<•llo8Jam on infrnstructure finan<ing I< 

imp<rath't. In tht nnr term,'~ propose in enhanced Qnd 

gtrengthened TIFIA progrnm. a rt>tornUon of the IIAI!s 

pruHram. an expanded Army Corps:. nnd reform of the g;u 

hn..to respo•l$ibly i1lcreast inrr;)Slructure lnve5tmem without 

rnl$lngtues for 1he Arntrlcan people. In the longer term. we 

prorose mechanisms for the f.:deral govcrnmcnltU promote 

bc:U<r utilization of user fc:es. a fe-deral plot foun for pooled 

procure.mtslt. and the creation of a N.ttional nfrastructu~ 

StrategyComn1iss.ion that would aim to better coordinate. and 

finance proj<ets ain><d at bolstering Americo'> bodcbone. If 

adopt«!. tb<>< proposals "'OUid pnt our n>tlon b.Kk on tnck 

to build and m~intain infrastt1J,Ct\lre that Is cntlcalty ocx<kd 

to ad> .. nce economic growth and p<O>p<nty throu3h the 

, .... '--.ttY 6rst ct:ctury. 
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Authors 

Roger C. Altman 

f'Owult:r amf E.ltcutive Chairmmt, Evertort 

ltOMtr C. Altman ts Founder and Execulh'e Chujrman or lhC"rcore, whkh has b«ome the most active indtpende!ll 

flwe:stment banking finn in the U.S. He served 1wo tour& 

o( duty ln lhe U.S. Trea$ury Department, initially serving 

I'IC.)Idcnt C.artcr a). As.sistant Secretary for Domesti-c FilliiiiCC 

and o~ltr scn•ing Pre$idcnt Clinton 35 Deputy Secretary. 

Ahman Is a Trustee of New York-Presbyterian Hospt[al, 

strvmg on Ils ln••cstmcnl Committee, and is Vke Ch.a1rman 

of '!k Boord of The Amencan MuS<Um of N>tural H1story. 

I te also stn"t's uChairman of~ew Visions fot Pub1k Schnot,. 

lie •• a member of 1he Council on Foreign Rdations and • 

Uarcclor of CoaK.c-nbuo lntcrnat1011aL He rec.etvrd an 

A.B. tro;n Grorgetown Uni\wsity and an M.B.A. froo1 lhe 

l;nlvmlty o( Chiugo. 

Aaron Klein 

D1rtttor oftl•~ Fimrlfcfal R.tgulatory Refonn lnitia ri~t. 

Bipt~n•m,. P..Hi .. yCtnttr 

Aaron Kkln b the director of the Financial Regulatory 

Rtfortn lnatiottivt at the Btpartisan Polky Centtr. Previously, 

Klein .. rvtd at the Treasury ~portmtnt as the deputy 

U$Ut:.1nt scc-rct.uy for economk policy. polky coordination. 

In tha.t c:apacity h~ has , ... orkc."<< on financial n.-gulatory rc(orm 

issues including craliing and helping secure pas.~1ge of the 

Oodd·Fronk Wall Street Reform and Con<um<r Protection 

lltt of20LO. Ht also pl<~ycd a leading role un hou!ing ftnan<e 

reform, lronspor1alion .and infraslru,lurc polky and TARP 

Implementation. 

Prior to his nppoi.,unem h\ 2009, he !.en·M for over eight 

years on the staff or the Senate Banking, Housing and Urban 

/\ffa\tS Commit\cc. most rccc-ntl}' as <hie( t"Conomist. In that 

upouty, he worked ro1 Chairmtn Chris Dodd (O-CT) Jnd 

Paul S..1rbanes (0.\1.0) on numerous piects of legid~tinn. 

Including the ~mcrgency Economic Stabilizatton Act (EESA). 

the Hou•ing •nd Economic Rccovory /let (HERA). the surfoce 

lro&.niportahon rc-authorJt.ation (SAFETEA).the Cha.k 21/\ct, 

th~ T(:rrnrlsm Risk Insu rance A<l (TRIA) und the S:.~rboanes · 

Oxley Act. lie al<o led the committee'• economic policy 

ogcnda which included ov,•rslghl over the l'cdcral 1\eS<rvc, 

confir•·n:\llon hc-al'it\gs (or the Council of Ec:onouuc Advisc.:rs 

otnd bf;tte' I'C(prdlng finandal Hternt.:y. Klein is t1 graduate 

of Oanmoutl• College and the Woodrow Wilson S<hool for 

Publtc .l\tf1ns at Princeton Uni\'1.'1 :.ity. 

Alan B. Krueger 

lk'ldhtim l'rofwqr of Econoonlr> <md l'w~/ie IIJ/m,., 

Prillctlo" UnhtNit)' 

Abn Ktllt'&f'l' has hdd a joint appomHoent in th~ Economics 

Dcp>nment and Woodro-.· Wilson School at Ptinwon 

Unlwrshy since 1987. l,rofc.sor KrUC'9'"Y JerYed u Ch-airman 

of Presidrnt &r.ack C>bamo~'s Counc;1l of Economk: Aduscrs 

and • Mrmbcr of hi< C.bhet from 1\ovm\bcr 2011 to August 

2013. lie abo S<Tvtd •• A>slitont :.ec:r<tary for Economic 

Pohcy ond Oi...C EcoOO<nl>t or th.. u.s. D<putmeot or the 

Tr<.uury In 2009·10, ond u Chttf Economist or t~ U.S. 

Ocp3rtrnent of Labor tn 1994·95. Kruq;cr h:u p<~bll•htd 

Yoiddy on the «unulm4.1 of cducalio.n. uncmploymcnl, labor 

de-mand, in<ome di\lnbutton. IOC:.Ialln\ttrancc.IOlbor m-:.Jrkel 

regul;ttlon. tinanda1 milrkcu. lerrorhm ~:md tn\ironmental 

(.XOnormc.s. H~ ,_, the :~.uthor of -what Make, a 'IC!rrorist: 

Economics and lht Roots o( T('rrorism'" and •Educ~tion 

Mancu: A Selection or r.s .. ys on l'dllcallon·. CO-dllthor 

or "Myth and Meuurcmcnt: 'lhe New Economics of the 

Minimum WJKt .. • gnd co Juthor of •tncqu.,lity In Amcrk~J: 

What Role for llumnn Cnphnl Pollci«!" l ie received • 1\.S. 

d<gree (with honort) lrom Comcll Unf,wity'• S<hool of 

lndu:!MtAI & Lubor ltelahons in 19HJ. an A.M. tn Et.onomics 

from llarv1u·d University in l985. :.md a Ph.D. in F..co.,ornics 

fmm llarvnro University ln1987. 
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Endnotes 

1. As of Mal\."h 26, 2015,che )'ldd on tlw! ID•)'tllf 1'rt'.asury n.)te .., JS about 

lpC<r.;<n1. 

1. 1he federal tax on diad futl IS :!4.4 C(ftt$ ptr g,t~Od; chis le\•clls also 

ul.lChm~d from 1993 (USDOT 201St). 

3. 1hls polnt has: al~ brtn rn:Wot in a recent t-Wnll tt~n Project di~u.sslon 

P\lf*l'by Ko.lhn ;tfld Lt:Yinwn(2011). 

4. FOf tH"\tr~nt pordQUo of1"1flA·f'ill$1lCtd projtd~ ~ USOOT (2'0 ISb). 

$. On d'lt other hand.. the hiper f«kral ma.tttl m('l)ns f~l' r~nfedcrJI 

t¢$0U"C$ a.rc needed for a ~Jta or a gl\'en slu,llnd this could lnaewe 

the chance that ft gfY\'1\ proj('("f will bt funded. 

6- 1'cdlnk:dly, thrir pi'Of0$'11 \'arits with ttlt prke of oil 1.TM1 11;J(llks ro 

upslttam oil ptttdwtf.. Wh.ilt tbcrt &rt' sood :trgt~n)tft!S for Imposing 

d~ I~'C on oU. whtthtr It bused for lr.msportntion fud Or t.l'lher l~· 

we propo&c tuing 83..-"iOiin<" tO n.lltn the lax with a USl'T itt. 
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132 

f 


dkrause on DSKHT7XVN1PROD with LOCATORS22332A.092

Highlights 

Roger C. AJtman of Evercore, Aaron Klein of the Bipartisan Policy Center. and Alan Krueger of Princeton 

University oHer seven proposals to address the &ack of investment in the nation's infrastructure and Improve 

Its financing. These proposals- four of wh;ch would be implem$nted in the short run while three would be 

Implemented in the longer term- would reduce inefficiencies, create jobs, and spur economic growth. 

The Proposal 

Expand TIFIA. The federal governmonl would expand lhe amoonl of funding available through the 

Transportalion Infrastructure Finance and Innovation Act (TIFIA) from $1 billion to $10 billion annually, expand 

eligibility 10 nonsurfac.o flansportation infrastructure projects such as airports and seaports, and Improve 

Inte-rnal accounting to increase the amount of prlvate sector financing that can support TIFlA projects. 

Bring Back BABs. The federal governmenl would restore the Build America Bonds J)<ogram to J)<OVido a 

dlrect intarest subsidy to support Infrastructure pro:ects financed by state- or locally Issued debl, at no not 

cost to the federal government. 

Expand Utilization of the Army Corps of Engineers and Harbor Maintenance Trust Fund. The federal 

government would more effectively employ the Army Corps to carry out high-priority proj&Cts funded with the 

S8.5 bitl1on Harbor Maintenance Trust Fund Suf'Pius. 

Reform the Gas Tax. The federal government would Index the gas lax to Inflation and have it vary Inversely 

with the price of gas to promole price stability and shore up the Highway Trust Fund. 

Modernize User Foe Technologies. The fodoral government would lncenllvize state and local governments 

to adopt new forms of user and benefteiary fees to finance infrasuucture projects, whilo also encouraging 

Innovation In user fee technologies. 

Encourage Pooled Procurement. The fcde<al government would establish a national platform and provide 

funds to state and local governments to encourage pooled PfOCurement of materials and equipment. 

Develop a National Infrastructure Strategy. The federal government would croattl a commission charg.ad 

wtlh longEN'·Ierm strateglc planning and ooordlnahon between the many mod43S of the nation's transportation 

Infrastructure. Their strategic plan would guide subsidies for Infrastructure Investment. 

Benefits 

These proposals would help Increase Infrastructure Investment by expanding financing, more-efficiently 

using existing funding sources and developing new sources, lowering costs. and improving coord1nation 

and planning aClOSS levels of government. Increased infrastructure investments would reduce economic 

ineffiCiencies and costs from doforred maintenance, boost economic competitilleness, create jobs. and 

encourage economic growth. 
133 

Mr. YOUNG. Now, I understand, as does everyone here, that P3s 

aren’t a panacea. They are not going to take care of all of our infrastructure financing needs. And, ultimately, those bonds need to be 

paid off, whether that is a prescriptive model driven from Washington, D.C. or, instead, left up to the States, or some combination 

thereof. 

But with all of that laid out there, and with 2 minutes remaining, I want to ask Mr. Poole this. I often hear from some of my colleagues that PABs, or public activity bonds, are suboptimal, because they allow the creation of infrastructure that doesn’t serve a 

public purpose. 

Now, it is my understanding that there have been some special 

programs in response to, say, natural disasters, where the impetus 

was to get money out the door. But beyond those sorts of in 

extremis situations, are you aware of any instances where infrastructure has been created under PABs that don’t serve a public 

purpose in recent years? 

Mr. POOLE. Not that I am aware of, certainly, in the PABs that 

were authorized for surface transportation projects. Those have to 

meet a strict criteria, and they are all—can only be authorized for 

a State to issue on behalf of P3 projects if the USDoT’s credit council approves them as meeting the requirements of the statute that 

says that for serving the public interest—I think 90 percent of the 

users have to be benefiting members of the public. And they are 

all doing that, as far as I can tell. 

Mr. YOUNG. Thank you. Beyond that misunderstanding—which 

I also sense is a misunderstanding—do you agree with concerns 

that I have heard from numerous local governments in Indiana and 

even from some folks outside my own State, that one of the main 

inhibitors to the use of P3 models, delivering oftentimes below cost, 

ahead of projected schedule, and delivering important services with 

private capital at a time of constrained resources, is one of the 

main concerns with competition with munis, which don’t allow private sector engagement? 

Mr. POOLE. Well, there has been some tension in a few States 

between government toll authorities and the private sector, whereas 

the government toll authorities believe—this is true particularly in 

Texas—they should have first pick of projects, and not let the private sector come in and take them. That is the only kind of problem of that sort that I have noticed. And that—it has only been, 

really, in Texas that that has been a problem. In Florida and Virginia it has not come up. 

Mr. YOUNG. But this dynamic is a real one. 

Mr. POOLE. It is a real one. 

Mr. YOUNG. Munis, and then—which also do not allow privatesector—— 

Chairman RYAN. Thank you. 

Mr. YOUNG [continuing]. Engagements. Thank you, sir. 

Chairman RYAN. Thank you. Mr. Kelly. 

Mr. KELLY. Thank you, Chairman, and thank you to all our witnesses. 

Now, I know we talk about this, we don’t want to make it political. But, as everything in this town is, everything is political. Just 

to set the record straight and not to get into any type of an arguVerDate Sep 11 2014 07:03 Apr 18, 2017 Jkt 022332 PO 00000 Frm 00137 Fmt 6633 Sfmt 6602 I:\WAYS\WAYSPS\22332\22332.XXX 22332

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ment, it is interesting that when the Minority was in the Majority, 

they actually extended this, I think, in that short time period— 

when you were in the Majority, the short-term extensions, I think, 

took place eight times. And so, when it comes to—what, do you 

want to use the term ‘‘kicking the can down the road,’’ or putting 

something off until a better time? I just don’t want to make it too 

disingenuous about what is going on. 

And I agree with what you say, Governor, it takes a really strong 

government to raise gas taxes. Our former Governor Corbett in 

Pennsylvania did that. He is no longer Governor. Pennsylvania has 

the highest State tax when it comes to gas. And when I am back 

home, everybody I talk to there says, ‘‘I want better roads, I want 

better bridges, I want better railroads, I want better waterways, I 

want everything to be much better,’’ and I say, ‘‘That is fine, who 

do you think should pay for it,’’ and they say, ‘‘The government.’’ 

And I say, ‘‘Fine. You know where the government gets its money,’’ 

and they will say, ‘‘They have all kinds of it.’’ I say, ‘‘Yes, but they 

get it from you.’’ 

So then it becomes a matter of—Mr. Poole, I really liked your 

analysis, talking about how we would get to that. And I think your 

term is ‘‘users’’ and ‘‘beneficiaries.’’ But the truth of the matter is 

payers and users—the end game for all of this is the consumer. I 

don’t care what it is, I don’t care what we talk about in this town. 

When it comes to who is going to pay for everything, make no mistake. Whether it is a good or a service, it is the final consumer who 

pays for it. And that is where the money comes from. 

I liked your idea on the—I think Mr. Neal had talked about the 

bonds, because I think you get more of the private sector engaging 

in something where there is a positive ROI, and it is an upscale. 

Everybody wins under that situation. 

Listen. I don’t think there is any lack of recognition of where we 

are on this. But it really is—as much as we would like to say it 

shouldn’t be partisan and it shouldn’t be political, it is totally partisan, it is totally political, and it is totally the end to your career 

here if you choose to raise taxes, though well intended. If you use 

the phrase for the general public’s welfare, the interpretation will 

be that you are a tax-and-spend guy or girl who just wants to keep 

raising taxes so the government can keep paying for it. 

I know in my home State of Pennsylvania, as—I am going to 

repeat it—I mean everybody wants better roads, better river— 

bridges, rivers, everything else. 

[Laughter.] 

We deal not only with the Highway Trust Fund, but also with 

the Harbor Maintenance Trust Fund. Everybody who puts into that 

says, ‘‘You know what? I don’t mind putting in more, if the funds 

would stay dedicated to the reason I put it in.’’ And I think, until 

we learn to do that here, it is going to be very difficult. 

You know, we have college education—we set money aside for 

our kids for college, and then we have a hot summer and we decide 

to put a pool in, and we get the money from the kids’ college education fund. Then, when it is time for them to go to school, we say, 

‘‘Gosh darn it, you know, I hope you had fun in the pool, because 

you are not going to school.’’ 


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Mr. Poole, what else could we do? And break it down for me, because you said—and if I understood you correctly, and I read your 

testimony—in the Highway Trust Funds we use funds out of that 

for a lot of other programs, to fund them, that—this is the only 

fund that does that. Is that correct? 

Mr. POOLE. I have not studied the other transportation trust 

funds to a significant degree. But I think the diversion to not building highways and bridges and transit systems of half of the trust 

fund money strikes me as extreme, and I don’t see that happening 

with the aviation trust fund that I do know a lot about. 

So I think it is really time for Congress to take a hard look at 

that. And so, part of the answer—I mean, obviously, we need to invest more in this country in transportation. But part of the answer 

is to spend wisely and spend it on the core priorities, and not try 

to be all things to all people. 

The Federal Government—Federal fuel taxes are not very credible to people. They don’t believe they are getting value, they would 

get value if they went up. Most of the States are able to—State 

DoTs and Governors are able to come up with a credible package 

and persuade the voters that they will really get something out of 

it. 

Mr. KELLY. But that is the key. I think the Governors—— 

Mr. POOLE. That is really the key. 

Mr. KELLY [continuing]. Around his State proving to people this 

is a good investment—— 

Mr. POOLE. Absolutely. 

Mr. KELLY [continuing]. A great return on this investment. That 

is the gap that we face, really. I don’t think there is a person on 

this panel or in this country that doesn’t agree that we need to do 

it. It is how you get it to a point where people out there who are 

paying for it accept it, and also understand the fact that, you know, 

necessarily, prices are going to rise if we are going to continue to 

build our infrastructure. That is just the way it is. 

So, I think what you did was marvelous, but it really does take 

a really strong will and ability to get out and get people to listen 

to what you are doing, with the end result being an uptick for the 

American people, and not just a drain down, because certainly 

their cost of living, especially for middle-income people and lowerincome people, they are getting killed right across the board with 

this. 

So I appreciate you all being here today, and this is something 

we are going to—I guess we will continue to talk to, but there has 

to be a positive end. Thank you. 

Chairman RYAN. Thank you. 

Mr. Renacci. 

Mr. RENACCI. Thank you, Mr. Chairman, and again, I thank 

the witnesses for being here. I really appreciate it. 

Ten months ago I sat in this hearing room and said that I would 

never vote for another short-term solution. I said that to the Chairman. But I did vote for that one. I told him I would vote one more 

time. So when you say no around here, you better have an answer. 

And I spent the last 10 months trying to come up with an answer. 

And, sure enough, I have talked to think tanks, and I have talked 

to individuals. 


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136 

But the most important people I talked to are my constituents. 

And my constituents, when they really realize that paying for 

something is important, user fees are important, they agree with 

it, and they are okay with it. They just want to make sure that 

what they are paying for they are getting. 

And it is interesting, because the one thing we have never talked 

about—I was also a Mayor in my community—we had a project 

back in 2002, it was $18.1 million. It was an interstate project. I 

was the Mayor and I had to come up with $1.8 million to put our 

10 percent in. That money is now still sitting there, 12 years later. 

And that project, today, is over $30 million. And that is the number 

we never talk about, the delay and the delay and the delay and the 

upward cost. And that is why these short-term fixes are not the answer. 

We have to make sure that we look at what is going on in the 

real world. So I also talked to my constituents, brought it to my 

Tea Party people. And everybody is afraid of the Tea Party. I 

brought them all in. I said, ‘‘Well, I have a bill. That bill indexes 

the user fee. Are you for it or against it?’’ First they were against 

it too, and I explained it to them. 

You know, then, what they said to me? ‘‘Quit going to the general 

fund. Quit going in there and taking dollars, because what you are 

doing is you are passing it on to our children and grandchildren. 

And what I would be willing to do is pay a user fee, as long as I 

get my roads and bridges fixed.’’ Amazing. 

One person said to me, ‘‘I just busted a rim. It cost me $400. And 

it would only cost me a couple pennies a year so I don’t bust my 

tire?’’ It costs the average driver $200-some per year in repairs. 

Truck drivers, I am sure, it costs them. So we have to come up 

with a long-term solution. We just can’t continue to go down this 

path. 

And when I hear people talk about, you know, electric cars, they 

only represent .71 percent. We have to start—when I hear people 

saying we have more miles per gallon, absolutely. We have more 

drivers, 23 percent more drivers since 1980. So if you start using 

statistics here, we just have to come up with an answer. Because 

statistics, I have learned a long time ago, can be used in your favor 

or against you. 

Now, what I heard from all three of you—and I hope you will answer this—you all agree that user fees are the answer. Correct? 

Every one of you? 

Mr. SHIRLEY. User fees provide, certainly, good incentives. 

Mr. RENACCI. All right. In fact, Mr.—— 

Mr. SHIRLEY. Or economic—— 

Mr. RENACCI [continuing]. Poole, you say using general fund 

and other non-transportation revenues to bail out the Highway 

Trust Fund undercuts integrity of the user-pay/user-benefit principle. 

Mr. POOLE. Yes, and I firmly believe that. And I think there 

is—in the written testimony there is a lot of amplification of the 

reasons why user-pays/user-benefits is the best approach. And I 

think we are probably all in agreement on that. 

Mr. RENACCI. Right. And that is what I thought I heard. 


dkrause on DSKHT7XVN1PROD with LOCATORS
137 

And I also heard you all say—and I agree with you—that we 

don’t—we are not going to have an answer by July 1st, a user-fee 

answer. Correct? You would all agree with that? So, we have to 

come up with a long-term solution. 

Now, Mr. Pascrell mentioned a bill that he and I have. And, 

quite frankly, it does give us 18 months by indexing the user fee. 

But what a lot of people don’t realize in that bill is that the bipartisan bicameral committee can eliminate that index. If they think 

there is another answer, they can go and—so it is not really an increase, it is a short-term solution. 

Now, Mr. Poole, you also mentioned—and I heard it in your oral 

testimony—that we should stay with a user-based system, but we 

should modify it in order to get to what you believe is a vehicles 

miles-driven tax. Correct? 

Mr. POOLE. That is correct, yes. 

Mr. RENACCI. So some modification of the current user fee 

would get us there. Correct? 

Mr. POOLE. Well, we need to get about 10 years before you 

could really have something at the Federal level, a mileage-based 

user fee that would really be politically and economically feasible. 

Mr. RENACCI. Well, I am glad you said that. Because the other 

thing I did for the last 6, 10 months, is go around to my colleagues 

and ask them for answers. And I have had people say, ‘‘I am not 

voting for anything but a vehicle mileage tax,’’ and I say to them, 

‘‘That is 10 years down the road.’’ 

Mr. POOLE. And you are right. 

Mr. RENACCI. You just confirmed that. 

Mr. POOLE. You are right. 

Mr. RENACCI. But I think what I am hearing out of this—and 

I really do appreciate the Chairman willing to have this discussion—is we need to have a user-fee-based program, and we need 

to do something long-term. And that is why, if you know the text 

of my bill, it gives us 18 months, it sets up a bipartisan, bicameral 

committee. Any thoughts on the bill from any of you that are aware 

of it? 

Mr. GRAVES. My only comment, Congressman, that, based on 

what I saw in the last day or two from CBO about the—again, the 

challenges with debt, with the need for this Congress, this country, 

to wisely use its general fund revenues, I think the near-term solution is something that is user-based, and the long-term solution is, 

well, whatever the long-term solution might be. 

Chairman RYAN. Thank you. 

Mr. RENACCI. Thank you. I yield back. 

Chairman RYAN. Thank you. 

Mr. Meehan. 

Mr. MEEHAN. Thank you, Mr. Chairman. And I thank you for 

holding this important hearing. I have a couple of questions that 

I would like to get some feelings on. 

One—and, Mr. Poole, you have identified a couple of times that 

there have been ideas of prioritizing and moving away from support of other kinds of transit. But I represent an area that is a 

suburban/urban area, with 36.7 million trips last year that were 

taken on that. And, in fact, the regional rail, which has not been 

invested in other regions—part of the problem in California, the 


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lack of this regional rail—that which exists has increased by 50 

percent over the last 10 years. And so, the utilization rates are up. 

If they are left to not get the kind of support—what does that 

do to create flow back into already crowded places where—these 

kinds of Federal investments in highways, it is increasingly expensive to do the kinds of construction in urban areas. 

Mr. POOLE. Well, in my testimony I did not call for eliminating 

transit from the trust fund. Although, in principle, it is a local 

issue that eventually I think ought to become, again, a local responsibility, like it once was. But there are a lot of other things 

that could be done—— 

Mr. MEEHAN. Can you do that, if you have 36.7 million people? 

Can you make that a local—— 

Mr. POOLE. Well, I think so, if you look at more cost-effective 

approaches. And a combination of an improved design of a bus system, outsourcing competitively to bus operators and a big push for 

bus rapid transit, which is a lot more cost-effective in most cases 

than passenger rail, could significantly reduce the cost, while increasing the service that—— 

Mr. MEEHAN. If you take passenger rail and you are coming 

from—you could get into town in 22 minutes. The same bus ride 

is an hour and 25 minutes. 

Mr. POOLE. Well, there are ways—if your freeways have express 

lanes, express bus service—— 

Mr. MEEHAN. Where do you put an express lane? Have you 

driven in New York lately? 

Mr. POOLE. I have not driven—I try not to drive when I am in 

New York—— 

Mr. MEEHAN. Let me ask a question, just one other thing. And 

I appreciate that. I have questions about vehicle miles traveled. 

And I think it is a fascinating concept. But I also bring a history 

in some other areas, working on matters associated with privacy 

and other kinds of issues, with cyber. How does this work? 

And those of you who have spent time, will Americans buy into 

the idea of having the government track everywhere they are driving? 

Mr. POOLE. No, they won’t. And that is why that is not the solution. There—Oregon, I think, is doing the most important pioneering work, and I give some examples in the written testimony. 

There is a whole array of options, including an all-you-can-drive option, where, when you pay your annual vehicle registration fee, you 

pay a fee that is your mileage charge for the year. Another simple 

one is you have your odometer read. If your State has an annual 

vehicle inspection or a smog check inspection, they read your odometer then, and you pay a fee, a per-mile fee, based on how many 

miles you have driven. 

There are low-tech options that use cell phone towers to tell the 

general area you are in if you are at a State border, where you 

need to know how many miles to go to New Jersey and how many 

to New York, a cell phone tower can—without tracking exactly 

where you drive, but just which side of the border you are on. 

So there are a lot of options, and that is why we need pilot programs, we need a lot more research to figure out how to do this 


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in ways that are cost effective and privacy protected. We are in a 

learning stage right now. 

Mr. MEEHAN. Governor, Mr. Shirley, in my remaining minute, 

do you have any insights on—— 

Mr. GRAVES. Well, I just—on that point, I would refer back to 

my submitted testimony in that the—you know, the estimates, 

however, are that we have to figure out how to collect from about 

250 million moving vehicles, 250 million. And this will be a government program, for the most part. Maybe we can privatize it. 

But my concern would be—is that today we collect fuel tax from 

about 1,000 payers, and now we want to transition to 250 million. 

So let’s just—again, I agree with a 10-year assessment. It is not 

ready for prime time, and might not be for quite some time. 

Mr. MEEHAN. Thank you for your insights. 

I yield back. 

Chairman RYAN. Thank you. Mr. Davis, do you want to go? The 

gentleman is recognized. 

Mr. DAVIS. Thank you very much, Mr. Chairman. This has been 

a very interesting hearing. And I want to thank the witnesses for 

all of their testimony. 

You know, we have heard a great deal, in terms of options, in 

terms of possibilities, alternatives, approaches that might be used. 

I noticed that many people are totally averse to the notion of taxation, that we try to avoid it as much as we possibly can. And 

when we get down to the bottom line, the ultimate is that the consumer, or the people, will always be the ones that pay, will always 

be the ones that pay. 

I am thinking it was Justice Oliver Wendell Holmes who suggested that taxation is the price that we pay for a civilized society, 

meaning that there is no way around it. Another one of my favorite 

philosophers, a guy named Frederick Douglass, used to say that he 

understood one thing if he didn’t understand anything else, and 

that is in this world we may not get everything that we pay for, 

but we most certainly will pay for everything that we get, and that 

if we didn’t pay one way, we would pay another way. Another truism is that we go all the way back to the Bible, and the prophet 

Isaiah suggested that we had to come and reason together, otherwise we would ultimately be destroyed by the edge of the sword. 

And so, as I think of all these philosophical—Lyndon Johnson 

was fond of saying there is no gain without some pain, that there 

is just no way around it. I think that the general public is pretty 

reasonable when they understand. We are not talking about any 

kind of entitlements. We are not talking about any safety nets. We 

are not talking about any kind of giveaways. We are talking about 

how do we maintain, an absolute need, our infrastructure that we 

can’t do without, that there is just no way to do without it. 

Governor, I find you to be quite refreshing, in terms of your approach that is kind of direct, saying you have to bite the bullet, you 

have to do what you have to do in order to accomplish what it is 

that you want to accomplish. How do you feel the general public 

might react? I mean we have seen gasoline prices fluctuate. We 

have seen them go way up, where you don’t want to go to the service station. We have seen them come down. How do you think the 

general public might respond to a modest gasoline tax increase like 


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Mr. Renacci may have been talking about, or Mr. Pascrell may 

have been talking—how do you think the general public, the guy 

who has to pull up to the pump, might respond to that? 

Mr. GRAVES. Well, Congressman, I think it depends a lot on the 

program that you all would sell to the public. And you have to— 

you know, again, you have to tell them, ‘‘This is what you are going 

to get in exchange for what we are asking from you.’’ 

I think my concern in this entire discussion is that, if we are 

worried about what it costs people, I am still one who believes that 

almost every option we have discussed has a price point that is 

greater than what the price point would be if we funded it through 

the fuel tax. And I—you know, tolls, if we are worried about people’s mobility, toll is an impediment for a lot of Americans to enjoy 

the mobility that they enjoy today. PPPs, as I said, there is an ROI 

expectation, that people are going to make money off of operating 

that system. 

So, I am just—you know, as you can tell, I am a fan of the system we have, it is the one we know. But I am not averse to discussing what a future would look like that might be different than 

that. 

Mr. DAVIS. I thank our witnesses, Mr. Chairman, I thank you, 

and I yield back. 

Chairman RYAN. Thank you. 

Mrs. Noem. 

Mrs. NOEM. Thank you, Mr. Chairman. I come from a part of 

the country that a lot of folks refer to as flyover country. I call it 

home. And I love it there. But the fact is it is one of the areas 

where we need roads and bridges to move commerce and move people. No matter where you drive or where you go, it is a long ways 

to get there. 

In fact, you know, families have to drive tens of miles to go to 

the doctor, to get groceries, to go to work, to go to school. Every 

morning at my house, four vehicles leave the yard, and by the time 

they come back they have traveled hundreds of miles. And that is 

just an everyday occurrence that happens in South Dakota. 

And so, I am very concerned about transportation funding, because it is necessary to have good roads and bridges all the way 

across the country to move commerce, and for that to happen efficiently in America. But also, we need to make sure that we aren’t 

disproportionately putting a burden upon people in rural America. 

We do not want to hollow out the center of this country by forcing 

high costs on people that can’t afford it. 

I had one woman I visited with in a grocery store one winter that 

came to me, crying, with her hands full of coupons, because she 

couldn’t pay her electricity bills because they were so high because 

of the cold weather. She had ridden into town with a friend to go 

to work, but therefore had missed taking her son to the doctor and 

had missed her daughter’s basketball game, because she was waiting for her friend to get off work so she could ride back home with 

her. 

And that is the concerns that I have when we talk about a VMT 

tax or adding some kind of miles traveled tax. And I know, Mr. 

Poole, this is something you have put forward as a solution. But 

tell me. Is there some kind of an assessment that we are going to 


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take into account the high burden that we will be putting on people 

in rural America with that kind of a system? 

Mr. POOLE. The researchers that are working on this are very 

aware of that concern and that problem. And a couple things—you 

know, this is longer than we have time to discuss. But, number 

one, there is good statistical evidence that, on average, rural people 

drive fewer miles per year than urban people. 

Now, that is going to vary in different cases, but that is important to keep in mind, to the extent that that is legitimate, and a 

verified fact. Number two is that a VMT system doesn’t necessarily 

charge the same rate for every kind of road. It may end up charging higher rates for premium roads, like interstates, and lower 

rates for, you know, two-lane farm-to-market roads, and this kind 

of thing, because those roads actually, you know, do cost less to 

build and maintain. 

Mrs. NOEM. Yes. 

Mr. POOLE. So this is what I mean. We need more research on 

this. A lot of research is going on. We don’t have all the answers 

yet to how a system like that would work. 

Mrs. NOEM. Okay. Governor, could you speak to this issue, as 

well? Because you may have some experience. I know that one of 

the proposals being put forward by your association is to have an 

increase of the user fees. But while in your industry it can be 

passed on to customers, that is not available to people that maybe 

are incurring that increased burden themselves and upon their 

family budgets. 

So I am concerned about that, especially being from a part of the 

country where we just don’t have public transportation as an option. There are no buses, there is no rail, there is no other way for 

them to get anywhere, except through their own vehicles that they 

have the cost of maintaining and running, but also paying the gas 

to fill them up every day. Could you speak to this issue, as well? 

Mr. GRAVES. Well, I think that, if I understand, you know, as 

I said earlier in my comments, we are not benevolent. We are going 

to figure out, as commercial operators, how to embed within our 

freight rate cost whatever it is, whether it is an increase in the fuel 

tax, whether it is toll, whether—you know, whatever it might be. 

And I just—you know, I could be proven wrong here, and Bob 

probably will at some point, but I still believe that, at the end of 

the day, the least expensive option of raising the money we need 

for infrastructure is the fuel tax. It is basically in the neighborhood 

of 1 or 2 cents on every dollar raised, compared to anything else 

you might use. 

Mrs. NOEM. Okay. Mr. Shirley, could you speak to CBO and 

how you look at geographical locations and take into account some 

of the challenges that we have been discussing, the variation between rural and urban areas of the country, and if that is accounted for in the analysis? 

Mr. SHIRLEY. Certainly. That is something that, you know, we 

see as being a difference out there between different geographical 

areas. 

In terms of a potential VMT tax system, you know, there would 

be trade-offs between sort of how perhaps complex this system 

would be to administer, and what the cost might be for that. A 


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trade-off between that and the ability to allow for different fees or 

taxes to be charged in different areas. That would be one factor to 

take into consideration. 

Mrs. NOEM. Well, I just want to, as we have the discussion, 

have a complete discussion, and talk about the challenges that we 

face in certain parts of our country. In urban areas we have seen 

investments by the Federal Government, and many more dollars 

poured in to provide other transportation options that simply 

doesn’t happen in rural America. And so I think we do need to take 

into account that we are placing a higher burden on the individuals 

in certain parts of the country when we look at user fees, just because of their lifestyles and the area and the geographical location 

in which they are located. 

Chairman RYAN. Thank you. Thank you. 

Mr. Larson. 

Mr. LARSON. Thank you, Mr. Chairman. And thank you again 

for holding this hearing. And I think I want to thank the witnesses 

for their patience and persistence. 

And I would also remark, Mr. Chairman, that the—I saw the 

lines of people waiting to get in here. And the number of people 

who have stayed here to listen to Members of Congress and to listen to our key witnesses, I think underscores the importance of this 

meeting. 

I want to associate myself with the remarks of Mr. Pascrell and 

Mr. Renacci. I want to commend them for their legislation. And it 

is my sincere hope that we can take this up. I think that is an important step forward. And it is not kicking the can down the road. 

And I respect what my good friend, Mr. Kelly, had to say, but this 

is about us. This is about the Congress now, and our opportunity 

to do what we were elected to do: Vote. 

I would quickly ask all the panelists—I am sure I know your answer to this—do you think we should kick the can down the road 

beyond July 31st? Yes or no. 

Mr. GRAVES. I prefer that you not. 

Mr. LARSON. Prefer that we not? Prefer that we not? 

Mr. POOLE. I prefer that you not, but I don’t think you have any 

choice. 

Mr. LARSON. You would prefer that we—or you can’t answer, 

Mr. Shirley, actually, probably. 

Mr. SHIRLEY. CBO does not make policy recommendations. 

Mr. LARSON. I understand that, and so should the audience, 

you know, that that is not your position. 

So let’s—so this is what we have here. I mean this is all going 

to be determined. And for people out there in the viewing audience, 

it pains me to say this, because I believe that we should step up 

and take our responsibility head on, and I believe that is what the 

American people expect out of us. And it especially pains us, because we know that the only jobs bill that is before the United 

States Congress is, in fact, this bill. This is the only opportunity 

people are going to have to vote on jobs, and we are going to kick 

that can down the road, which further destroys people’s credibility 

in Congress. 

I do think that there will be a solution. I do think, unfortunately, 

that solution will come by way of an omnibus bill. 


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Now, for those of you—and many in this audience are familiar 

with omnibus bills—but Congress either does a continuing resolution or an omnibus bill. We don’t do anything in regular order, 

which means we don’t take up good proposals like this. We wait 

until the last minute because we can’t do the fundamental thing 

that we were sent here to do, which is to vote on difficult subjects. 

If we did, irrespective of the outcome of the vote, we would be 

moving the agenda forward and the—so that is really why these 

public hearings are important, that we need the opportunity to 

vote. 

I think a number of you have mentioned, with respect to private 

activity bonds, that you support them. Am I correct in saying that? 

And at least, Mr. Shirley, you acknowledge the benefits that they 

would provide, as well, in terms of the testimony that we have 

heard. We—however, that has been eliminated. Private activity 

bonds have been eliminated in a draft of the tax reform bill put together by our colleagues. I think we have to revisit these things, 

as well. But, fundamentally, we have to vote. 

Mr. Tiberi, who is a dear friend of mine, said, ‘‘Look, you have 

to’’—in some of his comments talking about how he agreed, as I do, 

with what Mr. Neal had to say about private activity bonds and 

Buy America bonds, and what we have to do. And he said—and 

then acknowledged, ‘‘Keep the pressure on us.’’ 

Well, we were elected to vote. And that is our fundamental responsibility. And it may be, as Mr. Poole suggested, we get to the 

31st and you see no other alternative. Let us hope—and our Chairman is very resourceful—let us hope, as they come up with a 

bridge, that it is not a bridge to nowhere, that, once again, everyone in America doesn’t see us kicking this down the road again to 

come up with another piecemeal solution. 

Mr. Renacci and Mr. Pascrell have put forward a bill that at 

least can provide us with that opportunity to do all the studies that 

we need. Personally, I would agree with Mr. Graves. I would be for 

whatever it takes. If it is a gas tax, it is a gas tax. If it is a carbon 

tax, it is a carbon tax. But, for God’s sake, put America back to 

work. That is what Roosevelt would have done, that is what Eisenhower did. When are we going to step up to the plate, as Americans, not Democrats or Republicans, but as Americans, and do the 

right thing for the citizens we represent? 

I yield back my time. 

Chairman RYAN. The gentleman is done with his question. 

[Laughter.] 

Mr. LARSON. Mr.—— 

I did have a couple. 

Chairman RYAN. Mr. Dold. 

Mr. DOLD. Thank you, Mr. Chairman. And I just want to say 

to my good friend, Mr. Larson, I don’t disagree. I think, as we look 

at a long-term surface transportation bill, this is absolutely critical. 

This isn’t a Republican or a Democrat issue. We all use the roads. 

And, frankly, as we look at how do we grow our economy, people 

are looking. When they are saying, ‘‘Where am I going to place my 

business,’’ one of the things that they look at is they look at our 

infrastructure. ‘‘How am I going to get my raw materials in? How 


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are we going to get our finished product out?’’ And, certainly in the 

Chicago terminal, my home area, how do we move people around? 

I mean this is absolutely critical. In talking to stakeholders back 

in the Chicago area, they are looking for that long-term certainty. 

How do we buy rail cars? Do we buy them one at a time, or do we 

buy them ten at a time? I can get a much better price if I am buying them ten at a time. The same thing is true if we are looking 

at how we are going to be able to fund our roadways. 

And so, frankly, this is an issue that has been kicked down the 

road. The can has been kicked by multiple different Administrations. We need a long-term surface transportation bill, and that is 

one of the things that I do believe unites us. And, frankly, we need 

to look at creative ways on how we are going to be able to fund 

this, because we have been operating, obviously, at a deficit for a 

period of time, roughly about $13 billion on an annual basis is kind 

of what the shortfall is. That is some pretty real dollars. 

And so, you know, when I look at certainly the Chicago terminal, 

and I look at Chicago and mass transit and highways—because, 

again, there are some that want to talk just about the roads, and 

I want to make sure that people understand that mass transit— 

and I know some of you on the panel aren’t necessarily big fans of 

mass transit—but when we look at congestion—Governor, can you 

talk to me for a second about how congestion impacts trucking and 

impacts just overall productivity? 

Mr. GRAVES. Well, again, I think the submitted testimony reflects the Texas Transportation Institute’s assessment of the billions of dollars that directly impacts our industry, just sitting idle. 

And, obviously, we have the hours of service issue, where, you 

know, a worker might be out trying to move a load, and if they 

somehow get caught in congestion, and then the hours run out, 

then you can’t finish the delivery, which disrupts the supply chain. 

And, of course, to Americans in totality, I believe the number is well over $100 billion of—$120 billion—of impact on our economy 

each year. 

Mr. DOLD. That is a lot of money. I know UPS did a study that 

said for every 5 minutes of idling time it cost the company about 

$100 million. Now, when you expand that off—that is enormous. 

But I want to highlight just another issue that is—okay, that is 

a business perspective, but I am talking about a real-life perspective. So we have switches, you know, that date back generations in 

the Chicago terminal. And, frankly, that could add as much as 15 

minutes a day to somebody’s commute on a train, 15 minutes each 

way. That is 101⁄2 hours a month, if you are a regular commuter. 

That is time that you could spend with your family. That is time 

that could be spent doing a lot of other things. That is a quality 

of life issue. 

And so, as we look at these types of things, Mr. Shirley, can you 

elaborate on the connection between the highway account and the 

mass transit account within the Highway Trust Fund? Specifically, 

do drivers on the roads and highways benefit from a robust mass 

transit network? 

Mr. SHIRLEY. So, drivers may face congested urban areas. Mass 

transit may make some contributions to reducing some of that congestion. 


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Mr. DOLD. It is a ‘‘may.’’ You think it may reduce? Could you 

definitely say it absolutely does? 

Mr. SHIRLEY. Yes, mass transit systems—— 

Mr. DOLD. Absolutely do? I can tell you that in—certainly in the 

Chicago area, if we got rid of our mass transit system, we would 

see an increased congestion of 50 percent on our roadways. Talking 

to some of the folks over at Metra, they tell me we need an additional 29 lanes of traffic. So, I mean, again, that is a lot of traffic. 

And so, again, I just want to make sure that, as we look at our 

surface transportation, as we look at this issue, it is going to be 

enormously important for us to work in a bipartisan fashion to 

come up with solutions. And, frankly, we have to start thinking 

outside of the box, because this is something that is not going 

away. And if we want to grow our economy, if we want to make 

sure that we are making people productive, this is one of the ways 

that we can do it. 

Governor, can you talk to me just a little bit about the importance of freight in the Chicago area? 

Mr. GRAVES. Well, there is—as I said, as our economy grows, 

and the number of people in this country grow, we have a everincreasing demand for freight movement. And the supply chain has 

become very, very precise, in terms of what their expectations are. 

The combination of the congestion, the road conditions, has made 

it very difficult for us to continue to meet some of those expectations, and it is having a very real impact on, you know, the economic competitiveness of this country, vis a vis the rest of the 

world. No doubt about it. 

Mr. DOLD. Governor, thank you. 

Mr. Chairman, my time has expired. 

Chairman RYAN. Thank you. 

Mrs. Black. 

Mrs. BLACK. Thank you, Mr. Chairman. And I am going to wrap 

this up. I think I am the last one to ask a question today. The discussion has been excellent. This has been a great hearing. I appreciate all the panelists’ written materials that you have given to us. 

I am going to keep them and reread them, because there is so 

much good material here. 

I really appreciated, Mr. Poole, that you gave us a little bit of 

history there in the—1919 is when the gas tax was originally put 

in by States. And then in 1959 is when the Highway Trust Fund 

was begun by the Federal Government. Those are two little facts 

that I was not aware of. 

But as we look at all of the challenges that have been talked 

about by my colleagues here, we know that regulations are increasing costs. I think we have to make sure that, as we talk about this, 

it is not a panacea to say the only solution here is to raise a tax. 

Because some of the folks in my community will say to me, ‘‘Well, 

if you just raise that tax on fuel, then it will take care of the problem.’’ 

But we know regulations are a part of increasing the costs in 

building a road when it takes—when I originally got into the public 

sector some 14 years ago, it took about 3 to 5 years in our community to build a road. Now it takes anywhere from 7 to 10 years. 

And the cost of those regulations are continuing to increase, and 


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that’s money that comes out of our trust fund. That’s robbing the 

trust fund for other kinds of things. Certainly I like walking paths, 

and I like those kinds of things, but that doesn’t take care of a pothole that is in the road, nor does it build another road to decrease 

the congestion. 

The cost of building materials is certainly going up. The cost of 

steel and concrete. So to just have that panacea, to say, ‘‘Oh, all 

we have to do is just raise the gas tax’’ certainly is not the answer 

to this. There are a whole lot of other things that we need to look 

at. 

So I want to go to the user pays, the user benefits. And that is 

certainly how we ought to think about anything that we do, is that 

when I use something I have to pay for that. I know that the VMT 

has some promise to it. 

I know, Mr. Poole, you talk about it is going to take a while before we can actually get there. Can you give me an idea of any 

State that has been using—doing a pilot project where you have 

seen things that have come out of that that we could maybe start 

with now, rather than waiting for 10 years to initiate? 

Mr. POOLE. Well, I think everybody agrees that Oregon is ahead 

of most of the other States. They have a 5,000-person pilot program 

that is going to get underway July 1st. They are using privatesector vendors to be the interface for people so that it is a private 

sector company that is going to be getting the mileage totals and 

arranging with the State to get the rebates for the fuel taxes that 

people are paying, their per-mile charge, instead of the fuel tax. 

They are also giving people a set of choices of how they want to 

pay. And that is a little more detailed in my written remarks. But 

that is—I think they have learned a couple of things. One is that 

it is really important that there be choices. Number two, we need 

a lot more trying out of different methods to see which ones people 

like and which ones they don’t, which ones cost too much and 

which ones are economical. 

There is also going to be—to go to Governor Graves’ comments 

about the cost of collecting, on very large-scale volumes, at the 

scale of Oregon, they are looking at maybe 3 to 4 percent of the 

revenue needing to be cost of collection once it were rolled out to 

the entire State population. Now, that is more than the 1 or 11⁄2

percent fuel tax. But it is not like the old tolling that was 20 to 

30 percent of the revenue that was needed for manual cash toll collection. 

So, there is potential there for this thing—these things to be economically doable. But we really don’t know enough yet to do anything at—certainly at the Federal level in the next year or two, for 

sure. Maybe sooner than 10 years, but that depends on how much 

is learned on pilot projects in the next maybe 3 or 4 years. 

Mrs. BLACK. What is the length of their pilot projects when they 

expect to be able to get some good information that could be 

shared—— 

Mr. POOLE. You know, I am not absolutely sure. It is at least 

a year in Oregon. And California is designing theirs, which is probably going to be a model on the Oregon one. But it will be at least 

a year, possibly two. 


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Mrs. BLACK. And I know my time is running out, but I think 

there is also some discussion that could be had on more toll roads. 

When you consider the amount of congestion that takes place on 

the roads that, obviously, are very busy roads, that—there has to 

be an alternative. Because sitting there for that amount of time I 

know—— 

Mr. POOLE. Right. 

Mrs. BLACK [continuing]. Mr. Graves, you talked about how 

that costs the trucker that sits in that traffic. If there were an alternative, would the cost of that alternative be better than them 

sitting for that amount of time, and not delivering their product, 

interrupting the supply chain, and then also the cost of the driver 

sitting there, when he could be on the clock, actually delivering the 

product? 

Thank you, Mr. Chairman. This was a great hearing. 

Chairman RYAN. Thank you. Thank you, gentlelady. 

The gentleman from Connecticut, did you have—I see that you 

wanted to make—— 

Mr. BLUMENAUER. Yes. Thank you, Mr. Chairman. Thank you 

for the opportunity to—for unanimous consent. 

I would like the witnesses—I am sure you are probably familiar 

with the Hamilton Project, and a number of the recommendations 

that they have put forward. I would like to submit their summary 

to you and ask if you could respond to that. I know we don’t have 

the time today. If you could respond with your—to their various notions that they have put forward. Thank you so much. 

Chairman RYAN. Yes, thank you. This concludes the hearing. I 

want to thank the three of you, known experts in your field. This 

is very informative. You can tell that Members on both sides of the 

aisle have a lot of passion for this issue. We are in search of solutions. 

I want to thank you for spending such a good amount of your 

time with us today. This concludes our hearing. 

[Whereupon, at 12:45 p.m., the Committee was adjourned.] 

[Questions for the Record follow:] 


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~ ... AMERICAN TRUCKING ASSOCIATIONS 

950 N, Globe Ro ed *Su ite 210 • Arlington, VA * 22203-4181 AlA 'tNWW.trucklng.org 

"l *----------------------------------------------------- Bill Graves 

President and C hief Executive Officer 

TI1e Honorable Paul Ryan 

Chainnan 

Ways & Means Committee 

U.S. House of Represematives 

Washington, DC 20515 

Dear Chairman Ryan: 

July21, 2015 

TI1ank you for the oppo1tunity to provide additional input on surface transportation funding 

options. I am pleased to provide responses for the record to your July 8 letter. 

Responsetoquestionfrom Rep. Larson. ATA has reviewed the May2015 Hamilton Project 

report. TI1e report makes several short-term and long-tenn •·ecommendations for addressing 

transportation infrastn•cture investment shortfalls. 

With regard to the short-tenn recommendations, three of the four impact highway funding, and 

one involves funding for harbor maintenance. We will address the highway funding proposals only. The 

document proposes to expand and reform the TIFIA program, and restore Build America Bonds. In 

general, ATA is not opposed to providing transportation agencies with additiona l financing tools. 

However, agencies' critical needs center around a lack of funding, and many cannot afford to take on 

more debt. Funhcnnorc, '''C arc eonccmcd that additional debt il'tstrumcnt.s, without sufficient revenue~ 

will spur state and local governments to accelerate their growing dependence on tolls as a primary source 

of funds for highway construction. As I mentioned in my testimony, toll financing is fnr less efficient 

than traditional methods, and many toll projects have failed to realize projected traffic and revenue le,•els, 

which creates public financia l risk. Furthermore, we would be very conccmcd if additional bond subsidy 

costs are borne by the Highway Trust Fund. 

Another short-term funding proposal would adjust the gas tax based on retail prices, lowering the 

tax when prices rise above a set threshold and raising it when lower than the threshold. An in nationadjusted noor and ceiling would be established to prevent large spikes or drops in the ta.x rate. Wh ile not 

stated explicitly, we assume on-highway diesel and natural gas taxes would receive the same treatment. 

We are ccncerned about the variability in tax revenue produced by this proposal, which is important to 

transportation agencies that depend on predictable revenue levels for long-tenn planning. We also fail to 

see how this proposal is more beneficial than simply raising and indexing the existing fuel tax. The 

authors claim a consumer benefit from more stable retail prices. flowcvcr, assuming tax rates do not 

increase substantially, federal laxes would be such a small percentage of the relail price that the impacts 

will be marginal and largely unnoticeable to consumers. 

With regard to the report's long-term funding recommendations, ATA recognizes that fuel taxes 

will, over the long term, be a declining source of revenue, particularly from passenger vehicles, and a 

supplement or replacement will be needed. We support the report's recommendation for mol'e research 

into Jhc potential usc of technology to improve revenue collection. We are ccncemed, however, with the 

proposal to allow state or regional fee collection systems, which could create inefficiencies for carriers 

that operate over large geographic regions. A TA agrees with the report's recommendations on adoption 

I JELL~~~~ ~ ----0-t-flc_o_:_7_0_3_-8_3_8-_1_8_0_4_*_FA_ X_: 7-0-3--a3- 8- --, 99- _4_ *_ b_g-ra_v_e_o_O_INC __ k_lng-.o-rg _ _ _ _ 
149 

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July21,2015 

Page2 

of national ~tandard . We also note that current toll collection and mileage-based user fcc technologies 

have far higher collection L"OSIS than traditionalu~r fees, and significant technological advancement 

would have to be made before they are more widely adopted. 

ATA suppon.s the concept of a national infrastructure strategy. However, such an effort is likely 

to be either too broadly conceived to be useful-effectively a check the box exercise - or too obtrusive to 

be accepted by state and loc.11 officials who would be reluctant to cede authority, pa rticularly over the 

expenditure of funds. rurthermore, we would oppose the establishment of a national, multi-modal 

infrastructure fund paid for primarily by highway users. We recommend a more limited, but feasible 

approach that identir.es major higltway freight botrlcnecks throughout the country and ensures thAt they 

receive federnl funding priority. 

Response 10 queslion from Rep. Sanchez. Poor roads and bridges add additional cost Md create 

safety problems for trucking companies. Pot holed puvcmcnu; increase fuel usage and add mainten•nce 

costs (e.g. for tires and suspension systems). When bridges arc closed or load-posted they fon:c tntcks to 

take longer routes, which adds cost and increases crash exposure. Congestion on the Interstate System 

alone costs the uucking industry $9.2 bill ion per year due to additional fuel and labor expenses. 

Furthemtore, road conditions arc a factor in one-third of highway crashes. Thcoe added costs are 

particularly problematic for small-business trucking companies, which comprise more than 90% of the 

industry. Smaller carriers are less able to absorb these additional expenditures. If a single-truck operator 

loses a week of work due to a major maintenance issue, lbt· example, that oper:uor may not be able to 

recover financially due to extremely low profit mMgins. 

Long-tem1, adequate and stable funding for the Highway Trust Fund would allow states to 

address their m~intenance needs and fund major projects. Currently, in large part due to the lack of stable 

federal funding. many sta e.~; have: resorted tn a h:~.~ic maintenAnce prog.N\m~ and h:'\Ve put larger. more 

expensive projects on hold or huve canceled them altogether. This means that many major bridge projects 

that in the past were routinely given prioriry are now indefin itely delayed pending fe-deral action. Eighty· 

nine percent of Interstate System congestion occurred on just 12% of tile network. The major bonlenecks 

which arc responsible for these traffic conditions arc not being addressed because state.• lack the 

confidence in the federal-aid highwoy program they need to move forward on long-term projects. This 

situation will continue to deteriorate unless the federul government implements a long-term solution to the 

funding shortfall. 

Bill Graves 
150 

[Submissions for the Record follow:] 


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ALAN LOI\'{NTHAl .Cl'nt0orU1'~ 

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June 15, 2015 

Chairman Paul Ryan 

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1llals1)ington, J:)q:; 20515 

Ranking Member Sander Levin 

House Ways and Means Committee 

1102 Longworth HOB 

Washington D.C. 20515 

Dear Chairman Ryan and Ranking Member Levin, 

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I applaud Chairman Ryan and Ranking Member Levin for holding a House Ways and Means hearing to 

address the shortfalls in the Highway Trust Fund (HTF). I support and encourage the committee to 

explore new long-term, sustainable user fee options for the HTF. I do, however, have a significant 

concern that I respectfully ask the committee to consider-fixing the HTF will not fix freight 

infrastructure. 

Goods movement depends on multimodal interconnected systems while the HTF singularly funds 

highways. Freight movement runs through air, sea and Inland ports, roads, rail, international border 

crossings and warehouses. The HTF funds highway construction and maintenance and does not fund the 

connectors that bridge highways, ports, warehouse centers and rail that are so critical to an efficient 

goods movement system. Frankly, we do not currently have a dedicated federal program that does fund 

multimodal freight projects. Funding goods movement will require a dedicated revenue stream that 

equitably taps multimodal users. 

According to a report by the U.S. Chamber of Commerce, freight bottlenecks on U.S. highways cause 

more than 243 million hours of delay in moving merchandise annually. Those delays cost truckers about 

$6.5 billion annually and untold costs to businesses awaiting the delayed goods. Nike alone spends an 

additional $4 million per week to carry an extra 7-14 days of inventory to compensate for shipping 

delays. 

The shippers who utilize our nation's freight infrastructure, including the US Chamber of Commerce and 

the National Association of Manufacturers are calling for an efficient, cost-effective multimodal goods 

movement system. 

We do not need to walt for a long-term sustainable fix to HTF solvency to fix freight. We can fix freight 

right now with a freight specific revenue stream- a 1% user fee on freight ground transportation costs, 

generating an estimated $8 billion annually. We can create a freight trust fund solely dedicated to 

freight projects. 

I ask that the committee review and consider the contents of HR 1308 Economy in Motion: The Notional 

Multimadal and Sustainable Freight Infrastructure Act. This bi-partisan bill could hold the key to begin a 
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significant investment in our nation's commerce and business. We can demonstrate to our nation right 

now that Congress can Indeed agree on solutions that move our country forward. 

Sincerely, 

~£o~-1f..,t__ Alan Lowenthal 

Member of Congress 
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HR 1308 

Economy in Motion: 

T!te National Multimodal and Sustainable Freight Infrastructure Act 

C ONGRESSMAi'll ALAN LOWENTHAL 

Original Cospatrsors: Dana Rohrabacher {R-CA), Brenda Lawrence (D-Ml), Ann Kirkpatrick {D-AZ) 

Cosponsors: Mark Takano (D-CA), Bobby Rush (D-IL), Grace Napolitano (D-CA), Mark Paean {OWl), Judy Chu (D-CA), Mark Meadows (R-NC). Gwen Moore (D-Wl), Robin Kelly (D-IL), Mart 

Cartwright (D-PA), Earl Blumenauer (D-OR), Susan DelBene (D-WA) 

The movement of goods in our C•Ountry is the engine that runs our e.conomy, yet we do not currently 

h~ve a freight-specific. national infrastntcture program. Without a ~n of strotcgic investment to 

expand the capacity, reliability and efficiency of our nation's goods movement, we stand to lose our 

place as a global economic leader. 

Economy in Motion: The Nlrtional Multi modal Freight Infrastructure Act will provide a dedicated 

and sustainable revenue source to fund multi-mod~!. freight-specific fommla grants to states and a 

nmlti-mocL1l, freight-specific competitive grout program to local. regiona l and state governments. 

Freight Act Goals: 

Strengthen the contribution of the national freight network to the economic competitiveness of 

the United States; 

lmprovc the efficiency, reliability, cost and safety of freight transponation; 

Support the connectedness of all freight modalities and relieve the bottlenecks in the freight 

transportation system: 

Acllieve and maintain the freight transportation system in a state of good repair; and 

Reduce the adverse community and environmental impacts of freight transportation, including 

greenhouse gas emissions. air and water pollution. 

Fr eight Act Provisions: 

Establish: 

o Freight Transportation Infrasmtcture Tmsl Fwtd 

o National Muhin1odal Freight Funding Fonnula Program for States 

Tier I Projects - single state fonnula 

Tier II Projects - multi-state collaborative analysis 

o National Freight Infrastntcture MuhimocL1l Competiti ve Grant Program for Local. 

Regional and State Governments 

o 5% set aside for technology neutral clean energy demonstration projects 

o Nationa l Muhimodal Freight Network and Strategic Plan 

• Qua lifying Proj ect Examples: 

o Capital freight projects on roads, rail, intenuodal connectors. including first and last 

mile connectors, rail grade separations. on dock rail and landside infrasrrucntre on 
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ports and aiq>orts included in a State Freight Plan. 

• Grant Pa1·ticipation Requirements: 

o State Freight Advisory Committees 

o State Freight Plans which include goals and strategies for reducing adverse 

environmental impacts. 

• Funding: 

o Approximately $8 billion annually provided through a I percent waybill fee on 

goods movement, requiring the entity paying for the cargo to be shipped via grotmd 

IJ'ansportation within the U.S. to pay a fee of I percent of total cost of that 

transportation. 

Staff Contact: Mavonne Garl'ity Mavonne.ganitv@mail.bouse.gov (202) 225-7924 
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American Association 

of Port Authorities 

Testimony of Kurt Nagle 

President and CEO 

American Association of Port Authorities (AAPA) 

Seaports 

Pr~~perity 

Hearing on Long-Term Financing of the Highway Trust Fund 

House Committee on Ways and Means 

Wednesday, June 17, 2015 

10:00 a.m. 

Room 1100, Longworth House Office Building 

Chairman Ryan and Ranking Member Levin, thank you for holding this important hearing on 

the Long-Tenn Financing of the Highway Trusr Fund. How we ftmd our infrastrucntre is a 

conversation that Congress and the Administration must have and AAPA looks forward to 

being engaged in this conversation, especially from a freight perspective. Thank you both, and 

in particular Congressman Blumenauer, for your leadership on this issue. 

AAP A is the tmified and collective voice of the seaport industty in the Ameticas. AAP A 

empowers port autlJorities, maritime industry partners and service providers to se1ve their 

global customers and create economic and social value for their conmmnities. Our activities, 

resow·ces and partnersltips connect, infonn and unify seaport leaders and maritime 

professionals in all segments of the industry around the western hemisphere. Tltis testimony is 

on behalf of our U.S. members. AAPA is also the Chair of the Freight Stakeholder Coalition, 

wltich is a tmique coalition of 19 national stakeholders comprised of system users, plarmers 

and builders, wlticb has provided comments on policy and ftmding on the transportation 

reauthorization bill since 1992. 

The next surface transpo11ation authorization is an opportunity to provide long-tenn, 

sustainable ftmding and to build upon MAP-21, wltich recognized the linkage between goods 

movement and economic competitiveness. However, AAPA believes it is time to match this 

new emphasis on freight by not only ensming both long-tenn Highway Trust Fund solvency 

but also adding new and additional non-HTF ftmding dedicated to prioritizing projects that 

optitnize and integntte the nation's freight transportation system. 

TI1e federal government must lead long-term effons designed to fttnher America's 

competitive advantage by advancing projects of regional and national significance as well as 
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fu-st and last mile projects that reduce congestion, enhance goods movement, improve the 

environment and create jobs. If we are committed to the modernization of our nation's freight 

transportation system, it must accommodate projected growth in manufacturing and trade in 

years ahead or risk the U.S. being surpassed by loreign competitors. 

One of the biggest challenges our industry sees today - and looking toward the future - is the 

state of port related infrastructure, and how we as a nation make the necessary investments in 

that critical infrastructure. There are sizable investment needs at port facilities and the 

connecting infrastructure on the land- and waterside. 

The Highway Tn•st Fund can be a vital resource for funding freight projects, such as first and 

last mile projects that connect the ports with the surface transportation system as well as the 

Congestion Mitigation and Air Quality Program (CMAQ), which provides funding for air 

quality projects. Port connector projects are also eligible for the Surface Transportation 

Program (STP) and the Projects of National and Regional Significance (PNRS) program to 

address large choke points on our freight network. 

Earlier this year, AAPA asked our members to look ahead 10 years and identify the key landside infrastn~cture investments that need to be made. With 95% of our U.S. port members 

respondi11g, The Srare o(Freighr survey results identified $28.9 billion of project investments. 

A copy ojrhis report has been submilledjor the record. Specifically, AAPA members 

identified 34 Projects of National and Regional Significance totaling $19.5 billion. 

Additionally, MAP-2 1 required the USDOT to encourage states to develop comprehensive 

immediate and long-term freight planning and investment plans, and to collaborate with 

individual states, Metropolitan Planning Organizations (MPOs) and Freight Advisory 

Committees. In addition to comprehensive freight plans, states were also encouraged to 

establish freight advisory committees. 

Ports are already engaging in the planning process so there is a blue print in place on how to 

fund freight projects. 

71% of U.S member ports participated in the development of its statewide freight plan. 

63% of U.S member ports are worlcing directly with its region's MPO or Council of 

Governments (COG) in the development and planning of a freight project that is either 

underway or has recently been completed. 

However, fixing the highway trust fund does not fix our freight network. The movement of 

freight is intennodal, meaning that it predominantly involves both rail and rn•ck. These two 

modes do not necessarily exist in hannony under the current HTF stn1cture. 

· 2 -
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For our country to build and sustain our infrastructure we must have an intermodal program 

thai provides direct funding for lreight Our freight infrastructure needs, demands and 

challenges have become much more dynamic since 1993, the last time the gasoline user tee 

was increased. 

Think of how much onr economy, our population and how we conduct business has changed 

in the past 22 years. The growth and integration of the internet into everyday shopping has 

dramatically changed how we make purchases and how it is delivered through distribution 

type businesses such as AMAZON and others. Titese new business models have placed an 

incredible amount of stress on our already aging infrastntcture. 

For example, our population has grown by 23% (or 60 million) since 1993, meaning more 

freight customers and more demand on our infrastructure. Additionally, in 1993, 20.4 million 

TEU entere.d the country and moved on our rail and highways. By 2014 that number has more 

than doubled to 46.4 million TEUs. And the total tonnage of freight that moves through our 

ports and around our country has increased by 46.2% since 1993 to a total of880,841 metric 

tons in 2014. That is a lot of wear and tear on our infrastructure that is also supporting the 

everyday trips of commuters, shopper and tourists around the country. 

This demand on our infras!tucture is only going to increase. Today, international trade 

through seaports accounts for over a quarter of the U.S. economy - and is projected to reach 

60% by 2030. At the center of trade and transportation are America's seaports, which handle 

approximately $6 billion worth of import and export goods daily, generate over 23 million 

jobs, and provide more than $320 billion in tax revenues. 

To address the immediate and long-term freight infrastntcture challenges, AAP A recently 

endorsed the concept of a I% waybill fee as an equitable approach to provide long-tenn 

funding for freight. This was included in legislation, H.R. 1308 Economy in Motion: The 

National Mullimodal and Sustainable Freight infrastructure Act, introduced by 

Representatives Alan Lowenthal (D·CA), Dana Rohrabacher R-CA and Mark Meadows (RNC) and I I other cosponsors. We urge the Committee to carefully look at this bill and how it 

can fund freight. 

To help plan and make sustainable investments in a national freight network, AAPA has 

suggested several approaches: 

I) Provide direct funding for freight projects, 

2) Create a freight fund that provides formula funds to states as well as a discretionary 

grant program so that adequate funding c.an be distributed; and 

. 3 . 
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3) Provide a sustainable funding source for the freight network. AAPA recently endorsed 

the concept of a I% waybill fee as an equitable approach to provide long-term funding 

lor freight. 

AAP A is happy to see that Congress and the Administration recognize the value of improving 

our freight network. Whether we will be successful will very much depend on the Ways and 

Means Committee finding increased, sustainable funding sources for the highway tmst fund 

and other mechanisms to fimd multimodal freight improvements. 

AAP A believes a strong case is being made lor direct funding toward our freight network and 

that freight starts and ends with our seaports. We look forward to working with the 

Committee as you move a sustainable funding package for the Highway Tmst Fund and for 

our Freight Network forward this summer. 

· 4 . 
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~ .. ltJ.- American Association lrl!!l of Port Authorities 
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In Peter Zeihan's acclaimed 2014 book, "The Ac· 

cidental Superpower," he cites the overwhelming 

freight transportation advantage the United States 

has over other trading nations in its system of ports 

and waterways. He argues that America has more 

miles of navigable waterways than any other nation, together with an enviable coastal geography of 

naturally deep harbors, barrier islands and indenta· 

tions that are unmatched for seaport development 

anywhere in the world. 

Unfortunately, due to insufficient investment in 

its freight transportation infrastructure, every day 

America Is losing some of the goods movement 

advantage asserted in Mr. Zeihan's book. 

Seaports are the backbone of a thriving 21st century 

global economy. Yet1 a nation's freight transportation 

system is only as good as its underlying infrastructure. In the American AssociatJon of Port Authorities' 

(AAPA} 2015 Surface Transportation Infrastructure 

Survey - The State of Freight, results indicate that 

the nation's unsurpassed goods movement network 

needs immediate and significant Investment in the 

arteries that carry freight to and from Its seaports. 

Without that investment, the American economy, the 

jobs it produces and the international competitiveness it offers will erode and suffer, creating predict· 

able and oftentimes severe hardships to the indlvidu· 

als who live and businesses that operate within its 

borders. 

In 2013 alone, some 1.3 billion metric tons of im· 

ported and exported cargo, worth nearly $1.75 

trillion, moved through America's seaports, while an 

estimated 900 million metric tons of domestic cargo 

with a market value of over $400 billion was also 

handled through these lntematlonal gateways. 

Port-related infrastructure connects American farmers, manufacturers and consumers to the world 

marketplace and Is facilitating the Increase of 

American exports that are essential to the nation's 

sustained economic growth. In 2007, Martin Associates, of Lancaster, PA, reported that U.S. port activity was responsible for about 13.3 million American 

jobs and $212.4 billion in federal, state and local tax 

revenue. Martin Associates' 2015 nationwide port 

economic impacts update study shows the benefits 
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"Enhancin~ connections behwen hi~hwa~· and rail S)'Stems and por·t infr·astructun• 

will be a key par·t of ensurin:: the first and last mile of tr·ansportation infrastr·uctur·e 

supports ~rowing demaml.~ 

t I.S. Senator John Thune (R-SD) 

Chalntlan, Senate Conunittcc on Conuucrcc, 

Science and Transportation 

of America's seaports having risen sharply over the 

intervening years, now responsible for 23.1 million 

U.S. jobs and $321.1 billion in federal, state and local 

tax revenue. According to the study, marine cargo 

activity at U.S. deep-water ports also generated $4.6 

trillion in total economic activity, or roughly 26o/o of 

the nation's economy In 2014, compared to $3.2 tril· 

lion In combined economic activity associated with 

U.S. deep-water ports in 2007, or roughly 20°/o of the 

nation's GOP at the time. 

Despite the Importance to the economy, freight In· 

vestments are disadvantaged in the current transportation planning and funding process. Freight projects 

face competition from non-freight projects for public 

funds and community support. Although passenger 

and freight movements must coexist on America's 

transportation network, these are two distinctly different stakeholder constituencies. 

Because there's no dear definition of what constitutes 

.. freight projects" in the federal government lexicon, 

there's been a lack of coordination among federal and 

state govemment entities and private sector stakeholders. This has resulted in a shortage of public 

funds to plan and invest in the nation's freight network and address the key freight chokepoints that 

impact both passenger and freight constituencies. 

Due to their significant role in driving commerce, 

public seaports have the experience to help grow the 

economy, create jobs and promote an efficient, safe 

and environmentally sustainable freight network. As 

in any other successful operation, every port has a 

business plan for its long·term success to identify 

markets, leverage assets and prioritize and sustain 

its capital investments. Similarly, if America wants 

its transportation system to achieve long-lasting and 

sustainable success, It must Implement a national 

freight plan to develop, sustain and grow its advantages for moving goods. 

The results of AAPA's Infrastructure survey reinforce 

one of the industry's key messages, .. Seaports Deliver 

Prosperity." The survey also illustrates the significant steps public ports ore making and have made In 

working with the planning community in developing 

and investing in freight projects. This has been particularly evident since passage of the 2012 Moving 

Ahead for Progress In the 21st Century Act (MAP·21), 

which laid out a clear and aggressive vision on how 

America plans and coordinates a national freight plan 

through collaboration with the individual states. 

Additionally, this survey helps deftne the role ports 

are continuing to play in developing innovative Public 

Private Partnerships (P3s) with the nation's business 

sector, and facilitating additional resources Into the 

process. 

This survey focuses on seaports - critical gateways 

in the U.S. freight network through which more than 

99% of America's overseas trade must pass. While 

there are other components of the freight network 

that must be addressed, the impact of vital seaport "ftrst and last mile" connectors on the country's 

regional and national transportation infrastructure 

cannot be overstated. Ports are national models of 

effective intermodalism and are the very definition of 

critical Infrastructure. 

From 2007-2014 the annual impact of America's seapot·ts inucased: 

43% to $4.6 trillion 74% to 23.1 million 

in total U.S. economic value U.S. jobs 

51% to $321.1 billion 100% to $1.5 billion 

in federal. state & local tax revenue in personal wages & salaries 
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Survey Purpose and Participation 

The purpose of AAPA's 20J5 Port Surface Freight In· 

frastructure Survey is to quantify the baseline need for 

investment in port infrastructure connecting the United 

States' deep-draft seaports to the rest of the nation's 

freight transportation system. The survey results reflect 

responses to questions asked of AAP/>Cs 83 u.s. member 

public ports in the six months leading up to the publla~tlon of this report. With a 95% response rate, the 

survey represents nearly all of the top U.S. seaports on 

the Atlantic1 Pacific and Gulf coasts, and along the Great 

Lakes. 

The survey seeks to illustrate the critical nature of 

connection points between seaports and the national 

surface transportation system, including highway con· 

nectors and on-dock rail. It's at these critical connection and transfer points that the efficiency of moving 

freight through seaports and to and from the interior of 

the country can be maximized. These connection and 

transfer points for goods are the foundation of Ameria~'s 

freight network. 

The freight network is vast and evolving. It's a living 

grid that infuses an economic lifeline throughout the 

country; from small towns to major metropolitan 

regions, and farming districts to technology centers like 

Silicon Valley. At its heart are America's seaports, which 

handle an overwhelming majority of the nearly $6 

billion worth of products that move to and from overseas 

markets every day. for the network to work property, it 

must seamlessly connect to commerce centers in every 

community, state and territory, as well as to an evergrowing and vibrant inland waterway system that is 

unparalleled worldwide. 
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Analysis of Surface Transportation Connectors With Ports 

It's been two decades since the United States addressed its surface transportation connectors. In 1995, the 

National Highway System (NHS) Designation Act, directed the Secretary of the u.s. Department of Transportation (USDOT) to develop a list of NHS intermodal connectors. With the input of state departments of transportation, the list was completed in 1998. In 2000, USDOT reported to Congress on the state of NHS lntermodal Freight Connectors. USDOT identified significant deficiencies in U.S. freight connectors and estimated the 

cost of them to be $2.6 billion. 

Between 2000 and 2013, the volume of containers shipped through U.S. ports grew by approximately SOOfo, 

from 30.4 million to 44.6 million twenty-foot equivalent units (TEUs), adding further strain to port highway 

and rail connectors. The population in U.S. metropolitan areas also grew by 33 million people (14%) over the 

same period, which created a related increase in the demand for goods. 

In the AAPA survey, respondents were asked what they anticipated the minimum cost would be over the next 

decade (through 2025) to upgrade the intermodaf connections at their port so it could efficiently handle all of 

their projected inbound and outbound cargo. 

Key Survey Results Included: 

Nearly 80% of AAPA U.S. ports surveyed 

said they anticipate a minimum $10 million investment being needed In their port's 

intermodal connectors through 202S, while 

30% anticipate at least $100 million will be 

needed. 

• These intermodal connectors, often referred to as 

the "first and last mile" of the Freight transportation 

network, account for roughly 1,200 of the 57,000 

miles in the national highway system. Many of these 

connectors are in various states of disrepair and 

face further deterioration, particularly as trade vol· 

umes continue to grow. Uke links in a chain, these 

transportation connections with America's seaports 

are critical to the overall freight network, and they 

are particularly vulnerable in large, congested metropolitan communities where commuters and freight 

share the same system. As the U.S. takes a closer 

look at planning and investing in its freight grid, 

intermodal access points must be prioritized. 

Looking further at lntermodal connectors, the AAPA 

survey asked respondents how much has congestion 

on these connectors over the past decade impacted 

their port's productivity. 

One-third of respondents said congestion 

on their port's intermodal connectors over 

the past 10 years has caused port productivity to decline by 25% or more. 

• MAP-21 made incremental steps in providing resources for improving intermodal connectors. 

Surface Transportation Program (STP) funds are 

now eligible for surface transportation infrastructure 

improvements in port terminals for direct intermodal interchange, transfer and port access. However, 

the competition for these funds is intense, as states 

have 27 other eligible funding activities in which to 

use these federal funds. 

• Among AAPA survey respondents, 33% said their 

port has applied For STP funds during the last two 

years. However, AAPA has also heard from ports 

that low success rates In securing funding has made 

it difficult for them to make long-term commitments 

for infrastructure projects. AAPA repeatedly hears 

from U.S. member ports that sustainable and reliable funding sources need to be available In order 

for them to invest and leverage funding into the 

connecting freight network. 
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Needed and Planned Investment 

in the Freight Network 

In a 2012 AAPA survey, U.S. public ports and their 

private sector partners reported plans to invest more 

than $9 billion each year for the next ftve years to 

maintain and improve their infrastructure. However, 

this investment is not being adequately matched by a 

federal government commitment to improve the corre· 

spending connecting infrastructure. Many of the landside connections to seaports are insufficient and outdated, n<!9atively affecting the ports' abllity to move 

cargo into and out of the U.S.1 and threatening our 

international competitiveness. 

Key Survey Results Included: 

There is an identified current need of $28.9 

billion in 125 port-related freight network 

p rojects. These projects range from intermodal connectors, gateway and corridor projects, to marine highways and on-dock rail 

projects. 

Of these 125 projects, there are 46 

intermodal projects totaling $7.5 billion, 

and 34 Projects of National & Regional Significance totaling $19.5 billion. Additionally, 

respondents identified 35 TIGER (Transportation Investment Generating Economic 

Recovery) projects totaling $1.9 billion. 

6 
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Building on the Planning Provisions ofMAP-21 

The 2012 MAP-21 surface transportation legislation required the USOOT to encourage states to develop comprehensive Immediate and long-term freight planning and Investment plans, and to collaborate with Individual 

states, Metropolitan Planning Organizations (MPOs) and Freight Advisory Committees. 

In addition to comprehensive freight plans, states were also encouraged to establish freight advisory committees. Furthermore, MPOs were directed to set performance targets for freight and to integrate freight planning 

performance provisions into their overall planning process. 

MAP-21 set into motion a useful proces.s for communicating, planning and ultimately funding important freight 

projects. Ports are engaging In this process and In many ways have been leading the conversation. In its The 

State of Freight survey, AAPA asked its U.S. member ports a series of questions on how they are building off 

the MAP-21 planning provisions and engaging with planning the freight network. 

Key Survey Results Included: 

63•/o of survey respondents said their port 

is working directly with its region's MPO 

or Council of Governments (COG) in the development and planning of a freight 

project that is either underway or has 

recently been completed. 

• From this response, AAPA learned that not only are 

two-thirds of its U.S. member ports engaging in the 

MPO planning process and actively including freight 

projects In their statewide or Metropolitan Transportation Improvement Program, these ports are also 

engaged In an ongoing dialogue with their regional 

planners. 

• AAPA also learned from this part of the survey that 

the availability of TIGER funding has slgniflcantly 

driven U.S. public port engagement with the planning community over the years. Because of port 

eligibility for TIGER funding and coordination and 

planning requirements in the submission of projects, the annual TIGER process has served as a catalyst in bringing freight stakeholders to the table. 

71% of those surveyed said their port has 

participated in the development of its statewide freight plan. 

• According to the Federal Highway Administration's 

(FHWA) Office of Freight Management and Operations1 42 states have worked with FHWA or are in 

various stages of development of their state freight 

plans. While many of these state freight plans are 

not yet MAP-21 compliant, the conversation on 

freight between states, stakeholders and the federal 

government is continuing. 

64% of surveyed ports are members of a 

local freight advisory committee. 

• MAP-21 encouraged the creation of local freight 

advisory committees to weigh in on the develop· 

ment of local and state freight plans. These freight 

advisories typically have a broad scope of mem· 

bership, much like the National Freight Advisory 

Committee that is housed in the U.S. Department 

of Transportation. This is a place where the private 

sector continues to weigh In on the freight planning 

and funding process, which has been described as 

chambers of commerce for freight. 

• An offshoot of this process has been a growing 

engagement and strong interest and understanding 

between ports, the private sector, and local and fed· 

eral partners, In the development of creative PublicPrivate Partnership (P3) projects. 
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Public-Private Partnerships (P3s) 

The ability to fadlitate business through port entry and 

exit gates, and the ability to manage transportation logistics, make public ports excellent laboratories for P3-

linanced proj£K:ts impacting the freight network. 

However, several federal financing tools that could be 

considered a good fit for ports have not had measurable 

impacts. Only five of the AAPA U.S. ports surveyed have 

engaged in the federal Railroad Rehabilitation & Improvement Financing (RRIF) program, which is surprisingly 

low, given the overwhelming need and focus that ports 

indicated they had for on-dock rail projects. In follow-up 

questions on the RRIF program, ports expressed a sense 

of frustration navigating the program, and cited the need 

for a capital grants program to match up with R.RIF loans 

to assist in facilitating and leveraging private sector capital. 

The Transportation Infrastructure Finance and Innovation 

Act (TIFIA) program is another example of a finandng 

program underutilized by AAPA's U.S. member ports. 

Key Survey Results Included: 

8% of the survey respondents reported having 

utilized a TIFIA loan for a port-related project. 

• While freight rail and intermodal transfer center projects are eligible under TIFIA, many ports have reported 

having experienced difficulty with how USOOT interpreted their TIFIA applications, concluding that USOOT 

doesn't encourage port-supported TIFIA projects. 

33°/o reported using, or planning to use, P3s; 

13% identified using or planning to use Private Activity Bonds (PABs); and 62% indicated 

they were using or p lanning to use another 

financing source. 

• The significant use by U.S. ports of P3 flnancing suggests there is additional opportunity to rein in and leverage private-sector resources in building projects that 

Impact the freight network. 

• In late 2014, the USOOT Build America Transportation 

Investment Center (BATIC) put out a call for projects 

and more than 25 U.S. ports submitted P3 proposals. 
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On-Dock Rail 

for many ports, on-dock rail (rail track which is located 

immediately next to the dock front) offers a vital link to 

efficiently move goods directly between ships and trains 

to get the goods to America's heartland and major distribution centers. In referencing on-dock rail, Bill Johnson, 

the former port director for Florida's PortMiami, testified 

on Jan. 28, 2015, before the Senate Commerce Committee, saying, "Without interconnectivity, you cannot connect your port to America or the global economy." 

Key Survey Results Included: 

73% of AAPA U.S. member ports have ondock rail, while most others have rail tracks 

within terminals near docks, which is often 

referred to as near-dock rail. 

• However, U.S. ports' apparent rail infrastructure 

strength Is misleading. Many port on-dock and neardock rail systems are out-of-date and need to be 

significantly enhanced and reinforced, as well as Integrated with new technology to accommodate rising 

shipping volumes. 

• Having up-to-date on-dock and near·dock ran able to 

accommodate aU the discretionary cargo that must be 

moved to and from a port's hinterland Is a big priority 

for U.S. seaports. The need is so urgent that several 

ports have purchased rail lines to ensure access to 

their existing freight network and for business development. Based on the survey responses, a majority 

of ports are engaged in upgrading and/or expanding 

their on-dock rail systems and have cited the need for 

federal resources in assisting with on-dock rail investments. 

• Even though improving port rail infrastructure is a priority for most ports, only 13% of survey respondents 

reported having applied for or are planning to use the 

RRIF program to pay for their projects. This may be 

due to what has been reported as a difficult application 

process to navigate. In the AAPA survey, respondents 

expressed a desire to revamp the RRIF program to 

make It easier to finance on-dock rail and other freight 

transportatjon infrastructure projects. They also indicated a desire that the RIUF program provide a capital grants aspect to work in tandem with its flnandng 

program. 
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Other Federal Options For Financing 

Port-Related Infrastructure Development 

In addition to facilitating the movement of cargo, seaports are 

also stakeholders and partners In the communities in which 

they operate. I n the U.S., public ports directly generate or 

influence the creation of millions of jobs, are environmental 

stewards and play a vibrant soclo/economic role in the communities they serve. While the condition of the air, land and 

water surrounding these public ports Is Important to those 

who work and do business in the respective communities, it's 

equally as important to those who work or do business at the 

ports themselves. 

In addition to infrastructure investments, ports partner with 

the federal government to fund programs that reduce diesel 

emissions and create economic opportunities through partner· 

ships with the Economic Development Administration (EDA). 

To illustrate, the final question in AAPA's survey asked respondents if their port had ever applied for or received funding 

from Diesel Emission Reduction Act (DERA) grants, Congestion Mitigation and Air Quality Improvement program grants 

(CMAQ), or the Surface Transportation Program (STP) or 

Economic Development Administration (EOA) grants. 

Key Survey Results Included: 

57% of the AAPA U.S. member ports surveyed 

have applied through the U.S. Environmental Protection Agency for DERA funding, and 43% have 

applied for CMAQ funding to pay for reducing 

emissions and congestion while improving air 

quality in and around their ports. 

45% have applied through the U.S. Department 

of Commerce for EDA grants by partnering with 

a regional academic institution and a local 

government authority, while 33% have applied 

for federal highway STP funding to improve their 

port's intermodal connections. 

10 
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Conclusion 

U.S. ports require at least $28.9 billion to handle 

projected 2025 freight volumes 

NORTH PACIAC 

PORTS 

$&,925,300,000 

~ 

SOUTH PACIFIC 

PORTS 

$6,508,102,500" 

....., .. ~.:.-..... 

America's freight network i s vast and evolving. It's a 

living grid and economic lifeline for the country; from 

small towns to major metropolitan areas, from farming regions to technology centers. 

At its heart are America's seaports, which handle 

approximately $6 billion worth of goods to and from 

overseas markets every day. These goods come In all 

shapes and sizes. Apparel and consumer electronics 

are shipped in standardized steel containers. cars 

and trucks are driven on and off ships. Farm harvests 

are conveyed into the hulls of vessels. Uquids are 

moved by pipeline. Gaseous products are shipped In 

pressurized tanks. Project cargoes, like wind turbines 

and electrical generators, require spedal handling. 

These different cargo types require different transport modes to get them from shore to ship, and ship 

to shore. for the freight network to operate smoothly 

and efficiently, it must seamlessly connect commerce 

centers in every community, state and territory. 

As indicated in AAPA's 2015 The State of Freight 

survey, investment in America's port connection infrastructure Is an urgent national priority. There Is a 

path forward. This survey documents and Illustrates 

the freight planning successes that resulted from 

the TIGER application process. Survey results show 

how MAP-21 built upon TIGER's targeted Investments 

with the various state freight plans and with ongoing 

input of the individual states· freight advisory committees. 

The survey also, for the first time, documents from 

the ports' perspective the requisite capital invest· 

ments that are needed to maintain and enhance a 

21st century freight network. These investments 

include "first and last mile" connector and gateway 

projects that, when viewed collectively, represent a strategic investment In the national transportation 

system, the national economy, as well as all of the 

individual enterprises and people who make the nation great. 

This survey is a strong first step towards identifying 

the critical Infrastructure needs of America's seaports, however more must be done. AAPA will contin· 

ue to gather input from the industry and work with 

our partners to ensure that investing in our nation's 

freight transportation system is a national priority. A 

reliable and efficient transportation system will guarantee that seaports continue to deliver prosperity for 

all Americans. 

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AMERICAN ASSOCIATION OF 

STATE HIGHWAY ANO 

TRANSPORTATION OFFICIALS 

ANtttg 

STATEJ\1ENT FOR THE RECORD BY 

The Honorable John F. Cox 

President, American Association of State Highway and 

Transportation Officials; 

Director, Wyoming Department ofTransportation 

REGARDING 

LONG-TERM FINANCING OF THE 

HIGHWAY TRUST FUND 

BEFORE THE 

Committee on Ways and Means of the 

United States House of Representatives 

ON 

June 17,2015 

American Associ.~t on of State Highway and Transportation Officials 

444 North Capitol Street, N .W., Suite 249 

Washington, D.C.,20001 

202-624-5800 

www.tcansportation.org 

info@aasb ro.org 
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HOCSE WAYS AND MEANS COMM ITTEE P•g• I 2 

INTIWDUCTION 

Cba.irman Ryan. Ranking Member Levin. and Men-hers of the Connlittee, thank you for tbe 

opporttulily to provide a1put 011 the need to identify a long-tenn sustainable revenue solution for 

the Federal Highway TniSt Fund. My name is John Cox, and I serve as President of the 

Alrerican Association of State Highway and TrariSportation Officials (AASHTO), and as 

Director of tbe Wyoming Departn-.:nt of Transportation (WYDOT). It is my honor to provide 

this Staterrent lOr tbe Record on behalf of AASHTO. which represents the State deparmrnts of 

trOTISpOrtation (State DOTs) of aD SO States, Washington, D.C., and Puerto Rico. 

For abnost 60 years, the Highway Trust Fund (HTF) provided stable, relk1ble, and substantial 

highway and transit funding. However. over tbe past seven years this has not been the case. 

Since 2008, abnost $62 billion have been tranSferred from tbe General Fund to the HTF to keep 

it solwnt. Recently-and retreading a path that we aU have walked down before- the U.S. 

Department ofTransportation (USD01) announced that the Highway Account oftlr HTF will 

bkely nm out of nxmey later this swmrr. If this is allowed to h.1ppen. States nny not be 

reimbursed for work they have already paid lOr. In addition. mih~e to enstre the solvency oftlr 

HTF will force States to drastically reduce tile obligation of new Fed~ral highway limds in Fiscal 

Year 2016. 

Ahmst half of capital in\'estnrnts made by States on o~ nation's roads, bridges, and transil 

systems are supported by the HTF. Withotu this strong Federa~S e pannersh.,, State DOTs 

wiD not be able to p~•Y their part in building and maintaining tbe n.1tional transportation network 

on which our eeono.ey reres to be con"4'etiti'e in the global •mrketplace. 

FAILURE TO REIMBURSE STATES FOR PRIOR OBLIGATIONS 

Tbe Federa~aid Highway Program c=ently provides abotll $38 billion a year to State DOTs !Or 

il~ortant road and bridge projects across the colllltry. Tbese filnds are dem<ed li'om contract 

autl10rily, a unique foml of Federal budgetary atnhorily weU-strited for infrastructure projects 

that require a multi-year constmction tinrtine. It is critica l to note that .,dollars oblig;lted 

onder this program represent the Federal govenmrn~s legal COllJUitnrnt and promise to payor more acc~tely-reimburse the States tor the Federal share of a project's eligib le costs. 

Under this reimbursement framework, States only recei\<e fionding from the Federal Highway 

Administration (FHW A) when work is conpleted on a project and ~-.: State subnlils a request for 

reiniJursement. States typically receive reimbursement electronically from FHWA tlr sanr day 

payments to the contractor are made. 

Stat~ l'n tnt f<u thto teo ad f10tn John F. Cox 

Pruident, Amtrican Associ.ation of State Higbway t~nd Tumpoctation Officials 

Oi1e-r101, \V)·om ing Oep·utmeaH of ·rtan$porutio n 
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HOCSE WAYS AND MEANS COMM ITTEE 

EXHIBIT J. FlDDlAL-AID DCHWAYPR CR.\.\ RID SE\ffi''TPR CIDU ~ 

Tim•-

Sourt~: Fedetal Highway AdmiJ1is1nuion 

State pnx:es$H 

st:il 

\ 

Statesubmi1J 

vcuehot to FHWA 

It is currently estimated by the US DOT and Department of the Treastuy that the Highway 

Accowll of the HTF is Ill< ely to nm Ottt of cash by t.'arly Septenlb<'r of this year. Prior to reaching 

this point of insolvency, FHWA will be fOrced to instiutc emergency cash managen~ t 

procedures in order to slow down reirrtmrsements to States for costs already ux:urred on 

highway and transit projectS. 

As Congress was fuced with the san:e HTF insolverx:y crisis last Stllllln!r, FHWA aTDlOunced 

that tOlder their proposed errergerx:y cash management plan at the lilre, States' reimbursementS 

would be capped at a drastically reduced an-ount relative to the full an»Wll owed. This cap 

would IJ,,_e been determined by the ewr-dwindting an-otull of cash i1 the HTF accessible by 

FHWA twi:e a tronth. Under this situation where FHWA camot cover I 00 perceru of the bills 

recen-ed, States would have been left to provide the cash cushion-by wbate,-er means necessa.ry 

such as short-tenn borrowing, standby li>es of credit, reliance on the state's gereral fiu.td- for 

pa~ments already made. Furthenrore. FHW A incurs a1terest liability if a State pa)'"S otn ils own 

fiu.tds lOr Federal assistance program purposes. which would only exacerbate the cash sbortfull in 

the HTF. Given the urgency of this situation, Congress passed the Highway and Transportation 

Ftoxling Act. which was enacted on August 8. 2014. to provide $ 10.8 billion to the HTF. 

Because States cotu.lt on prompt payn:ent from tl>e Federal govenm:ent to be able mm .. ge cash 

flow and pay colliTactors fOr completed work, any delay in reintbto-sement from FHW A will 

cause a significant disnption o1 an States. And in rum. contractors that rely on pronvt payntent 

from the State would be w .. ble to pay their en-plo)<ees and stqlpliers. As )'Oit can imagine, such a 

devastating scenario will send shockwaves tl1tougho1n the transportation cornwnity and an 

other oxlustries supported by Federal infrastructure invcstnrnt. 

Stat~ l'n tnt f<u thto teo ad f10tn Joh n F. Cox 

Pruident, Amtrican Association of State Higbway 111nd Tumpoctation Officials 

Oi1e-r101, \V)·om ing Oep1utmeaH of Taansporutio n 
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HOUSE U"AYS AND 'lEANS COMMITTEE Pop< I 4 

£\:JUBIT l. PROJOCTID£';IDL\11S FORKfF JfiGHWA\' ACCOl::S'rS n-1>-0F-MON11ICASH0ALA.KCEASOF 

A.PRIL24 201S 

FEDERAL HIGHWAY TRUST FUND 

HIGHWAY ACCOUNT WEEKLY BALANCE AS OF APRIL24, 2015 

--· Estlt!MTAHI 

10 

3iis~s~\~ ~ !i ;::. $ s . ~ 

\, 

., 

Sot~n:e: US Oeparturot orTmosponatioo; US Dep u.1urnt oCt he Treasury 

DEVASTATING IMPACT TO STATES OF A IDGHWAY TRUST FUND SHORTFALL 

IN FY 2016 

Even if FHW A is able to keep the Highway Accoltnl solvent by delaying reirrbursements to 

States this SlaunEr. it will not address the lDxlerlying structural problem 1be Congressioml 

Budget Office (CBO) estirmtes that yearly HTF rece~lls will be Sl7 billion less than HTF 

spending annually over the ne"1 ten years (FY 20 16-2025). In order to keep the HTF solvent 

beyond this fiscal year. AASIITO estirr<Hes that Slates will have to significantly reduce new 

Federal highway fiaxling in FY 20 16-going from $40 billion to $4 billio1t Even with virtually 

no new highway fiaxling in FY 2016. there remains a possA>aity that FHWA will still have to 

a her its reimbursement procedures i1 FY 2016 to be able to pay for prior-year obligations. 

StAttom en r fo t ~ Record fro m Jo hn F. Cox 

Presidenl , Am etlan Association o f State Highway and Transpo rtation Officials 

Oi~ ecto . \\'yom ing en~ of Tun$pOtt:uion 
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IIOU~P WAYS ANO M P.AN~ CO.\IM I rTF ~ 

tXUtDIT3 t .. IDIAlJD f)pgtAI IGIIWAXAS]) fBa~ IIOQIICADOSSHfYOSD}'Y201..;Wrm NO 

AppmONAl tyt~ Uffl mmt H!Gli\VAYlBt'Sit)JS'Q 

ESTIMATED FEDERAL HIGHWAY TRUST FUND OBLIGATIONS 

., • Htchw.ay • Hi&hwly Safety Transit 

)S 

10 

Ell 

L· 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 

lli;torrally. Federal highway fuoding bas accouoted for approxilmtely 45 percent of what State 

DOTs spend on highway and bridge capital irrprovemeniS. This means a sigllif~ea ot ponion of 

much-needed bighway and transit projeciS-projeciS that uoderpin economic development and 

improve the qu.•lity of life- in every coo•nnity and Congressional distri::t will either be 

delayed or cancelled ouuiglu. Such cutbacks on contract lenings would nl!an missed 

oppomlllities to pare down the backbg of investnl!nt needs, while causing a negative donino 

effect on construction industry employment exactly when it is starting to rebouod after being one 

of the b..rdest hir segnl!niS in the recent recession Furthernl:lre. rampi1g up and down 

construction activities- including eq~menr and labor resource nnn.1gemeut--<lue to the 

instability of the Fedeml program would represeut an e~tre nl!ly wnstefi~ exercise and irrpose 

heavy opportuoity cosiS fur ~" eolire transportation industry ard the nation as a whole. 

St:atem~nt for th~ Record from John F. Cox 

Pcujdent, AmNica.n Associ:arion of Stat~ Highway :and Transportation Officials 

Oit<'(tOr, \V)·omiog De J)iUtl)'leot o r T!::~n pOit~tion 

202S 
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HOUSE U"AYS AND \JEANS COMMITTEE r •r• I 6 

ADDITIONAL REVENUES NEEDED JUST TO MAINTAIN CURRENT INVESTMENT 

LEVELS 

As a major disruption to lhe HlT ren..,ins on lhe horizon. lhe Congressionally-chartered National 

Strice Transportation Policy and Revenue Smdy Commission projected annual Federal capital 

investment needs at $225 billion fOr lhe next filly years. When corrpared to the current 1\Dlding 

level of abotu $90 billion. there is a significant inwstment deficit in strice ttall5p<)rtation 

infrastructure. In order to sustail the long ttadition of robust national investn:ent in 

transportation, we must enstU'e the HlT's looming cash shortftU is addressed with so~nions that 

enable sustainable program fitnding not just beyond this summer or FY 20 16, bltl fOr the long 

temt 

W!Ule the HTF continues to derive about 90 percent of its revenues from taxes on motOr fuels. 

lhese taxes are fucing an increasingly tUJSustainab le long-tenn funU'e, therefore placing lhe 

viability of lhe HTF in question. Motor fi~el taxes at the Federal level were last increased to the 

curretll rates of 18.4 cents per gallon lOr gasoline and 24.4 cents for diesel 22 years ago in 1993. 

As a static excise tax levied per gallon, L1xes on motor fnel have lost a s®Uf'.cant share of its 

purchaso1g power. Compared to the Constoner Price Index, the gas tax 1><1d lost 39 percent of its 

purchaso1g power by 20 14, and is expected to lose more tl-.an half of its \1:\lue-or 52 percentby 2024. This loss of ptU'Cbasalg power is tmllSllal considering tbe increase in nomina l cost of 

virtually all other aspects of lhe economy. 

Facing these structural beadwi.lds, CBO projects the HfF in FY 2016 to ilcur S54 billion in 

otulays \\1Ule raising only $40 billion in receipts. leading to a cash sbortJall of S 14 billion lOr its 

Highway and Mass Transit Accourus. This situation is not new. as the HlT wiD have- by lhe 

e:-:piration of the current strice transpOrtation program e>.1ension on July 31, 20 15- relied on a 

series of General FliOd transfers anX>wlting to ahrost S62 billion sax:e 2008 to close this gap. 

But tllis annual cash i1t>alance is expected to only get worse, and tlx: HTF cannot incur a 

negative balaJlCC lllllike tbe General Fund. 

StAttometH fot the R.ee<ud from Jo hn F. Cox 

Pr~side11t , Amer.i.an Association of State Highway and Transporu1ion Officials 

Oirectot. \\'yomit1g Oep:utm ent of Tum$pOttation 
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liOUSP. WA\"!-0 AND MF.ANS COM~I TTrF. 

This situation leads to lbree possible scenaoos for later Ibis year: 

I. Provide additional General Fund 1ransfers to tbe HTF 01 order to maintain the cWTent 

Je,<el ofbig)tway aoo transit iwesnnent aoo to meet prior-year obligiltions: 

2. Provide additional receipts to the HTF by adjusting existing re,<enue tnOCbanisms or 

irrpkml!nting new sources of revenue: or, 

3. Reduce reitrbursemelll pa}ments this swrmer and drastically reduce new Federal 

highway and transit obligations in FY 2016. 

In order to support One of the first tWO scenaOOS where ClOTent ~way and tran~it fiuxJing 

levels are ~mintained or increased. there is oo shortage oftechni:ally 6:asible revenue optionsirdoding user tees and 1axes-th,1t Congress could consider. 

Staum~nt for thf: ~cocd hom john F. Cox 

!>resident, Am etican Associ:uion of Stsre Highw:ty ~nd T,~nsporurion Orficillh 

OilectO I, Wrorning Ot p:urtneut o( T1:\t~ p01t~ti01\ 
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•· ' I s 

IUUX 6 MA IB~ o E I II Jl~lBAlll'X S' B...A~f F T 

-&~S~QB:J'all o · R ~ltt 0 fDQ~~ co ~~rm 

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__ ., ___ ... _ suo 

~-LOY• i'Xi' ~...., 10.01 

~-LOY• 1:· ' ~- 10.17 

.....-Foo-ligiiC Duly- $'$10 Dolor- $3,$1 

~Foo-T""*' I1>.·A ~...., $1.83 

~-- 12\)00 

_,_,.,.,_ ~- lUI 

'"• 

_ .. _ W2 _,_ley<itt , ·. 

_.,_ _,_ 10.06 

··.·, -GI-Cocl.-- $116$ 

-"....- .... -CI-CIICI.-- $2<06 

StloiT....-UQ~o~Duly- . 

-.. - $2AI 

SolnT....-IOdUMdiJti<Duly- I 

_.,_ $:1.<6 

Tn T....alq<lto L'•C ~porllqdt .. 1008 

TnTu~Duly- ' ... , 01-CILOY .. 10.33 

, ..... ....__,_Ftt "< 

"*---... ·-- $QJ4 

--T.-fto--1J9111Duly- I __ cAD\1-.. - ... - WIZ , __ '""*• '< 

~----... ·- $10.9:1 

----- ---... ·- - ___ ,... __ CI'W 

On the other band. if oo new re,<enues can be found tor the HlF and the third scenario prevails, 

State DOTs will be left to lilce two dire consequences that will se\<erely tmdennine n-u:h- needed 

transponation inwstm.:nts throughout the nation: potentially signifrant delays on Federal 

reinlbur$emeotS owed to States for costS already incurred, and a vinml elinination of new 

Federal funding con•nitn-.:ol~ in FY 20 16. 

CONCLUSION 

1bere is 31l111e docuo-.:nted evidenc.e tbat shows infrastructure awestornt is critcal for longteml economic groMh. increasing productivity, emplo}onenl housebokl DlCome. and expons. 

Conwrsely. without prioritizing our o.11ion's infrastructure t-.:eds- deteriorating conditions can 

produce a SC\<ere drag on the owraU economy. ht light of new capacity and upkeep needs for 

ewry State in the country, the current trajectory of the HlF- the backbone ofFederal surlilce 

transportation program-is s~1ly unsustainable as it wiD ba\<e insufficient resources to m.:et aU 

of its obligations later this SUOllrer, resulting in steadily accunlllktting sbortfulls. 

Wlticbever revenue tools are utilized. at a mininmn\ it is cmcial to identify soltnions tb,1t will 

sustaol the MAP-2 1 level of surface transportation investment in real temlS. Gi,<en the 

de\'llStating onpact that potential deL1ys on tederal reinDursements to State DOTs conDined with 

a virtual elimination of Federal surface transportation obligations in FY 2016 can ba\<e on the 

economy and cotlStrloction industry employment. we look fOrward to assisting you and the rest of 

your House coUeagues in finding and implem.:nting a viable set of revenue solnions to ti'M! H1F 

not only for later this year, but for d1e long tenu 

St:Uttntnt fo1 lilt> R.eoord from John f. Cox 

President, Amtdan Associ:uiou of St~ut Highway and Tuns porudon Officials 

Oice<to r, Wyoming Oepartm("nt of Tunsponatiou 

St&lS 

'"' 1111 

In II 

110~ 

UUI 

m.a< 

... 

16l,. 

II >f • 

S1U1 

mAO 

lOll 

lz.tZ 

IU$ 

111UI 

sl'tn 

ROUt 
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HOUSE \"{lAYS AND 'lEANS COMMITTEE 

Sutf'menr fo1 th~ Reco1d from J o lm F. Cox 

Presidenl, Amed:can Association of State Highway and Transportation Officials 

OitectO t, \\l yoming Oep:utment of TumspOitaliOn 

P•t• I 9 
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...- ---- ACEC 

100 Yr.u-. oft u .. lh me 

Statement for the Recot'tl 

U.S. Rouse of Representatives Conunittee on Ways & Means 

Heat;ng on the Long-Temt Financing of the Highway Trust Fund 

Wednesday, June 17,2015 

Chairman Ryan, Ranking Member Levin, and Members of the Committee: 

On behalf of the Ameri::an COlmcil of Engineering Companies (ACEC) - tl1e voice of America 's 

engineering industry - thank you for holding this hearing today on options for providing long-tenn 

funding certainty fOr fuderal surfuce transportation programs. There are few more important topics that 

this committee will address this year, because federal investrrent in transportation infrastructure pL1ys an 

essential role in protecting public heahh and safety, promoting collllllCrce, and keeping America 

economica lly competitive. 

We were heanened by !he action taken by 285 Members of Congress - incklding 22 members of this 

comnittee - earlier this year to write to House leaders on the need to end !he cycle of short-tem1 

e:o.1ensions and do the work necessary to enact a sustainable, long-term solution to transportation 

funding. 

As you know, nearly $63 billion bas been transrerred into the Highway TniSt Fwxl since 2008 because 

of the failure to address systemic fi.mding shortfalls with real revenue soltnions. Absent congressional 

action, the baL1ncc of the Trust Fund will soon be depleted again. inl:>eriling more st.1te and local 

projects with continued tb:lCertainty. More than $1 billion in plam1ed improvements have already been 

cancelled or delayed because of the wlCertainty over future federal contribtttions. and many nX>re 

projects are sure to be shelved as this problem persists. These projects will only get DX>re e:o.'Pensive due 

to the delay. 

Engineering is a leading indicator of economic pcrfomk10Ce, particularly in !he building and 

development sectors. When state a1xl local transportation agencies can't develop long-tenn fi.uxling 

programs, our firms can't hire engineers or n"9ke equipment purchases necessary for plamling. 

designing. and delivering those projects. When our 6nns aren't working on pre-construction activities, 

those projects can't move on to construction, which rreans fewer construction workers working, fewer 

n-gch.DlCs being built and sold, less economic activity bei11g ge11erated, and ultumtely, goods not getting 

to market and U.S. businesses not being competitive. 

According to the ACEC Engineering Business hxlex quarterly survey of engineering finn CEOs 

(www.acec.onl/publications/engineering-bus uleSS-index!), nearly ore in five respondents (19 percent) 

e:-.'Pect !he transportation on market to worsen over !he next year. Only 40 percent anticipate that public 
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transponation tmrkets will improve. In the Fall 2014 EBI survey, three in four respondems (77 percent) 

C)tpressed doubt that the U.S. transponation infrastructure will regain its stants as a world leader. This 

disheanening pessinlism bodes poorly for the prospects of broader domestic economic growth, and it is 

firmly rooted in congressional fuilure to enact sustainable capital investments. 

We recognize the need to look for new ways to fund road, bridge, and transit projects because of the 

long-term challenges posed by the rise in ahemative-fueled vehicles and i1ereased fi~e l efficiency. We 

have endorsed a range of options. including mileage-based user fues. widespread tolling, new freight 

charges, and revenues from increased domestic energy production. Numerous blue nbbon comtlissions 

have e>:plored these options in depth, and they should aU be on the table ot your deli>erations. 

While they aU have trerit. the reality is that none of these options is a near-term solution for fitrtding a 

six-year bill. 

The simplest and most effective action Congress can take to stabilile the Highway Trust fnnd is 

increasing and indexing federal gas and diesel taxes. These user fees have been the basis of the federalaid program for decades, but C1ilure to adjust the rates sitx:e 1993 has dinlinished their purchasing power 

by 40 percent and led to the fiscal crisis of the Trust fund that we fuce today. A modest increase in 

n-.:>tor fi~els charges - a measure endorsed by highway users and the trucking industry representing those 

payit1g olio Ute system - is a relatively small price to pay fur improving sarety, enhatx:ing tmbility, and 

ensuring An~rican competitiveness. 

The altemative is to cominue on the san~ path of shon-tenn patches, which is fiscally irresponsible, 

relying on government borrowing and budget gitnmicks. 

Contitmed itJStability and mxleritwestme nt in tratlSponation infrastructure will only hamper economic 

growth. Deteriorating roads and bridges and worsening congestion have raised tlte price of doing 

business through itx:reased rnaitllenance costs, wasted fitel and delayed shiptrents. Last year, our 

economy was crippled by$121 bill.ion in congestion costs, or$818perU.S. con11.nu1er, and an 

additional $230 billion in economic costs from accidents. By contrast, every dollar invested in highway 

~nd transit development generates between $4-8 itt economic OUipUt. 

It is past time for Congress to advance a sustainable. k>ng-tem1 solution to the Highway Trust fwxl. 

beginning with an increase in existing user fees that ltelp pave the way fur ahernati\e soltrtions down the 

road. Our industry and our economy and our citizens cannot wait for a combination of unrelated tax 

changes that may or may not mnerialize later tllis year. Congress must act now, startit1g with action itt 

this committee. Predictable a.nd growing reventJe sources. particularly user fees. will give state and local 

agencies the fiotding cenaituy they need to plan and dem'er ittfrastrllcttu-e nl\'eSttrents that foster 

economic growth and enhance our qwlity of life. 

ACEC members - murbedng more than 5,000 finns representing n-.:>re than 500,000 employees 

througbou1 the cO\Dltry - are engaged in a wide range of engitteering works that propel the nation's 

economy atxl enhaoce and safegnard America's quality of life. The CoiDlcil and its me!OOers stand 

ready to assist this cmnminee in advancing long-tenn solutions to the ittfrastructme crisis fucittg O\U" 

CO\Ultry. 
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Testimony for the Record 

Heari ng on the Highway Trust Fund 

Committee on Ways and Means 

Select Committee on Revenue Measures 

U.S. House of Representatives 

By Gregory Cohen, P.E.; President & CEO 

American Highway Users Alliance 

The American Highway UsersAIIiance (The HwyUsers) is a non-profit coalition that represents AAA 

mot oring clubs, trucking and bus companies, the RV and mot orcycle industries, and a diverse range of 

companies and associations that fund t he Highway Trust Fund through user taxes. Our members 

represent millions of motorists and employers who want our roads t o be safe, effi cient, and rel iable. 

Although we represent road users, we stronglysupportt he principle that users should pay t heir own 

way for infrastructure improvements. In return forfully funding t he Highway Trust Fund, road users 

deserve to benefit directly from guaranteed investments in roads and bridges t hrough multi -year 

highway bi lls. This type of system has traditionally enabled the United States to outperform competitors: 

by efficiently moving logistics over our vast networkoftoll-free Interstate highways. It is hard to 

imagine how much poorer our country would be wit hout the investmentsofthe past generation into 

modern roads. 

The federal role in road f unding and the user-pays/ user-benefits principle has been an important, 

principled approach to investment. The conservative user-fee concept dates back as earl y as 1776, 

when British philosopher and political scientist Adam Smith endorsed national funding of roads in The 

Wealth of Notions, provided that users pay their costs. 

From 1956 to 2008, t he Highway Trust Fund was exclusively funded with user taxes. Since 2008, deficits 

have repeatedly t hreatened the solvency of the f und. Congress has responded by voting time and again 

to prevent highway funding cuts. At the same time, Congress has failed to find a fi scally sustainable 

solution to the revenue shortfall. Over$60 bi llion in transfers from the General Fund of the Treasury 

has kept highway funding flat- preventing cuts but also creating doubts as to t he ability of Washington 

to pass a long-term highway bi ll that can fund the major highway and bridge projects critical to public 

saf ety, economic growth, freight reliability, and congestion relief. Without a sustainable solution, State 

transportation departments can't plan and implement the most important projects. 

As Congress debat es a path forward to funding a long-term six-year highway bill, we would be grat eful 

for almost any source of funding to reverse the decline in our road conditions. But Congress should do 

more t han prevent cuts; it should fairly raise enough revenue to make significant inroads in t he backlog 

of national highway and bridge needs. 
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We urge Members to renewtheirhistoricsupport for the userfee approach to restore a sustainable 

Highway Trust Fund. We urge policymakers in other Committees to ensure that the programs are 

transparent, environmental reviews are streamlined, and wasteful diversions are minimized or 

eliminated. If Congress is to raise the funds to sustain a national highway program, the spending out of 

that fund must be focused on addressingourmajornational highway needs. We urge Members to 

consider the findings of two separate Congressionally-chartered commissioned that studied these issues 

over the past decade and develop a long-term financial sustainability model of growing the trust fund 

with user-based revenue. 

In closing, what is currentlyoccurringwould certainly have embarrassed Presidents Lincoln, Eisenhower, 

and Reagan - all of whom envisioned and supported a majorfederal role for transportation 

infrastructure. It is time for a bold, brave and bipartisan solution and this Congress can certainly get it 

done. 

The members and staff of The Highway Users look forward to working with Members of Congress to 

restore and grow the Highway Trust Fund and urge immediate action toenacta long-term highway bill 

this year. Thank you for the opportunitytosubmit these comments into the record. 
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MICHAEL P. MELANIPHY 

PRESIDENT AND CEO 

AMERICAN PUBLIC TRANSPORTATION ASSOCJAllON (APTA) 

SUBMn -reD TO 

THE HOUSE COMMITTEE ON WAYS AND MEANS 

Heating on the Long-Term Financing of tbe Highway TnJSt Fund 

June 17, 2015 

Mr. Chainmn and members of the Committee, thank you fur this opporttmity to submit 

written testimony on ideas to provide a sustainable long-tenn solution to the highway tntSt fund 

shortfull Public tramportation systems across the co~mtly fonu an interconnected system of 

national significance U1at ID:Jks our regions, urban and suburban centers, and rural comULU.tities. 

1bis integrated network of public transportation services is an essential component of our nation's 

overaO transportation system Public transportation provides mobility tlJat significantly 

contnbllles to natiotJal goals for global economic corrpetitiveness, congestion mitigation, energy 

consetVation, environmental sustainability, and emergency preparedness. APTA urges the 

Committee to increase the dedicated revenues that go into the Highway Trust Fund, so that 

Congress can pass a surfuce transportation bill d1at provides predictable fimding growth under a 

IJII.liti-year authorization bill 

ABOUT AYTA 

TI1e Am::rican Public Transportation Association (APTA) is a nooprofii, inte01ational 

association of nearly I ,500 public and private nJetroer organizations, including transit systems and 

commuter, intercity and high-speed rail operators; planning, design, constmction, and finance 

finn>; product and service providers; acadenU: instittnions; transit associations and state 

departments of trdnsportation APTA t:neniJers serve the public interest by providing sare, 

efficient, and economical public transportation services and products. More than ninety percent 

of the people using public transportation in the United States and Canada are served by APTA 

member systems. In accordance with the National Infrastntcture Protection Plan, APTA has been 

recognized by the Departlnent of Homeland Security as serving in the capacity of the Mass Transit 

Sector Coordinating CotalCil (SCC). 

OVERVIEW 

Public transportation exists in aD 50 states and the District of Coluni>ia and U.S. territories. 

The nation's public traJ1Sportation systems are an integral pa11 of the nation's surlitce trat1Sportation 

system Transit provides an ahe01ative way to get to jobs, education, heahhcare and social 

activities in every comnunity, it urproves the efficiency ofdJe existing roadway system in 1netro 

areas by reducing the nwroer of cars on dJ.C road and the resulting traffu congestion. Less 

congestion reduces costs for businesses d1at transport goods and cotJSWll:!rs who buy those goods. 

Public tral1Sportation is important to commmities of aU sizes, from large metropolitan regions to 

s111all cities and rural comrunities. Less urban states and s111aOer cities depend on the federa l 

tra.nsit program to pay for a larger share of then· transit capital investlnents than nl:lre urban areas, 

aod they also rely on federal fimds to pay for an important sbare of the costs assoc~ted with 

providu1g service. 
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To m:et the demands of our nation's aging infrastructure network, growing urban 

population, and changing travel and cornn"llting patterns, a renewed long-tem1 federal cotmlitment 

to public transportation is essential Currently, system needs fur surpass resources fi·om aD levels 

of govetm-.ent. At the federal leve~ fi.el taxes dedicated to the Mass Transit Account of the 

Highway Trust Fund, last raised in 1993, have lost nnre than 37 percent of their purchasing power. 

APTA urges the Committee to increase the dedicated revemJes that go into the Highway Trust 

Fund, so that Congress can pass a surtilce tramportation bill thm provides for the growth of 

predictable federal fimding under a rrulti-year atnhorization bill 

Since the expiration ofTEA-21 in 2003, we have now had 25 short-term extension;, lasting 

a little nnre than four years authorization tutder SAFETEA-LU, and a bit nnre than two years 

under MAP-21. More recently, federal tramit fiuxling has gro\\~1 only minimally, from $10.231 

billion in FY 2009 to S I 0.692 billion in FY 2014. The tulCertainty of recent federal authorizing 

laws and lack of predictable fiulding of the federal tramit program have made it nearly irrpossib le 

for the industry to keep the system in a state of good repair, replace the aging infrastructure and 

fleets, and address the growing demand for service. Short-temt authorizations increase project 

costs and decrease certainty for long-tenn plamung. 

Willie growing con:u.nunities convete fOr limited funds to build a variety of new 6xed 

guideway systetm (BRT, light rail, trolley, heavy rail and collD.l"llter rail), and tramit ridership 

contim.es to grow, the deterioration of our system<; adversely invacts both efficieney and sati:ty. 

The U.S. DOT now estimates that we have an $88 billion backlog in the state of good n.>pair of 

public tramportation capital investn-.ent needs. And this backlog doesn't even include the aruma! 

cost of maintaining the current system, bke replacing aging buses, rail cars, vam, buildings, 

bridges and stations; the cost of building new capacity, and the nnre than $3 billion in costs to 

install positive train control systems at the nation's comn"lltcr railroads. 

Willie spending for public tramportation is paid onstly by fues that riders pay, as well as 

state and local fimding, the rederal govemm:nt is an essential partner in this process. Willie federal 

fiutding supports 19.2% of aD spetxling on public trampOttation, 44.4% of all capital spending for 

transit comes from the federal government. However, according to the CBO, the decline in real 

spending on transportation infrastruct·w-e bas occurred at all levels of govenur.ent, but it has been 

the greatest at the federal le~-el Yet, federal fiutding is critical as it helps to ensure that locallyderived benefits are fully integrated into the national tmdtinlodal tramportation network that is so 

essential to ensuring U.S. competitiveness in our global economy. 

These are son-.e of the reasons that APIA has urged Congress to enact a long- term 

authorization bill that grows federal fiutding for public transportation. We strongly support the 

preservation of the federal tramit program, and we support an increase in the dedicated revenues 

that go into the Highway Trust Fund for bod1 the Mass Tramit atxl Highway Accotll.lts. It is 

estimated that nnre than $90 billion in new revcntJes is needed just to maintain cturent public 

tramportation and highway programs, and APIA strongly believes that there is a need to grow 

cturent federal investl.llCnt levels for transit. We need a revenue stream that supports growth of 

the federal programs, as flat fw1ding at cw1·ent levels will not pemut tramit to adequately address 

the growing backlog of capital needs or the growing demand for transit service. It should come as 

no staprise that we strongly oppose efforts to devolve the federal transit or lughway programs to 

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the states. Public transportation is an essential part of the over.~ II surface transportation system, 

and given our growing population and increasing congestion on ow· roadways that progr.tm is more 

in1p0rtant than ever. 

We know transit ridersbip is growing, we know the nation's population is expected to grow 

significantly, and we believe that the den-end for public transportation service in our communities 

will continue to grow. Nationally, public transportation ridersbip continues to set record levels. 

In 2014, people took a record 10.8 billion trl>s on public transpottation- tbe highest annual 

ooersbip number in 58 years. Some public transit systems experieooed aD-tim: record high 

ooersbip last year. lllis record ridership didn' t just happen in large cities. It also happened in 

small and medium size conml.ltlities. In fact, some of the biggest gains carne in towns with less 

than I 00,000 people with ridersbip growth of double the national average. 1llis record growth in 

ooersbip occtUTed even when gas prices declined by 42.9 cents in the fourth quarter. From 1995-

2014 public transit ridersbip increased by 39 percent, almost double the population growth, which 

was 21 percent. The estirnated growth of vehicle miles traveled was 25 percent. 1llis proves that 

once people start riding public transit, they discover that there are benefits over and above saving 

troney. 

Our failure as a nation to adequately invest in this essential element of our surfuce 

transportation system will only cost the nation nme in tl'l! long run Conversely, investn'l!nt in 

public transportation will help support a heahhy, growing economy, facilitating tile efficient 

movernent of goods and people, arxl stimulating economic developrnent in commtnities served by 

vibrant public transportation systems. 

One only needs to ride a train or bus during the morning comnne to recognize the growing 

den-arxl, and to experience firsthand the strains that that den-and is placing on systems. The 

demarxl and St!pport for public transportation is also reJlected at the ballot box. Last year, 69 

percent of ballot initiatives seeking taxpayer St!pport for transit investment were approved by 

voters. Clearly, citizens are willing to pay for improved transit service. These local ballot 

initiatives confirm the stability of the local partnership, but they are not a substittlte tor the federal 

partnership. 

RETIJRN ON THE FEDERAL INVESTMENT 

For eve!)' dollar we invest in public transportation, we generate about $4 in economic 

retums. And $1 bill ion in federal transit investment fosters productivity gains that create or sustain 

50,000 jobs. It is in1Jortant to note that 73% of federal transit capital fiulds Dow through tile 

private sector. In fact, much of the bus and rail equipment is rnanufactured in rural areas and 

provides high wage jobs in those communities. For exalllple, bus origiJJal equipment 

nnnufucturers IJave plants located in Alaba1m, North Dakota, Kansas, Minnesota, South Carolina, 

Califuruia and upstate New York. Rail Cars are nnnufuctured in places Like Nebraska, Idaho, 

Illinois, and Pennsylvania. CoiJ1>onents and subcomponents arc being nnmuactured aD across 

this COlUltl)'. As these investn'l!nt n'l!trics nnke clear, local and regional transportation 

improvements yield national benefits. 

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On a very fundamental !eve~ federal transportation fm!ding keeps this economic engine 

naming, as transit agencies can only plan and advance large, tnllti-year capital projects when they 

can be confident the resources will be there when they are ready to break ground. 

APTA PROPOSAL 

To ensure the reliable, long-temt limding best suited to infrastructure investment, APTA 

tU'ges Congress to enact a 6-year, $100 billion authorization for the federal transit program that 

includes robust limding to grow the program from $10.7 billion in the current year to £22.2 billion 

in 2021. Revenues into the Highway TntSt Fund (HTF) must increase to support this much needed 

growth. 

Additionally, we see this troment in tim! as an ideal opportunity to establish a dedicated 

revenue stream for intercity passenger rail, separate from the revenues required for the Highway 

TnJSt Fund and Mass Transit AccoWJt. Like public transit, intercity passenger rail is experiencing 

tilership growth and increased demn!ds for public service in cortilors tbrougbout the com1try. 

We have asked that Congress provide $50 billion over the next six years to fucilitate the 

development of a nationa I !Ugh-speed and intercity passenger rail system 

APTA's surfuce transportation authorization recommmdations are based on needs 

identifted in eight categories of equipment and facilities lit11ded ttllder the ctuent federal program. 

They are based on the need for six-year investm:nt from all sources- lares, loca~ state, and 

li:deral-of $245 billion. APT A's investment requirem::nts include dte cost of bus replacements, 

demand response vehicles, rail vehicles, state-of-good-repair spending, New Starts and core 

capacity projects, and other costs. And dtey reflect investment requirements in states, cities and 

connnutities across the cotnttry. 

APTA recollll:n!nds dtat Congress take the necessary steps to restore, maintain and increase 

d1e ptU'chasing power of tlte federal n~tor litels user fee to suppon a significant increase in tlte 

federal investment for the public transportation program. ln addition, in order to meet the full range 

offm!ding tteeds, APTA supports d1e use of other 6nancing strategies to meet tile investJrent goa~ . 

First and fore~st, limding lll\ISt be suflic ient to address tl1e capital investment rteeds 

dictated by the nation's population growdt, economic and personal ~bility needs (including the 

reduction of traflic congestion), environmental ru!d sustainability needs, ru!d of om· aging 

population. While treeting our capital expansion needs, ftntding trust a~o be suJJicient to address 

issues of state of good repair across so many of our aging public transportation systelllS natiomv ide. 

It is in:portant to note dtat tilefe are difterences between .liu.tding and financing when it 

comes to transportation infi<tstructurc projects. Ftutding options are d~sc dtat generate revenue 

streams and financing options leverage revenue streams. Financing options are programs or 

instruments that leverage revenue streams as a way to trove many infrastrucnu-e projects forward, 

especially siguit'icantly large attd expensive projects. Will~ut adequate limding sources, states 

and local govemments cannot take full advantage of tl1e 6nancing tools available. Additional ly, 

6nancing options may not be practical or available for every infrastructure project. 

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Unfortunately, current revenues going into the Highway Trn5t Ftu1d are $ 15- 16 billion 

short of what is needed annually just to fund current tran~it and highway programs. Since the 

expiration of the SAFETEA-LU authorizing law in 2009, fuderal funding has grown by less than 

one-half percent wllile demand for transit service has grown and the cost of restoring the existing 

systems to a state of good repair has gf0\\11 to $88 billion 

Second, it is imperative that the funding for transportation investment be stable and 

reliable, whether they be from federa~ state, or local sources, or from public transportationgenerated rev-enues or public-private partnerships. Major transit capital investments often require 

advaiiCe plamli.ng and multi-year con~truction programs. 

Third, it is critical that the transportation finaiiCe le~lation devehped by this Comnittee 

recognize that not all financing mechanisiiiS and revenue generators work at the same level of 

ellicieiiCy and efrectiveness for all n-.:>des. Our proposal recomn:nds le~lation that would 

prou-.:>te the devehpment of revenue generated from traditional financing sources like 1llll1Jic ipa l 

bouds to inoovative financing mechauisms, such as public private partnerships, tolling and 

congestion pricing to supplement current revenue streams. However, infrastnlCture banks, 

nnulicipal bonds, private activity bonds, and loan programs such as Transportation Infrastructure 

and Finance Act program (TIFIA) and the Railroad lnmvation and Improvement Financing 

Program (RRJIF) that require payback \vill oot sustain an ongoing transit program They can help 

public-pri\'llte partnerships work, but transit public-private partnerships are not a revenue source 

but rather a management toot 

We \vant to emphasize that the certainty and predictability of the dedicated funding within 

the Mass Transit Accotu1t oflhe Highway Trn5t Fund, and chameled through the Federal Transit 

Program, has lntly served the needs of the public transportation industry, and allowed agency 

finance professiona Is to take advantage of and leverage a tll.l!titude of financing arrangenl!nts. 

For many years the federal gas tax has supported the national program and served 

effuctive ly as a user fee. While trends and market forces suggest tl~t the gas tax is not the growing 

revenue source that it once was, it renllins a viable source that can be collected efficiently and 

without creating any new red era] bureaucracy in the short rtul. The n-.:>st sustainable, forwardlooking and outcoiJl!-oriented approach nlly be a vehicle miles traveled (VMT) fee, but because 

the systems, IJl!tbods and infrastructure to irrpleiJl!nt such a nationa I system arc years away, the 

augmented gas tax could be the bridge to an ongoing natio11<1l VMT fee. While APTA has put 

forward these ideas on bow to raise revenues for the Highway TniSt Fund, we are open to any 

mechanism that provides a predictable source of funding tor these in-.:>ortant investments. 

CONCLUSION 

Mr. Chairman and IJl!tnbers of the Committee, I thank you for this opportunity to 

share our views as you D'()ve forward on this next authorization of surfuce transportation programs 

and urge the Committee to support the Federal Transit Program with a six-year investment level 

for transit projects of at least $ 100 billion The next program will absolutely require a wide range 

of funding options, but for the immediate firturc, we feel strongly that the base program must 

restore and increase the purchasing power of the Federal Motor Fue.ls User Tax while we 

concurrently D'()Ve with a true sense of urgency to develop and implement a national transportation 

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future fwl<ling n~del that is both economicaUy arl<l environmentally sustainable. We need to have 

funding predictability, both for our agencies arl<l our private sector partners. 

'Thank you for allowing us to provide testilrony on these critical issues. We look forward 

to working with you and the meni>ers of the Comnittee as you work to develop this next critical 

authorization bill 

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Statement for the Record 

American Public Works Association 

Holl'le CoiiDlittee on Ways and Meam 

Hearing on 

Long-Term Financing of the Highway Tmst Fund 

June 17,2015 

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Statement for the Record 

Hou5e Conuuittee on Ways and Means 

Long-Term Financing oftlte Highway Tmst Fund 

June 26, 2015 

The A.rrerican Public Works Association (APWA) is pleased to provide the rollowing statement 

to the House Corrmittee on Ways and Means on "Long-term Financing of the Highway Trust 

Fmd". 

APW A is an organization dedicated to providing public works infrastructure and services to 

millions of people in nU"al and IU'ban comrnmities, both small and large. Working in the public 

interest, APWA's 28,500 meni>ers plan, design, build, operate and m1intain OW' vast 

transportation network, as weD as other key infrastructure assets essential to our nation's 

economy and way of lifi:. 

Every commnuty has a stake in the funD"e of our transportation system Local goveroments own 

approximately 75 percent of the nearly four million-mile roadway network, more than half of the 

nation's 300,000 bridges, and manage about 90 percent of the transit systems. With nearly every 

trip beginning and ending on a local road, street or sidewallc, a strong local state-federal 

partnership is vital to ensuring a safi:, seamless and efficient multi-modal transportation system 

Funding Stream Consistency Is Imperative 

We fuvor a nulti-year SW'fuce transportation authorization that provides a sustainable fi.tnding 

soru'Ce. This essential component will ensure An-w!rican businesses can move goods efficiently 

and con'4Jete globally. We appreciate the budgetary constraints the committee is contending with, 

but action must be taken to close the gap between transportation needs and fi.tnding rather than 

operating by extension. 

Among the solutions we support increasing the federal nntor fuel nser fi:e and indexing it to the 

rate of inflation. APW A believes any revenues from that ree should be used solely for StD'fuce 

transpot1ation purposes. 

Additional options we support are a transition to vehicle-nlileagc fees, an expansion of access to 

innovative financing tools, moving to a Utility SystenvEnterprise Fttnds Model to finance and 

operate national transpot1ation networks, and encouraging local govennnents to increase 

participation in transportation projects. 

The ptD'chasing power of the federal fuel tax revenues is declining as electric vehicles, hybrids 

and other more energy-effiCient vehicles increase in number. APWA supports incentives to 

develop new concepts to of!Set revenue losses caused by nnre fuel-effJCient vehicles. One such 

concept is the vehicle-miles driven approach in addition to gas taxes or in lieu of gas taxes. This 

is a technology-driven application that records vehicle miles driven to allow equitable payn-.:nt 

of a fee to the state or federal govenm'W!nt based upon an established rate per vehicle-mile driven. 

A certain level of capital investn'W!nt will be required to in:plement a vehicle miles traveled 

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(VMl) program. APW A encoumges the federal govenurent to support a transrt10n to a VMT fee 

as a stable, long-tenn replacement for the fuel tax, which would serve as a 100re appropriate 

''user fee" and encoumge efficient use of our nation's transportation system. 

Secondly, APWA recommends fiuther expansion of the use of financing mechanisms such as 

Public Private Partnerships (P3), tolling, congestion pricing, and ''pass through !inane i ng". The 

latter has proven to be quite successful in states such as Texas. Cities and counties are stepping 

up to design, construct and fund highway improvements in urban areas using revenue bonds 

backe.d by guaranteed revenue streams. By doing so, these cities and counties arc also 

guaranteeing their own revenue streams to help ensure low interest rate financing ofthese 

specific projects. 

Lastly, we understand that ~roving our transportation system should be a partnership of loca~ 

state and federal efforts. We believe that partnership must be continued and even expanded to 

leverage scarce taxpayer do1L1rs. Our association supports federal incentives for state and local 

agencies to increase the use of voter approved sales taxes, local option gas taxes, bond programs, 

tratlSportation in1Jact fees and od1er dedicated tax revenues to advance or accelerate 

~lementa ion of critical projects. In addition to financial participation, local agencies should be 

encouraged to assist by providing rights-of.. way, helping with the environmental review process 

and perfonning any other local activity that expedites and reduces the cost oftlte project. To the 

extent possible, federal programs should remove or minimize any legislative or regulatory 

obstacles to local use of ahernative financial tools for participation in critical transportation 

projects. 

While another short-term exte11Sion will ensure some projects 100ve forward, the ongoing use of 

extensions is hastening the decay of our nation's roads and bridges. There arc a muroer of 

projects that will not be able to m:>ve without at least a patch for the Highway TnlSt Ftmd. The 

Interstate 710 project in Los Angeles is a $5 billion project to ensure goods can flow from d1e 

nation's largest port to d:te mid-city's rail yards, warehouses, and distnbution centers. In 

Tennessee, 32 projects, totaling $393 billion are being postponed to at least the 2016 fiscal year 

because of tlte lack of a long-tenn transportation bill 

As these major projects are delayed, so is badly-1teeded maintenance. 1his only drives costs 

higher over the long-tenn The Anx:rican Association of State Highway and Transportation 

Officials reports that for every Sl spent to keep a road in good condition, it avoids $6-$14 

nee.ded later to rebuild tlte same road once it has deteriorated significantly. These costs will have 

to be paid by the taxpayers who already pay an extra $324 muJtJally more in vehicle n'Bintenance 

due to cnuroling roads. 1bis negatively in1pacts businesses too, who, according to the U.S. 

Treasury Department pay $27 billion in additional freight costs because of poor road conditions. 

The sittJation is dire and APW A supports any revenue method to ensure our members are able to 

contintle to build, operate and maintain our roads. 

Taxpaye•· DoUa l's Can No Longe•· Be Wasted 

APW A's members arc the ones on the ground in1Jlementing our 11<,tion's transportation policies. 

However, they m.ISt comply with burdensome, duplicative federal environnxntal laws adding 

significant cost to projects with little additional environmental protections. Congress can take 

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certaio steps to guarantee the revenue it collects for tbe purposes of road, highway, and bridge 

coostruction is well spent. 

Wbile progress was made in MAP-2 1, federal and state oversight truSt be filrther streamlioed to 

ensure the nnst efficient use of limited federa~ state and local fiscal resources. Legislation is 

needed to cootinue to address the problem of project delays and rapidly escalating costs 

associated with regulatory requiremems from nl.llll:rous federal regulations and agellCies. We 

recognize the conunittee does not have direct jurisdiction over some of these deficiellCies in 

federal law. However, because Ways and Means bas long been the guardian of the federal 

treastuy and taxpayer dollars the committee has a stake in making certain these nnnies are spent 

efrectively. 

APW A suppotts Congressiona I action to streamline project delivery by allowing federal 

participation and approval of ahemative neutral activities prior to conpletion of dJe National 

Envirotm~ntal Policy Act (NEPA) requirements. For projects demoostrating no ahenJative 

in-yael, right-of-way acqui<Jition should be an eligtble activity prior to NEPA Further, we 

strongly urge the establishment of statutory in~lines for project reviews and findings by federal 

and state regulatory agencies for all transportation in"4>rovement projects. 11JCSe changes would 

dramatically reduce the overall tm to nnve a transportation project from design to construction 

Moreover, Congress can create a streamlined pennirting process for state and .local projects that 

receive $5,000,000 or less in federal funding. This process should ensure adequate 

environmental protections and diligence for right-of-way acqui<Jition, but eliminate many ofdJC 

duplicative steps, like frivolous citizen suits which drive highway costs higher and lengthen 

tin·dines. Certain projects should also be included, like the N atiotJal Safe Routes to Schools and 

National Scenic Byways programs. 

Lastly, we urge increased fk:xibility to use federal funds on a range of transportation ahematives 

as well as trore fk:Xtbility in allowing for contingencies in d~e planning and funding processes. 

Without latitude for local flexibility in detennining fiutding sources and an~nding plans, 

conmunities Jose the ability to nnve to the next project in line if an tmforeseeable problem 

develops with a particular project. 

Conclusions 

11Je American Public Works Association urges Congress and the Administration to preserve and 

enballCe the federal investment in our nation's transportation infrastructw-e. Building dJC 

inti-astructtlfe T~eeded to suppo11 our economic health, welfure and safety rakes several years, 

even decades to in"4>Ien~nt. Action is needed now to identity new revenue sources for sustaining 

the Highway Trust FlUld and Mass Transit accotu1ts, and to enable red era~ state and local 

in"4>rovements to our nation's surfuce transportation T!el\vork. 

Investment in transportation projects is a proven way to boost the econoll\Y. Every $1 billion 

invested in transportation geT~era es an estin~ ed 27,800 jobs and up to $6 billion in additional 

gross don~stic product. Our nation cannot remain economically con-yetitive with the rest of dJe 

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world if our transportation system is left inadequate and cnurbling. Investing to in1Jrove and 

repair our deteriorating surtace transportation network will build the foundation for long-term 

and prolonged economic growth. A strong federal role in fimding our 11<1tiona~ regior1<1l and local 

transportation systems is critical to job-creation, economic well-being, and the safuty and weltare 

of our country. We comrmnd you for bringing focus to the issue by hold.ing this hearing. APW A 

is hopeful Congress tuxlerstands the key role long-term financing plays in the health of our 

nation's roads, highways, and bridges. Thank you fur your consideration of our colll!l);!nts. 

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Statement of the Ame1ican Truck Dealers Di\'ision 

National Automobile Dealers Association 

A Hearing Entitled 

''Long-Tenn Financing oftbe Highway Tn JSt FUIId" 

Before the House Ways a nd Means Committee 

JUlie 17,2015 

Mr. Chainnan, thank you for the opportunity to submit the comments of the American Truck 

Dealers Division (ATD) of the National Automobile Dealers Association (NADA), to the 

hearing record. NADA is a national trade association that represents 16,000 franchised new car 

and tmck dealers and collectively employs more than one tnillion individuals. NADA has 

abnost 1,800 ATD m::Jllbers, which represents 82 percent of commercial truck dealers. 

MAP-21, the current highway authorization, will expire on July 31,2015. While there is 

bipartisan support for a long-term highway bill, the biggest challenge is fimding the currently 

insolvent Highway Trust Fund (HTF). If Congress were to maintain the Federal surface 

transportation program at current levels, the HTF would need an additional $168 billion in 

revenue through 2025. 1 

Currently, a 12 percent fuderal excise tax (FEl) on new heavy-duty trucks contnbutes revenues 

to the HTF. Proposals have been made to increase the FET as a way to raise revenue for the 

depleted HTF. The FET already depresses new truck sales and increasing this tax would further 

slow deployment ofcleaner, safer, and more fuel efficient !niCkS. Congress should also consider 

lowering or eliminating the tax to address the detrimental impacts of the tax on safety, the 

environment, and the !niCk industry. 

The truck FET was originally imposed in 1917 to help defray the cost of World War J.2 This tax, 

applicable to most new highway heavy-duty tntcks, tractors, and trailers, has risen from 3 

percent of the selling price to 12 percent today, making it the highest percentage excise tax 

Congress 1el'ies. With the average retail price of a new heavy-duty truck near an all-time high 

of$169,000, the 12% FET costs truck customers roughly $20,000. 

Unfortunate ly, the FET has the effect of discouraging businesses from buying new heavy-duty 

tn~eks that are sarer, cleaner, and more fuel efficient, and encourages trucking companies to hold 

on to their older trucks longer. 

1 "Projeclions of Highway Tmst Fund Accomlls",CBO March 2015 Baseline, is uedJa~1 . 26, 2015. 

hlip://www.cbo gov/sjles/defauh/ fi(es/cbofiles/ntl achments/43884-?015-03-HjghwavTmslfund pdf 

2 FHWA, Federal Tax Ra1es onMolorVebicles and Related Pl'Oducts,September 1999: 

h!tp;//www.Onva,do!.gov/ob nnlhs98!Jables/fe lOib.pdf. In recent yea1~, some even have suggesled increasing !be 

FET. For exao1Jie. in 20 13, the Senate Finance Committee included an FET increase of l percent (lo 13 percent) in 

ao "options paper" on infraslmcture funding. Addilionally, a Govemmenl AccouUiabilily Office report, "Highway 

Tmst Fund, Pilot Program Could Help De1ennine the Viability ofMileage Fees for Certain Vehicles", (Decenilel' 

13, 2012) concluded ihat Congress considel'" new revenues" on con•nercial tmcking. 
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An increase in the FET would be in addition to the cost of new Ji:deral emissions and fuel 

economy mandates that are increasing the price of new heavy-duty trucks. For example, the 

Owner Operator Independent Drivers Associations (OOIDA) calculated the average per truck 

regulatory costs associated with the Environmental Protection Agency's (EPA) MY 2004-20 10 

truck emissions standards to be $20,000-30,000.3 

Additionally, EPA has proposed a new set ofcon:nnercial truck fitel economy/greenhouse gas 

rules that require fuel economy increases of up to 24% by 2027. 1he Obama administration 

estnmtes that its proposa~ phased in between model year 20 18 and 2027, will cost at least $25 

billion or some three tilnes the estilmted cost of Phase I. According to a recent New York Times 

article, "It is expected that the new rules will add $12,000 to $14,000 to the manufucturing cost 

of a new tractor-trailer ... "4 Together, the cost of these new standards, coupled with associated 

increases in the FET, will price many truck purchasers out of the market. 

1he complexity of assessing and remitting the FET is another tmjor area of concem Tm:k 

dealers spend considerable tune and attention navigating the byzantine and complex IRS 

regulations associated with the collection of the tax . AID continually gets questions from truck 

dealerships regarding how FET should be calculated and collected. I.n fdct, AID's guide for 

truck dealers on collecting and remitting the FET is over one hundred pages long. 1he many 

exceptions and gray areas related to the FET make it tripe for IRS audit and impose significant 

financial and admi11istrative challenges for small business truck dealerships and customers alike 

to stay in compliance. 

1he HTF is in desperate need of reliable and consistent funding into the fitturc. 1he FET tails to 

provide certainty and in filet is a very volatile tax. For example, the FET generated a little over 

$1.4 billion in 2008 when truck sales took a hit durmg the recession.) In 2013, on the other hand 

when the truck market came back $3.2 billion was generated for the HTF. 6 The FET is not a 

user Ji:e but a tax on a product. When truck sales are down the revemte into dlC HTF is directly 

in1pacted. 

H. Con. Res. 33 

H. Con. Res. 33, introduced by Reps. Reid Ribble (R-WI) and Tin1 Walz (0-MN), is a bipartisan 

conctnrent resolution that would put Congress on record in opposition to any increase in the FET 

on heavy-duty trucks and trailers. AID strongly supports this bipartisan resolution which to date 

has 26 cosponsors. 1he following organizations have endorsed this cortctUTent resolution: 

American Highway Users Alliance, American Truck Dealers, Daimler Tmcks North America, 

Mack Trucks, Inc., Meritor W ABCO, NAF A Fleet Management Association, National Trailer 

3 Scott Grenenb (Professional driver and n.:ni>er ofOOIDA), Testimony before the House ConJnittee on 

Oversight and Govemmenl Refom\ (October 12, 2011). 4 Aaron M. Kessler and Coral Davenpo1t, E.P .A. Proposal Will Pur Bigger Tnrckson a Fuel Dier, The New York 

Times, (May 30, 2015). 

s FHWA. Office of Highway Policy Information, October 2007 to September 2008: 

http:Uwww. fhwa .dot.gov /pol i cyi nformation/s ta tisti cs/2008/felO 2008.cfm 

• FHWA. Office of Highway Policy Information, October 2012 to September 2013: 

http://www. fhwa .dot.gov /pol i cyi nformation/s tati s ti cs/2013/fel O.cfm 
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Dealers Association, Navistar, NTEA - TI1e Association for the Work Truck Industry, Owner 

Operator Independent Drivers Association, Recreation Vehicle lndustry Association, Truck & 

Engine Manufacturers Association, Truck Renting and Leasing Association, Tn10k Trailer 

Manufacturers Association and Volvo Trucks North America. 

Conclusion 

A TD strongly supports an equitable long-term Jimding solution for the HTF designed to ensure 

that Americans travel safely on our roads and there is a reliable roadway system for goods to 

travel to n:~arket in a cost effuctive rrnm1er. A TD believes that a user fee approach is the fuirest 

and most eflicient way to achieve these goals. Finally, Congress should not only oppose any 

itt::rease in the FET, sit1Ce this excise tax contradicts government mandates fur a cleaner, safer, 

atxl nX>re thel eflicient truck fleet, but it should also examine the adverse irnpacts of the FET 

pofuy particularly on the nearly 7 rnillion Americans employed in the trucking industry. 
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Statement of 

The Associated General Contractors of America 

Presented to the 

House Committee on Ways and Means 

on the topic of 

Long-Term Financing of the Highway Trust Fund 

June17, 2015 

The Associated General Contractors of America (AGC) Is the largest and oldest national construction 

trade association in the United States. AGC represents more than 26.000 firms. including America's 

leading general contractors and specialty-contracting firms. Many of the nation's service providers and 

suppliers are associated With AGC through a nationWide network of chapters. AGC contractors are 

engaged in the construction of the nation's commercial buildings. shopping centers. factories. 

warehouses. highways, bridges, tunnels, airports. waterworks facilities, waste treatment facilities. dams. 

water conservation projects, defense facilities. multi-family housing projects, site preparation/utilities 

Installation for housing development. and more. 

THE ASSOCIATED GENERAL CONTRACTORS OF AMERICA 

2300 Wilson Boulevard, Suite 300 • Arlington, VA 22201 • Phone: (703) 548-3118 • FAX: (703) 837-5407 

lnh·odul'tion 

Mr. Chairman and Members of the Collllllittee, AGC represents more than 26,000 fll'ms, 

including over 6,500 of America's leading general contractors, and over 9,000 specialtycontracting finns. More than I 0,500 service providers and suppliers are also associated with 

AGC, all through a nationwide network of chapters. These finus, both union and open shop, 

engage in the construction of buildings, shopping centers, factories, industrial facilities, 

warehouses, highways, bridges, nmnels, airports, water works facilities, waste treatment 

facilities, dan1s, water conservation projects, defense facilities, multi-family housing projects, 
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numicipal utilities, and other improvements to real property. Most are small and closely held 

businesses. 

Since the creation of the Interstate Highway System in 1956, the Highway Tmst Fund has been 

supported by revenue collected from users. This 'pay-as-you-go'system has served America 

well, allowing States to plan, construct and improve America's surface transportation 

infrastrucnrre. AGC has long-supported maintaining the user-fee model for providing Highway 

Trust Fund revenue - including taxes on gasoline and diesel fuel -and encotrrages Congress to 

act immediately to provide the revenue necessary to fill the Highway Tmst Fund revenue gap we 

will face this summer and beyond. User fees and taxes have not been increased in over twenty 

years. Since 2008, the revenue going into the Highway Tmst Ftmd has fallen short of what is 

needed to address America's infrastrucnue needs and keep ftmding at existing levels. This has 

resulted in the Highway Tmst Fm1d receiving over $63 billion in transfers from the general ftmd 

simply to meet its obligations. 

Immtdiale IDghway Trust F1111d Shortfall 

According to the Congressional Budget Office (CBO) the Highway Tmst Fund will be unable to 

meet all of its obligations in July or August. CBO also estimates that with no change in 

estimated receipts into the Highway Trust Ftmd, in 2016. all of the revenue credited to the ftmd 

will be needed to meet obligations made before that year. Simply put, without additional 

revenue the trust ftmd will be unable to support any new federal obligations in 2016, resulting in 

a I 00 percent cut to new highway and transit fimding. In order to avoid such draconian cuts and 

sin1ply maintain cmrent ftmding levels, $16 billion in additional revenue either through a gas tax 

increase or other user related fees or a transfer from the general ftmd will be necessary. 

According to CBO. the gap between trust ftmd receipts and obligations beyond 2016 is $11 to 

$18 billion annually. 

Nttd for Ctrtaintv 

Because of the current state of trust fimd fmances, Congress must take steps to maintain certainty 

in program continuity. The construction industry makes decisions about investments in new 

equipment and in retaining and training a workforce based on its best projection about where the 

market will be over the long tenn. Without the knowledge that a continuous and growing market 

is on the horizon, contractors will not make the invesnnents necessary to carry out this program's 

objectives. This is particularly true for small businesses, which typically have less operating 

capital to invest, thus are more risk-adverse with their capital. TIIis trait is also magnified by the 

economic conditions, whlch make risk reduction a company's top priority. This hurts the 

progran1 as much as it does the industry. Efficiency and productivity increases when contractors 

can project a steady fumre market in which to work. This helps lower costs, and allows for a 

better constructed project because new equipment and improved teclmology improves the final 

project. 

The stop gap funding measures since 2008 have caused tmcertainty in the transportation 

constmction market place. Congress's inability to make the difficult decisions and provide real, 

growing and sustainable revenue for the Highway Tmst Fund has resulted in states throughout 
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the county delaying or cancelling much needed transpOitation construction projects. AGC 

members from Georgia to Wyoming, Tennessee and South Dakota among others are seeing their 

state departments of transportation let fewer and fewer jobs. Nearly $2 billion in vital 

transportation constntction projects has been delayed or cancelled because Congress will not act 

and fix the Highway Trust Fund. 

Ft>deral Role 

Not only has Congress failed to act on addressing the solvency of the Highway TntSt Fund, some 

want to strip away most federal ftmding for surface transportation projects, essentially 

eliminating tl1e federal govenm1ent's constinttionally mandated role in promoting interstate 

commerce (commonly known as devolution). Legislative proposals such as the Transportation 

Enhancement Act (TEA) would reduce funding for the federal-aid highway program by more 

than 80 percent, with no consideration of the in1pact on state and local govenm1ents or private 

indttStry. It also calls for the elinlination of tlle federal transit program, taking more tllan $8 

billion from state and local public transportation agencies, which rely on federal fimds for more 

than 43 percent of their capital spending. 

While TEA pmports to retain a federal role in maintaining tl1e Interstate System, according to the 

U.S. Department of Transportation (U.S. DOT), Interstates require at least $17 billion in ammal 

investment to sinlply sttStain current levels of maintenance, and more tllan $33 billion per year to 

improve system conditions. Furtl1ennore, the National Highway System, which carries 55 

percent of total vehicle miles traveled and 97 percent of truck miles, also requires an ammal 

investment of$75 billion, according to U.S. DOT. TEA doesn't "empower" states; it burdens 

them with 90 percent of the fiscal responsibility for supporting highways that the federal 

govenm1ent currently helps to maintain. It would also have a devastating impact on public 

transportation systelliS tllat help to alleviate highway congestion. reduce emissions and provide 

critical transportation options to tmderserved populations. 

A furtller burden on states lies in the amotmt of revenue tllat they would have to raise to replace 

the absence of federal transportation funding. On average federal dollars are responsible for 52 

percent of states capital budgets for transportation. If states replaced the lost revenue with an 

increase in tlleir fttel taxes, on average tlleir gas taxes would have to increase by roughly 23 cents 

by 2020 and some states would have to raise tlleir taxes by more tllan 30 cents jttSt to maintain 

the ctnTent level of fiu1ding. 

TEA and otller "devolution" proposals do not bring any new money to tlle table so tlley are not a 

solution to the long-tenn transportation needs of our cotmty. Congress mttSt continue to reject 

such proposals and irtStead work in a bipartisan, bicameral way to enact a long-tenn sustainable 

revenue somce for tlle Highway TntSt Fund. 

Motor Furls Tax 

AGC believes tllat tllere is no easy solution for addressing our transportation investment deficit. 

The level of investment provided by the Highway TntSt Fund should be increased to address 

mounting needs. An increase in revenue is necessary jttSt to keep up witll inflation additional 
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funding is also needed to address the backlog of transportation investment needs. Numerous 

authoritative reports have come to the conclusion that, for the foreseeable future, the federal 

motor fuels tax is the best method for funding transportation infrastmcture investment and that 

the motor fuels tax needs to be increased. SAFETEA-LU established two national commissions 

to look at the future of the federal transportation programs and to make recommendations on 

paying for these needs into the future. Both Commissions were appointed with bi-partisan 

membership and included transportation experts and individuals representing businesses and 

other users of the system. 

In 20 II, the Simpson Bowles Commission recommended a IS-cent per gallon gas and diesel tax 

increase plus inflation. In addition to Simpson-Bowles, Congressman Early Blumenauer (0-0R) 

has introduced legislation (H.R. 680) that would increase the gas tax by 15 cents over 3 years (it 

currently has 32 cosponsors) , while Congressman Jim Renacci (R-OH) and Congressman Bill 

Pascrell (D-NJ) have a bill (H.R. 1846) that would pay for the next surface transportation 

authorization with indexing the current gas and diesel taxes to inflation and subsequently 

increasing them by an amount that would maintain current fmding levels if Congress failed to 

address the long-tenn solvency of the Highway Trust Fund (31 cosponsors). AGC supports all 

three of the above proposals. 

AGC Recommendations 

Recognizing the need to look at all viable options to fund the highway trust fund, AGC along 

with our partners in the Transportation Constnaction Coalition (TCC) have been advocating for 

over a year that Congress look at other revenue options - that maintain the user-pays model -

that would be viable. This is our all of the above approach. 

The chart below (and attached at the end) shows the S I 02 billion shortfall from 2015-2020 

between the revenue going into the Highway Trust Fund and projected outlays of the fund 

assuming current f1mding levels plus inflationary increases. The TCC is proposing a 

combination of new and existing user fees currently being collected at the federal and state level 

as options to the 6-year shortfall and create a basis for much needed future growth. In addition, 

we look beyond 2020 and provide the next generation of revenue options to fund growth that 

addresses the needs of our transportation network. 
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.... '"-' ·~~-·• J 6tCI .......................... __ ........... .... 

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o--~· i.!lJQJ leW .... ....._ ~,. • • 

.. " __ .... ....,. ............. ~1601 

.. ,... ....... .,_....,~ _ I ._...,..,bt>LW> 

The proposed revenue options include: 

• Drdicatiog 15 pt>rct>ot of Custom Dutit>s CIIITt'ntly coUt>ctt>d to tht' Highway 

Trust Fund - The U.S. has recognized the connection between infrastmcrure 

investment and imemational commerce since the Lighthouse Act of 1789 dmi.ug 

the first Congress. CustolllS duties are imposed at varying rates on various 

imported goods passing through US intemational gateways and currently go to the 

General Ftmd of the US Treasury. A number of interest groups as weU as the 

SAFETEA-LU policy commission have suggested that given the role 

transportation infrastmcrure plays in facilitating the i.mpon of goods, a poniou of 

current custolllS duties should be allocated to support transportation investment. 

• $5 Dt·ivt>r License Fee- The allllual driver's License fee would be a federal surcharge on current state license fees. AU states charge a fee which in some cases 

simply covers the cost of administeti.ug the licensing progr31llS. In many states 

however, license fees also are used as a source of funding for transportation or 

other purposes. CtUTently 48 states have a registration fee and all but a handful 

use the proceeds for road improvement projects. This fee. as with others, should 

be indexed to CPI for inflation. 

• $5 Light Duty Tire Tax - - Sintilar to the existing heavy vehicle tire fee. this fee 

would apply to tires that do not exceed maximmn capacity of 3,500 potmds. This 

would be a national tire tax on both new cars and replacement tires. This fee, as with others, should indexed to CPI for inflation. 

• Incrt>asr Heavy Vt>hiclr Ust' Tax - Clu-rently this tax is levied on aU trucks 

55,000 potmds Gross Velticle Weight (GVW) or greater. Tile tax rate is $100 plus 

$22 for each 1,000 potmds of GVW in excess of 55,000 up to a maximt.ml armual 

fee of $550 (thus all trucks with GVW greater than 75,000 pounds pay the 

maximmn). 

• $10 Light Duty Regish·ation Ft't'- AU states impose armual vehicles registration 

and related fees, and at least half the states raise more than a quarter of their 
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dedicated transportation revenues through this mechanism. TI1e structure of the 

registration fee varies widely, from a flat per vehicle fee to a schedule of rates 

based on factors such as vehicle type, weight, age, horsepower, and value. This 

increase in would apply a federal surcharge to state registration fees. We propose 

that this and all other fees are indexed to CPI. 

• 10 Cent Diesel Tax Increase- Increasing the tax on diesel only is modeled after 

the inland water ways tmst ftmd proposals that was included the ABLE Act which 

was signed into law last December. TI1e barge operators convinced Members of 

Congress to increase the ft1el tax that they pay to ftmd infrastmcmre investment. 

• lndrx Diesrl & Gas Tax - When these user fees were last increased in 1993 they 

did not include any adjusllllents for inflations. If you measw·e the federal gas tax 

rate today relative to road construction costs, the tax has lost 38 percent of its 

value since 1993. 

• Oil Leasing on Federal Lands -Expanding oil and gas drilling on federal lauds 

and in the Outer Continental Shelf and dedicating the royalties to the Highway 

Tn!St. 

• Dremed Repatriation - Some members of Congress have proposed to tax the 

profits of U.S. corporations on earnings made outside of the United States. 

Several different ways have been suggested on how to accomplish this. including 

a "tax holiday." nus proposal is for "deemed repatriation", taxing corporate profit 

made outside the U.S. at au 8.75 percent rate, regardless of whether the profits are 

ret1m1ed to the U.S. 

Again, if Congress continues to fail to increase the user fees for gasoline and diesel ft1el, they should look to these options as altematives that would maintain the traditional user pays model 

for our federal transponation programs. 

Conclusion 

AGC believes that the federal government should double-down on its infrastructllre investment, 

not reduce it or shift the responsibility to the states. The long-term benefits from transportation 

invesllllent are well doctiDlented. Every dollar invested in Highway Tmst Ftmd programs renuus 

74 cents in tax revenue and adds $1.80 to $2.00 to Gross Domestic Product (GOP). The "t!Ser 

fee" principle is well respected aud easily tmderstood. The Highway Tn!St Ftmd concept of fiscal 

responsibility served the country well for fifty years tmtil the Congress decided it was more 

acceptable to take money from the general ftmd than increase the t!Ser fee to cover the atmual 

expeuditllres from the Highway T111St FWld. The U1lited States bas face the reality that they have 

been Wider investing in our transportation systems for far too long and the impact is now being 

felt in every state and in most towns. With tbe interstate system beyond capacity and design life, 

this Widerinvestment is costing U.S. bt!Sinesses and individual's time and money. Providing 

continued suppon for traditional ftmding mechanisms and fmding new user based options is 

necessary to address this dire situation. 

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Reauthorization Funding Options 

I 2015-2020 2020-2030 Provide 6-Year Funding Security to Creote Basis for Growth Next Generation Revenue Options to Fund Growth tho

Addresses Actual System Needs 

Current spending+ inflation: $330 Billion Needed to Improve petformance: $936 Bil

Projected Highway Trust Fund revenue: $228 Billion 

Shortfall: $102 Billion 

Revenue Ol!tions esdlllllll EUblll R-111 ODiions 

Dedicate 15% Customs Duties/HTF•: $ 34.98 B Distance traveled fee 

$5 driver license fee•: s 6.988 Enersv emaction fee 

$5 light duty tire tax•: s 10.60 8 Energy transmission fee 

Increase heavy vehicle use tax•: s 6.848 frei&ht fee (such as customs duties, container fee and freight f

$10 light duty Reg. fee•: $ 15.41 8 Gas equivalent fee for electric vehicles 

10 cent diesel tax increase: $ 27.76 8 LNG export fee 

I Index diesel tax: $ 5.22 8 Repatriation of corporate profits 

Index gas tax: s 10.87 8 Per barrel oll fee 

Oil leasing fees federal lands•: $ 14.25 8 Transit fee 

Deemed Repatriation: s 93.60 8 

Total New Revenue: $226.51 B 

Or 

15 cent increase In gas and diesel taxes: 

$1608 

Or 

Phase in of items listed here 

•indexed for inflation 

3/13/2015 Explanation of Shortfall and Revenue Option.s on Reverse 
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Explanation of Shortfall and Revenue Options 

Shortfall - The 2015·2020 shortfall represents the discrepancies between the revenue going into the HTF and the projected outlays of the trust fund assumin

funding levels plus inflationary increases. The Congressional Budget Office projects that without Congressional action the HTF will be unable to meet all of its 

in 2015 and will be unable to support any new projects in fiscal year 2016. 

Revenue Options - TCC is proposing a combination of new and existing user fees currently being collected at the federal and state level as options to fill the 

shortfall and create a basis for future growth. States that are currently using various fees for transportation revenue Include: 

48 States w/ Vehicle Registration, license or Title Fees 

o CA, DC, GA-do not hove ony such fees 

37 States w/ Vehicle or Truck Weight Fees 

o DE, DC, FL, GA, 10, IN, lA, MA, Ml, NE, OK, PA, Rl, SC, WV-donothoveonysuchfees 

2 3 States w/ a Vehicle Sales Tax 

o AK, AZ, CT, FL, HI, II. KY, MD, MN, MO, MT, NE, NV, NJ, NM, NY, NC, NO, SO, LIT, VA, VT, WV 

Explanation of Revenue Options 

(EXISTING) Cust.oms Duties-Customs duties are imposed at varying rates on various imported goods passing through US international gateways and curren

General Fund of the US Treasury. A number of interest groups as well as the SAFETEA·LU policy commission have suggested that given the role transportation 

infrastructure plays in facilitating the import of goods, a portion of current customs duties should be allocated to support transportation investment. 

(NEW) Drivers license Fee- The annual driver's license fee would be a federal surcharge on current state license fees. All states charge a fee which in some c

covers the cost of administering the licensing programs. In many states however, license fees also are used as a source of funding for transportation or other 

Currently 48 states have a registration fee and all but a handful use the proceeds for road improvement projects. This fee, as with others, should be indexed 

inflation. 

(NEW) light Duty Tire Tax - Similar to the existing heavy vehicle tire fee, this fee would apply to tires that do not exceed maximum capacity of 3,500 pounds

would be a national tire tax on both new cars and replacement tires. This fee, as with others, should indexed to CPI for inflation. 

(EXISTING) Increase Heavy Vehicle Use Tax-Currently this tax Is levied on all trucks SS,OOO pounds Gross Vehicle Weight (GVW) or greater. The tax rate Is $

$22 for each 1,000 pounds of GVW in excess of 55,000 up to a maximum annu•l fee of $550 (thus all trucks with GVW greater than 75,000 pounds pay the m

(EXISTING) Heavy Duty Truck Tire Tax-Applies to tires with a maximum load rated over 3,500 pounds. The current tax is 9.45 cents for every 10 pounds of 

capac.ity that exceeds the 3,500 threshold. The maximum was last increased In 1982 and was actually lowered in 1984. This fee, as with others, should index

for inflation. 

(NEW) Vehicle Registration Fee - All states impose annual vehicles registration and related fees, and at least half the states raise more than a quarter of the

transportation revenues through this mechanism. The structure of the registration fee varies widely, from a flat per vehicle fee to a schedule of rates based o

such as vehicle type, weight, age, horsepower, and value. This increase in wo(jd apply a federal surcharge to state registration fees. We propose that this an

fees are Indexed to CPl. 

{EXISTING) Diesel Fuel Tax Increase -Increasing the tax on diesel only is modeled after the inland water ways trust fund proposals that were included in the 

for tax reform, the president's budget and the Senate Finance committee extenders package. The barge operators have convinced members of congress to i

fuel tax that they pay to fund infrastructure investment. 

(NEW) Deemed Repatriation - Some members of Congress have proposed to tax the profits of U.S. corporations on earnings made outside of the United Sta

different ways have been suggested on how to accomplish this, including a "tax holiday.• This proposal is for •deemed repatriation•, taxing corporate profit m

outside the U.S. at an 8.75 percent rate, regardless of whether the profits are returned to the U.S. 
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Association of Equipment Manufacturers 

6737 West Washington Street 

Suite 2400 

Milwaukee, WI 53214 

Jllllel7, 2015 

Chainnan Ryan and Ranking Member Levin: 

On behalf of the Association of Equipment Manufacturers (AEM) and the almost 900 manufacturers of 

constntction, agriculture, forestry and mining equipment we represent, I want to thank you for offering 

this opporrunity to submit a statement for the record explaining our industry's thoughts on financing the 

Highway Tntst Ftmd. 

The Highway Tmst Fund, the federal government's primary tool for supporting critical investments in our 

surface transportation infrastructure, has now endured years ofllllcertainty because Congress has been 

tmable to address a chronic shortfall driven by both inflation and vehicles' increasing fuel efficiency. 

AEM strongly urges Congress to end the cycle of delays and borrowing and develop a long-tem1 solution 

for the trust fund; we sincerely hope today's hearing will offer a productive oppornmity to move toward 

that important goal. 

However, I want to use this opportunity to explain the effects of uncertainty on equipment manufacturers, 

and outline our industry's perspective as it relates to financing a long-term highway bill. 

The negative effects of repeated patchwork fixes to the Highway Tmst Fund are reverberating throughout 

our economy, and would only be exacerbated if Congress adopts another short-term fix instead of a longterm solution. 

The short-tem1 bills adopted by Congress in recent years have sapped state government planners of their 

ability to make long-term capital investment plans. Beyond depriving states of their ability to improve 

their infrastructure, that means that jobs are being lost as states defer or cancel bids for projects. 

What that means for om manufacturers is depressed demand for equipment that would otherwise be used 

to help rebuild our surface transportation infrastntcture, the backbone of our economy. It also means that 

our roads and bridges continue to deteriorate, meani11g that there's less ability for fanners to move their 

products to market, or for manufacntrers to sell their products across the country, or overseas. 

Though the manufacturing economy has recovered steadily from the depths of the Great Recession, the 

absence of a long-term highway bill continues to serve as a restraint on our industry from unleashing its 

full potential. To make matters worse, this is an avoidable problem, and Congress has available solutions 

to fix this matter. 

The most obvious solution would be to modestly adjust the federal surtax on gasoline and diesel to make 

up for its diminished buying power when it was last adjusted in 1993. The gas tax is a straightforward 

user fee espoused by no less a conservative than President Ronald Reagan. It remains the most simple and 

straightforward way to assure that those who incm use of our roads pay for their maintenance. 

But while we favor adjusting the gas tax, we also acknowledge the political difficulties associated with 

raising this ta.x and the fact that the chainnan of this COilllnittee has all but mled out such a solution. 
206 

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AEM believes that it is too premature to mle out most solutions for addressing this vexing problem. A 

bipartisan duo on this committee, Reps. Jim Renacci (R-Ohio) and Bill Pascrell (D-N.J.), have put 

forward a creative proposal that would essentially force Congress to confront this problem and develop a 

long-term solution for the tmst fund and impose automatic adjustments to the gas tax if lawmakers fail to 

reach a consensus. 

One "solution" we would reject, though, would be any proposal to "devolve" the federal highway 

program to the states. These proposals ignore the original intent of the Highway Tmst Fund: to promote 

interstate conm1erce and preserve a strong nationwide infrastntcture for national security purposes. Put 

bluntly, no one outside of a few extreme, DC-based partisan interest groups favor devolution: Not mayors 

or governors or industry groups. Devolving the federal highway program would lead to inconsistent 

maintenance and repairs and limit the federal government's ability to set long-tenn nationwide priorities 

for our surface transportation infrastructure. 

AEM also recognizes that the debate over the Highway Tmst Ftmd right now is deeply tied into 

congressional deliberations over whether to refom1 our nation's tax code. AEM favors comprehensive tax 

refonn that streamlines corporate taxes and helps manufacturers stay globally competitive. But we also 

ask that lawmakers be honest with themselves about the likelihood of advancing such difficult legislation 

during this Congress. Tax reform is an incredibly worthy goal, but it shouldn't have to come at the 

expense of the Highway Tmst Fund, which is already urgently in need of a solution. 

As this debate moves forward, AEM would respectfully ask members of this committee and the whole 

Congress simply for their ideas. We can't afford for lawmakers to hold forth any longer on their ideas for 

fixing the Highway Tmst Fund. The time has come for members of Congress from both parties to come 

together and put forth their best and most innovative solutions for ensuring our nation's infrastructure 

needs will be addressed for another generation. 

Put forward proposals, and debate their merits. Inaction is simply no longer an acceptable solution for 

AEM and its members, which is why we urge this conm1ittee to move toward passing a long-tem1, 

sustainably-funded highway bill as soon as possible. 

Sincerely, 

Dennis Slater 

President 

Association of Equipment Manufacturers (AEM) 
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June 22, 2015 

Honorable Rep. Paul Ryan 

Chairman 

U.S. House Ways & Means Conuninee 

1102 Longwonh House Office Building 

Washington, D.C. 20515 

RE: Long-Temt Financing of the Highway Trust Fund 

Dear Conunittee Members: 

Hello, my name is Andrew Wells. Jam a graduate student at the University of Delaware sn1dying strucnrral 

engineering and bridge design. Speciftcally, my graduate thesis deals with evaluating the structura l 

capacity of in-service bridges. As I am sure you are aware, one in every II bridges in the United States is 

classif.ed as structura lly defiCient. While this and other infrastructure defiCiencies are a safety issue to 

some extent, I believe the overarching concems with the current state of the nation's transponation network 

are economic in nature. Consequently, addressing revenue problems associated with the Highway TniSt 

Fund (HTF) is of utmost importance for securing the country's long term economic success. 

As I mentioned, I am c urrently perfonning research on the structural evalua tion of bridges. In particular. I 

am attempting to show that a very specific type ofbridge strucmre, known as a box culven, has the capacity 

to carry more load than the bridge design code currently allows. The reason being that many of these 

stnactures require weight restrictions and would hinder the local economy in OeL'lware, should they be 

closed to heavy traffiC. When looking at the nationa l infrastructure, I am concemed that bridges of national 

economic significance (i.e. on critical freight corridors) will soon necessitate similar limitations. However, 

these structures are not in the same position as box culverts, where research would drastically change the 

loads they are allowed to carry. Should current conditions continue to deteriorate, the reperc11Ssions I am 

seeking to avoid in Delaware- namely the rerouting of trucking routes- will come to fruition on a national 

scale , costing businesses and conswners bard earned money. For that reason, I believe that transportation 

fiutding as well as spending must increase. 

When examining transportation trust f1mds, such as the Harbor Maintenance TniSt Ftutd and the Inland 

Waterways Trust Fund, they are alike in that they rely on user fees to support their maintenance and 

expansion. I believe this is an essential pillar of transportation fiutding because it draws revenue from the 

source of its damages. Currently. there are several ideas as to the most effective means of charging highway 

tiSers, however in the current debate I s upport raising fuel taxes because insolvency is only weeks away. lf 

revenue is to be raised in the immediate future, Congress mtiSt implement a system tltat bas been proven. 

In my opinion, that system is taxing gasoline and diesel fuels. 

ln addition to raising fuel taxes, I also support adjtiSting them to the Consumer Price Index (CPI). According 

to the Congressional Budget OffiCe, the buying power of fuel taxes has decreased by nearly 40 percent over 

the last twenty years due to inflation. That amowtts to 14 billion dollars today a nd suggests that the current 

fiutding problems would not exist had fue l taxes been indexed beginning in 1995. Furthermore, I feel that 

the spirit of the law is to keep taxes the same in constant dollars over time. If Congress agrees today that 

infrasmacture needs require a cenain level of taxation, I feel that the effective rate of taxation should be the 

same next year and the year after, regardless of inflation. 
208 

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Over the past two decades, Congress has averaged about one short tenu transportation ftmding extension 

per year. This pattern must stop so that transportation agencies around the cmmtry can adequately plan and 

execute complex transportation projects. Moving forward, I believe raising fuel taxes by 18 cents and 

indexing them to CPI will not only give agencies the ability to rely on the federal government, bm will also 

help advance our economy into the next era of growth and prosperity. Thank you very much for your time 

and consideration. 

Most Sincerely, 

A

~~ 

ndrew Wells 

Private Citizen 

331 PakoAve. 

Keene. NH 03431 

C: (603) 313-1926 

awells@udeledu 
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WCETTA OUNN. C~r 

eoe /14..VAP.AOO. VIce cro.r 

DARIUSASSEMI 

YVONNE B. BURKE 

JAMESEAAP 

OAAIO FROMMER JNAES C. GHIEIJAETTI CARL GUAAOINO FRANINWH 

JMtES M/<O/$FER JOSEPH TAVAIJUONE 

~TOR JIM BEALL. Ex Olflcb 

ASSEM8L Y MEMBER JIM FRAZIER, Ex 011100 

w11~ eec..a-.e Otteer:r 

STATE OF CAUFORNIA. EO•t.JND G BROWN Jr., Governor 

• 

. 

. 

CALIFORNIA TRANSPORTATION COMMISSION 

July I, 2015 

1l1e Honorable Paul Ryan, Chainuan 

Committee on Ways and Meaus 

U.S. House of Representatives 

SENT VIA EMAIL 

1120 N SffiEET. MS-52 SACRAMENTO, CA 95814 

P. 0 . BOX 942S73 

SACRM'ENTO, CA 94273-0001 FAX (916) 653-2134 

(916) 654-4245 

http'l!www.CMC:.C8.QOY 

RE: Conunittee Hearing on Long-Tenn Financing of the Highway Tmst Ftmd 

Wednesday, Jtme 17, 2015, 10:00 AM 

Dear Chainnan Ryan, 

As the state agency responsible for progranuuing and allocating transportation dollars, the Califomia 

Transpo11ation Conmussion encourages Congress to take action to address a long-term ftmding solution 

for the Nation's transponation system. Federal ftmding for transportation is a cmcial component in the 

process of maintaining our mobility and ensuring a robust national economy. As a result, Congressional 

consideration of tl1e future of transportation ftmding is c1itical 

Investments to preserve our transponation system have not kept pace wi111 demand, and the cturent 

rnetbod of ftmding t11e Highway TrtlSt Ftmd tlU'ough excise taxes is no longer keeping up with the cost of 

maintaining, operating, and expanding the Na tion's vast transportation network. In rea l tenns, ftmding 

has diminished while the demand and the cost to maintain and operate the u-ansponation system have 

soared. To effectively address this pending transportation ftmding c1isis, iuU'nediate and long-range 

stJStainable solutions are reqtlired. A soh1tion should be implemented in t11e near-tenn to stabilize 

transportation ftmding while a long-tenn mechanism is secured. 

Excise taxes are paid based on ft1el COIJS\Ullption, not direct usage of the tralJSportation system. As fuel 

consmnption continues to decline due to improved and more ft•el-effJCieot vehicles, and as COIJStuners 

ttll'll to altemative fueled vehicles; the relationship between ft1el consumption and costs imposed on the 

transportation system will continue to deteriomtc. A road usage charge, also known as a mileage based 

user fee or a vehicle miles traveled fee, refers to a fee based on the number of miles a vehicle travels over 

a given tillle period. A road charge is corJSidered to be a more effective option for nmding transportation 

The Honorable Paul Ryan 
210 

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July 1, 2015 

Page2 

infrastrucnlfe than excise taxes since it directly charges users prices that reflect the full cost of the 

transportation services provided 

Along with several other states, California is taking an aggressive stance to address this chronic 

transportation funding shortfall by investigating the potentia l of a pay as-you-go road charge in-lieu of the 

traditional fuel-based excise tax. in 2014, California legislation was enacted to establish a Road Charge 

Technical Advisory Committee to design a road charge demonstration program in Otlf sta te. 

Development and implementation of a road charge pilot program requires a collaborative development 

and deployment process to address privacy. technology, administra tive and other public concerns while 

ensuring the ultimate success of a new ftmding mechanism. 

We strongly support efforts to develop a bipartisan plan to stabilize and enhance the Highway Trust 

Flllld's current revenue stream this year and in subsequent years. We believe Congress must also 

consider the next generation ofstlfface transportation revenue mechanisms now, to be in a stronger 

position in funlfe surface transportation authorization debates. As such, we request the next Stlfface 

Transportation Reauthorization bill include provisions to help states undertake the research and 

development activities necessary to implement a new mechanism for collecting transportation revenues 

based on user fees reflective of the full cost of transportation services provided. 

Sincerely, 

Chair 

California 

L'ff;r~ Transportation Conunission 

~ 

cc: Honorable Devin Nunes, U.S. House ofRepl'eseutatives 

Honorable Xaviel' Becem, U.S. House of Representatives 

Honorable Mike Tbon1>son, U.S. House of Representatives 

Honorable unda Sanchez, U.S. House of Representatives 

Connlissionel's. California Transponation Conuuissiou 

Vice-Chair 

California Transporta tion Conunission 

Jim Beall, Chair, Senate Con l~ttee on Transpo1tation and Housing 

Jim Frazier, Chair, Assen"bly Con••~ttee on Transportation 

Brian Kelly, Secreta1y, Califomia State Transponation Agency 

Malcolm Dougbeny. Director, Califomia Dept. ofTransponatiou 
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Coalition for America's Gateways 

and Trade Corridors 

AE<XlW .b1e 15, 2015 

-~ ~A-, .. ~c.-w _, ~ ..... 

Cllooogo AQOII<ylor~ --.. 

Cryol~ 

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F---o.p.t,_ol 

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-EM 

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HERZOG 

-~ __ ., __ -

-~ 

The Honorallle Paul Ryan 

Chaoiman. House COimitlee on Wr,s and Means 11 021.ongW0111l House Office Building 

Washlnglon, D.C. 20515 

Deat Chairman RyM: 

On behalf of the Coalition lor America's o.ways and Trade Cooidors (CAGTC),Ihank you 

lor aclledulng a hearirQ on Slllace tnper18Cion ~ CAGTC is comprised of OVf!Jf 

tt.1y cxganiultion$. fncUk1g-oors. IM'O's. por1s and~ Inns, !hal haYe 

CllCIIt ~ .. ~ naiJClNI highl policy <Morpizllllon is eager .. - eav- poss a~ and rotuey......., ...tao....__, bA and welool< lorwanlb Y'R 

loldofSIIp"' delernR!g h best wy lo rwr lor lUCile bl. 

The CongtessoonaiBudget Ollce-flit~ 2015 and 2024, h ~ Tl\l!ll 

Fund wl need $107 b11cn In acldilianll..........ues 10 tn1i11m h insu!li:ienllellel o1 CIIT8IIt 

fl.llld~ng Ft.llhermole, asgenenly aa>ll*ld Ill' our mernbfi and ofle<ooganizallons. our 

COIJltry's fleigttlr.r1sportabon ~ needs ., additional II'IOOal inYes1ment of at least S2 

t>illion pe1 year, b support ootical syslem-Wide, roolbmodal, and ~needs. H 

is also impor1ant to note lhal many freight projeas are ICiually highway projects lhalgteally 

beoellt all motOOsts. 

We lrg8 you to uliltze this !wing 10 c:apt\ltll the petSpeelives of knowledgeable witnesses 

rej)IISenting a bmad coalition from small and lalgo privafjl businesses, ~hi sysm usets 

and pro'lldets, stile and local ~ and organized labor, al ol whom ate in favor of 

a~ fede<al Rlle in our naCJon's SUI1act ll'8nlpOIIlMior thallfnks our Slales and 

inlemalional tradir9 pal1ners. 

-- The liiiSt vn,s and Meoros ~on hs...,.- held "' ~ 2009 Slllce then, our -.. o.g.,..- ~~ ir*asllucUe has oonlnlld 10 dlcft, AICIIMr1g a 0+ tanh Amenean SoCiety 

1.<10 AnQoiN eo.ny of CM . eon.-lfiUelo arlequlllly "-lin ournaion·s fre9teotrillors has 

- ''-=: led to snarled chotepolllls and ri'asiNctJre clelllflorlllon, post1g sigrilcart safely hlzards 

...,..., _,eo ~our GOmiiiJIIilles and slowilg h rntMI1'Iel1l of coovne~a~. Mea!wtWe, our 

--"' ec:onomy IS trying 1o IJOW, and an elliaenl nnsportltlon S)'SIIm is essentiallo ils kll1g 1e1m 

- recovery. 

~""*'-"' T-otoon 

Moryifltf<IPcn Adml,.,,.tiOfl 

....,.. cnon-

~ 

ol -T-- c:om...,_, ,. __ 

~­ --

Whle l is cri1icallo find a snort.lelm solution, as you and yoor Ccmmillee Membefs haYe 

noted, a long-term bll oontainiog a wei-funded !Ieight program as well as sustainable and 

dependable funding lor sulface transportation infraeWctutll must be the ultimale goal. 

TheAI are many proposed fundiog solullons on the lable. Wm ,oor leadelship, we.,. 

Oj)timjstlc the Committse on Ways 8nd Means can fdenlity a f1.llldiog ~ lhal supportS 

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CRSI Concrel8 Relnlorcing Steel Institute 

June 16, 2015 

The Honorable Paul Ryan 

Chairman 

933 Noml'llln Grove Road Scllaunw g, l60173-4758 TeL 847.517.12001 Fax847.5111206 www.Ml«g 

The Committee on Ways and Means 

U.S. HollSe of Representatives 

Washington, D.C. 

Re: Long-Term Financing ofttle Highway Trust Fund Hearing - Letter For The Record 

Dear Chairman Ryan and Members ofttle Committee on Ways and Means: 

I write on behalf of the Concrete Reinforcing Steel Institute, one of our nation's oldest technical 

institutes and a Standards Developing Organization (SDO). The CRSI is recognized as the 

authoritative resource for steel reinforced concrete construction. Members include some of the 

counby's largest steel mills, fabricators, material suppliers and placers of steel reinforcing bars and 

related products. Our Professional members are involved in lhe research, design, and construction 

of slructures and pavements. Together, lhey form the backbone oflhe steel reinforced concrete 

indllSby spanning our nation lhat relies heavily on surface lransportation. 

As Chairman of CRSI, I am responsible for the well being oflhe Institute, and to keep apprised of 

public policy impacts to ourindusby. Lack of a long-term transportation auttlorization at sufficient 

levels of funding impacts not only our indusby, but also every business lhat relies on a well built 

and maintained lransportation system, and disadvantages ttle counby as a \'A1ole. As members of 

Congress, you have the responsibility of providing federal funding for our nation's surface 

lransportation system. 

We believe lhat the solution to funding is to maintain a user-fee-based Highway Trust Fund wilh 

increased levels of investment We lhank you for your attention and urge Congress to pass 

legislation on this model ttlis year. 

Finance and support for our surface lransportation systems is based on a per .gallon tax 

unchanged since 1993. Few of us in lhe private sector are operating wilh 22 year old systems or 

funding mechanisms. No American business or a state Department ofT ransportation is working 

with the same W2 numbers from 1993; no business small or large is using the same trucks or 

machinery from 22 years ago. Our organization and practically every interest from the National 

Association of Manufacturers to lhe AFL -CIO recognize the need for an increase in infrastructure 

investrnenl and we are willing to pay for an increase in the federal gas fee. We know that you 

recognize lhata safe. efficient system of transport and trans~ is essential to our economic strength. 

Tools, personnel and equipment used to make and deliver products require periodic investmenthighways and transit are no different 
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CRSI Concrete Reinforcin<J Steel lnttitute 

The Honorable Paul Ryan 

Page2 

9<l3NortlPI.rn Grove Road,Scllaumbttg, L 60173-4758 Tel 847.517.12001 Fax847 .517.1206 www.crslorg 

The user fee assessed at the pump is paid by those who use fuel in proportion to that use. It is a 

sensible system. Granted, with the improvement in fuel efficiency and other contemporary 

developments, Congress will in the future need to address other funding mechanisms to meet our 

infrastructure spending needs. For now we believe the current system is lair and functional. 

Many states have raised their fuel fees because they recognize their residents and industries are 

willing to support a higher level ofinvesbnenl Leaders in these states have demonstrated they 

know !hat a vibrant economy requires invesbnent This has been the tradition of our federal 

transportation program since it's founding -citizens willing to pay. 

We have patched, extended, delayed and dallied forlar too many months. The country needs a 

serious, six-year highway authorization bill with funding beyond the clearty inadequate current 

levels. We need a sustainable funding stream, not obscure "pay-fors" to offset spending or to take 

revenue from the General Treasury. Highways, transit and bridges take years to plan and build. We 

cannot do the work with short-term funding band-aids. Congress should not think that status quo is 

good enough; ifs not 

We urge you to invest in and restore the infrastructure superiority of the United States. Delay will 

only be more cosdy and detrimental. 

Respectfully submitted, 

Scott 

~~ D. Stevens, PE 

Chairman of the Board 

Concrete Reinforcing Steel Institute 
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Hearing on Long-Term Financing of the Highway Trust Fund 

June 17, 2015 

The following is an exploration of some possible ways to fund transportation facilities, with my 

recommendations forfederal funding at the end. Some of these should be considered extreme and 

undesirable, but are included here for illustration. Many may suit one jurisdiction well while be 

unadvisable to others. For the purposes of this article, Transportation District refers to any private, 

local, city, county, or state organizations with authority to build and maintain transportation. The 

advantages and disadvantages are intended to be illustrative and not exhaustive. 

1) Property owners responsible for maintaining the right of way bordering their property. 

Advantages: Property owners pay no taxes to the government for t he upkeep and construction of 

transportation facilities but do pay for others to do the work or does the work themselves, no 

restrictions on the types of transportation, tends to reduce urban sprawl. Di sadvantages: No economy 

of scale, undue burden on corner and other long frontage properties, pressure to allow property owners 

to toll the portion they are responsible for, possible differing standards and stat es of repair, no public 

mass transit, no public higher speed facilities, resistance to spending for heavier and higher capacity 

facilities especially in residential areas, limited freight movement. Government enforcement of 

minimum maintenance likely to be required and faci lities are likelytodeteriorate rapidly in hard times. 

Recommendation: Should not be used; whi le t he apparent savings of taxes looks attractive, it is very 

possible more tax money, from a diff erent tax, would be required to provide enforcement of the 

maintenance st andards, notto mention the property owner is likely paying more for road work due to 

lack of economy of scale. Once neighbors agree to work together to keep the roads and how to pay for 

it, they have created something equivalent to a tax structure. 

2) Neighborhood Associations 

Advantages: Property owners pay no taxes to the governmentforthe upkeep and construction of 

transportation facilities but do pay an association fee as agreed or/and perform the work t hemselves, no 

restrictions on the types of transportation, tends to reduce urban sprawl, better economy of scale, 

maintenance likely to be better, may support on-demand transit with association owned vehicle. 

Disadvantages: Pressure to allow associations to toll the roadways for which they are responsible, 

possible differing standards and states of repair, facilities may deteriorate rapidly in hard times, no 

public higher speed facilities, resistance to spending for heavier and higher capacity facilities especially 

in residential areas, likely limited freight movement, maybe poor connections between associations. 

Recommendation: Could work very well for some residential neighborhoods, which would strengthen 

them; could work well wit hin a commercial district with businesses of similar market reach. The 

businesses may want to partially provide the highercapacitytravelways through the neighboring 

residential neighborhoods. Combining associations into cooperative districts could reduce some of the 

disadvantages and improve the advantages, funding fort he cooperative district would come from the 

associations, not directly from the people. 

3) Monthly Access(Utility) Fees(similartothose used by communications companies). 

Advantages: Economy of scale, use for emergency services and for nonemergency medical 

transportation possible, burden to longfrontage properties reduced, consistency of f unction and repair 

is bet ter, does not treat one person as worth more than another, funds transportation more like a 

utility, which it is. Disadvantages: May be focused on access to the detriment of mobility, depending on 

the size of the transportation district, may be perceived as falling heavily on small properties and the 

poor, connections between transportation districts maybe poor, may allow urban sprawl. 

Recommendation: Should not be used as a standalone funding system. Could be used to fund up to 

two lanes for each roadway, walkways, bikeways, and possibly, a fare less local bus like system with 
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stops a reasonable walking distance from every address. If adopted, vehicle registration fees should be 

rescinded, and property taxes for roadways and services should be reduced accordingly. 

4) Tolls and Fares. 

Advantages: Users pay the cost of the systems, does not treat one person as more important than 

another, provides for robust limited access transportation, tends to reduce urban sprawl. 

Disadvantages: Difficult to applytowalkways, places wit h numerous access points, and residential 

neighborhoods; may be perceived as fall ing more heavily on the poor; connections to other 

transportation districts could be choke points; traffic on some portions may be insufficient to toll or fare 

at a reasonable rate. Recommendation: Should not be used as a standalone funding system. Works 

best if all limited access type systems are tolled orfared. 

5) Property taxes (traditional method forfunding local roadways). 

Advantages: The col lection of property taxes is well understood, distributes the tax burden fairly evenly 

based on property values, good transportation systems tend to increase property values . 

Disadvantages: Property values can experience significant f luctuations, making forecasting the revenue 

less predictable than other taxes, poor people may own relatively high valuepropertiesand rich people 

may own relatively low value properties, does not account for traffic generation. Recommendation: 

Should continue to move away from using this tax in a standalone system. A property tax with 

limitations is sti ll a viable method of funding transportation. In good years, a percentage of the increase 

in property tax revenue from one year to the next, due to valuation increases, could be set aside for 

transportation expansion to encourage continued growth and soften some downturns. 

6) Fuel Excise Tax (used to primari ly to fund higher mobility roadways). 

Advantages: Well understood taxing system, user tax, can be used to discourage use of carbon based 

fuels. Disadvantages: Does not account for weight orgas mileage of the vehicle, not a true user tax; not 

easily justifiable for non-roadway use even when drivers are benefitted, induces urban sprawl, 

greenhouse concerns, some needed roads cannot be maintained based on trafficcount sfor that road. 

The history of this tax provides a lesson on how a seemingly progressive tax can become regressive. 

Recommendation: Excise taxes sti ll have some value for funding transportation, but should be 

depended on less and less moving into the future. Nevertheless, since the trucking industry already 

supports a tax increase, the diesel tax could be immediat ely raised to an amount the trucking industry is 

agreeable to. 

7} Vehicle Miles Traveled Fee (could be used for all roadways). 

Advantages: Truer userfee that can account for the weight of the vehicle, can be discounted for older 

vehicle that the poorer are more likely to drive, appliesevenlytoalternately f ueled vehicles, can be 

tracked by GPS, odometer reading at registration, orothermethod if available, can make use of the fuel 

tax or regular estimated billing to avoid yearly lump sum payments. Disadvantages: Privacy concerns 

with tracking, not easily justifiable for non-roadway use even when drivers are benefitted, may induce 

urban sprawl, may be political pressure to match the fundingwiththe portion of roadway related to its 

collection, some needed roads cannot be maintained based on traffic counts for that road . 

Recommendation: Should not be used as a standalone funding system. The VMT fee is a more accurate 

and fair system than the Fuel Excise Tax and could be implemented as soon as privacy issues can be 

resolved. However, many commercial vehicles already carry GPS systems and the privacy concerns are 

less. The developmentofVMTfees for commercial vehicles should fast track, with the lessons learned 

then being appl ied as VMTfees for private vehicles develop. 

8) Commuter Miles Tax (Based on distance from primary home to work location). 

Advantages: User tax, may be used f or any type of transportation, f itseasilywith improving congestion 

and bottlenecks, uses well understood payroll deduction to assess, can be limited to a maximum 

amount for lower tax brackets, can be indexed at higher rates for greater miles to locations within 

defined urban areas, may reduce sprawl, can be used in combination with a Fuel Excise Tax decrease, 
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revenues increase as the number of jobs increase. Disadvantages: Little known concept with unknown 

resistance, payroll deduction may make the tax more noticeable even though not greater, would likely 

not provide adequate funding for many rural roads. Recommendation: Should not be used as a 

standalone tax; should be phased in until the amount collected is consistent with and covers the number 

of commutermilestraveled while the Fuel Excise Tax is reduced accordingly. 

9) Commercial Income Tax (Transportation is necessary for business to do business). 

Advantages: May be used for any type of transportation and can better provide for freight Corporate 

Taxes are well understood. It is within the interests of the businesscommunitytodraw people to their 

businesses and to reduce the costs of goods and services, which good transportation does. The tax 

could be considered more as an investment rather than a tax if done right. Disadvantages: Conflicting 

interests may affect project priority, especially when funding is down. Recommendation: Set aside a 

percentage of corporate income taxes for transportation use in keeping with t he desire to grow the 

economy. 

10) Repatriation 

Advantages: Provides a large one-t ime source offundswith relatively little pain due to the current large 

amounts of money parked overseas. At a more normal level, repatriation could provide a steady source 

of funding for ports, airports, and border crossings, and their associated facilities. Recommendation: 

Use the large one-time funds to repair, rehabilitate, rebuild, and expand as necessary all bridges and 

tunnels, road or railroad, that cross state lines, and then to do the same with bridges of tunnels of 

longer than 2000 feet regardless of location . The remainderofthis funding could then be used to make 

mass transit more competitive against automobile traffic, ideally, with automated vehicle-on-demand 

transit. Use the normal flow of repatriated funds to provide infrastructure and support for international 

trade. 

The first five of these funding methods should not be used at the federal level, but there should 

be no law or regulation at the federallevel torestrictorinhibitthe used of these funding options at the 

local level. 

According to the best figures I could find, commuter travel is about a third of all miles traveled. 

A rate of $0.01 per mile will generate about $10 billion per year and would be about $1.60 per week for 

the average commuter. Transportation studies would require obtaining the most effective mix of 

transportation forms to fund for construction and operation. 

The commercial and industrial community should be chall enged through the Chamber of 

Commerce and other such organizations to consider how they would pay for transportation systems, 

like they were making an investmenttoimprovetheirbottom line. They should be challenged to 

propose self-taxing funding options and amounts in such a way as to be reasonably fair to all the 

businesses, and that can be essentially rubber-stamped by Congress. They should be challenged with 

how to improve highways, waterways, railways, airways, and all their associated infrastructure and 

interconnections. 

Final recommendations forfederalleveltransportation funding: 

1) Change and combine the differing trust funds to a Transportation Trust Fund, and require the 

best option for a transportation project among types as well as location and size for the 

preferred alternative. 

2) Over a six year period, phase in a commuter distance tax to a rate of$0.03 permile,limited to a 

fixed amount peryearforlower income people; phase in a commercial vehicle miles traveled 

tax at rates consistent with the weight of the vehicle; phase out the fuel excise tax; and phase 

out or reduce fares on mass transit systems, depending on amenities. Do not impose a VMT on 

personal vehicles. Also, increase the commuter distance tax rate for those who commute more 

than 20 miles and 30 miles to $0.035 and $0.04 respectively. Since a tax deduction is allowed 

for personal vehicles used for business, the regulations can be changed to allow the IRS to 
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subtract the commercial vehicle miles traveled tax from the normal deduction and place that 

amount in the trust fund. These changes w ill keep the present tot al collections about the same 

while providing future growth as the number of jobs increases. I twill also be a more 

progressive tax structure. These taxes are more sustainable that what is done now and fit wel l 

with the types of projects funded with federal dollars. 

3) Challenge business and industry to find $20 bi llion in "se If -t axing" to add to the trust fund at the 

federal level, and phasing that up to $50 billion over six years. The regulations should allowthis 

funding to continue to grow as the economy grows. 

4) Use repatriationtofund certain "megaprojects"that wil l not be done without avery large 

source of funding. Reduce the overseas tax rate to something more reasonable so the money 

parked overseas comes back in a reasonable amount of time. Discount that rate by 5% to bring 

funds back more quickly for a short length oftime. letthe tax be voluntary, but if it is to be 

more than a 5% discount, then it should be mandatory. In the future, use al l the repatriation 

funding for infrastructure and services that support international trade. 

All ofthese taxes are sustainable because they are used to build up the base from which they come, 

unlike the fuel excise tax. 
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=- ~ Great lakes 

Metro Chambers Coalition 

June 16, 2015 

The Honorable Paul D. Ryan 

Chairman 

Committ ee on Ways and Means 

1102 Longworth House Office Building 

Washington, DC 20515 

Dear Chairman Ryan: 

The following statement of the Great Lakes Metro Chambers Coalition is provided for the record of the 

Committee's June 17, 2015 hearing on long-term financingofthe Highway Trust Fund. 

Transportation infrastructure is critically important to a thriving Great Lakes regional economy. 

Modern, effective, multi-modal, integrated transportation infrastructure syst ems create good jobs, 

support the unique needs of inland metropolitan regions, and facilitate international trade and exports. 

They are the platform for the highly-integrated regional supply chains which have made the Great Lakes 

and Midwest one of the world's top manufacturing centers. The critical connector in our supply chain 

systems- what gives them their great flex ibility and adaptabi lity -is our highway and bridge systems. 

Their continued maintenance and development are essential to the performance of our regional and 

nat ional economy. 

The future of Great Lakes manufacturing depends on resolving the long term surface transportat ion 

funding issue. American prosperity is closely linked to the abil ity to move goods and materials 

seamlesslywithin the Great Lakes region, which produces 35% of U.S. manufacturing output, provides 

42% of U.S. manufacturing jobs, and accounts for 28% of U.S. exports. In the Midwest, the nation's 

industrial core, a single disruption in a "just in t ime" supply chain component due to inadequate 

infrastructure can impact results throughout the entire chain. 

The Great Lakes Metro Chambers Coalition urges the House Ways and Means Committees to develop a 

sustainable funding solution that will provide adequate federal resources for the maintenance and 

development of our nation's surface transportation systems. The Coalition is deeply concerned about 

the rapidly approaching surface transportation reauthorization cli ff, as well as the projected tremendous 
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shortfall in federal Highway Trust Fund revenues over the long haul as motor vehicles become far more 

efficient and motor fuel tax revenues become much less predictable. The need for significant progress 

on infrastructure is urgent. 

Historically, increased user fees have been the prescription for projected revenue shortages in the 

Federal Highway Trust Fund. The Coalition believes that fees from users should remain the basis for 

funding our nation's transportation infrastructure. However, we recognize that t o meet the f unding 

challenges in the near term, the Congress may need to look to a broader range of revenue sources and 

that userfees may be just one of the options. The Coalition is therefore prepared to support other 

responsible options, such as repatriation of foreign taxes, which could provide significant near term and 

medium term relief. 

As Congress grapples with this issue that is so important to our nation's future, we encourage legislators. 

to also provide f lexible options for the states that can supplement federal resources and help provide a 

greater impact in catching-up and keeping-up with our infrastructure needs. One of t hose options is 

toll ing on int erstate highway systems and Federal aid highways. Toll ing can supplementmotorfuel 

revenues in providing resources to maintain and develop heavily used corridors. It is already used on a 

number of key arteries in our region and has helped immeasurably in keeping them in good condition. 

Its t echnology is well-developed and now allows for efficient movement and minimal congestion. 

The Great Lakes Metro Chambers Coalition urges the Congress to allow states the option to use tolling 

on interstate systems and Federal aid highways in heavi ly travelled corridors. Tolling can supplement 

the use of other funding streams, reduce some of the pressure on federal resources, and help states and 

localities address many of theirserious problems with roads that feed into and support the interstate 

highway syst em. Toll ing is also consistent with the Coalition's strongly-held belief t hat userfees are the 

best sources of sust ainable fun ding resources for transportation corridors. 

Congressional action is essential to secure the trade corridors that get the region's manufactured and 

agricultural goods and commodities to market. Providing adequate, stable and predictable resources 

will el iminate the barriers which have combined to delay rebuilding our nation's infrastructure. The 

Coalition wi ll supportyourleadership on this vital issue. 

Sincerely, 

Ed Wolking, Jr. 

Executive Director 
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Great Lakes Metro Chambers Coalition 

Contributing Chambers of Commerce: 

Ann Arbor/Ypsilanti Regional Chamber of Commerce 

Allegheny Conference 

Battle Creek Area Chamber of Commerce 

Buffalo Niagara Partnership 

Canton Regional Chamber of Commerce 

Chicagoland Chamber of Commerce 

Cincinnati USA Regional Chamber 

Columbus Chamber of Commerce 

Dayton Area Chamber of Commerce 

Detroit Regional Chamber 

Duluth Chamber of Commerce 

Erie Regional Chamber and Growth Partnership 

Fox Cities Chamber of Commerce and Industry 

Grand Rapids Area Chamber of Commerce 

Greater Akron Chamber of Commerce 

Greater Cleveland Partnership 

Greater Des Moines Partnership 

Greater Indianapolis Chamber of Commerce 

Greater Louisville Inc. - The Metro Chamber of Commerce 

Greater Niagara Chamber of Commerce 

Greater Pittsburgh Chamber of Commerce 

Lancaster Chamber of Commerce & Industry 

Lansing Regional Chamber of Commerce 

Metropolitan Milwaukee Association of Commerce 

Michigan West Coast Chamber of Commerce 

Minneapolis Regional Chamber of Commerce 

Muskegon Lakeshore Chamber of Commerce 

Northern Kentucky Chamber of Commerce 

Northern Michigan Chamber Alliance 

Plattsburgh North Country Chamber of Commerce 

Quad Cities Chamber 

Rockford Chamber of Commerce 

Saint Paul Area Chamber of Commerce 

Southwest Michigan First 

Toledo Regional Chamber of Commerce 

Traverse City Area Chamber of Commerce 

Youngstown/Warren Regional Chamber of Commerce 
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OAED ..._ __ 

NATIONAL AI,NALT 

'AVIMINT AUOCIATION -

AEM 

.... A$$(1(14fi()N 01 t.OUtP.,thr ¥JH.Jt~IURUI$ 

Comments for the Record 

Submitted to the 

Committee on Ways and Means 

U.S. House of Representatives 

"long Term Financing of the Highway Trust Fund" 

June 17, 201S 

Dear Chairman Ryan, Ranking Member Levin. and esteemed members oft he Ways and Means Committee: 

On behalf of the Highway Materials Group, we submitthe followi ~statement. The Highway Materials 

Group is composed of nine organizations that provide the materials that are essential to road and highway 

construction and the equipment manufacturers and distributors that move those materials. The group 

includes the American Coal Ash Association, American Concrete Pavement Association; Associated 

Equipment Di stributors; Association of Equipment Manufacturers; Concrete Reinforcing Steel Institute; 

National Asphalt Pavement Association; National Ready Mixed Concrete Association; National Stone, Sand & 

Gravel Association; and the Portland Cement Association. Together, these nine trade associations 

represent thousands of companies that provide hundreds of thousands of direct highwayconstruction jobs. 

We are united around the common issue of a long·term, Federal·aid Highway authorization bill that both 

increases highway investments, and addresses the Highway Trust Fund with durable solutions that both 

stabilize and increase highway investments now and for the long·term. 

Since 2008, the mantra of "doing more with less" has had grave implications for the transportationconstruction industry, State transportation agencies, and the system of highways and bridges that every 

citizen depends upon for personal mobility, commodity flows, safety, and security in times when our system 

is tested in natural disasters and other emergencies. 

We recognize the vast number of issues Congress must address. Investing in America's infrastructure should 

be a toppriorityforlawmakers. However, 33extensionsoverthe past 6yearsand an unknown number of 
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delays in transportation fundi!'€ are causing not only the nation's system of highways and bridges to fall 

further into disrepair, but iscrippling the ability of our economy to grow and prosper. 

The American Society of Civil Engineers {ASCE) rates our overall infrastructure between poor and mediocre. 

Within ASCE's analysis, they report 1 in9 of the nation's bridges are structurallydefic:ientand42 percent of 

urban highways are congested and cost the economy $101 billion in wasted time and fuel each year. 

Our industries and our customers in the public sector have an extremely difficult time plannin,g for the 

future, and there is great concern that withoutafirm com mitmentfrom Congress, backed by bold and 

decisive steps to fix the Highway Trust Fund and authorize a six -year transportation program, the nation's 

surface transportation infrastructure w ill fall further behind in terms of rehabilitation, repair, preservation 

and expansion. 

The Highway Materials Group has four basic principles that we urge the Committee to consider. They 

include the following: 

Transportation Infrastructure is the Bac:kbone of America's Economic Prosperity-America's economic 

vitality and ability to compete in the global marketplace depends on an integrated national, intermodal 

surface transportation network that reliably moves goods and people to maximi ze global competitiveness, 

quality of life, and economic prosperity for all citizens. Unfortunately, the investments needed to maintain 

and expand the highway system have been inadequate. As a result, America is ill-prepared to meet the 

competitive demands ofthe global economy. To ensure economic prosperity and global competitiveness, 

the nation needs to invest in m ulti-modal transportation infrastructure systems that not only keep pace with 

today's businesses and industries, butalso thatwill allow for the healthy expansion in the future. 

The Federal Government Must Remain Committed and Involved- Maintaininga vital, national 

infrastructure has been a federal responsibility since the founding of the Republic. Congress is tasked w ith 

establishing "post roads", pre-cursors of today's national highway system, and regulating commerce among 

the states and with other nations. Commerce is the lifeblood of ournation'seconomy, and America's 

transportation infrastructure is its circulatory system. This network of roads and transportation structures -

built by Americans employed in well-payingjobs that cannot be exported -is essential forthe economic 

growth, safety, security, freedom of mobility, and quality of life benefiting every American. We oppose 

efforts totransferthis responsibility to the states as an unfunded federal mandate. 

We Support User-Fee Based FundingSolution-lnordertoovercome the highwayfundinggap, we support 

the adoption of any user· feebased fundingoptionsand innovative finance tool s to provide federal and state 

transportation departments with the funding they need to make critical investments in our transportation 

infrastructure. It is our contention that a userfee based funding approach, such as a motor fuel based user 

fee, is the most rational and easily implementable funding sol uti on available in the short to medium term. 

Our position is consistent with that of President Ronald Reagan, who in 1982 noted: "Good tax policy 

decrees that wherever possible a fee for a service should be assigned against those who directly benefit 

from that service. Our highways were built largely w ith such a user fee - the gasoline tax. I think it makes 

sense to follow that principle in restoring them to the condition we all wantthem to be in." Moreover, we 

believe that continued extensions are not a solution, and is in fact the lease fiscally conservative approach to 

address this challenge. 

2 
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Timeliness and Long-term Authorization Are Essential - The longer Congress delays in making the 

investments necessary to our highways, roads and bridges, the more difficult and expensive it will be for our 

nation to finance this critical and necessary endeavor. At a time when cost is paramount, Congress must act 

now. Timely enactment of a six year authorization bill is critical for state transportation departments to plan 

and budget for projects and for our industry to make critical business decisions. 

In closing, Congress should embrace the opportunity to invest in America's infrastructure. I tis the only way 

our economy wi II be positioned for success in a vi brant and growing global economy. America has the 

strongest economy in the world thanks to the investments made by a previous generation of American 

leaders who understood the value of infrastructure, and recognized that investing in roads and bridges is the 

best path toward prosperityforourgreat Nation. Many of America's critical highways and bridges have 

reached the end of the design life and must be rebuilt. Every day we delay making the necessary 

investments in our infrastructure exacerbates an already critical situation. 

We thank the Committee for holding this important hearing on the long term health ofthe Highway trust 

Fund. We urge Congress to address the critical highway needs of the country and enact the revenue 

necessary to fund a multi-year surface transportation authorization now. 

# # 

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A Conservative Vision for the Future of the Highway Trust Fund 

Submitted to the House Committee on Ways and Means in response to its invitation for v.rilten 

comments in connection v.ith the hearings on Long-Term Financing of the Highway Trust Fund, June 17, 

2015 

by Kenneth Orsk i, Editor/Publisher of Innovation New;Briefs, a transporlation neW> letter 

10200 Riverv.ood Drive, Potomac, MD 20854 

tel. 301-299-1996; fax 301-299-4425 

Many states, facing repeated short-term program extensions and anticipating uncertain prospects for 

increased congressional funding, haw taken steps to significantly increase their transportation budgets 

this year. Their intent is to place local transportation programs on a more stable and predictable footing 

that is less subject to the vagaries of congressional budgeting. Twenty-fiw states haw taken steps to 

raise transportation rewnue this year and another 16 states are currently in the process of doing so (for 

the latest summary of state funding initiatiws see the attached appendix and the report of the American 

Road and Transportation Builders Association (ARTBA) at http·l/www transoortationimestment org/wpcontent/uploads/2015105/May-2015.State-Transoortation-Funding-lnitiatives-Reoort.Qdf ) 

Collectiwly, these measures are generating billions of additional dollars, enabling states to assume 

greater responsibility for maintaining local infrastructure and paying for transportation improwments of 

local benefit, such as those in\QI\ed in the "TIGER Grants," the "Transportation Altematiws• program 

and the "Surface Transportation Program" (STP). Shifting these acti\ities and other expenditures of low 

federal priority out of the Highway Trust Fund could ewntually bring Trust Fund spending into balance 

with incoming gas tax rewnues--and fulfil one of the goals of the recently adopted joint congressional 

Budget Resolution (See, Conference Report on Concurrent Resolution on the Budget for Fiscal Year 

2016, April 29, 2015). It also would restore the Trust Fund to its primary function of sel\1ng as a source of 

funds for programs that are clearly of federal concern or national significance- notably, maintaining and 

upgrading the Interstate Highway networl< and the National Highway System, fixing aging bridges and 

modernizing critical transit infrastructure .. 

Most importantly, aligning Trust Fund expenditures with incoming Trust Fund rewnue would place the 

Highway Trust Fund once again on a self-sustaining basis. It would end the need for periodic transfers of 

general funds, do away with the awkward search for legitimate offsets (or "pay-fors") and put an end to 

the constant lurching from one funding crisis to another . 

As Robert Poole pointed out in his June 17 testimony before the House Ways and Means Committee, a 

Gowmment Accountability Office analysis of FY 2013 Highway Trust Fund spending found that of the 

entire $50.7 billion total, only $24 billion - less than half-was spent directly on roads and bridges, and 

only $3 billion or six percent was de\Qted to actual construction, reconstruction or rehabilitation of major 

projects. "To me," Poole said, • this finding cries out for Congress to rethink and revamp how HTF monies 

are being used." (Rethinking the Highway Trust Fund, testimony by Robert W. Poole, June 17, 2015. 

quoting Report GA0-15-33, October 2014) 

Restoring fiscal soundness to the Trust Fund is not "deiAOiution," a concept that calls for phasing out the 

federal gas tax and transfering all authority owr federal highway and transit programs to the states. "I call 

this a judicious rebalancing of federal-state responsibilities for funding transportation,· a senior state 

Republican lawmaker told reporters. "States feel they haw no choice but to assume more responsibility 

because they are not con\inced they can rely on Congress for adequate and reliable funding. But the 

federal transportation program continues and the federal gas tax remains an integral part of the highway 

funding system. The Democrats' talk of deiAOiution is just a straw man." 

And indeed, the Congressional Budget Office projects a steady and predictable stream of federal gas tax 

receipts of $40 billion per year well into the future ($35 billion is credited to the Highway Account, $5 

billion to the Transit Account, see Baseline Projections of Highway Trust Fund Accounts, March 2015). 

This should put to rest the misleading notion that the Highway Trust Fund is about to "go broke," become 

"insolwnt" or "run out of money." 
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A self-sustaining, stable annual $40 billion federal-aid transportation budget extending o-.er a period of six 

to ten years would go a long way toward restoring and improving the nation's core surface transportation 

infrastructure. As proposed in a recent paper by Ste-.en Lockwood, an annual $35 billion highway budget 

would allow to address "unique federal interest responsibilities" such as maintaining and upgrading a 

national interconnected system of "Highways of National Significance" and funding federal responsibilities 

for highway safety. R&D and federal lands roads. A $5 billion transit account would continue to provide 

funds for a program of transit in-.estment (A Constrained Federal-Aid Highway Program, by Ste-.en 

Lockwood, Eno Center Newsletter, January 2015). The "constrained" $40 billion program would still be 

able to provide states with certainty and continuity to pursue large capital intensi-.e infrastructure projects 

of national significance that require funding o-.er multiple years. 

(Howe-.er, because of prior obligations that ha\9 not yet been liquidated, the transition to a self-sustaining 

program would need to be gradual. As reported by CBO's Joseph Kile at the June 18 Senate hearing, at 

the end of FY 2014, $65 billion in contract authority had been obligated but not spent and another $26 

billion was still av.lilable but not yet obligated, for a total of $91 billion in contract authority. These 

unliquidated obligations represent more than two years' worth of tax receipts. (The Status of the Highway 

Trust Fund, testimony by Joseph Kile, June 18, 2015). 

### 

The June 17-18 hearings of the House Ways and Means Committee and the Senate Finance Committee 

re-.ealed an absence of a political consensus on how to pay for a long-term bill with its projected $85·90 

billion shortfall. The majority in Congress are firmly opposed to raising the gas tax -most recently 

reaffirmed by Chairman Paul Ryan at the June 17 hearing.("We are not raising gas taxes, plain and 

simple"). At the same time, the Senate Republican leadership is opposed to a tax on the accumulated 

o-.erseas corporate earnings (" ... It is not a serious proposal to pay for a long-term highway bill," said 

Finance Committee chairman Orrin Hatch in his opening remarks at the June 18 hearing.) Another 

potential solution, a practical mileage-based road user fee, is "a decade away• Robert Poole told the 

committee. 

There remains the option of gradually bringing spending into balance with incoming fuel tax re-.enue. This 

would require progressi-.ely shifting funding responsibility for local transportation from the Highway Trust 

Fund to the States and localities and limiting Trust Fund re-.enues to projects and programs that are truly 

federal in nature. Such a rebalancing of the federal-state relationship would require us to accept a 

narrower concept of the federal role in transportation- but it would offer probably the only lasting solution 

to the transportation funding crisis. 

### 

Kenneth Orski is the Editor and Publisher of Innovation NeiNSBriefs, a transporlation neiNSietter now in its 

2f1" year of publication This submission is in his ooo behalf. 

Appendix 

2015 State Transportation Funding Initiatives 

The followng states have taken steps to raise transporlation revenue this year. 

New York: Gov. Andrew Cuomo proposed $4.2 billion for transportation in-.estments as he began his 

second term; Florida: Gov. Rick Scott proposed $9.9 billion for transportation (o-.er $4 billion for roads 

and bridges) in his 2015 budget request to the state legislature; North Dakota: Gov. Jack Dalrymple 

signed into law a bill that will provide $450 million for state highway impo1.111ents. Another bill, known as 

the Surge Funding Bill will dedicate $1.1 billion from the state's Strategic ln-.estment and lmpro\ement 

Fund for critical infrastructure projects; Iowa: Iowa legislature appro\ed a 10-cent per gallon gas tax 

increase The increase will allow $700 million in spending on state highway projects and $200 million in 

local projects annually. The Iowa House passed a $365.2 million transportation bill. Utah: The state 

legislature passed a bill that will increase the gas tax by 5 cents -per-gallon, add a 12 percent tax on the 

wholesale price of gasoline and permit counties to seek \Oier approv.ll for a local sales tax for local 

transportation projects. South Dakota: The state legislature appro\ed a fuel tax increase of 6 cents per 

gallon; the bill also raises -.ehicle license fees and gi-.es local go-.emments authority to levy their own 
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road improvement fees. The measure is expected to generate over sao million/year for state and local 

programs. Montana: a bipartisan group of state senators introduced a bill that calls for spending $50 

million in cash and $50 million in bond proceeds over two years on infrastructure. If state revenue receipts 

exceeded a certain trigger, the authorized amounts could rise as high as $100 million in cash and $100 

million in bond proceeds. Ohio: The House-Senate conference committee approved a $7 billion 

transportation budget for the next two years and sent the bill to the Governor. Nebraska: The Nebraska 

legislature approved a 6-cenUgallon gas tax increase over the next four years, eventually expected to 

generate $76 million annually. Tennessee: Gov. Bill Haslam released a three-year transportation 

program featuring $1.2 billion in infrastructure investments. The program reftects the state's commitmemt 

to remain debt-free, Haslam said. The budget ensures that projects already undetway won1 be negatively 

impacted by decisions out of Washington, he added. Mississippi: The state legislature \Oted to raise 

$200 million in bond financing to pay for transportation improvements, most of them targeted at 

structurally deficient bridges. The measure takes effect July 1. DOT Secretary Melinda McGrath linked the 

legislature's action to lack of action by Congress. Idaho: the Idaho legislature passed a compromise 

$94.1 million transportation bill funded with a 7 ~ent increase in the fuel tax and vehicle registration fees. 

Minnesota: The Minnesota legislature passed a $5.5 billion, two-year bill. Georgia: Georgia Governor 

Nathan Deal signed into law a bill that will increase transportation funding by $900 million per year 

through increases in fuel taxes and vehicle fees. Georgia thus joins Idaho, Iowa, South Dakota and Utah 

to have increased their gas tax to generate recurring transportation revenue. The measure also allows 

local governments to increase transportation-related taxes. Atlanta \Oters approved a $188 million 

transportation infrastructure bond. Louisiana: The House Ways and Means Committee approved a 

Democratic-sponsored one~ent sales tax increase and a tO-cent gasoline tax increase that "could pour 

billions into transportation improvements over the next decade." according to press reports. Kansas: A 

gas tax hike, possibly of five to ten cents, is under discussion in the House committee, according to press 

reports. South Carolina: The South carolina House approved a 10 cenUgallon (or 60 percent) gas tax 

increase that will pro~de at least $370 million for transportation projects A competing Senate bill would 

generate $800 million. Pennsylvania: The state House passed a measure that will pro~de up to $2.3 

billion in annual transportation funding for highways($1 .3 billion) transit. (500 million) and local road 

maintenance. The measure raises revenue mainly by remo~ng a cap on the franchise tax paid by fuel 

distributors. The Senate is expected to take up the measure next. Vermont: Gov. Peter Shumlin signed a 

$616 million transportation bill authorizing funds for FY 2016. The bill includes $116 million for bridges 

and $100 million for road resurfacing. California: California's Senate is considering a bill that would raise 

the state gas tax by 10 cents/gallon and increase vehicle sales and registartion taxes. The bill is projected 

to generate more than $4 billion annually.ln the lower house, Assembly Speaker Toni Atkins proposes to 

create a road user fee to raise $2 billion over five years. A compromise state budget plan is yet to 

emerge. Washington: The state legislature approved and sent to the governor a $7.6 billion 

transportation budget to keep existing transportation programs going. Another measure, to pay for new 

projects, is still being negotiated in the legislature. "The current plan is the most positive movement that 

we've seen on transportation in this state for many. many years," said Sen. Joe Fain, Vice chairman of 

the Senate Transportation Committee. Texas: Gov. Greg Abbott signed three transportation-related bills 

that, in his words, prol.ide •a historic amount of funding• to build roads. The bills include a measure that 

ends about $1.3 billion in diversions of gas tax money for non highway items and a pro\ision for a 

November referendum to approve amending the state constitution to dedicate $2.5 billion of the general 

sales tax and a portion of future motor vehicle sales taxes to the highway fund. The combined pieces of 

legislation pro~de more than $4 billion a year for transportation. Oregon: June is the launch of the state's 

new \Oiuntary road usage charge program (OReGO) that proponents l.iew as a potential transportation 

funding model for the nation, replacing the motor fuel tax. Connecticut: The state legislature and Gov. 

Dannel Malloy have reached agreement to pro~de $10 billion over the next five years for transportation. a 

$2.8 billion increase from last year, partially funded by redirecting one-half cent from the state's sales tax. 

This would be the largest investment in transportation in the state's history, the Governor announced. 

North Carolina: Gov. Pat McCrory has proposed a $2.85 billion bond initiative (Connect NC) to finance 

his 25-year statewide multimodal "Vision for Transportation." The proposal includes a $1 .37 billion 

highway bond that would fund 27 highway construction projects and 176 pa~ng projects in 64 counties 

throughout the state. If approved by the General Assembly, the bond proposal will be placed on the ballot 

in November. Massachusetts: Gov. Charlie Baker signed a $200 million road bond bill in April 2015. 

State transportation officials proposed roughly $3 billion in capital transportation projects in fiscal year 
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2016 for highways, small airports and transit according to press reports. Michigan: The state House of 

Representati\€5 approl.ed a series of measures that would generate an extra $555 million in the fiscal 

2015-16 budget year and rise to an estimated $1.16 billion when fully phased in during the 2018·19 

budget year. The mesures include a hike of 4 cents a gallon in the state diesel fuel tax, indexing all motor 

fuel taxes to inflation starting in 2016 and re~oenue di~ers on from the state's general fund by dedicating 

portions of state income and sales taxes to transportation. A final road funding plan still awaits Senate 

action. New Mexico: Gov. Susana Martinez signed a $294 million infrastructure construction bill largely 

paid for with bonds and cash reser~es. The measure includes more than $70 million for highways and $45 

million for major critical road projects according to local press reports. 

Sources: ARTBA's Transportation Investment Advocacy Center; AASHTO Daily Transportation Update; 

T4America's sur~ey "Stale Legislation to Raise Additional Transportation Revenue;• NCSL State Bill 

Database. 

### 
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Before the 

Committee on Ways and Means 

United States House of Representatives 

Statement for the Record 

International Brotherhood of Teamsters 

Hearing on 

Long-Term Financing of the Highway Trust Fund 

June 17, 2015 

International Brotherhood ofTeamsters 

25 Louisiana Avenue, NW 

Washington, DC 20001 
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Statement for the Record 

International Brotherhood ofTeamsters 

Mr. Chairman, Ranking Member Levin, and Members of the Committee, the 

International Brotherhood of Teamsters (IBT) is pleased to submit this 

statement for the record on this very timely and important issue. The lBT is 

North America's largest transportation union, with more than 600,000 of our 

1.4 million members using our nation's roads and highways as their 

workplace and they have a front seat view of the problem of the continuing 

deterioration of our infrastructure. The IBT applauds the Committee for 

holding this hearing and taking this step in examining long-tenn financing 

options for the Highway Trust Fund (HTF). 

Since the expiration of the last multi-year highway bill in 2009, Congress 

has passed over 30 short-tern1 extensions to keep surface o·ansportation 

programs funded. Congress must act now to close America's widening 

transportation infrastructure funding gap with stable, long-tenn solutions to 

ensure the certainty of a ftmding strerun to the states, some of which have 

already put construction projects on hold. In addition, we risk 

compromising public safety, losing our ability to compete in the global 

economy, and losing productivity as congestion consumes more commuting 

time and adds to freight delivery schedules. We are clearly missing an 

opporttmity to save money and create good jobs in the process. 

The American Society of Civil Engineers' gives the nation's overall 

infrastructure a grade of D+. Sixty-five percent of the roads we drive on are 

in Jess than good condition; one out of four bridges we cross needs to be 

replaced; and 45% of Americans lack access to basic transit services. 

[ASCE, DOT] Highways and bridges face an $808.2 billion backlog of 

investment needs, inch1ding $479.1 billion in crit~al repair work. The 

United States needs $3.6 trillion in infrastmcture investment by 2020 to 

bring infrastmcture to a safe and reliable state of "good repair." [DOT, 

ASCE] The U.S. transportation system moves more than 54 million tons of 
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goods worth nearly $48 billion each day. Freight tonnage is expected to 

increase by 45 percent by 2040, requiring additional capacity to our 

highways, airports, railroads, and ports, and improvements to multi-modal 

connections that move freight efficiently. [DOT] 

The seriousness of this inaction by Congress to pass a multi-year bill cannot 

be understated. Already 19 states have expressed concerns about moving 

forward with transportation projects, with 7 states already cancelling or 

delaying projects because of a potential disruption in federal funding. Prior 

to authorizing the current surface extension, the American Association of 

State Highway and Transportation Officials cautioned that more than 

660,000 jobs and at least 6,000 state DOT construction projects were at risk 

had Congress failed to act in tin1e to ensure the solvency of the Highway 

Trust Fund. [AASHTO] 

The impacts of not resolving tllis funding issue go far beyond repatrmg, 

maintaining, and building out our infrastructure to address deficiencies. 

Americans spend 5.5 billion hours in traffic each year, costing fanlilies more 

than $120 billion in extra fuel and lost time. American businesses pay $27 

billion a year in extra freight transportation costs, increasing shipping delays 

and raising costs on every day prices. [WI-liTE HOUSE 7/14 report] And 

further delay can have deadly consequences. Last year, there were more 

than 33,000 highway traffic fatalities. Roadway conditions were a 

significant factor in approximately one-third of those accidents. [DOT, 

ASCE] 

According to a study by Duke University, expanding Federal Funding 

consistent with U.S. DOT's request would result in over 2.47 million jobs, 

or 58% more jobs than current funding levels, and over $404 billion in total 

economic output. Further, for every dollar invested in infrastructure, the 

economy grows by $1.15 to $1.25. [CBO, 2/14; Alliance for American 

Manufacturing, Duke University] 

The Teamsters Union is open to supporting multiple revenue sources that 

will provide long-term stability to the HTF. While a fi.1el tax increase would 

appear to be a likely solution, improvements in fuel efficiency and the need 

to meet additional CAFE standards makes it less of a viable option in closing 

the funding gap. It also lacks the support of key Congressional leaders and 

in the end may not have the support of a majority of the Congress. 
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A Vehicle-Miles-Traveled (VMT) tax in slightly different configurations has 

undergone testing through pilot programs in several states, with Oregon's 

program being the fttrthest along. Several issues need to be addressed before 

this tax receives the public acceptance it would need to advance to a 

pennanent nationwide program. The scope and size of collecting a VMT tax 

from individual dtivers and their vehicles and the costs involved in 

administering such a program may be difficult to overcome. Other issues 

relating to privacy of location and how wear and tear on infrastmcture can 

be assessed to heavier vehicles remain as additional challenges to overcome. 

In any case, Congress should not revert to methods that place additional 

burdens on taxpayers to close the funding gap. Giving states the authority to 

toll their existing interstate highways is asking taxpayers to pay twice for the 

privilege of using that highway, once at the pump when they paid for their 

fuel and again at the toll booth. Motorists find altemative routes on 

secondary roads to evade tolls, which can lead to safety issues and 

degradation of highways not meant for the volume or weight of interstate 

traffic. 

Given the expanding shortfall in the HTF, the political and logistical issues 

with other revenue sources, and the necessity of finding significant funding 

to advance a multi-year surface transportation reauthorization in the 

immediate future, the Teamsters Union believes that a tax on the repatriation 

of corporate profits from overseas is the preferred solution to filing the gap 

and funding a long tenn bill. It's estin1ated that there are over $2.1 trillion in 

foreign profits held by U.S. corporations. While some may argue about 

what rate those profits should be taxed (the Administration has proposed a 

rate of 14%), a rather small portion of those revenues would be needed to 

provide stable funding for a six-year reauthorization. 

It's clear that investing in irtfrastructure is good for the economy and will 

keep us competitive in the global marketplace. And so it is vitally important 

that the shortfall of RTF revenue be solved sooner rather than later. 

Congress has subsidized the HTF with approxinlately $64 billion over the 

past seven years. These shott-term patches have left state and local 

governments with a great deal of uncertainty in project planning, causing 

delays and cancellations. This stop-and-go approach increases construction 

costs and continues to put the nation behind in meeting its infrasttucture 

needs. We urge the Committee to act swiftly to provide a long-tenn solution 

to the HTF shortfall. 
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ITEP 

INSTITUTE ON TAXATION AND ECONOMIC POLICY 

Adding Sustainability to the Highway Trust Fund 

Testimony for the House Committee on Ways and Means 

Hearing on Long-Tcm1 Financing of the Highway Trust Ftmd 

Carl Davis, Research Director 

Institute on Taxation and Economic Policy (ITEP) 

Jwte 17,2015 

The tederal Highway TnlSt Ftmd (HTF) is the single •oost important mechanism for funding 

maintenance and improvements to the nation's transportation infrastructure. Absent 

Congressional action, however, the HTF will fuce insolvency at the end of July. Unfortwlately, 

despite the critical importance of infrastructure to the U.S. economy, the condition of the HTF 

has been allowed to deteriorate to the point that imminent insolvency has become entirely 

nonnal 

Since 2008, Congress has deah with recurring shortfulls in the HTF through a series of shorttenn patches that have collective ly transferred S65 billion in oll!side fimding to the accOtmt. 

While these transfers bave played an important role in filttding the nation's transportation 

nel\vork, they also represent a fuilure to deal with the root cause of these rectUTing shortfulls: an 

outdated and poorly designed gasoline tax. 

Increasing and refOrming d1e gas tax could adequately and sustainably fund dJ.e HTF for decades 

to come. New funding sources such as a vehicle miles traveled tax (VMT tax), on the other 

hand, hold some long-tenn promise but cannot address the li.md's current sbortfull and are not 

necessarily a panacea for d1e 1-ITF's revenue StlStainability problem Finally, other high profile 

fimding options such as a repatriation holiday or deemed repatriation of corporate profits are 

problematic from a tax policy perspective, and entirely tmsustainable as revenue raising options. 
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Gas Ta:t Design is Flawed but Fhable 

The H1F is currently tacing insolvency because the federal g;~s tax is poorly designed. On 

October I st, the nation's 18.4 cent per gallon federal gas tax rate will become 22 years old. As a 

result, drivers have been paying roughly $3 in federal gas taxes on every tank of gas they bave 

bought over the last two decades. But as drivers' contributions have stagnated, the cost of 

asphalt, stee~ and machinery has risen by roughly 60 percent. 1 This growing discomtect between 

the cost of the roads that drivers use, and the price they pay to use them, has played a large role 

in causing H1F revenues to consistently fuO short of infrastructw-e needs. 

Sirq>ly put, the 18.4 cent federal gas tax rate is outdated. Federal funding for the nation's 

transportation in&astructure would be on a much more sustainable course if the rate had been 

allowed to rise alongside inflation in the salllC manner that nwnerous incolllC tax provisions did 

over this tim: period (e.g., personal exen1>tions, standard deductions, tax brackets, and the 

E..1med neon~ Tax Credit). 

But a lack ofplamli.ng for inllation is not tbe only chaOenge lacing the federal gas tax. 

According to the Federal Highway Administration, the average fuel-efftciency of a passenger 

vehicle on America's roadways has increased by roughly 12 percent over the last two decadesfi·om 19.3 to 21.6 miles per gallotL2 Fora vehicle with a 15 g;~ Don gas tank, this means that the 

average driver is able to wear down tlle roadways with 35 extra miles of driving before they have 

to stop, refiweL and pay anything in g;~s taxes. 111e result has been reduced g;~s tax coOections, 

and Jess revenue with which to maintain and improve the nation's transportation network. 

In L1te 2013, ITEP examined the impact ofboth infbtion and liwel-effic iency growtll in 

significant detail and conchxled that infla tion has, by fur, played the larger role in contributing to 

the H1F funding shortfulls of recent years: 

Over rhree-fourrhs (78 percenr) ofrhecun·enr gasoline rax revenue shortfall is a resulr of 

Congress' failure to plan for inevirable growrh in rhe cost of building and mainraining 

rhe nation's infrastmcture. The remainder (22 percent) is due ro improvements in vehicle 

f uel-efficiency. 

3 

11lis does oot need to be the case. l"tntmdiately increasing tbe gas tax and allowing the rate to 

rise each year alongside a fonm1la that considers both infL1tion and fl~e efficie ncy gains would 

1 This covers the 1993-2013 pctiod in order to be consistent with the lhel-effieieney figures cited below. To be 

clear. this does not suggest tbal coustmction costs have grown in an unpre.cedenled orune~ected way. Prices in tbe 

broader economy, as u.:asured by the Consumer Price Index, rose by 61 perce01 ovet this s ame period. 

2 See Table VM-1 &om the Federal Highway Administmt.iou 's Highway Slatistics series. 1993 data for "passenger 

cats" aod "2-axle, 4-tire tmcks" are available at: hllp/fwww lhwa dot oovfohinVJ99,11sectjon51vm-J pdf and 2013 

data for "aU light duty vehicles" are available at 

htto·//www Otwa dot goy/no!jcyinfomJltiop/statjsticsa OL3/yml cfm. 

3 Institute on Ta>iatioo and Economic Policy. "A Federal Gls Tax for the F\11 ure." Septembel" 22, 2013. Available 

a1 : httu i/itep org/itep reports/?QJ;/09Ja.fedem l·gas-tax-for-the{utnre php. 
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pttt the HTF on a sustainable course for decades to com::. Had this reform been implero::nted in 

the late 1990s, there would be no question as to the HlF's solvency as the fund would have ran a 

swplus in every std>sequent year, thereby fucilita ting as much as $2 15 bilfun in additiona I 

transportation investments. Today, the cost to drivers associated with this refonn would be 

rougbly 11 cents per g;~llon in additiona I g;~s taxes-an amount equal to less than $5 per month 

for the average driver.4 

Diverse Group of States Show the Way Forwa rd 

While federal gas tax increases and refolllll have long been viewed as politically impossible, the 

progress being made in the states shows that there is a practical way forward. Since February 

2013, sixteen politically and geographically diverse states stretching from Idaho to 

Massachusetts have enacted meaningful 8"5 tax increases or refoml'>. 5 

Partially as a result of these changes, there are now nineteen states that levy a refonn:d, variablerate gas tax where the tax rate can atdomaticaUy grow over time alongside fuctors such as 

inllation, gas prices, or fuel-effic iency.6 Some states, such as Florida and North Carolina, have 

used these smarter, variable-rate structures for a nwnber of years. Others, such as Petmsylvania 

and Utah, are more recent additions to this group. 

Btu of all the states with variable-rat.e g;~s taxes, Georgia is arguably the leader. ht May 20 15, 

Governor Nathan Deal signed a reform that addresses both of the major challenges to the 

sustainability of the state's gas tax. In addition to a Oat, one-tin-.e increase in the tax, Georgm's 

g;~s tax rate will now be allowed to rise each year to keep pace with bod1 inflation and vehicle 

fuel-efficiency gains. While dJe inflation component ofthis fonnula is not tmusual (similar 

fonnuL1s exist in Florida, MaryL1nd, Rhode Island, and Utah), the ft.el-efficieney inflator is the 

first of its kind. 

Issues ''itb Vehicle Miles Traveled Taxes 

As electric and highly efficient vehicles have grown in popularity, increased attention has been 

paid to proposals that would transition the nation's system of transportation finance away from 

taxes on motor fttel and toward taxes directly on the munber of tniles driven. On July I, Oregon 

will take a significant first step in this direction by allowing 5,000 volw1teer drivers to 

penuanently exempt themselves from d1e state's g;~soline tax in exchange for paying a I .5 cent 

4 Ibid. 

s Davis. Can. "Sweet Si\1een: Stales Continue 10 Take On Qls Tax Refonn" Tax Jus lice Slog. May 20. 20t5. 

Available at: hup:l/www taNustjcebJog.org/archjve/2015(05/sweet sixteen states conljnue php. 6 luslituteon Ta,.,liou and Economic Policy. "Most Americans Live in Slates with Variable-Rate Qlsoline Taxes." 

May 20, 2015. Available al: hnp://ilep.om/ilep repons/2015/02/nlOSI-au-cticans-livc-in-states-with-variabk-rategas·taxes·l.php. 
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tax on each mile that they drive7 While this experiment is a welcome exat:qlle of forward 

thinking, there are at least three in~ortant caveats to keep in mind. 

First, VMT taxes are not a solution to the inllnediate fiuJding challcn~s fucing the HIT, or to 

the broader infrastructure funding needs that exist right now. Recent opinion polling shows that 

VMT taxes are unpopular anl:)ng the American people, though this may change as people 

become Jll:)re fumiliar with these types of taxes.8 Moreover, installing the devices needed to 

track and report vehicle mileage is a costly and tin~ consuming etJdeavor that could take years or 

even decades to fully irrplement, depending on whether efforts are made to retrofit current 

vehicles with the technology. 

Second, even if a VMT tax could be in1Jiemented inunediately, these types of taxes are not 

inherently better than gas taxes at weathering the gradual effects of infl1tion on their purchasing 

power. Oregon's flat VMT tax of 1.5 cents per mile, for exaiqJle, is exactly as vulnerable to 

inflation as the state's flat gas tax of 30 cents per gallon. As we explained in a recent report on 

tllis subject: 

Transitioning from a pay-per-gallon gas tax to a pay-per-mile VMT tax will not 

necessarily put federal and state transportation revenues on a sustainable course. If the 

tax rate levied under a VMT tax is not allowed to grow alongside the inflation rate, 

revenues will quickly begin to lag behind the cost of building and maintaining the 

nation 's infrastructure- much as gas tax revenues have for decades. Lawmakers 

interested in adequately funding transportation on an ongoing basis should immediately 

index their gas tax rates to inflation, and should be aware that such indexing will also be 

needed under any VMT tax they might enact. 9 

Third and finally, many VMT tax proposals come with worrisome environmental implications. 

Oregon's upcoming experiment, for exatJ1>le, is expected to be very poplllar anl:)ng owners of 

fuel-inefficient cars who purchase larger volwnes of gasoline (and pay higher gas taxes) relative 

to their neighbors. Paying by the mile, rather than by the gallon, will be of such great benefit to 

tl1ese drivers that lawmakers put a fnn cap on the nwnber ofineftlcient cars allowed into tlte 

experiment (only 1,500 slots are reserved for vehicles rated at 17 miles per gallon or less). 

Hybrid and electric vehicle omters, by contrast, will fure quite poorly w1der this program. The 

Oregon Department ofTransportation calculates that a Toyota PmJS owner could see their taxes 

rise by as much as S I 1 7 per year wJder tllis tax. 1 o While some of tllis disparity could be 

alleviated by reducing tlte tax rate for vehicles that get better gas milea~, this option has tl:)t 

been a central part of nl:)st VMT tax discussions thus fur. 

7 See Senate Dill 810 of Oregon's 20t3 Regular Session. Additional infonmtioo on the program is available at 

httu//www myorego.om/ . 

' Agrawal Asha Weinstein and Hilary NL'«>Il. " flow Do An.,ricans Feel Abom Taxes and Fees to Fund 

Tmnsp011ation?" Mineta TmnsponationbJstitute. April2015. Available at: 

httu//tran5>web sjsu edu!pDFs/ research/ 14'8·tax·snrvey-2015-!op·ljne-resu1ts pdf. 0 lustituteon Taxation and Economic Policy. "Pay-Per-Mile Tax is On ly a Pm1ial Fix" May28, 2014. Available 

at: htrp:l/itep org/itep reports/2014/05/pay-per-mik;-lax-js-ontv-ai>a" ial-fix pho. 

to Oregon Departn~nt ofTmnspoJ1arion. "How does the toad usagechargc con1)are wilh paying the fuel laX/" 

May 20JS. A vaiJable at: httu:l/www.myorego org/wp=eontent/uploads/?015/05/orego odot cost COUI>3ri50il pug . 
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Repatriation: An Ineffective Band-Aid 

Rather !han deal with !he gas tax Oaws at !he heart of !he HTF's Cl.liTCnt shortful~ son..: 

lawrrekers have proposed patching the IITF with either a vohlntary or mandatory tax on profits 

held oflShore by corporations. These proposals would reward and encourage oflShore tax 

avoidance, while at best only providing a telll'orary fix to the gap in funding. 

The most problematic proposal in this category is known as a repatriation holiday. Under a 

repatriation holiday, 1mthiJl,1tional corporations could voltmtarily bring back profits held oflShore 

by paying tax on those profits at a rate llltlCh lower than the 35 percent rate they would nonnaUy 

owe (one such proposal would set the repatriation rate as low as 6.5 perceot). 

Bttt repatriatioo holidays are oot a sustail1<1ble fimding source for the HTF because they would 

actually lose revenue in the medium- and long-tenn. In fuct, the Joint Committee on Taxation 

(JCT) fotmd that a repatriation holiday could cost as n-uch as $96 billion in just I 0 years.11 11~ 

is because the holiday would encourage companies to hoard eveo more of their future profits ill 

oflShore tax havens ill anticipation of another holiday, and because tmJCh of the money 

repatriated tmder a holiday would have beeo eventuaUy repatriated at a higher tax rate if the 

holiday were not enacted. 

Aside from a voltmtary repatriation holiday, consideration has also been gjven to enacting a 

mandatory, or deemed, repatriation tax on corporate profits held oflShore. For example, 

President Barrack Obama has proposed paying for infrastructure with a 14 percent mandatory tax 

on Wtrcpatri.~tcd profits as part of a broad corporate tax reform th.1t would inchldc a I 9 percent 

minimum tax on foreigll profits toovillg forward. 

As with a vohlntary repatriation holiday, however, this tom1 of mandatory repatriation would 

reward companies for their cl.liTCnt oflShore tax dodgillg with a pec~1l lower rate, and would 

illcentivize companies to shift toore of their operations oflShore in order to enjoy the lower rate. 

In addition, while both proposals would raise revenue in the short-tenn, they are oot sustaillable 

soltttions. Tftbe HTF is simply patched with a repatriation tax, the ftmd will inevitably fuce 

illsolvenc y yet agaill ill the very near fttture. The result would be a quick return to the same 

debate that bas been rehashed repeatedly from at least 2008 to the present, and a continued lack 

of certaillty for the agencies responsible for mailltaining and enhancing the nation's 

infrastructure. 

Conclusion 

The root cause of the Highway Trust Fwld's looming insolvency is that its primary revenue 

source- the federa l gas tax- is poorly designed. SpecificaUy, the tax's stagnant and outdated 

11 Banbold, ThormsA. Leucrto&oa1or0niu Hatch. Join1Commincc ooTa>Oltion. Junc6, 2014. Available a1: 

h!tp:lfwww hatch senale.oov/publis/ cache/filesl!b?4c4cf-§()()5-4a4e-bab 7-3d9e38?0c509/JCT'.4206-6-14 pdf. 
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rate contains no mecbanjsm fur growing with inJlation, or for dealing with the nvre recent rise in 

vehicle fuel-efficiency. 

In an effort to address these same flaws in their own gas taxes, state-level lawmakers have 

increasingly been moving forward with gas tax increases and refonns that could serve as n¥>dels 

for federal action on this issue. Rather than focusing on short-tem1 solutions, a gro\ving group of 

states h.we transitioned toward a reformed, variable-rate gas tax that can finance economically 

vital transportation investments in both the short- and long-tenns. 

Unlike the gas tax, a new tax on the mnnber of miles that drivers travel is not a realistic fiulding 

option in the short-tenn Moreover, this type of vehicle miles traveled tax (VMT tax) will be 

unsustainable in the long-tem1 as well if its tax rate is calculated as a flat an¥>unt per mile, 

regardless of changes in inflation. 

Of all the proposals wlder consideration, repatriation is an¥>ng the n¥>st problematic. A 

repatriation holiday could olfur a short-term revemu: boost but would provide no funding for 

transportation in medium- or long-term, and would actually reduce federal revenues overall 

Additionally, any repatriation plan comes with the added dowlJSide of encouraging corporations 

to conduct nvre of their operations oflShore (either on paper or in reality). 

1be gas tax bas been the comerstone oftraLJSportation finance for nearly sixty years. As the 

states have shown. this tax could continue to play thjs valuable role for decades to come if its 

rate is s~ly updated and reformed. Done correctly, the result could be an end to the HTF's 

perpetual funding crises for decades to come, and the begjlming of hugely valuable investments 

in the nation's transportation infrastructure. 
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Los An~les County One Gateway Plaza 

®Metro 

Metropolitan Transportation Authority Los Angeles, CA 900U·>95> 

June 16. 2015 

Hon. Paul Ryan 

Chairman 

House Committee on Ways 

&Means 

1106LHOB 

Washington, DC 20515 

Hon. Sander Levin 

Ranking Member 

House Committee on Ways 

& Means 

1106LHOB 

Washington, DC 20515 

Dear Chairman Ryan and Ranking Member Levin: 

Phillip A. Washington 

Chief Executive Officer 

»3-9»-7555 Tel 

2>3-9»-7447 Fax 

washingtonp@metro.net 

I am Wliting on behalf of the Los Angeles County Metropolitan Transportation 

Authority (Metro) to express our appreciation for the hearing you have 

scheduled on June 17. 2015 to discuss Issues related to the long-term 

financing of the federal Highway Trust Fund. Metro strongly supports efforts 

by the U.S. Congress to ensure the solvency of the federal Highway Trust 

Fund in order to permit the adoption of a fully: funded long-term surface 

transportation authorization bill In the 114lh Congress. 

Working In partnership with the U.S. Department of Transportation and with 

funding from the federal Highway Trust Fund, Metro Is working on an 

ambitious program of Improving the environment. building a vibrant economy. 

and reducing congestion for the residents of Los Angeles County. the 

country's most populous county. By utll1zlng a mix of federal, state and local 

funds, our agency has five major rail projects under construction. dozens of 

freeway Improvements underway, among other alternative transportation 

Initiatives. To continue building our projects. which employ thousands of 

public and private sector employees. Metro will need a fully funded federal 

Highway Trust Fund. Like many Members of Congress and transportation 

stakeholders across the nation, we are concerned that our positive efforts to 

Improve mobility for the ten mlillon residents of Los Angeles County will be 

compromised should the federal Highway Trust Fund, as highlighted by the 

Congressional Budget Office, face stgnlftcant funding shortfalls. 

In 2008, the voters of Los Angeles County passed Measure R. a half-cent sales 

tax. to fund an unprecedented number of transportation projects. Many of 

these projects, which depend on resources from the federal Highway Trust 

Fund, are well underway and represent some of the largest public works 

projed,:; In the t"!Ountry. Be.-.au,:;e ou.r agency i,:; determined to continue 

building our Measure R projects without delay. we are encouraged by your 

decision to hold a hearing on the long-term solvency of the federal Highway 

Trust Fund. 
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Letter to the Chairman and Ranking Member 

House Committee on Ways and Means 

Page-2 

Thank you In advance for considering Metro's strong support for malntalnlng 

the federal government's commitment to Investing In transportation programs 

and projects. Please do not hesitate to contact me at (213) 922-7555 with any 

comments on this correspondence or on any other matter. 

~A.~ Phillip A. Washington 

Chief Executive Officer 
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...,, 

Manufacturers 

Robyn Boerstling 

Ditector, Transportation & hfraSlructure Policy 

iJfmstrocture, Legal and Regulatory Polley 

The Honorable Paul Ryan 

U.S. House of Representatives 

Washington, DC 20515 

Dear Chairman Ryan and Ranking tvlember Levin: 

June 17, 2015 

The Honorable Sander Levin 

U.S. House of Representatives 

Washington, DC 20515 

The National Association of !Vtanufacturers (NAM) believes increased funding for the 

nation's transportation infrastructure is a critical priority which will help keep manufacturing 

competitive and grow the nation's economy. !Vtanufacturers appreciate your commitment and 

interest in securing the financial health of the Highway Trust Fund (HTF). the main funding 

mechanism for the nation's highway and transit systems. 

While competitor nations continue to ramp up investments in transportation 

infrastructure, the United States risks a continued slide in the opposite direction. The level of 

real capital investment in highways and roads declined 20 percent from 2003 to 2012. 

A long-term approach to funding infrastructure is needed to avoid uncertainty and ensure 

states have the ability to undertake multi-year and complex transportation investments such as 

new bndge replacements, tmproved tntercnanges, transit upgrades and addtOonal capactty to 

relieve congestion that chokes our roads. Because many states do not have the resources or 

ability to keep up with the demands of aging or deteriorating infrastructure, the federal and state 

partnership is critical to maintain. No state in our Union would be better off on its own. 

Transportation funding is a productive investment but manufacturers urge caution when 

considering tax proposals that promise to provide the resources for transportation investments 

over the next several years. For exam pie, stand-alone proposals to tax overseas earnings 

outside of comprehensive tax reform represent a massive retroactive tax on manufacturers and 

would impose an additional cost burden on U.S. companies at a time when they already face 

significant challenges in the global marketplace. 

The federal government has a fundamental role to play in investing in the nation's 

highways and transit systems to serve passenger travel, interstate commerce and national 

defense. Unlike most other government programs, the HTF was designed to be funded by 

federal fuel taxes and truck excise fees paid by those who use and benefit from access to our 

transportation networks. We encourage Congress to recognize the importance of user fees in 

developing a solution to the current HTF funding crisis in addition to the other potential funding 

mechanisms. but also begin to develop future pathways that will lead to new approaches that 

will ensure appropriate funding levels in the years to come. 

Leading lnnovaUon. CreaUng Opportunity. Pursuing Progress. 

733 10"'Street, tffl· Suite 700 • Wa!hlngton. DC 20001• ,. 202.637 .3178 • '202 6l7 3182 • 'WWtt'.nam.ag 
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Manufacturers welcome the Administration and Members of Congress in both parties 

working together to take decisive action on a multi-year funding solution for the HTF. We look 

forward to working with you and appreciate your consideration of this important issue. 

Sincerely. 

t;e-dpt-"'»· ~ 
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' llli\ 

I IIIII 

NATIONAL CONFERENCE (}I STATE LEGISLATURES 

The Forum for America's Ideas 

STATEMENT FOR 11-IE RECORD BY 

DELEGATE SAlLY JAMESON, 

MARYLAND HOUSE OF DELEGATES 

AND 

SENATOR CAM WARD, 

ALABAMA SEi'IA TE 

Co-Chairs ofthe Natural Resources and Infrastructure Comnittee, 

National Confurence of State Legislatures 

ON BEHALF OF 11-IE 

NATIONAL CONFERB-ICE OF STATE LEGISLATURES 

LONG TERM FINANCING OF THE HIGHWAY TRUST FUND 

TOlHE 

COMMITTEE ON WAYS AND MEANS, 

UNITED STATES HOUSE OF REPRESENTATNES 

JUNE 17,2015 

444 North Capitol Street, N.W., Suite 515, Washington, D.C. 20001 

Tel: 202-624-5400 1 Fax: 202-737-1069 
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On behalf of the National Conference of State Legislatures (NCSL), a bipartisan 

organization representing the 50 state legislatures and the legislatures of our nation's 

conunonwealths, territories, possessions and the District of Columbia, we applaud 

Chairman Ryan, Ranking Member Levin, and the other distinguished members of the 

House Ways and Means Committee for making this hearing a priority. It represents a 

key step in examining the need for federal transportation infrastructure investments. It 

is important that ali parties, including state legislatures, work together to ensure a safe 

and reliable surface transportation system throughout the country. 

As you know, on August 1 the highway account of the Highway Tmst Fund 

(HTF) is forecast to fall below the critical $4 billion funding level. This will likely resull 

in the U.S. Secretary of Transportation employing certain cash management strategies 

that could both delay or reduce reimbursements to states for critical surface 

transportation infrastructure projects. NCSL urges Congress to ensure the continued 

solvency of the Highway Trust Fund (HTF), while committing to adopt a long-term 

agreement on surface transportation funding as part of a multi-year reauthorization of 

the Moving Ahead for Progress in the 21st Century Act (MAP-21). 

Although the enactment of MAP-21 in 2012 put a brief end to the numerous 

short-tem1 extensions tha t followed the expiration o f the Safe, Accountable, Flexible, 

Efficient, Transportation Equity Act: A Legacy for Users (SAFETEA-LU) in 2009, it 

unfortunately appears that Congress is returning to this pattern. The uncertainty tha t 

pervades short-term extensions makes it extremely challenging for states to adequately 

plan and achieve their perfom1ance targets especially because many transportation 

infrastructure projects requi.re a multi-year couunitment. This uncertainty has already 

caused some states to defer projects. These d elays have a harmful impact on a sta te's 

economy. It is difficult to overstate the negative state impacts this uncertainly creates. 
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Despite federal inaction, over the past two and half years, state legislators in 

more than a quarter of states, from Maryland and Virginia to Iowa and South Dakota, 

have stepped forward and invested billions of dollars to repair and upgrade our 

nation's surface transportation assets to ensure their continued safety and viability. 

However, the significant steps taken by many states must not be tnisconstrued. NC:SL is 

a strong supporter of the federal government's role in a national surface transportation 

system that facilitates interstate commerce, addresses fairly and equally the mobility 

needs of all Americans and meets our national defense needs. We would also stress that 

NC:SL supports the continuation and preservation of a federal-aid surface 

transportation program that directs spending to national priorities while providing 

flexibility for states to address regional variations. The federal program should provide 

states maximum flexibility in deciding how to generate and leverage transportation 

revenues and how to use state and federal dollars. The ability of states to maintain 

flexibility in decision making and comply with environmental and other mandates 

depends on regu Ia tory flexibility as well as adequate and reliable federal funding. 

Revenues for our transportation system continue to decline as vehicles become 

more fuel efficient and travel patterns change nationwide. The American Society of 

Civil Engineers has estimated America's surface transportation irlfrastructure faces a 

funding gap of about $94 billion a year based on cunent spending levels. 1 Taking all of 

this into account, NC:SL urges Congress to work closely with states to develop a new 

shared, long-term vision for financing and funding our nation's surface transportation 

systems, one that will enhance the nation's prosperity, the quality of life of all 

Americans and guide it beyond the interstate Highway era into the 21st century. NC:SL 

believes that Congress must: 

Provide a short term increase in federal highway transportation funding, based 

on the current status of the Highway Trust fund, so that sufficient funds are 

available for the next au thorization until a new, more stable long-term funding 

mechanism for surface transportation can be put in place. 
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• Examine innovative fw1ding systems that capture all system users and 

encourages pilot programs in states for experimentation with approaches, 

methods and mechanisms. Any system must ensure both the privacy of users 

and provide maximum flexibility for states in the use of funds they receive from 

theHTF. 

Approve the creation of a $20 mHiion program, with no more than $2 million 

available for allocation to any one state, to support state-level pilot programs that 

explore transportation funding alternatives to fuel taxes. 

• Migrate the Highway Trust Fund (HTF) from a gas tax to a new national funding 

stream. A federal trust fund financed by user fees, should be retained as the 

primary method of fw1ding federal-aid surface transportation programs. It must 

provide states a s ustained, reliable source of transportation funding. 

Make all funding and financing options available to state legislatures for state 

and federal-aid surface transportation programs. Statutory and regulatory 

barriers to state and locally-generated revenues should be removed, incl uding a ll 

current federal restrictions on states' authorities to toll, to allow states to optimize 

resources for capacity expansion, operations and maintenance, while ensuring 

free flow of goods and people. 

Encourage and expand incentive-based programs in order to spur local and 

regional b·ansportation innovation in full coordination with state authorities. A 

comprehensive approad1 would promote the use of tolling, congestion pricing, 

public transit, telecommuting, real-lime traffic and other advanced technologies 

(also known as intelligent transportation systems), and other strategies to achieve 

interstate mobility goals through urban congestion reduction. 

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• Ensure states have continued flexibility to create legislative and progranunatic 

frameworks for Public Private Partnerships (PPPs) and full authority to select 

and engage in PPP projects. While the level of private sector participation is best 

detemlined by state and local authorities, federal guidelines should be designed 

to accommodate private sector support, although private participation should 

not be a prerequisite for receiving federal f·unds. 

Continue credit-based and loan guarantee programs, including the 

Transportation Infrastructure Finance and lrU1ovation Act (TIFIA), Grant 

Anticipation Revenue Vehicles (GARVEE), private activity bond, and State 

Infrastructure Bank (SIB) programs, in order to incentivize private sector 

investment-particularly for freight mobility by rail, highway and waterway - in 

projects sponsored by the public sector. 

• Provide incentives and adequate funding for mass transit. 

• Avoid the expansion of federal-local funding streams without appropriate 

coordination with state legislatures as these complicate state-local relationships, 

financial arrangements, and state match expectations for transportation 

programs. 

NCSL appreciates the opportunity to submit testimony on this important issue 

before the Committee. We respectfully request it be submitted for the record along with 

NCSL policiesonsurface transportation. 

Appendices: 

NCSL Surface Transportation Federalism Policy Directive 

NCSL Solving America's Long Term Funding Crisis Policy Resolution 

1 Amtrican Soc-iet yof Civil Engiuea-s. "2013 Rtpon card for An:~trica 's lnfmsmrrure:• May20l 3. bup:l/w\\W.infrasmx::rurcreponcardorgl 
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NSSGA 

NATIONAL STONE. SAND 

& GRAVEL ASSO IATION 

STATEMENT FOR THE RECORD 

BY 

THE NATIONAL STONE, SAND & GRAVEL 

ASSOCIATION 

SUBMITTED TO THE 

COMMITTEEONWAYS AND MEANS 

U.S. HOUSE OF REPRESENTATIVES 

"LONG TERM FINANCING OF THE HIGHWAY TRUST FUND" 

JUNE 17, 2015 

1 
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Chairman Ryan, Ranking Member Levin, and other members of the Ways and Means 

Committee: 

The National Stone, Sand and Gravel Association (NSSGA) appreciates the 

opportunity to submit a statement for the record of this full Ways and Means Committee 

hearing and to address the importance ofthe nation's surface transportation system and 

finding a sustainable, long term funding solution. 

NSSGA is the leading voice and advocate for the aggregates industry. Its 

members - stone, sand and gravel producers and the equipment manufacturers and 

service providers who support them - produce the essential raw materials found in 

homes, buildings, roads, bridges and public works projects. During 2014, NSSGA 

member companies represented more than 90 percent of the crushed stone and 70 

percent of the sand and gravel consumed annually in the U.S., and there are more than 

10,000 aggregates operations across the United States. Near1y every congressional 

district is home to an aggregate facility. Production of aggregates in the U.S. in 2014 

totaled 2.39 billion tons at a value of $20.3 billion. 

Aggregates and the Economy 

Aggregates are the foundation of our business and an essential American 

industry that serves as a barometer for the rest of the U.S. economy. Stone, sand and 

gravel are essential to any construction project -public and private. When the demand 

for our products is high, the nation is growing, jobs are being created and essential 

national assets are being built. If the aggregates industry is doing well, America is 

doing well. 

Aggregates are used in nearly all residential, commercial, and industrial building 

construction. They are also used for many environmental purposes, including pervious 

pavements and other LEED building practices, the treatment of drinking water and 

sewage, erosion control on construction sites, and the treatment of air emissions from 

power plants. While Americans take for granted this essential natural material, it is 

imperative for the construction of our infrastructure and homes and for positive growth in 

our communities. 

Sales of natural aggregates generate over $40 billion annually for the U.S. 

economy. When combined with related industries. such as cement, concrete, asphalt 

and construction equipment and supplies, the transportation construction industry 

generates more than $200 billion in economic activity every year and employs more 

than two million people. The aggregates industry alone employs approximately 100,000 

highly-skilled men and women. At its core, surface transportation reauthorization is a 

jobs bill that results in long-term national assets. 

Through its economic, social and environmental contributions, aggregates 

production helps to create sustainable communities and is essential to the quality of life 

Americans enjoy. Aggregates are a high-volume, low-cost product. Due to high product 

transportation costs, proximity to market is critical; unlike many other businesses, we 

cannot simply choose where we operate. Our members are limited to where natural 

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forces have deposited the materials we mine. Generally, once aggregates are 

transported outside a 25-mile limit, the cost of the material can increase 30 to 100 

percent. Because so much of our material is used in public projects, any cost increases 

are ultimately borne by the taxpayer. Since our members operate near areas of limited 

quality reserves we ship up to 200 miles via truck and rail to meet the demand where 

quality aggregates are not locally available. This is only possible using adequately 

maintained highways and railways. 

Over the past eight years, the aggregates industry, like many others, has 

experienced the most severe recession in its history with the federal regulatory tsunami 

causing further harm to an industry that has seen production drop by 39 percent since 

2006. During that time, when the commercial and residential construction markets 

slowed to a crawl, we were forced to scuttle expansions. lay off employees and alter our 

business plans. 

Our highway system infrastructure continues to deteriorate at a rate much faster 

than we are making repairs. Our local towns. counties and state DOTs struggle to 

maintain adequate conditions, to say nothing of reconstructing roads that have 

exceeded design life or design capacity. With federal funding in a continual state of 

limbo, states are unable to adequately plan for long term infrastructure repair and 

maintenance. Businesses struggle to strategically allocate resources due to ongoing 

uncertainty. Our equipment is extremely expensive, so making huge capital equipment 

investments without a clear vision is difficult at best Many things need to fall into place 

to do a project in the shortened construction seasons of parts of the U.S. While it may 

not seem like long time, a four-week delay in funding or awarding contracts can cause a 

project to lose a complete construction season and add to its cost. This has a ripple 

effect, impacting businesses along the supply chain resulting in a great deal of 

economic distress. 

Solve the Funding Nightmare 

The business of successfully building and maintaining our national surface 

transportation infrastructure depends in large measure on funding stability and yearover-year predictability provided by the surface transportation authorization. The 

extension of the current law, MAP-21, expired on May 31. 

Congress passed a two-month extension of the program to July 31, which 

continues authorization of the program and allows continued expenditures from the 

Highway Trust Fund. ~ was the 33rd short-term extension of the program over the past 

six years. At the end of July, the Highway Trust Fund is expected have a balance of 

$3.5 billion. 

Congress needs to do what they were elected to do and stop kicking the can 

down the road by addressing the long-term funding of our nation's surface 

transportation infrastructure. No more short-term extensions. Reauthorization is critical 

to NSSGA's many small and large aggregates producers. 

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Last increased in 1993, the transportation user fee has outgrown its current buying 

power. The cost of materials and labor has gone up dramatically since then, as well as 

increased fuel efficiency. In order to keep up with the twenty-first century, two 

commissions, created by the last multi-year surface transportation reauthorization law, 

recommended a simple, straightforward, effective solution -to increase the motor fuel 

user fee coupled with indexing it to inflation. The commissions' reports suggested other 

potential revenue sources; so, too, have reports from a host of organizations. Revenue 

options are not the problem. 

In order to overcome the highway funding gap, NSSGA supports the adoption of 

any user-fee based funding options and innovative finance tools to provide federal and 

state transportation departments with the funding they need to make critical investments 

in our transportation infrastructure. It is our contention that a user fee based funding 

approach, such as a motor fuel based user fee, is the most rational and easily 

implementable funding solution available in the short to medium term. 

Long-Term Certainty 

Continued patches and temporary fixes hurt future and existing projects as states 

and localities are hesitant to move forward out of fear the federal government will not 

meet its funding obligations. 

In the absence of a long-term plan, our members' customers are telling them 

they are not sure what the next years are going to bring to them, thereby causing our 

members to withhold investment in plants and new machinery for the foreseeable 

future. It is increasingly difficult to do long range workforce planning due to uncertain 

demand. 

Multi-year surface transportation reauthorizations are particularly vital for the 

funding confidence they instill in state departments of transportation. When they know 

that the Federal Highway Administration will apportion their funding year after year, in 

the amount authorized, they have confidence that their state expenditures will be 

reimbursed. The states then award contracts, and the process of building and 

maintaining our transportation infrastructure can proceed smoothly. Confidence in the 

stability of the program is a critical factor in ensuring success, particularly for small 

businesses. 

When there are doubts, as there are today, awards for construction slow. 

Already Arkansas, Georgia, Tennessee, Wyoming Montana, Nevada, Utah, Colorado, 

Nebraska, Mississippi, Pennsylvania, West Virginia, Connecticut, Vermont and 

Maryland have either delayed or cancelled highway, bridge or transit capital projects 

this year or are considering doing so because of uncertainty over Mure federal funding. 

Congressional highway program extensions have affected $1.3 billion in transportation 

improvement projects. 

There are those that say we should devolve the program to the states in order to 

return maximum discretionary authority and fiscal responsibility to them for all elements 

of the national surface transportation systems. It is critical to remember that the federal 

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government's role in maintaining the national road network, which carries more than 73 

percent of the 48 million tons of goods transportation across the country daily, is a 

constitutional one. Article 1, Section 8, directs the federal government "To establish 

Post Offices and post Roads," or the forerunner of our national highway system. 

Devolution of the program would saddle the states with 90 percent of the fiscal 

responsibility for supporting highways that the federal government has an obligation to 

establish. In order to make up lost federal monies, Wisconsin would have to raise both 

the gas user fee and the diesel fuel user fee 20.6 cents just to flat fund their program. 

A better approach is to reform the system, not risk the nation's economic future 

by disinvesting in a highway system that is already under-funded. 

Conclusion 

We recognize the difficulty in finding long-term funding for the highway 

program. NSSGA supports an all-the-above approach to fund our nation's infrastructure 

projects. We also understand that no one funding mechanism is a panacea. n the 

absence of action, the costs to maintain and improve our nation's vascular system only 

increase. Meanwhile, Americans are becoming more and more frustrated with the 

growing number of potholes, cracked roads and traffic jams plaguing our roads, 

highways, and bridges. According to the Texas Transportation nstitute Americans 

spend 38 hours and $1 21 billion in wasted fuel sitting in the congestion plague our 

urban areas. Extra vehicle repairs and operating costs are costing $94 billion a year 

billion -- $444 per motorist. 

President Eisenhower signed the law creating the National nterstate Highway 

System nearly sixty years ago. It was designed to last 25 years. We are 34 years 

beyond is useful life. Is it any wonder that it is deteriorating? 

The least expensive way not to waste fuel and to improve air quality is to 

increase the capacity of our roads and bridges and alleviate congestion. The Federal 

Highway Administration estimates that each dollar spent on road, highway and bridge 

improvements results in an average benefit of $5.20 in the form of reduced vehicle 

maintenance costs, reduced delays, reduced fuel consumption, improved safety, 

reduced road and bridge maintenance costs and reduced emissions as a result of 

improved traffic flow. 

Improved safety is another important reason to pass a multiyear highway 

reauthorization bill now. There were 32,719 traffic fatalities in 2013 in the U.S. A total of 

165,340 people died on U.S. highways from 2009 through 2013 . The fatality rate on the 

nation's rural roads is disproportionately higher than that on all other roads . 

Mr. Chairman, NSSGA thanks you for holding this very important hearing. 

Congressional action on a multi-year surface transportation reauthorization, one that 

increases investment in the nation's roads, bridges, and highways, is of utmost 

importance to the aggregates industry. Our industry, like most businesses, requires 

certainty to make sound capital investment decisions. Reverting to short-term 

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extensions will only create havoc in resource development decisions and construction 

projects. 

Attached to this statement are two infographics that NSSGA put together. "Small 

Change" calculates the real costs to the average American of the Corker-Murphy 

proposal to increase the fuel user fee $12 cents. The second infographic shows visually 

the costs of doing nothing. 

NSSGA looks forward to continuing to work with the committee in doing what is 

right for America. If we ignore the maintenance and improvement of our nation's road 

and highway network -the circulatory system of America, it is at our own peril, we risk 

the loss of economic growth, improved safety, cleaner air, and jeopardize the freedom 

of mobility we all take for granted. 

Attachments 

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HYBRID 0 40MPG 

WHICH IS EQUAL TO 

ONE200UNCE HALF·CAF SOY LATT£ 

PER MONTH 

ADDffiONAl 

--

PER YEAR FOR HYBRIDS 

WHICH IS EQUAL TO 

160UNCE8AG 

OF TORTillA CHIPS PER MONTH 

SEDAN 0 22MPG SUV016MPG 

WHICH IS EQUAL TO WHICH IS EQUAL TO 

ONE HAMBURGER 

AND COLA PER MONTH 

HALF OFA PORTERHOUSE 

PER MONTH 

--=.-- -~ -

GAS T.A3CiM-PACf.6R"ivERS? 

FOURAA 

BATTERIES 

PER MONTH 

-ONE MOVIE 

T1CKET PER MONTH 

The Murphy-Corker Proposal: N SSGA 

an effective and responsible way _ 

to save the H1ghway Trust Fund w.rJONAL sroo.tO '>AM) 

• ,( u " Jlf~",m,.....f 4J ••n'.,'W"1 Jfft .. 'JJ' &. C.A.AYll A.SSCX.&ArVN 
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ROUGH ROAD AHEAD 

THE ECONOMIC IMPACT OF AMERICA'S FAILING TRANSPORTATION INFRASTRUCTURE BY 2020 

Femilinlleve e American businessn AMERICA LOSES GROUND 

LOWER STANDARD end workers in the global economy. 

OF UVING. PAY A HEAVY PRICE. 

- - US. Bl@!ts would drop by 

lam•hswou:d 83m America wou'd lose S28 billion. 

$700 less cacn Will 877,000 joOs + 

+ 

Ancther 234,000 jobs exist only if bportSdroplll ArrJ spend $360 more 79 ol93 different many more woRM agree to payc;uu. tradable corrmoames. eadlyeac 

= - = Between now and 2020 America'$ gross domG1ic 

Toll I impact on 11ch lamlly's b1Jdg01: transportation coN productunderparforms by 

$1,()60 per year. increase $4308. $8978 . 

00 
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Gas Taxes and MPG 

Some people say that the gasoline tax is no longer a viable source of revenue fort he highway trust fund 

because cars aregettingbettergas mileage. What is the evidence? 

Let's play around with statistics on historicgas mileage trends from the EPA: 

h Ll p:// "~'·" .epa.gov/ otaq/fe trends-completP. htm 

AppendixB 

Car mileage changes over the decade from 1975 to 1985: 

1975 t3.SMPG 

1985 23.0 MPG 

Fora 70%increasein MPG 

Car mileage changes over the decade fl·om 2003 to 2013: 

2003 23.0MPG 

2013 27.4 MPG 

For a 19%increase in MPG 

Things to note: 

The 1990s were the lost decade for MPG improvement Cars in2o03 had the same 23.0 MPGas cars in 

1985. 

The inc t·easeoft7%in the most recent decade was substantially smaller than the increaseof70%i n the 

earlier decade. 

So why is it that the gas tax will no longer work because of recent increases in MPG, but the gas tax was 

still able to work after the much larger increases in MPG from 1975-1985? 
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Repeating the exercise for Light Trucks: 

Light truck mileagechangesoverthe decadefrom1975 to 1985: 

1975 11.6 MPG 

1985 17.5 MPG 

Fora 51 %increase in MPG 

Light truck mileagechangesoverthe decade from 2003 to 2013 : 

2003 16.7 MPG 

2013 19.7 MPG 

Foran 18%increase in MPG 

Light truckMPG actually fell over the lost decade of the 1990s. 

An increase oft 8%in the recent decade, vs. a much larger increaseofst%in thee;trlierdecade. 

Once again, the problem is not the technical feasibilityofthegas tax after the relatively modest increases 

in gas mileage over the last two decades compared to the 1975-198speriod. The problem is political will. 

Finally, since the last time the Federal gas tax was increased in 1993, inOation bas bad 3 times t he impact 

on tbe purchasing power ofgas tax revenue as changes in mileage have had. Any revenue source will fail 

over time if it is not adjusted (automatically or manually) to keep up with inflation. 

Consumer Price Index: 

1993 144 

2013 233 

An itt crease of62% 
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215 Pennsylvania Avenue. SE • Wuhl"'lon. D.C. 20003 • 202/54ll-4996 • www.cfriren.of1 

PUBLICCITIZEN 

June 23, 2015 

United States House of Representatives 

Committee on Ways & Means 

1102 Longworth House Office Building 

Washington, DC20515 

Via email to: waysandmeans.submissions@mail.house.gov 

Re: funding for infrastructure investments 

Dear Chairman Ryan and Honorable Committee Members, 

On behalf of PublicCit izen's more than 400,000 members and supporters, we appreciate t he 

opportunity to submit this statement for the record outlining our recommendations for securing long· 

term funding for transportation and infrastructure funding. 

Public Citizen strongly urges the committeetoconsiderfunding options that both maximize the benefit 

for taxpayers and that are sustainable over the long term. For these reasons, we recommend that you 

avoid short-term fixes such a repatriation tax holiday for multinational corporations' profits stashed 

overseas and concentrate instead long-term fundi ng sources that would also create an i ncentive to 

reduce harmful emissions from vehicles such as i ncreasing the gas tax or implementing a tax on carbon. 

It's clear that America has an infrastructure crisis: bridges are crumbling, roads are in desperate need of 

repair and mass transitoptionsare too few and far between. The American Society of Civil Engi neers 

2014 "Report Ca rd for America's Infrastructure" estimates that$3.6 trillion in investments are needed 

to modernize and repair U.S. infrastructure. 

The short-term funding for the Highway Trust Fund will run out again this summer, and it is encouraging 

that this committee is searching for long-term funding solutions instead of continuing to move from 

patch to patch as has been done in recent past. However, as you weigh your options, it is important to 

not choose solutions that would be a losi ng proposition for American taxpayers. 
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One such losing proposition is a repatriation "holiday" for taxes owed on profits listed as being earned 

by foreign subsidiaries of American corporations. Because of the current system of deferral, where taxes 

may be indefinitely put off until profits are repatriated or"brought back" to the U.S. in the form of 

dividends orothershareholder payments, multinational corporations are able to play games with their 

accounting books and transfer profits between entities, usually to companies located in low or no tax 

jurisdictions (or"tax havens.") 

This type of corporate tax haven abuse costs the federal government$90 billion in lost revenue every 

year. In total, more than $2 trillion in profits are booked offshore. It's true that without changes to our 

tax code, those monies will continue to be stashed in offshore accounts. But, it is nota good solution to 

allow corporations to voluntarily repatriate those profits at much lower tax rates than would have 

otherwise been due, using a tactic that is known as a "repatriation holiday."Thisexperimentwas tried 

and fai led in 2004, and as a country we must learn our lesson and not repeat the same mistake. 

A 2011 Senate report analyzing the tax repatriation holiday in 2004 found that much of t he profits that 

multinational corporations were supposedly holding offshore were actually sit ting in U.S. bank accounts 

and other assets, undercutting the concept of "bringing the money back." And, the repatriated taxes 

came from a smal l number of corporations that used the money to pay dividends instead of reinvesting 

in the economy and at the same time ended up cutting theirworkforces. 

Proposals like the one offered by U.S. Sens. Barbara Boxer(D-Calif.) and Rand Paul (R-Ky.) would al low 

companies to choose to repatriate offshore taxes at the bargain-basement rate of only 6.5 percent, 

slightly more than 1 percent higherthan the rate used in the 2004 tax holiday. The Joint Committee on 

Taxation scored the Boxer-Paul bi ll as costing$118 billion overlOyears.ln addition to losing money in 

the long run, as a funding option, a repatriation holiday would only be a one-time source of money that 

would do nothing to fix the long-term funding shortfall for infrastructure investments. Additionally, 

allowing another repatriation holiday would reward corporations that have for years avoided paying 

taxes by using accounting gimmicks to shift profits to the books of related foreign corporations. 

Mandatory "deemed repatriation" proposals, such as the 14 percent rate put forward by President 

Barack Obama in his FY 2016 budget proposal, are still not a good deal for taxpayers. This is because 

corporations are given a break on the tax rate, forcing the U.S. to give up t he other 21 percent of taxes 

that could have been assessed if loopholes like deferral were ended and companies were forced to pay 

the full35 percent statutory rate on offshore profits (after receiving a credit forforeign taxes paid.) 

Research by the Institute forPolicyStudiesand the CenterforEffectiveGovernmentin their Apri l 2015 

"Burning our Bridges" report examines the myriad of infrastructure investments that could be made if 

loopholes were closed and offshore profits were taxed at the full st at utory rate. 

Though the President's budget proposal was encouraging in that it proposed to require a minimum tax 

on offshore profits of 19percent moving forward, meaningitcould be used fora long-term funding 

source, given the difference between that rate and the normal statutory rate, it would continue the 

incentive for companies to play accounting games and shift profits to overseas subsidiaries. 
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A betteralternativewould be to instead fund transportation and other infrastructure investments with 

long· term funding pots that are not only sustainable, but that are tied to the use ofhighwaysand would 

incentivize positive behavioral shifts to reduce emissions that contribute to climat e change. Examples 

include increasing the gas tax and institutingacarbon tax. 

The gas tax has not been raised for more than two decades and because of inflat ion, t he value of the 

18.4 cent tax continuestofall. The gas tax provides a disincentiveforfuel use, and it makes sense to 

raise the tax since it has not been changed since 1993. It should also be tied to inflation in order to 

ensure it s value holds steady. 

Another great option for long-term funding for infrastructure investments (among other things) would 

be to implement a tax on carbon dioxide pollution, w ith a refund given to U.S. consumers on a per 

capita basis as a way to balance out the regressive nature of the tax. Since transportation produces 

around a third of our nation's C02 pollution, which causes climate change, it makes sense to t ie a 

portion of the proceeds from a carbon t ax to fund improvements to highways and mass transit. 

Either way, both the gas tax and a carbon tax would be directlytiedto the use of our highways and 

provide long-term solutions to funding infrastructure investments, as opposed to a one ·t ime option like 

a corporate tax repatriation holiday. 

The American people should not have to settle for a repatriation holiday's discounted tax revenue at the 

expense of f urther incentivi zing activities by multinational corporations that disadvantage responsible 

small business owners and ordinary taxpayers. Inst ead, the incentive we should be creating is to reduce 

carbon pollution and limit the harmful impacts of climate change. 

Thank you again for the opportunity to submit our t houghts on this important topic. 

Sincerely, 

Li sa Gilbert 

Director 

Publ ic Citi zen's Congress Watch division 

(;"',e;-·---

Tyson Slocum 

Director 

Publ icCitizen's Energy program 

Susan Harley 

Deputy Director 

PublicCitizen'sCongress Watch division 
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Hon. Rick Nolan 

Testimony - House Ways & Means Committee re Highway Trust Fund 

june 16, 2015 

Mr. Chairman and Members of the Committee: 

Our infrastructure is facing a crisis of epic proportion. It is imperative for the 

security of our nation, the safety of our people and the health of our job -creating 

economy that Congress move ahead with a long term bipartisan funding plan for the 

Highway Trust Fund without further delay. 

The facts could not be more clear. Delay after delay in establishing a clear, long-term 

path to finance the Highway Trust Fund have moved beyond national 

embarrassment to a point just short of national emergency. 

Our highways are falling apart- 65 percent of them are in poor condition -and the 

Highway Trust Fund is facing a 40 percent shortfall. Without action from Congress, 

six weeks from now, the Highway Trust Fund will be broke. If that were allowed to 

happen, 6000 of the largest and most necessary national highway projects would be 

stopped in their tracks -and 600,000 construction jobs would be in jeopardy. 

Our bridges are collapsing. We know all about that in Minnesota, where the I -35 

Bridge in Minneapolis fe ll into the Mississippi River in 2007, killing 13 and injuring 

many more. Today, one in four bridges across America are in need of significant 

repair. 

Just a few weeks ago in my District, an old wooden railroad trestle bridge collapsed 

and caught fire as a train loaded with fertilizer was crossing the Rat Root River near 

the Canadian border. If that train had been loaded with a portion of the 21 million 

barrels of oil that come across that route every year, we would have experienced an 

environmental catastrophe. 

Moreover, it is imperative for the Speaker of the House to stop impeding the 

Committee process, and allow the Transportation Committee to work in parallel to 

write a long-term s urface transportation bill. As we all know, it is through the 

Committee process that we find common ground and achieve the bipartisanship 

necessary to solve the problems we face and get things done. 

In doing so, we must reject the arguments of those who would abdicate our federal 

responsibilities. The federal government has a critical role to play in highway and 

transportation funding in partnership with local and state governments. Just as we 

all benefit from national defense, education, environmental protections and a host of 

other things that require close cooperation, we all travel the highways, enjoying that 

freedom to safely travel, and to live and work where we choose. 
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2 

The good news is that is clearly strong bipartisan support for highway and 

transportation funding here in Congress and throughout our nation. Now we need ID 

get moving. 

We need creative new solutions and good ideas that come through the committee 

process- where we discuss and debate and bring in the best experts for advice and 

counsel- and then reach some common ground. 

We can talk about raising the gas tax -but that's not going to be enough. 

The President has proposed a six-year transportation bill calling for about$470 

billion in new investments- and many of us on the Transportation Committee have 

signed on. 

About $260 billion of that funding would come from a one-time, 13 percent tax on 

$2 trillion dollars multi-national corporations are keeping overseas- coupling that 

measure with tax reform to lower the corporate tax rate and encourage those 

companies to repatriate their funds back here to promote more investment and 

create more jobs. 

The Highway Trust Fund will take in enough to supply the rest of the money in the 

President's proposal with a little left over. 

Remember, this is not a tax increase - just money those multi-nationals rightfully 

owe the United States. 

However, $470 billion is still not enough to do what needs to be done for 

transportation in this country. 

The experts tell us we should be investing at least ONE TRILLION dollars to rebuild 

our highways- roads- bridges- ports- pipelines -airports- railroads and mass 

transit systems. 

An investment like that would create about 13 million new jobs- for about one 

third of the $3 trillion dollars we've spent over the past 13 years on the war in Iraq. 

We have the money and d1e resources. 

The question is- do we have the political will to reorder our priorities to put a stop 

to nation building abroad and wars of choice -and use those resources to begin to 

rebuild America, beginning with our highways and our infrastructure. 

The answer is - we have no choice but to muster that will - and do what needs to be 

done. 

Our safety depends on it 
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3 

Our jobs depend on it 

Our ability to compete in the world depends on it 

And our future depends o n it 

I thank the Committee for holding this hearing, and I look forward to working with 

my colleagues to find bipartisan solutions to our highway and transportation crisis 

and get our great nation moving again. 
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• Sooth 

I West 

Tnnsn 

lssoctadon · - · - · - ~ South West Tronslt Assoc;otlon • PO Box 153157 • Austin, TX 78715 

June 18, 2015 

The Honorable Paul Ryan 

Chairman 

House Committee on Ways and Means 

1102 Longworth House Office Building 

Washington D.C. 20515 

The Honorable Sander Levin 

Ranking Member 

House Committee on Ways and Means 

1236 Longworth House Office Building 

Washington, DC 20515 

Dear Chairman Ryan and Ranking Member Levin: 

This letter is being sent on behalf of the 182 public transportation providers, businesses and members of 

!he Soulh West Transit Association, from !he slates of Arizona. Arkansas. Colorado, Kansas, Louisiana, 

New Mexico, Oklahoma and Texas. 

I am writing to encourage !he passage of a long -term transportation bill !hat will sus lain growlh and 

opportunity for people in communities across oureightslate region and !he Nation. 

The basic facts are: 

• Americans took 10.8 billion bips on public transportation in 2014, which is !he highest annual public 

transit ridership number in 58 years. This growlh occurred in rural, small and large urban 

communities and across all modes. (source: American Public Transportation Association) 

• The Highway Trust Fund cannot keep pace wilh growing demand from bolh !he highway and 

transit programs. The current federal fuel laX level (18.4 cents per gallon), which has not been 

raised since 1993, is not enough. This is !he key impediment to reaulhorizing federal transportation 

legislation. 

• Since 2009, Congress has funded transportation lhrough a dozen short-term measures. ranging 

from one week to two years. This me !hod of crisis management cripples our transit Agencies' 

ability to provide adequate community services, disrupts plans for long term growlh projects and 

halts economic progress due to poo~y mainlained equipmen~ roads and bridges. 

Often !he facts alone don't allow you to see !he full picture. To put a face wilh !he data, local transit 

agencies have provided basic facts about how public transportation impacts !he communities !hey serve. 
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Letter from S<luthWestTran$itAssociation 

Junel8, 2015 page Page 2 of4 

Public transportation supports communities on a personal level by providing the way to jobs, 

healthcare and life events. Transit options increase economic health and save tax payers money. 

Kibois Area Transit (KATS) in Stigler, Oklahoma serves an eleven county area that includes 

partnerships with bibal groups. From January 1. 2014 to Oecember31, 2014, KATS drove a total 

of 5,598,226. 7 miles. completing 738,101 passenger bips. 65.725 oflhose bips took people to 

worl<. That means 292 people are able to go to work each day because of the consistent job 

KATS is doing. Thafs 292 people are off welfare rolls in rural, eastern Oklahoma. living productive. 

tax paying lives becauseoftheirride to worl<. 

Colorado transit agencies are connecting people to what is important in life. 

80% of ECO, the Eagle County, Colorado transit system bips get people to worl<. 

59% of the Mountain Metro transit riders in Colorado Springs are going to worl< or school. 

60% of worl<ers in downtown Denver ride the RTD bus, train, carpool, walk, or ride a bike; they do 

not drive. 

Public transportation supports communities by creating economic activity through public-private 

transit oriented development and by providing jobs to build and maintain services. 

Investment in the Dallas Area Rapid Transit (DART) rail capital projects between 2003and 2013 

has generated a return of $7.4 billion in regional economic activity, creating more than 54,000 jobs 

that paid more lhan $3.3 billion in wages, salaries and benefits. In addition. more than $5.3 billion 

in private-capital transit-oriented development projects have been built, are under construction, or 

are currenUy planned near light rail stations since the debut of DART Rail in 1996. 

Public transportation provides a way for America to be energy responsible, strong and 

independent. 

Ozark Regional Transit Authority in Springdale, Arkansas just received four compressed 

natural gas vehicles into its' fleet The authority's new vehicles cost$101,968 each for a total of 

$407,872. Roughly $345,000 came from the Surface Transportation Program under the Federal 

Highway Administration, while $60,000 was funded by a matching grant from the Northwest 

Arkansas Economic Development Disbict and approximately $19,000 of the Authority's own 

money. The four new buses will be used for routes in Springdale and for paratransit, which is doorto-doortransportation for people with disabilities. 

In addition to reduced emissions, CNG provides significant savings compared to gasoline. Fuel 

costs average between $0.75 to $0.80 less per gallon resulting in a savings of at least$6,900 per 

year, per bus. 

Public transportation reduces congestion dramatically in and around metro areas, produces few 

carbon emissions and makes a safer community for all, providing additional benefits even to 

people not using transit. tt makes the entire transportation system worl< more efficienUy. For every ten 

people on a bus or train during rush hour equals nine fewer cars on the roads. 
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letter from SOuthWest TransitAsSO<iation 

June 18,2015 page Page 3 of4 

Out of250,000 daily llips taken on Valley Metro, Phoenix, Arizona bus and light rail, one-lhird are 

worl< trips saving 3,300 pounds of pollution and reducing approximately 7,7'f:IJ vehicles from lhe 

freeways and streets. Four hundred Valley Metro vanpools also help save five million drive -alone 

miles and 182,000 gallons of fuel each monlh. 

The bottom line regarding congestion is economics: lime spent stuck in traffic can be converted to 

non-productivity. Increased productivity improves economic vitality and ultimately generates more 

money for individuals and lhe community. 

A strong investment in capital projects for small and rural fleets allows public transportation 

providers to give safe and reliable service on a consistent basis. Currently, lhe following small 

systems are living wilh lhe choice-making reality oflhe cost of keeping older vehicles on lhe road versus 

cutting service. 

Citibus, Lubbock, Texas Sixty-one percent (61%) of lhis system's fleet is pastits useful life. They 

currently operate fixed route, university service wilh 70 buses and para transit service wilh 32 vans. 

The majority ofbolh lhe university buses and lhe paratransit vans are beyond lheir useful life. In 

orderto keep upwithlhe demand for service, Citibus is forced to procure buses beyond useful life 

from neighboring DART. Parts are scavenged from lhe older DART vehicles and placed on lhe 

current Citibus fleet because some parts are on longer produced. 

Fort Smith Transi~ Fort Smith Arkansas Sixty-five percent(65%) oflhe vehicles in lhis system 

have met lheir useful life. They maintain 17 revenue vehicles in lhe fleet and operate 12 vehicles 

daily. Twenty-five percent (25%) of trips served are to or from medical appointments. Thirty -five 

percent (35%) are to or from employment destinations. The elde~y and disabled residents 

comprise more lhan twenty-five percent (25%) of all passenger llips combined. Their average 

annual bus replacement needs equal lhree buses per year. 

Santa Fe Trails, Santa Fe, New Mexico, currently has 36 full-size buses in lhe flee ~ and 18 of 

lhose vehicles are pastlheirusefullife (by some lhree years and 150,000 miles). The latter bus 

model is no longer manufactured , and parts are all but impossible to find. They are only able to 

replace twelve oflhese buses atlhis time, which will reduce lhe fleet to 30 buses, lhus reducing 

service. This causes Santa Fe Trails to maintain a perilously low spare ratio. Furthermore, since 

Federal funding has all but disappeared , seven oflhese twelve replacement buses are being 

purchased entirely wilh local funds,lhrough a public project revolving fund loan from lhe New 

Mexico Finance Aulhority. 

Sportran, Shrevepo~ Louisiana, reports 58% oflheir fleet is beyond its useful life. Wilh 55 Fixed 

Route Buses, 20- Paratransit Cutaways and 10- Service Vehicles in lheir fleet, lhey find it difficult 

to keep up lhe demand for vehicle replacement In addition to fleet replacement needs, Sportran 

has major capital investment needs for lheir CNG station maintenance. 

The clock is ticking. By July 31, lhe Highway Trust Fund and Mass Transit Account will hit dangerously low 

levels which will require lhe Department of Transportation (001) to slowdown reimbursements. We need 

a comprehensive,long-terrn solution for infrastructure lhat includes roads, bridges, and public 

transportation. 
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letter from SOuth West TransitA$SO<iation 

June 18,2015 page Page 4 of4 

There are many difficult choices you must make in order to sufficiendy invest in the nation's surface 

transportation infrastructure, which includes public transportation, but these are choices that must be made. 

The current stopgap approach of generating revenue to support surface transportation programs only 

succeeds in costing more money to continue 1he same limited outcomes. These resources could be better 

spent in addressing our nation's unmet transportation and infrastructure needs if long-term plans and 

solutions were developed and implemented. 

We respectfully request that you keep all options for funding on the table and find solutions that 

will move our Nation forward. 

Congress must act this year to restore, maintain and increase the purchasing power of the federal motor 

fuels user fee to support increased federal investrnentfor the public transportation program. While the 

federal motor fuel userfee remains a viable funding source, Congress should adopt a bipartisan 

mechanism that provides predictable funding for investment in public transportation. 

Funding for aging buses and vans in smaller communities is not on the radar of nFIA, which is too complex 

for rural and small-urban communities with smaller projects. To remedy this, SWTA supports CTAA's 

proposal to establish a qualified intermediary lending program for rural and small-urban infrastructure 

projects eligible under nFIA. 

We ask that Congress continue to reward excellence and commitment to small urban transit efficiency and 

effectiveness by growing STIC's Section 5307 set-aside to three percent 

In closing, SWTA can deliver further vivid examples from our region and nation, of those providing vital lifeenhancing transportation services to the people you represent Thank you for working to find the best 

solutions for all. 

S

~ 

incerely, 

Kristen Joyner 

Executive Director 

South West Transit Association (SWTA) 

817-295-3663 

kjoyner@swta.org 
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Statement for the Record 

Hearing on Long-Tem1 Financing of the Highway Trust Fund 

Conuninee on Ways and Means 

U.S. House of Representatives 

Jw1e 17, 2015 

As the House Conunittee on Ways and Means meets to consider the feasibility of various ideas 

to provide a sustainable. 1ong-tenn solution to the shortfall in tl1e Highway Trust Fw1d, the tuldersigned 

organizations urge the Conunittee to consider a simple. cost-effective proposal that would galvanize 

billions in new private capital for investment in U.S. transportation and infrastn•cture. SpecifiCally, any 

long-term highway bill should inch1de reforms to the Foreign Investment in Real Property Tax Act of 

1980 (FIRPTA), such as those proposed in H.R. 2128. legisL1tion introduced by Ways and Means 

Members Kevin Bmdy (R-TX) and Joseph Crowley (D-NY). 

FIRPTA is a major obstacle to mobilizing private sector capital for infrastrucmre projects. The 

pwutive FIRPTA law subjects foreign invesh11ent in U.S. real estate or infrastructure to a much higher 

tax burden than applies to a foreigJl investor purchasing a U.S. stock or bond, or an investment in any 

other asset class. FTRPTA imposes U.S. tax on gain realized by a foreign investor on the disposition of 

an "interest" in U.S. real property, which includes infrastrucntre assets. In some cases, FIRPTA can 

generate a tax burden as high as 54.5 percent. The FIRPTA regime is an anti-competitive outlier that 

dete rs and deflects capital to other markets. FIR PTA refom1 would serve as a strong, market-driven 

catalyst for the fUlancing of much-needed infrastrncture mprovements, including upgrades to our 

transportation system. 

Meeting our infrastrucntre needs will require a combination of public and private investment, 

and passive foreign investors could play a siglllficant role in ful3ncing public -private parmerships 

itwolving: ports. bridges. airports, turmels. toO roads, 6ght rail, freight rail, and other income-producing 

infrastructtrre assets. Pooled and syndicated capital is already being deployed in itlfrastructure projects 

through infrastructure fw1ds organized as partnerships. REITs are another model that bas been used 

with some success for infrastrncntre invesbllent. 1 Nonetheless, the United States is far behind other 

regions of the world in harnessing private invesbllent for infrastrucntre development. 2 

1 Deloitte. RE!Ts and Jn(rasMictw·e Projects (20 I 0). available at: 

http1/www2.deloitte.com/content/dam/Deloiuelmx/Documelttslbienes-l1!icesiREITs infrastmcttue proyeciS.pdf 

2 OECD. Pension Funds Investment in Infrastm cl!lre: A Survey (2011 ), available at: 

http-J/www .oecd.orglstilfutltreslntfrastmctltreto2030/48634596.txlf. 
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Fore ign institutional investors- pension funds, life insmance companies, e tc.- are ideal 

parmers for U.S. infrastructUie projects because they have the capital needed for large-scale projects and 

the time horizon necessary for the long-tenn retmns associated with the upfront investment. 

InfraSinJCture investments are attractive to foreign instimt iona I investors because they offer: stable and 

predictable income streams that exceed fixed income markets, diversification benefits. and a hedge 

against inflation. Because the public-private infrastructUie model is more developed in other countries, 

foreign institutiooa I investors are often more comfortable and experienced investing in infrastrucrure 

assets than are their U.S. counterparts. 

FIRPTA is a major hmdle for the foreign investor seeking to invest in US infrastructwe projects. 

Under cUirent law, FIRPTA applies when at least 50 percent of a company's balance sheet is 

attributable to the value of real property. In 2008, the IRS issued an allllolUtcemem in which it indicated 

that many of the govenunental licenses and pennits being issued in cOnttection with the leasing of 

transportation assets. such as toU bridges, should be treated as inseparable from the wtde rlying real 

property, and thus as US real property interests subject to FIRPTA. 3 In 2014. the IRS issued proposed 

reguL1tions in the REIT area confmning that, among other things, certain inherently pemument 

structmes such as microwave transmission, cell broadcast, and electrical transmission towers: bridges: 

mnnels: roadbeds: and railroad tracks are real propeny for REIT pmposes. 4 

The fear of triggering FIRPTA liability is blocking inbound infraslntcture inveshnent. In a 2013 

report, one of the big fOUI accounting frnts noted how FIRPT A obstructs infrastructUie investment in 

the United States: 

The FIRPTA ntles may be of significant relevance to non-US persons investing in 

infrastrucrure projects because such investments often provide investors various rights 

in the wtderlying infrastruc ture asset. As a result of these interests or rights in the asset, 

a further issue is raised as to whether the investor has obtained beneficial ownership of 

real property rig)its to which the FIRPTA ntles could apply' 

Tbe Joint Committee on Taxation has also acknowledged tbe effect of FIRPTA on foreign investors in 

U.S. infrastructure, "the special U.S. tax rules applicable to foreign investment in U.S. rea l estate ... 

may affect tbe U.S. tax treatment of foreign (infrastntcmre] investors. Some advisors have taken the 

position that the intangible franchise right is an interest in rea l property for purposes of section 897."6 

Large private investors in transportation infrastructUie cite FIRPTA as a pritJCipal obstacle to 

attracting greater foreign capital for infraslntcture projects. According to Christopher Lee. fotmde r and 

managing panner of Highstar Capita~ an infraslntcture inveshnent fum ,"ft]here are many billions of 

dollars in overseas capita l sitting on the sidelines because those investors are wary of the bmden 

' Intcntal Revenue Service, Amtouncemcnt 2008-115 (Dec. I, 2008), available at: hltp1/www .irs.govlirb/2008-

48 IRB'arl8.html 

• Treas. Prop. Reg.§§ 1.856-3; 1.856- 10. The proposed ntles were ptJblisbed in the Federal Reg.ister on May 14, 

2014 and are available at: hup://www .gpo.gov/fdsyslpkg/FR-20 14-05- 14/pd£'201 4- 111 15.pdf. 

5 PWC, Jnfrastntcture Investing: Global Trends and Tax Considerations, Part 2 (2013), available at: 

hnp:l/www .pwc.com/ns/en/capital-proiecls-infrastructurelpublications/assets/infrastmcn•re-investinR.-part2.J?df. 

6 Joint Cotruniuee on Taxation, Ove•viewo[Selected Tax Provisions Relating to the Financing of Swfnce 

Tronspo11ntion lnfrnstrucwre, JCX-49-14 (May 5, 2014). 

- 2 -
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FlRPTA will have on their Divestments! Highstar Capital has invested more than $7.8 billion in 

infrastmcture since its inception. 

Because of the close c01mection between FrRPTA and infrastructure investment. the 

Administration has included a FIRPTA refom1 proposal in its Rebuild America infrastructure initiative 

and its last three budget submissions. 

Moreover, transportation improvements, n1fraslrllcture bmld-outs, and thousands of new jobs 

would flow from the commercial real estate investment generated by FIRPTA reform. Real estate 

development and iufraslrllcnrre upgrades are inextricably linked For example, in jnst the last month, a 

prominent property owner in the Northeast agreed to invest $220 mill ion in n11proveme nts to Grand 

Central Station, one of the country's roost important trariSit hubs, as part of a larger commercial real 

estate project in New York.$ Similar examples, on a smaller scale, can be found throughout the cOtmtry. 

Last year. the Urban Land Institute (ULI) released its annual report on infrastntcture trends and 

issues! According to ULI's survey of250 public sector leaders in locaVregional government and over 

200 senior-level private developers. the most promising source of infraslrllcture funding over the next 

decade will be joint development or cooperation between local governments and developers. Also higb 

on the list was "negotiated exactions,'' which refers to tying development rigbts to infrastnrcture 

improvements. The report concluded that ''contributiotlS from real esta te are often essent~1 1 components 

of the ftmding package for mfrastructtrre projects.'' 10 

The infrastructure build-outs that accompany new development are a major component of real 

estate iuvesbnent. Real estate projects fmance transportation and other improvements througb 

mandatory state and local in1pact fees. A 2012 stndy fotmd that nationally, for a typical muhi-family 

development, impact fees in excess of 6. 7 percent of the project's value will be paid to the local 

government to fmaoce the co!lllllunity's surrotmdiog infrastructnre. 

11 The same sllldy found that the 

average developer of a 100,000 square foot retail shopping center in the United States will pay a loca l 

govenunelll $568,500 to m>prove nearby roads, $244,000 to improve the water and sewer system, and 

$83,700 to build up surrotmdiug parks. 

The Rea l Esta te Investme nt and Jobs Act of 2015 (H.R. 2128). introduced by Representatives 

Brady and Crowley, includes nvo critical provisions to mobilize foreign capital for real estate and 

infrastnrcture investment in the United States. First, it would increase the ownership stake that a foreign 

investor can take in a publicly traded U.S. real estate investment trust without triggering FlRPTA 

liability and extend the provision to certain collective investment vehicles. Second it would remove the 

1 See Qlfistopher Lee, Let's at Least Have a Sensible Ta.x Stnrcttrre When It Comes to lnfrastructtrre, The 

Huffmgton Post. available at: http1/www.huffn>gtonpost.com/christopher-h-leellets-at-least-have-asens b 3112325.html 

• Associated Press, NYC approves sk-yscraper 01 exchange for· transit hub work (May 27, 20 15), available at: 

http1/fniaticc.yahoo.com/ncws/nyc-awrovcs-sk-vscraper-excbange-tnuiSit·20120.1047.hunl. 

9 Urban Land Institute, Infrash7tcture 2014: Shaping the Competitive City (2014), available at: lmp://uli.org/wp· 

conrent/uploads!UU·Doclllllenrsllufrastructure·20 J4.pdf 

10 !d. 814. 

11 Dtutcat.l Associates, 2012 National impact Fee Swvey (20 12). available at: 

http1/www .impact fees.conlJ\?ubticntioriS%20pdf/20 12 survey.pdf . 

. 3. 
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tax penalty that FIRPTA imposes on foreig11 pension funds that invest in U.S. real estate and 

infrastmcture. Together, these two bipartisan and noncotttroversial changes would UJ1)ock billions of 

foreig11 capital for job-creating investment here at home. 

In less than two mombs, H.R. 2128 has already attracted the co-sponsorship of 31 of the 39 

members of tbe Ways and Means Conmuuee. ht February, the Senate Finance Committee wtanitnously 

passed a version of the Rea l Estate Investment and Jobs Act (S. 915). The full House passed a similar 

bill in 2010 by avote of 402-1 1. 

Over the long run, by mobilizing capital and increasing investment, FIRPTA refonn will have a 

positive impact on the economy, job growth, and tax revenue. However, any short-tenn effect on the 

federal budget, as estimated by the Joint Committee on Taxation, can be fully offset with 

noncontroversia l, related revenue provisions. At the time of mark-up, S. 915 was flll3nced with 

provisions aimed at improving tax compliance. 

Congress should reform outdated UIX regimes such as FIRPTA and pave the way for marketbased, privately financed infrastruc ture investment. Thank you for the Comnlittee's consideration of 

our submission. If Ways and Means Committee sUI IT would like to discuss this issue in greater deUiil 

please contact Ryan McConnick, Vice President and Counsel of The Rea l Estate Roundtable, at (202) 

639-8400 or mtccomlick@rcr.org. 

We look fonvard to working with the Conmuttee to advance meaningful FIRPTA reform. 

Ahernative & Direct Investtnent Securities Association 

American Hotel & Lodging Association 

American Resort Development Association 

American Society of htterior Designers 

Building Owners and Managers Association Imernational 

CCIM lnstitnte 

Institute of Rea l Estate Management 

htternationa l Comtc il of Shopping Centers 

International Union of Painters and Allied Trades 

Investment Program Association 

NAIOP, Commercial Real Estate Development Assoc~1tion 

Nationa l Apartment Association 

National Association of REAL TORS® 

National Association of Real Estate Investment Trusts 

National Multifamily Housing Cotmcil 

Tite Rea l Estate Romtdtable 

·4· 
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Testimony 

Dr. Roy Littlefield 

Executive Vice President 

Tire Industry Association 

1532 Pointer Ride Place, Suite G 

Bowie, MD 20716 

Ways and Means Committee 

U.S. House of Representatives 

June 17, 2015 
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TIRE INDUSTRY ASSOCIATION 

www.tireindustry.org 

Mr. Chainnan and members of the Ways and Means Conuninee, I appreciate this 

opportunity to submit comments on funding options for long tcnn infrastructure funding. My 

name is Roy Littlefield, and I serve as the Executive Vice President of the Tire Industry 

Association (TIA), TIA is a national trade association representing close to 8,000 small business 

members (who operate over 20,000 small business retail outlets), engaged in the retail, 

retreading, importing, and distributing of all varieties of tires. TlA members have been involved 

in the collection of Federal tire excise taxes since 1918. Our industry is dependent on a sound 

highway system. 

TIA suppons a long-tem1 Federal Aid Highway bill. It is time for Congress to look 

beyond sbort-tenn patchwork funding proposals. If Congress tries to continue funding at current 

levels, it will have to choose among several unsavory options. While we support a long-tenu bill, 

we are opposed to many proposals being circulated. 

The Federal Excise Tax on tires was first levied in 19 18 mainly because of revenue needs 

brought about by World War l. The Revenue Act of 1918 imposed a tax oo both tires aod tubes 

at the rate of 5% of the retail price. 

The tax was reduced after the war, and then later repealed in 1926. 

The levy was reintroduced during the Great Depression, and was increased in 1941 to 

help finance World War II. 

In 1956, the rate of the tax was raised in response to legislation enacted to build the 

interstate highway system and to create tbe Highway Trust Fund. 

The Federal-Aid Highway Act of 1956 provided for a significant expansion of the 

federal-aid highway program and authorized federal funding over a longer period of time so as to 

pennit long-range planning. It was considered necessary to authorize tbe entire Interstate 

Highway program to assure orderly planning and completion of this network of highways 

througholll the United States as efficiently and as economically as possible. In the case of tire 

taxes, the act raised certain rates and expanded the rate structure by prescribing different rates for 

different tire types. Tires for highway vehicles were taxed at 8 cents per pound, other tires at 5 

cents per pound, inner tubes at 9 cents per pound, and tread mbher at 3 cents per pound. Later, of 

course, that was raised to 5 cents per pound. 

In an eftort to stimulate job creation, the Congress passed the Surface Transportation Assistance 

Act of 1982. TI1c tire tax was acntally hammered out late on a Friday night during a conference 

commjuee session. 

One of its goals (besides) increased revenues for constmction and maintenance of the 

Nation's highways) was a redistribution of highway costs between car and truck users. 

Accordingly, the act changed several of the excise taxes that fund the Highway Tntst Fund. For 

example, the excise taxes on tread rubber and inner tubes were repealed as were the taxes on 

Tl.. .... ,. ~ . ., ....... ••••e•••••.., 
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TIRE INDUSTRY ASSOCIATION 

www.tireindustry.org 

non-highway and laminated tires. A new tax structure for heavy tires with graduated excise tax 

rates dependent on tire weight was established. Tires which weigh less than 40 pounds were 

exempted from the excise tax so that tires for most passenger cars are no longer taxable. TI1e 

excise tax rates on heavy tires ranged from 15 to 90 cents a pound according to the weight of the 

tire. These rates are shown in the following table. 

Exdse Tax Rates on Tires Under the Sut·face Transportation Assistance Act of 1982 

Weight of Tire Tax 

0-40 lbs. No tax 

40-70 lbs. 15 cents per lb. over 40 lbs. 

70-90 Ibs. $4.50 plus 30 cents per lb. over 70 lbs. 

90 lbs. - UP $ 10.50 plus 50 cents per lb. over 90 lbs. 

Following the merger, we quickly met with RMA and worked out language to end the dispute. 

The American Jobs Creation Act of2004 changed the method of taxing tires from the 

graduated weight stmcture of prior law to a tax based on the load capacity of the tire. l11e tax is 

set at the rate of9.45 cents for each 10 pounds of tire load capacity in excess of3,500 pounds. [n 

the case of super single or bias ply tires the tax rate is set at 4. 725 cents for each I 0 pounds tire 

load capacity in excess of 3,500 pounds. 

A provision included in the Energy Tax Incentives Act of2005 clarifies the definition of 

super single. 

The following chart shows the current tax rate which funds the Highway Trost Fund. 

Federal Highway-User Tax Rates-Current 

Tl...... ,. ~ . ., ....... ••••e•••••.., 

in Cents 

Fuel 

Tax 

Rate 

(per 

gallon) 

Distribution of 

Taxes to the HTF Non-HTF 

Higbwa Mass Leaking 

y Transit Undergt·ound 

Accouo Accoun Storage Tank 

t t Trust Fund 
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TIRE INDUSTRY ASSOCIATION 

www.tireindustry.org 

Gasoline 18.4 15.44 2.86 0. 1 

Gasohol 18.4 45.44 2.86 0. 1 

Diesel Fuel 24.4 21.44 2.86 0.1 

Liquefied Petroleum Gas 18.3 16.17 2.13 0 

Liquefied Natural Gas 24.3 22.44 1.86 0 

M85 (85 percent methanol) 9.25 7.72 1.43 0. 1 

Compressed Natural Gas (cents per thousand 48.54 38.83 9.71 0 

cubic feet) 

Non fuel Taxes (All proceeds to Highway 

Account) 

Tires Maximum rated load capacity over 3,500 pounds -

9.45 cents per each 10 pounds in excess o£3,500. 

Truck and Trailer Sales 12 percent of retailer's sales price for tractors and 

trucks over 33,000 pounds gross vehicle weight 

(GVW) and trailers over 26,000 GVW. 

Heavy Vehicle Use Annual tax: Trucks 55,000-75,000 pounds GVW, 

SIOO plus $22 for eacb I ,000 pounds (or fraction 

thereot) i11 excess of 55,000 pounds. Trucks over 

75,000 pounds GVW, $550 

Without Congressional action, lhe Highway Trust Fund will soon run out of money. Will 

Congress pass another short-tenn bill, or will they fund the infrastructure at a level deemed 

necessary to sustain the system for tbe foreseeable future? Let's look at the range of some of lhc 

options being C·Onsidered. 

Op!lon #I 

Significantly raise the fuel tax. This would be the easiest option to administer, and would 

be supported by environmentalists. It would be opposed by most in the auto and truck industries. 

Thjs option would not require any changes to nonfuel taxes. 

Option #2 

Moderately raise the fuel tax, reinstate the FET on passenger tires and retread mbber (5 

cents a pound). 

Option #3 

Raise the fuel tax by a lesser amoum, reinstate FET on passenger tires and retread nabber 

(5-15 cents a pound), and increase existing nonfuel taxes by 10% (including heavy tires). 

Option #4 

Tl...... ,. ~ . ., ....... ••••e•••••.., 
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Consider: 

I) Increased rolling 

2) Congestion fees 

3) Vehicle Miles Traveled (VMT) charges 

4) National Weight-Distance Tax on Truckers 

TIRE INDUSTRY ASSOCIATION 

www.tireindustry.org 

5) Increase private sector investment (i.e. privatization ofbighways) 

6) National Infrastructure Bank 

7) Sales tax on oil producers at tbe wholesale level 

Today, revenues from the excise tax on tires provide Jess than 2% of the Highway Trust 

Fund receipts. 

We are taking 2 strong positions: 

I. Eliminate diversion. We are approaching 30% of the funds collected for the Highway 

Trust Fund diverted for non-hjghway purposes. 

2. Engage creatively in future highway funding. We were an early supporter of 

legislation introduced by Congressman John Delany (D-MD) "The Partnership to 

Build America Act" (H.R. 2084). 

The Partnership to Build America Act is a bipartisan effort to find new funding for roads, 

bridges, and transit. The Act finances $750 billion in infrastructure investment using no 

appropriated ftmds and has 50 co-sponsors (25 Republicans and 25 Democrats). On January 17, 

2014, two Senators- a Repnblican and a Democrat, introduced a companion bill. Within a week, 

5 Republican Senators and 3 Democratic Senators came out in support of the bill. 

The bill is an attempt to address two problems: how to fund transportation and how to 

entice U.S. corporations, which have stashed an estimated $ 1.45 trillion abroad, to bring that 

money home. Delaney's plan would create a $50 billion federal fund to bankroll loans and 

leverage private investment tor transportation and other infrastrucn•re. The money would come 

from bonds bought by companies who want a tax break if they bring cash earned abroad back to 

the U.S. 

TIA's position is very clear: eliminate diversion, oppose tax increases, engage in creative 

ftmding and tax refonn, address our infrastmcture crisis and pass a long-term infrastructure 

finding bill. TIA, along with the highway, transit, trucking, and motorist communities, is 

collllllitted to supp011ing your efforts. 

Tl...... ,. ~ . ., ....... ••••e•••••.., 
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Transportation Transformation Group 

Statement for the Record 

U.S. House Committee on Ways and Means 

Long-Term Financing of the Highway Trust Fund 

Wednesday,June 17, 2015 

Tire Trmzsportation Tmnsfonnation Group is an unprecedented alliance of state 

got1ernment, finance, acadL'Inic and pritJate industry leaders wlwaspire to trmzsform 

American transportation policjl into a goal-based arrm1gement that maximizes jlexibili~f 

to enhance the roles of the sttlte and local public sectors and theirprit•ate pt~rtners to soh-e 

the growing problems of congestion and mobility. This statement is submilled by 

William Moore on behalf of tire Trmzsportation Trmrsformation Group. 

Private activity bonds (P ABs) allow private parties to issue tax -exempt debt based on the 

investment purpose of the bond proceeds and subject to a series of limitations. 

Federal law generally prohibits debt issuers from financing highway and transit programs by 

combin ingtax-exen1pt debt or its proceeds with long-term private managementcontracts or 

private equity investment. This prohibition, written into the 1986 Tax Reform Act, includes 

exceptions for airports, solid waste facilities, and high -speed rail because those infrastructure 

classes were expected to attract private-sector investment and management. 

Given the potential application of PASs to surface transportation, Congress created a limited 

PASs demonstration program for highway/intermodal projects inSAFETEA-LU. The program 

permits USDOT to allocate up to$15 billion in PASs between qualified highway and surface 

freight transfer facilities. To be eligible, the project has to include a Federal aid highway project 

in its scope an d the private entity must have a public conduit to issue the debt, such as a state or 

local government. 

PAS designation allows the bonds to retain tax-exempt status despite a greater level of private 

involvement than is ordinarily allowed. This allows projects with private-sector finandal 

participation to obtain lower financing rates, eliminating one barrie r to private sector 

participation in transportation investment. PABs are intended to make private infrastructure 

investment eligible for the same federal tax exemption that state and local governments enjoy if 

they assume debt direc tly. 

Like virtually all other private activity bonds, the interest on highway /intermodal PABs has 

been subject to the Alternative Minimum Tax (AMT), which increases borrowing costs and 

narrows the market of potential investors. Under th e American Recovery and Reinvestment 
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Act, PASs that were issued in 2009 and 2010 are exempt &om the AMT, encouraging greater 

investment in user backed infrastructure projects that benefit the public. 

OnJy 25 percent of P A B proceeds can be used to acquire Ia nd. Qualified highway or surface 

transportation facilities may require significant right-of-way (ROW) acquisition for project 

construction. ROW acquisition typically accotmts for about 10-25 percent of total project costs 

and can be necessary far in advance of construction. 

Many start-up facilities do not generate sufficient revenue during the ramp-up period to fully 

cover the interest expense on borrowed funds. Tax reguJation prohibits the accretion of intere;t 

on PASs, which limits the usefuJness of PASsin project financings that require back-loaded 

repayments, where interest is deferred to accommodate the revenue profile and increase the 

amount of proceeds available for construction. 

To enhance the ability of PASs to solve the current financing shortfall confronted by our 

national highway program. T2 recommends: 

• Double the $15 billion ceiling on surface transportation PASs. 

• Relax restrictions on purchases of land and other infrastructure and expand the types of 

projects that qualify for PAS financing. 

A flow deferred interest on Highway PASs. 

T2 believes that an enl1anced and expanded Private Activity Bond program is an essential 

element in meeting the nation's transportation needs within a severely restrictive budgetary 

environment. 

The Transportation Transformation Group 

633 Pem1Sylvcutia Avenue, NW Fourth Floor 

Washington, DC 20004 

202-288-0892 

www.trnns2worrp.am1 
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Wage Works Statement to the House \Vays & Means Committee Hearing 

on The Long-Term Financing of the H ighway T rust Fund 

J une 18, 2015 

TI1e following statement is being submitted by Wage Works, a leading nationa l thu:d patty provider 

of commuter benefits. Wage Works applauds the House Ways and Me<>ns Committee for holding a 

hea rutg On dle long-term £i lJ.allCing of d!e Highway T lUSt Fund. As the Committee considet"S ideas 

to improve the economics of the HighwayTmst FtUld, we tu"ge inclusion in the Highway Bill of d1e 

employer provided mass transit benefit and, in patticular, consideration ofThe Commuter Patity 

Act of 2015 (H.R. 990) introduced by Rep. Peter King (R-NY) and co-sponsored by 30 other 

lv[embet"S of the House. The Bill would11chieve permanent parity between d1e tax treatment 

provided for parking and conu1mter benefits by setru1g bod1 parking aJJd tmnsir benefits at $235. 

Restoration of the conunuter benefit parity will illllnedia tely help millions of worlcing Americans and 

d1eir employers. It is also impottant to note that parity can be attained without increasing the deficit 

ruJd can potentially help finance the Highway Tntst Fund. The Joint Committee on Taxation QCI) 

l.as noted d1at a pennanent provision setting both parking 1111d tJ:ansit benefits at $235 and indexing 

dtem for infla cion would raise net re,•euues of $130 million over ten yellt"S. 

Federal tax a nd transportation policy has long recognized the unique role of the federal goveounent 

in encom"llgingcommerce and d1e transport of Americans by Cllr or mass tl"llnsit to their place of 

employment. Parity between d1e tax treatment provided for parking <>nd m<>ss tmnsit has 

accompanied prior Highway Tntst Fund legislation. 

tvfany employers tum to fums such as WageWot:ks to administer commuter benefit progt"llms at low 

cost to d1e company. Employers have a vested interest in helping their employees get to work in a 

timely and efficient manner, which the transit benefit facilitates. These programs are broad based, 

middle class benefits that at-e designed to enhance work force productivity. TI1ey pose uo substar>tiaJ 

drain on d1e TreaSUl)' and the mass transit benefit is likely a net saver to the govenuneut as it 

reduces congestion, pollution, and the need for costly expansion of roads. Commuter benefits also 

prevent dips in mass transit ridership that can fi.uther stt-ain municipal, state and federal coffet"S. By 

encom"llging use of mass tmnsit, conunuter benefits reduce the need for govenm1ent to provide 

direct financial suppo1t to public txansit opera tot-s. 

Due to inclusion of commuter benefit parity in tax extender legisla tion, until the end of December 

2013, d1e maximtUll allowable pre-tax deduction for u·ansit and parking was equal at $245 per 

mondt. Because Congress did not act to extend parity, commuters who travel to wot"k using mass 

transit are now limited to a moutllly pre-tax deduction of$130 per montl1 while the maximum 

allowable parking benefit has risen to $250 pet· mondt. Congress retroactively exte11ded benefit 

parity at d1e end o£2014, but as a result of the moutlt-to-moud1 nal~l(e of d1e benefit, it is difficult 

to reinstate this benefit retroactively. 

Tius inequita ble tax code anomaly encout"llges commutet"S to drive to wot:k L-ather than use public 

transpo1tation or van pools. \XIhile a debate can be had over tl1e pre fen-ed fom1 of transpottation, it 

is evident that, at a mininnun, mass transit provides a clear benefit to employet-s and to the 

conununity as a whole especially in congested urban areas. Both public policy a nd the tax code 

should not pe11<~lize commutet-s for use of public transit versus driving to collUlmte to work. 
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